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TMI Blog2009 (9) TMI 80X X X X Extracts X X X X X X X X Extracts X X X X ..... in the circumstances of the case, the learned CIT(A) erred in allowing the deduction under s. 80HHC to assessee ignoring the fact that the assessee himself claimed the deduction under s. 80HHC at rupees nil." 3. The first issue for consideration relates to deleting the disallowance under s. 14A of the IT Act, in respect of expenditure incurred on exempted income. The AO disallowed proportionate administrative management expenses under s. 14A by placing reliance on the decision of Hon'ble Supreme Court in the case of CIT vs. United General Trust Ltd. (1994) 116 CTR (SC) 194 : (1993) 200 ITR 488 (SC). During the course of proceedings before the learned CIT(A) it was submitted that only that part of expenditure was not allowable which had a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diture as relatable to the exempt income in terms of sub-ss. (2) and (3). Thus, sub-ss. (2) and (3) are procedural in nature and retrospective. In the case before us the AO as well as the learned CIT(A) have not examined as to how the administrative expenses are related to exempted income. The disallowance under s. 14A of the Act has to be computed as per the provisions of s. 14A(2) and (3) r/w r. 8D as held in the decision of Tribunal, Special Bench in the case of ITO vs. Daga Capital Management (P) Ltd. We, therefore, set aside the matter to the file of the AO with the directions to examine the claim of the assessee in the light of the decision of the Tribunal, Special Bench and work out the disallowance as per r. 8D of IT Rules, 1962. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it came to our notice that the decision of the Special Bench in the case of Syncome Formulations (India) Ltd. has been overruled by Hon'ble Bombay High Court in the case of CIT vs. Ajanta Pharma Ltd. (2009) 23 DTR 1 (Bom). The case was again fixed for clarification in the light of the decision of Hon'ble Bombay High Court decision. 10. During the course of hearing the learned Authorised Representative of the assessee submitted that the question before Hon'ble Bombay High Court in the case of CIT vs. Ajanta Pharma Ltd. was whether on facts and in the circumstances of the case and in law the Tribunal was justified in approving the order of the learned CIT(A) in allowing respondent to exclude profits for the purpose of s. 115JB of the Act at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the decision of Special Bench in the case of Syncome Formulations (India) Ltd. has been overruled by the Hon'ble Bombay High Court. He further submitted that only one controversy revolved around in the case of Syncome Formulations (India) Ltd. and, therefore, the entire order has been overruled. So far as deduction under s. 80HHC of the Act is concerned, the principle is same. The insertion of sub-s. (1A) does not affect the principle laid down. Para 12 of Hon'ble Bombay High Court decision talks about the provisions of s. 80-IB and imposes another restriction. If the contention of the assessee is accepted, s. 80AB will be redundant. Hon'ble Bombay High Court has laid down the law. Therefore, the assessee's claim cannot be allowed on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction is to be reduced as computed as per provisions of s. 80HHC(3)/(3A) of the Act. Sub-s. (3) is machinery section for computation of deduction under s. 80HHC(1) of the Act. There is no dispute that under s. 80HHC(1) of the Act, the assessee is not eligible for deduction as the gross profit computed after application of provisions of s. 80AB is a negative figure. Therefore, while computing the income under MAT provisions, under s. 115JB of the Act, the gross profit as per P L a/c cannot be reduced by the deduction of s. 80HHC computed on the basis of gross total income ignoring the provisions of s. 80AB of the Act. The contention of the assessee is that the decision of Tribunal, Special Bench in the case of Syncome Formulations (India) Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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