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TMI Blog2005 (7) TMI 307X X X X Extracts X X X X X X X X Extracts X X X X ..... er VI-A should be given on the amount of income of that nature as computed in accordance with the provisions of this Act before making any deduction under Chapter VI-A. Therefore, we set aside both the orders of the lower authorities and direct the AO to allow the deduction under s. 80HHC at Rs. 20,92,136 on the income included in gross total income before making any deduction under Chapter VI-A, however, the total deduction under ss. 80-IB and 80HHC should be restricted upto gross total income. Sundry expenses written off - We hold that the disallowance made by the AO in respect of telephone expenses and depreciation on telephone is reasonable as element of personal expenses can't be ruled out and we confirm the order of CIT on this issue. However, as regards disallowance of sundry debtors written off, we are in opinion that the disallowance made by the AO is not proper. The position of law in this regard is clear that if the necessary entries are made in the regular books of account regarding the writing off of the amounts, then no further requirement is necessary. The claim regarding written off has been made only after passing the necessary entries in the books of accounts, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nowhere mentioned in s. 80HHC that where more than one deductions under Chapter VI-A are available then firstly deduction under s. 80-IB/80-IA shall be given and after that the deduction under s. 80HHC shall be given on the reduced amount. The learned Authorised Representative (has) drawn our attention towards the provisions of s. 80HHC(1) and (3), which state that the deduction under s. 80HHC shall be allowed on the profit derived by the assessee from export of goods. The learned Authorised Representative further submitted that the main section, governing the deductions under Chapter VI-A is 80AB. The s. 80AB of the IT Act clearly mentions that while computing the deduction under a particular sections of Chapter VI-A, the amount of income to be considered shall be the income before making any deduction under Chapter VI-A. The s. 80AB has been given an overriding effect over all other sections given in Chapter VI-A. Thus, the s. 80HHC/80-IA(9) are governed by s. 80AB. The learned Authorised Representative relied on the decision of apex Court in the case of IPCA Laboratory Ltd. vs. Dy CIT (2004) 187 CTR (SC) 513 : (2004) 266 ITR 521 (SC), wherein Hon'ble apex Court has held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sons and decision of Tribunal, Jaipur Bench in the case of Jt. CIT vs. Gupta Chemical (P) Ltd. 6. We heard both the parties and gone through the material available on record. The dispute is whether the deduction under s. 80HHC should be allowed on export income included in gross total income or on the gross total income arrived after allowing other deduction under Chapter VI-A of IT Act. We have carefully considered the provisions of ss. 80AB, 80HHC and 80-IB of IT Act. The s. 80AB of IT Act is reproduced as under: 80AB. Where any deduction is required to be made or allowed under any section included in this Chapter under the heading 'C.-Deductions m respect of certain incomes' in respect of any income of the nature specified in that section which is included in the gross total income of the assessee, then, notwithstanding anything contained in that section, for the purpose of computing the deduction under that section, the amount of income of that nature as computed in accordance with the provisions of this Act (before making any deduction under this Chapter) shall alone be deemed to be the amount of income of that nature, which is derived or received by the assessee and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of CIT vs. Rochi Ram Sons. As per the scheme of s. 80HHC, the deduction has to be given with reference to total profit. The profit of the business has been defined in Expln. (baa) which is as under: (baa) profits of the business means the profits of the business as computed under the head Profits and gains of business or profession as reduced by- (1) ninety per cent of any sum referred to in cls. (iiia), (iiib) and (iiic) of s. 28 or of any receipts by way of brokerage, commission, interest, rent, charges or any other receipt of a similar nature included in such profits; and (2) the profits of any branch, office, warehouse or any other establishment of the assessee situate outside India. The profit has to be taken as computed under the head Profits and gains of business or profession , which means it cannot be reduced by the deduction allowed under s. 80-IB. 8. In the light of above discussion, and by considering the totality of the facts and circumstances of the cases and by keeping in mind the ratio laid down in the case of IPCA Laboratory Ltd. vs. Dy. CIT, we hold that the s. 80AB has an overriding effect over all other sections given in Chapter VI-A and deduction under Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X
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