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TMI Blog2000 (2) TMI 230X X X X Extracts X X X X X X X X Extracts X X X X ..... t the deduction under section 80HHC has to be worked out as per the profits of the relevant year only, i.e.- without setting off the unabsorbed investment allowance of earlier years. However, the Assessing Officer did not accept such proposition, since according to him, deduction was to be allowed with reference to the gross total income as defined under Chapter VI-A. Accordingly, he computed the relief at Rs. 21,738 on the business profits of Rs. 46,71,154 which was arrived at after setting off the unabsorbed investment allowance of Rs. 26,22,335 pertaining to the assessment years 1986-87 and 1987-88. 3. The matter was carried before the CIT(A) who opined that deduction under section 80HHC was to be allowed with reference to the profits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e order of the CIT(A) and also relied on the decision of the Bombay High Court in the case of CIT v. Albright Morarji Pandit Ltd. [1999] 236 ITR 914. 5. After considering the rival submissions of the parties, we find sufficient force in the contention raised by the learned counsel for the assessee. Under section 80HHC sub-section (1), any person engaged in the business of export is to be allowed a deduction of the profits derived by the assessee from the export of such goods. The profits derived by the assessee from export of goods are to be determined in accordance with the provisions of sub-section (3) which provides a formula based on export turnover and total turnover. Such formula is to be applied to the profits of the business as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ature has provided to set off the unabsorbed investment allowance against the total income of the subsequent years and not against the business profits alone. Total income has been defined as total amount of the income referred to in section 5 computed in the manner laid down in this Act. That means it is the net income which is arrived after considering all the allowances and deductions and set off etc. while the profits from business is part of the total income. In our view, if the Legislature had intended to set off such unabsorbed allowances against business profits, it could have said so in clear terms. Therefore, we agree with the view of the learned counsel for the assessee that the Legislature has provided set off of unabsorbed inve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowance. Therefore, the said decision of the Bombay High Court cannot be applied to the facts of the present case. 8. In view of the above discussion, it is held that unabsorbed investment, allowance cannot be deducted while computing the profits of (he business under the head 'profits and gains of business or profession'. Therefore, the order of the CIT(A) is set aside on this issue and the Assessing Officer is directed to recompute the claim of the assessee in accordance with our decision. 9. The next issue relates to the disallowance under Rule 6B. This issue is covered by the decision of the Bombay High Court in the case of CIT v. Allana Sons (P.) Ltd. [1995] 216 ITR 690 wherein it has been held that no disallowance can be made if t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng in view of the decision of this Bench in the case of Dy. CIT v. Jagdish Electronics (P.) Ltd [1998] 66 ITD 542. On the other hand, the learned D.R. has relied on the order of the CIT(A). 11. Rival submissions have been considered. The interest on deposit with MSEB and interest on deposit with Bank of Maharashtra as margin money falls within the ratio of this Bench in the case of Jagdish Electronics (P.) Ltd .Therefore, to that extent, sums of Rs. 6,1 10 and Rs. 21847 would be included in the income of the industrial undertaking. As-far-as interest on deposit with Modem Foundry Machine Works Ltd. is concerned, the same has not been seriously challenged by the learned counsel for the assessee and we do not find any nexus between the in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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