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TMI Blog2003 (5) TMI 467X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 143(3) was completed on 11-12-1995 by determining the assessee s income from business at Nil and income from capital gains at Rs. 1,36,147. Subsequently it was a submitted, that the Assessing Officer issued a notice under section 154 on the ground that the deduction under section 80HHC was not granted in accordance with law. After considering the assessee s explanation the Assessing Officer accepted the assessee s claim. Again the Assessing Officer issued a notice under section 148 for the very same reason. Since the Assessing Officer has already considered the question of deduction under section 80HHC in the proceedings under section 154 the issue of notice under section 148 is only a change of opinion. Hence the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed investment allowance from the profit of the business. The ld. counsel submitted further that section 80AB does not control section 80HHC. It was further submitted that section 80AB was introduced by Finance Act No. 2 of 1980 w.e.f. 1-4-1981 whereas section 80HHC was introduced by Finance Act, 1983 w.e.f. 1-4-1983. Therefore, section 80AB cannot override the provisions of section 80HHC. He further submitted that the profit of the export business has to be computed under clause (3) of section 80HHC. If the profit of business includes any Misc. income such as interest, commission or brokerage, in such a case the profit of the business shall be reduced by 90 per cent of such income which is included in the profit of the business. Merely beca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... computing the total income and thereafter deduction should be granted under section 80HHC. The first appellate authority has confirmed the order of the Assessing Officer by placing reliance in the case of CIT v. Macmillan Co. of India Ltd. [2000] 243 ITR 403 (Mad.). We have carefully gone through the judgment of the Madras High Court in the case of Macmillan Co. of India Ltd. s ( supra ). The case before the Madras High Court was that the assessee company was carrying on printing, publishing and trading. The Assessing Officer for the purpose of deduction under section 80QQ set off the trading loss first that had been incurred by the assessee in trading business against the profit earned by the assessee from printing and publishing bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siness, the same proportion as the export turnover in respect of such goods bears to the total turnover of the business carried on by the assessee; ( b )where the export out of India is of a trading goods, the profit derived from such export shall be the export turnover in respect of such trading goods as reduced by the direct costs and indirect costs attributable to such export; ( c )where the export out of India is of goods or merchandise manufactured (or processed) by the assessee and of trading goods, the profits derived from such export shall, ( i )in respect of the goods or merchandise manufactured (or processed) by the assessee be the amount which bears to the adjusted profits of the business, the same proportion as the adjust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used is to the effect that where the gross total income of an assessee includes any profit and gains as specified a deduction has to be allowed from such profits and gains of the specified amount in each of the provisions. On comparison section 80HHC stands out by virtue of the language employed and it is not possible to state that on a plain reading it would fall within the same set of provisions which have been contemplated to be governed by the provisions of section 80AB of the Act." (p. 535) It is therefore clear that the language employed in all the provisions falling under Chapter VIA except section 80HHC reads to the effect that the gross total income of the assessee includes any profit and gains as specified a deduction has to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uction under section 80HH is to be allowed first before set off of the unabsorbed depreciation and business loss. 10. In view of the above discussion it is very clear that in view of the language used in section 80HHC and the special procedure contemplated for computing the profit of export for the purpose of deduction, in our opinion, the unabsorbed depreciation, unabsorbed business loss and unabsorbed investment allowance of the earlier years cannot be deducted before granting of deduction under section 80HHC. In other words, deduction under section 80HHC has to be granted before deducting the unabsorbed depreciation, business loss and investment allowance of the earlier years. In view of this position we set aside the orders of the l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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