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TMI Blog2006 (6) TMI 252X X X X Extracts X X X X X X X X Extracts X X X X ..... IA at Rs. 32,88,094, invoking the provisions of sub-section (9A) of section 80-IA which was introduced by the Finance Act, 1998 w.e.f. 1-4-1999 by the Assessing Officer. This order of the Assessing Officer was challenged before the CIT(A), but, the fortune of the assessee did not fluctuate. 3. Now the assessee has preferred an appeal before the Tribunal with the submissions that deduction under sections 80-IA and 80HHC are to be computed independently following the different formula. The eligible profit or income for deduction under sections 80-IA and 80HHC are different, as such, it cannot be proper to say that the eligible income for deduction under section 80-IA is the same amount which is eligible for deduction under section 80HHC. The learned counsel for the assessee has also relied upon the Judgment of the Bombay High Court in the case of CIT v. Nima Specific Family Trust [2001] 248 ITR 291 in support of his contention that by invoking sub-section (9A) of section 80-IA, deduction under section 80HHC cannot be reduced by the amount eligible for deduction under section 80-IA on the ground that double deduction was claimed on this eligible income. At the most, the double deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or any assessment year, deduction to the extent of such profits and gains shall not be allowed under any other provisions of this Chapter under the heading 'C - Deductions in respect of Certain income' and shall in no case exceed the profits and gains of the undertaking or the hotel, as the case may be." It envisages a situation where deduction under section 80-IA is claimed and allowed to an eligible Industrial Undertaking then deduction to that extent shall not be allowed under any other sections of 80HH to 80RRA falling in heading "C - Deduction in respect of certain income". Upper limit of the multiple deduction under different sections in heading 'C' under Chapter VI-A is the total profits and gains of the undertaking. Thus for example, where one industrial undertaking is also exploiting them, it is entitled to deductions both under section 80HHC as well as 80-IA and where deduction under section 80-IA is higher than deduction under section 80HHC, then total deduction under two sections will be limited to deduction under section 80-IA. On the other hand, where deduction under section 80HHC is higher than deduction under section 80-IA then total deductions under two sections w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earlier to 1-4-1999 even though mentioned in the amendment Act as effective from 1-4-1999. We are not convinced. The controversy, if any, has been set on rest by the decision of the Hon'ble Rajasthan High Court in CIT v. Rochiram & Sons 271 ITR 444 (Raj.). The head notes from that decision are as under : The provisions of section 80-IA of the Income-tax Act, 1961, have been amended by insertion of sub-section (9A) which provides that if deduction under any of the sections has been allowed under Chapter VI-A and if any further deduction is to be allowed under any other section, that should be allowed only on the balance amount. This amendment has been brought by the Act of 1998 and made effective from April 1, 1999. Prior to the amendment, section 80-IA did not provide that if deduction under section 80HHC has been allowed on the gross total income, deduction under section 80-IA should be allowed only on the balance income, i.e., the amount remaining after deduction under section 80HHC. When there is no such provision or intention of the Legislature to allow deduction under section 80-IA on the balance amount, there is no justification to allow deduction under section 80-IA only on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into India whereas deduction under section 80-IA is available for specific industrial activity. Certain percentage of eligible profits from that industrial undertaking is allowed as deduction. Question involved was whether deduction allowed under section 80HHC could be reduced from the total income for computation of deduction under section 80-IA. This question was considered by the Hon'ble Rajasthan High Court in Rochiram's case (supra) as under : The only dispute between the assessee and the Department is as to whether the deduction under section 80-IA should be allowed only on the balance amount, i.e., the amount remained after deduction under section 80HHC or on the gross total income. Even section 80-IA of the Act does not provide that if deduction under section 80HHC has been allowed on the gross total income, deduction under section 80-IA should be allowed only on the balance income, i.e., the amount remained after deduction under section 80HHC. When there is no such provision or intention of the Legislature to allow deduction under section 80-IA on the balance amount, there is no justification to allow deduction under section 80-IA only on the balance amount i.e., the am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Chapter, the deductions specified in sections 80C to 80U. (2) The aggregate amount of the deductions under this Chapter shall not, in any case, exceed the gross total income of the assessee. (3) Where, in computing the total income of an association of persons or a body of individuals, any deduction is admissible under section 80G or section 80GGA or section 80HH or section 80HHA or section 80HHB or section 80HHC or section 80HHD or section 80-I or section 80-IA or section 80J or section 80JJ, no deduction under the same section shall be made in computing the total income of a member of the association of persons or body of individuals in relation to the share of such member in the income of the association of persons or body of individuals. 18. Thus it is clear from sub-section (2) that total deduction under Chapter VI-A will not exceed gross total income computed before giving deduction under Chapter VI-A. 19. As a result we hold that: (a )Sub-section (9A) to section 80-IA is prospective to be effective from 1-4-1999. It is also not declaratory. (b)Deduction under section 80HHC and 80-IA are mutually exclusive prior to 1-4-1999. (c )After 1-4-1999 Capping on two deductio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 3,288,094 Deduction under section 80HHC : Deduction as revised Rs. 8,301,210 Restricted to (Rs. 8,301,210 - Rs. 3,288,094) Rs. 5,013,116 7.1 We have carefully examined the mode of computation adopted by the assessee as well as the Assessing Officer in the light of the provisions of sub-section (9A) of section 80-IA of the Act and we find that neither the assessee nor the Assessing Officer has made a proper computation of deductions in view of provisions of section 80-IA(9A) of the Income-tax Act. According to sub-section (9A), any amount of profit and gains of an industrial undertaking or of a hotel claimed as deduction under section 80-IA, shall not be allowed as deduction under any other provisions of Chapter VI-A under the head "C" i.e., from sections 80H to 80RRB. Meaning thereby, deductions under this chapter are to be computed on eligible profit of the undertakings independently and thereafter deduction under section 80-IA is to be allowed first and the deduction under other sections under the head "C" of this Chapter shall be restricted to the remaining amount of profit and gains of such industrial undertakings. In any case, the total deduction claimed under the he ..... X X X X Extracts X X X X X X X X Extracts X X X X
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