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TMI Blog2006 (9) TMI 343X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the Legislature yet on going through the circular mentioned in the decision of Tribunal in the case of Mittal Clothing Co.[ 2005 (6) TMI 480 - ITAT BANGALORE] , we do not find anything to suggest that first limb in section 80-IA(9) is to be ignored. Circular simply refers to the intention of the Legislature in respect of the second limb. Therefore, the circular does not support the case of assessee. The Apex Court in the case of IPCA Laboratory Ltd.[ 2004 (3) TMI 9 - SUPREME COURT] has clearly held that relief cannot be allowed by ignoring or misreading the provisions of the Act. Therefore, reference to the circular, in this case, is misplaced. We have already referred to the relevant provisions of sub-section (9) of section 80-IA. It clearly provides that where any amount of profit of an undertaking or of an enterprise of an assessee is claimed and allowed under this section then deduction to the extent of such profit shall not be allowed under any other provisions of Chapter VI-A under the heading C-Deductions in respect of certain incomes . Section 80HHC falls under the above heading in Chapter VI-A. Therefore, while computing the relief u/s 80HHC, the tax authorities du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r while computing deduction under section 80-IA excluded the scrap sales of Rs. 15,130/- from the gross total income and allowed deduction of Rs. 29,22,265/- being 30 per cent of the balance amount. While computing deduction under section 80HHC, the Assessing Officer was of the view that no deduction can be allowed to the extent of profits for which deduction has been allowed under section 80-IA in view of the provisions of sub-section (9) of section 80-IA. Accordingly, the profits of the export business, excluding export incentives, was taken at Rs. 52,73,021/- and then deducted Rs. 29,22,265/- therefrom which amounted to Rs. 23,50,756/- (Rs. 52,73,021 - Rs. 29,22,265/-). Then he calculated the deduction under that section by applying the formula given in sub-section (3) and thus worked out the deduction at Rs. 26,67,213/- as against Rs. 38,07,772/- computed by the assessee. Thus the total income was determined by him at Rs. 41,56,537/-. On appeal, the CIT(A) confirmed the computation made by the Assessing Officer. Aggrieved by the same, the assessee has preferred this appeal before the Tribunal. 3. Both the parties have been heard at length. The learned counsel for the assessee M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d therefore, computation has to be made in accordance with the provisions of section 80HHC independently. Proceeding further, it was submitted that both the limbs mentioned in sub-section (9) should be construed as one, i.e., the object. According to him, the object of this sub-section is that all the deductions under Chapter VI-A should not exceed the profits derived from the industrial undertaking. Meaning thereby, if deductions computed under both the sections exceed the total profits derived from industrial undertaking, then the deductions under sub-sections would be restricted to such profits, but in no case the deduction computed under section 80-IA can be reduced from the profits of business for the purpose of computing deduction under section 80HHC. 5. Rival submissions of the parties have been considered carefully. The question for our consideration relates to the interpretation of the provisions of sub-section (9) of section 80-IA effective from assessment year 2000-01. The said sub-section is being reproduced as under :- Where an amount of profits and gains of an undertaking or of an enterprise in the case of an assessee is claimed and allowed under this section for any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the words should be supplied to the language used and resort to any rule of interpretation to unfold the intention is permissible only where the language is ambiguous. Plethora of decisions of the Apex Court is there to support this proposition. The Hon ble Supreme Court, in the case of Smt. Tarulata Shyam v. CIT [1977] 108 ITR 345, approved the observations in the case of Cape Brandy Syndicate v. IRC [1921] 1 KB 64 by observing as under : To us, there appears no justification to depart from the normal rule of construction according to which the intention of the Legislature is primarily to be gathered from the words used in the statute. It will be well to recall the words of Rowlatt J. In Cape Brandy Syndicate v. Inland Revenue Commissioners [1921] 1 KB 64 (KB) at page 71, that .....in the taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used. Once it is shown that the case of the assessee comes within the letter of the law, he must be taxed, however, great the hardship may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... object or intention of the Legislature by resorting to aids to interpretation where the language of a provision is clear and unambiguous. Consequently, the meaning of each word used by the Legislature is to be given its plain and natural meaning and no word should be ignored while interpreting a provision of a statute. In view of the above discussion, it has to be held that effect of both the limbs has to be given while computing deductions under any other provision of Chapter VI-A under the heading C - Deductions in respect of certain incomes inasmuch as the language used by the Legislature is quite clear and unambiguous. 9. The contention of Mr. Irani, learned counsel for assessee that section 80HHC is an independent section and is not subject to other provisions and therefore could not be controlled or governed by other provisions unless the other provisions are non obstante appears to be attractive but without force. Normally, the Legislature provides conditions/limitations in the same section. It also uses the expression subject to other provisions of the Act where the main provisions are to be regulated by other provisions. Sometimes, it enacts non obstante provisions by usi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Britannia Industries Ltd. v. CIT [2005] 278 ITR 546 by overruling the decision of Bombay High Court in the case of Chase Bright Steel Ltd. (No. 2) ( supra ) by holding that no expenditure/allowance could be made in respect of a guest house in view of the specific provisions of section 37(4) notwithstanding the language used by the Legislature in section 37(4). The Court reaffirmed the principle that where intention of the Legislature is clear then, no violation is permissible to the language employed by the Legislature. 11. In view of the above discussions, it has to be held that if specific disallowance has been made by the Legislature even elsewhere in the Act, then such disallowance has to be made despite there being no provision for disallowance in the main section. It is the dominant intention of the Legislature which would prevail irrespective of the place where it is expressed. The decision of Rajkot Bench of the Tribunal in the case of Rajoo Engineers (P.) Ltd. ( supra ) relied on by the assessee s Counsel does not help the assessee and is quite distinguishable inasmuch as the issue in that case was quite different. In that case the dispute was whether deduction und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the word and has been used by the Legislature between clauses ( a ) and ( b ) and therefore, profits are to be calculated by counting profits or loss in respect of export of goods falling in clauses ( a ) and ( b ) of section 80HHC. Thus if there was loss in trading export and profit in export of manufacturing items then it is the net profit/loss which will have to be considered for the purpose of allowing deduction. If net result was loss then, no deduction was allowable. The ratio laid down by this judgment supports the view taken by us. 14. The decisions relied upon by the learned counsel for the assessee are distinguishable for the reasons given hereafter. Before adverting to these decisions, we would first refer to the observations of the Apex Court in the case of CIT v. Sun Engg. Works (P.) Ltd. [1992] 198 ITR 297 , wherein their Lordships observed as under : It is neither desirable nor permissible to pick out a word or a sentence from the judgment of the Supreme Court divorced from the context of the question under consideration and treat it to be the complete law declared by the court. The judgment must be read as a whole and the observations from the judgment have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sum total deduction allowed under section 80-IA/80-IB and other incentive provisions of Chapter VI-A should not exceed the profit and gains of such eligible business. Otherwise, the second limb need not be there at all. 17. We are of the view that the provisions of section 80-IA(9) only regulate the deductions allowable under Chapter VI-A and there is no restriction contained therein to regulate other deductions. The provisions of Chapter VI-A are meant to encourage various objects and these incentive provisions must be construed for the benefit of the taxpayer. For these reasons, we hold that since the assessee has not claimed more than 100 per cent deduction in respect of the profits of the undertaking and since the Assessing Officer has also not allowed more than 100 per cent deduction of the profits under both sections 80-IB and 80HHC there is no need to interfere with the order of the Assessing Officer. [Emphasis supplied] The above observations are to be understood in the context of the issue before the Tribunal. The Tribunal, in the above case, was not concerned with the issue whether profits of business could be reduced by the deduction allowed under section 80-IA with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case mentioned above, has not given any reasons for not applying the first limb of provisions of section 80-IA(9) of the Act. Considering the various decisions of the Apex Court, it has already been held by us in earlier part of the order that specific conditions/limitations provided by the statute cannot be ignored. Therefore, the said decision of the Tribunal cannot be applied in deciding the issue before us. It may also be mentioned that the decision was rendered by single member which is not binding on the division Bench. The decision of Tribunal in Wockhardt Ltd. s case ( supra ) is based on the above decision. Therefore, the same also stands distinguished. 18. Though we have already held that in view of the clear language employed by the Legislature, the courts are not required to look into the intention of the Legislature yet on going through the circular mentioned in the decision of Tribunal in the case of Mittal Clothing Co. ( supra ), we do not find anything to suggest that first limb in section 80-IA(9) is to be ignored. Circular simply refers to the intention of the Legislature in respect of the second limb. Therefore, the circular does not support the case of asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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