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TMI Blog2011 (8) TMI 405X X X X Extracts X X X X X X X X Extracts X X X X ..... se, Mr. A.K. Dey. For the Respondent: Mr. Dipak Kumar Shome, Mr. Ranjan Sinha. Bhaskar Bhattacharya, J.: This appeal under Section 260A of the Income-tax Act, 1961 is at the instance of an assessee and is directed against an order dated 23rd June, 2004, passed by the Income-tax Appellate Tribunal, C Bench, Kolkata in Income-tax Appeal bearing ITA No.1220 (Kol) of 1997 for the Assessment Year 1991-92 and thereby dismissing the appeal filed by the assessee. Being dissatisfied, the assessee has come up with the present appeal. The facts giving rise to filing of the appeal may be summed up thus: a) The assessee is a public limited liability company within the meaning of the Companies Act, 1956 and the present appeal arises out of the assessment made under the Income-tax Act, for the Assessment Year 1991-92 for which the relevant previous year was the financial year ended on March 31, 1991. The assessee was amalgamated with M/s. Chand Chhap Fertilizers and Chemicals Limited with effect from January 01, 1994 pursuant to an order dated September 13, 1994 passed by this Court. The amalgamated company was renamed as Duncans Industries Limited with effect from No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its return of income for the Assessment Year 1991-92 accordingly claimed deduction under Section 80HHC in respect of the aforesaid two amounts aggregating to Rs.6,49,18,876/-. i) The Assessing Officer by order dated March 18, 1994 accepted that the purchased tea business was a separate one and computed the profits thereof at Rs.6,25,02,070/- as against Rs.6,22,61,946/- returned by the assessee. However, instead of computing the deduction under Section 80HHC separately in respect of the purchased tea business and garden tea business with reference to the respective turnover of the said two business, the Assessing Officer aggregated the profits of all the business of the assessee, the export turnover of the two business and also aggregated the turnover of all the business of the assessee and he worked out the quantum of deduction under Section 80HHC at Rs.4,73,57,023/- by applying the provisions of sub-section (3) of Section 80HHC to the aggregate figures so arrived at by him. j) Being dissatisfied, the assessee preferred an appeal before the Commissioner of Income-tax (Appeal), who, however, by an order dated February 27, 1997 following his order dated February 24, 1997 for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s.6,22,61,946/- in respect of the purchased tea business and Rs.26,56,930/- in respect of the garden tea business? Therefore, the only question that falls for determination in this appeal is whether in view of the amended provision of sub-section (3) of Section 80HHC of the Act, the appellant is entitled to the benefit of calculation on the basis of separate computation as was accepted in respect of earlier year under the preamended provision of sub-section (3). In order to appreciate the question involved herein, the provision contained in Section 80HHC (1) and both the pre-amended and the postamended provisions of 80HHC (3) are quoted below: 80HHC. (1) Where an assessee, being an Indian company or a person (other than a company) resident in India, is engaged in the business of export out of India of any goods or merchandise to which this section applies, then shall, in accordance with and subject to the provisions of this section, be allowed in computing the total income of the assessee, the deduction of the profits derived by the assessee from the export of such goods or merchandise: Provided that if the assessee, being a holder of an Export House Certificate or a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been amalgamated. Dr. Pal contends that it would appear from the sub-section (3), as it stood prior to amendment, by invoking the principle of sub-section (b) thereof, the same result could be achieved also in respect of cases coming under the purview of sub-section (a) and for the above reason, the legislature made the amendment by making an amalgamated provision by virtually maintaining sub-section (b) of an preamended provision. Dr. Pal contends that there is no substantial change in giving effect to the provisions after the amendment with effect from 1st April, 1991 from the one that it stood prior to the amendment. Dr. Pal contends that after the amendment, the sub-section (3) as it stands, clearly indicates that each of the separate business of the assessee should be computed separately for the purpose of calculating the benefit of deduction under Section 80HHC as would appear from the fact that the phrase the business has been has been employed therein. Dr. Pal, therefore, prays for setting aside the order passed by the Tribunal and for giving the same benefit has been given to his client in respect of earlier assessment year by separately calculating the profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 80-HHC (1) the deduction is to be given in computing the total income of the assessee. In computing the total income of the assessee both profits as well as losses will have to be taken into consideration. Section 80-AB is relevant. It reads as follows "80-AB. Where any deduction is required to be made or allowed under any section included in this chapter under the heading "CDeductions in 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 which is included in his gross total income." Section 80-B(5) is also relevant. Section 80-B(5) provides that "gross total income" means total income computed in accordance with the provisions of the Income-tax Act. 14. Section 80-AB is also in Chapter VI-A. It starts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... meaning. The meaning that the word "profit" will depend on the context in which it is used. In S. 80-HHC(1) it is admittedly used to indicate positive "profit" because the deduction will only be of a positive profit. Section 80-HHC(3) is the sub-section which provides how profits are to be worked out in computing total income. For purposes of such computation both profit and losses have to be taken into account. Thus the word "profit" in S. 80-HHC(3) will mean profits after taking into account losses, if any. More importantly, in our view, the term "profit" in S. 80- HHC both in sub-section (1) and in sub-section (3) means a positive profit worked out after taking into consideration the losses, if any. Thus the word "profit" has the same meaning in S. 80-HHC (1) and (3). (Emphasis supplied by us). The principles mentioned above have been all along followed by the Supreme Court in the subsequent cases of ITO, Bangalore vs. Induflex Products Pvt. Ltd ( (2006) 1 SCC 458) and Commissioner of Income-tax, Pune vs. Shirke Construction Equipment Ltd. (AIR 2007 SC 2089). In our opinion, in view of the aforesaid principles laid down by the Apex Court there is no scope of advancing any ..... X X X X Extracts X X X X X X X X Extracts X X X X
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