9911796707
TMI Blog2012 (6) TMI 317X X X X Extracts X X X X X X X X Extracts X X X X ..... n under section 80HHC in respect of the Bangalore unit. It is seen from the orders of the assessment that the Assessing Officer aggregated the profit in respect of the two units and computed the relief under section 80HHC in respect of the net income. Aggrieved by the same, the assessee preferred an appeal before the Commissioner of Income-tax (Appeals), contending that when the profits from the export unit at Bangalore was identifiable, the assessee would be entitled to 100 per cent. deduction for the said profits. The assessee pointed out that the units at Bangalore and Ramnagaram are independent units having separate work force. Even though there was a centralised management, they are keeping separate set of books of account for the two units, having separate bank accounts. There is no inter-dependency between these units. Consequently, the assessee prayed for grant of full relief in respect of the 100 per cent. export oriented unit at Bangalore. The claim of the assessee was, however, rejected by the Commissioner of Income-tax, holding that there was no scope for working out the deduction under section 80HHC in respect of 100 per cent. export oriented unit separately and even i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), and pointed out that when the accounts maintained by the assessee relating to the export business was independent of the other unit business ; that there was no intermingling of expenditure or interlacing of funds of any kind what- soever, and the assessee had also complied with the legal requirements by filing Form No. 10CCA in support of his claim, the question of rejecting or restricting the claim in respect of the 100 per cent. deduction did not arise. 7. He further pointed out that the decision reported in Waterfall Estates Ltd. v. CIT (No. 1) [1981] 131 ITR 207 (Mad) approved by the apex court in the decision reported in Waterfall Estates Ltd. v. CIT [1996] 219 ITR 563 (SC), wherein it was held that when the assessee carried on various acti- vities, even though there may be centralised accounts maintained, yet, so long as there is no interlacing, inter connection on inter dependence of the various units, the various activities carried on by the assessee has to be treated as separate and distinct activities. 8. Learned counsel for the assessee also brought to our attention the deci- sion of the apex court reported in L. M. Chhabda and Sons v. CIT [1967] 65 I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of relief under section 80HHC in respect of the assessee having export business as well as local sales has to be decided and the decisions reported in CIT v. Macmillan India Ltd. [2007] 295 ITR 67 (Mad), CIT v. Rathore Brothers [2002] 254 ITR 656 (Mad), CIT v. Suresh B. Mehta [2007] 291 ITR 462 (Mad) and CIT v. M. Gani and Co. [2008] 301 ITR 381 (Mad) have not been challenged by the Revenue and had reached finality. Hence, we are satisfied that principally these decisions conclude the issue in favour of the assessee. 12. The facts herein are not in dispute. Before considering the legal argu- ments of the assessee, it is but necessary that we draw our attention to the decisions of this court relied on by the assessee. 13. The decision reported in CIT v. Suresh B. Mehta [2007] 291 ITR 462 (Mad), relates to a case of an assessee engaged in the manufacture and sale of jewellery and gold ornaments in Chennai. They also exported diamonds and precious stones from Bombay. In respect of the assessment year 1997- 98, the assessee claimed Rs. 49.75 lakhs as deduction under section 80HHC by treating the export unit as a separate business. The Assessing Officer restricted the cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ambiguity as regards the maintenance of separate books of account, the assessee's claim for deduction under section 80HHC for 100 per cent. relief could not be rejected. 16. Thus, the consistent view of this court is that even in cases where the assessee had different units of business, so long as there is no inter- mingling of expenditure or interlacing of funds of any kind whatsoever and that the assessee had maintained accounts separately which revealed the export business and that the claim was supported by a chartered accoun- tant certificate in compliance with the statutory provisions, the claim of the assessee under section 80HHC to have deductions at 100 per cent. on the export made by the unit, engaged 100 per cent. in exports, could not be denied merely on the score that the assessee had various units, some of which had export and some had export as well as local sales. 17. As far as the decision of the apex court reported in IPCA Laboratory Ltd. v. Deputy CIT [2004] 266 ITR 521 (SC) is concerned, we do not find that the statement of law declared by the apex court could, in any way stand, in the way of this court accepting the plea of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trading goods. The only condition that governs the grant of relief under section 80HHC is that the assessee having positive profit alone would be entitled to have the deduction under section 80HHC. In other words, if there is a loss then no deductions could be claimed under the provisions of section 80HHC in arriving at the positive profit. The apex court held that profits and loss of the business have to be considered in arriving at the gross total income, and income from various units have to be calculated and if one of the units indicated a loss, then going by the said provisions available, the gross total income will have to be arrived at and ultimately if the net figure is also a loss, the claim of the assessee for deductions would be rejected. The apex court further pointed out that section 80HHC(3) provides for working out the computation of total income and for the purpose of such computation, both profits and loss have to be taken into account. Thus, section 80HHC, both in sub-section (1) and in sub-section (3), means a positive profit worked out after taking into consideration the losses, if any. Dealing with the meaning of gross total income, in the decisions reported i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee are profit-making units and the gross total income was computed in the manner as given under the Act and that there was a positive income of profit. Going by the decisions referred to above and the same when applied to the facts of the case herein, the assessee would be entitled to deduction under Chapter VI-A. In the light of this fact, we do not find any justification in the view of the Tribunal, rejecting the plea of the assessee for deduction under Chapter VI-A. 21. A reading of the order of the Tribunal shows that it misconstrued the decision of the apex court reported in IPCA Laboratory Ltd. v. Deputy CIT [2004] 266 ITR 521 (SC), to reject the case of the assessee. Applying the said decision and the decision reported in Synco Industries Ltd. v. Assess- ing Officer (Income-tax) [2008] 299 ITR 444 (SC), to the facts herein that the assessee had profit and the decisions of this court cited supra, viz., CIT v. Macmillan India Ltd. [2007] 295 ITR 67 (Mad), CIT v. Rathore Brothers [2002] 254 ITR 656 (Mad), CIT v. Suresh B. Mehta [2007] 291 ITR 462 (Mad) and CIT v. M. Gani and Co. [2008] 301 ITR 381 (Mad), as regards the grant of 100 per cent. relief to the unit engag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... well as domestic trade. The said situation is not covered under any of the limbs of sub-section (3) to section 80HHC. The manner as to how the profit from export of goods has to be ascertained is indicated in sub-section (3) of section 80HHC and section 80HHC provides that in a case where the assessee is engaged wholly in the business of export out of India of any goods deductions must be granted in accordance with section 80HHC(1). In the absence of any specific provision, the assessee was not entitled to have the relief granted in respect of 100 per cent. export oriented unit. 23. We do not think that we need to deal with this aspect at length, since in the decision of this court cited supra in similar situation, this court had taken the view that so long as the export details of the unit engaged in exports are separately maintained, the assessee could not be denied of the benefit in respect of section 80HHC with reference to the export unit. The decisions thus taken by this court in the said decisions have attained finality too, as there was no appeal filed by the Revenue. 24. In the light of the consistent view taken by this court in the decisions cited supra, we have ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
