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TMI Blog2007 (4) TMI 122X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment 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 incomes' , and shall in no case exceed the profits and gains of such eligible business of undertaking or enterprise, as the case may be." 3 Shri Farrokh Irani learned counsel for the assessee submitted that the wordings of section 80-IA(9) confine in their operation to undertaking based deduction in Chapter VI-A. Section 80HHC not being an undertaking based deduction cannot be prejudiced by section 80-IA(9) of the Act. 4 Learned counsel for the assessee invited our attention to the Central Board of Direct Taxes Circular No. 772, dated December 23, 1998, (see [1999] 235 ITR (St.) 35). The relevant portion of the circular reads as under (page 63) "35.2 However, it was noticed that certain assessees claimed more than 100 per cent. deduction on such profits and gains of the same undertaking, when they were entitled to deductions under more than one section of Chapter VI-A. With a view to providing suitable statutory safeguards in the Income-tax Act, to prevent taxpayers from taking undue advant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me-tax (Appeals) upheld the impugned order. On second appeal, the Tribunal held that the assessee is entitled to deduction under section 80HHC(1) in computing the total income to the extent of profits referred to in sub-section (1B) of section 80HHC derived from export of such goods or merchandise. The section in Explanation (baa) below sub-section (4C) provides the manner of determination of the business profits. The Assessing Officer cannot determine the business profits by reducing the deduction allowable under section 80-IB as Explanation (baa) does not provide so. Further, section 80B(5) defines the gross total income as the total income computed in accordance with the provisions of the Act before making any deduction under Chapter VI-A. It is while computing the total income of the assessee according to the Act that the deduction is to be allowed under sections 80-IB and 80HHC to the extent of the gross total income of the assessee under Chapter VI-A. Thus, it is to be ensured that the total deduction allowed under Chapter VI-A does not exceed the gross total income of the assessee. The Tribunal, therefore, directed the Assessing Officer to compute the deduction under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder which reads as under (page 23) "Section 10A of the Act is a code by itself. It contains the scheme of taxation formulated by the Government for taxability of units set up in the export processing zone. As such, it cannot be compared with section 10 of the Act. Ex consequenti, the decisions rendered in the cases of Harprasad and Co. P. Ltd. [1975] 99 ITR 118 (SC), and S. S. Thiagarajan [1981] 129 ITR 115 (Mad) in the context of section 10 of the Act, cannot be applied over here. Coming to the applicability of section 10A(4) (ii) of the Act, I find that it put interdict qua sections 72 and 74. It does not preclude the operation of sections 70 and 71. Section 14A of the Act is applicable in respect of 'expenditure'. Loss is different from expenditure. As such, the assessee is entitled to setting off the loss incurred by the SEEPZ unit. In view of this finding, the question whether section 14A of the Act is prospective or retrospective in operation has become academic. I concur with the finding of the learned Accountant Member." 14 On a conspectus of case law on harmonious construction it was pleaded that it is the duty of the courts to avoid a head-on clash between ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to double benefit. Reference was made to the decision of the Tribunal rendered in the case of Future Software P. Ltd. v. Deputy CIT [1993] 45 ITD 459 (Mad). In this case, it was held that as a matter of State policy Chapter VI-A incorporates various concessions in the form of deductions, etc. If a particular term of income is eligible to deduction under more than once section of Chapter VI-A, it cannot be held that the assessee is getting double or multiple benefit. What is required to be seen is whether the assessee satisfies the pre-conditions prescribed under various sections of Chapter VI-A. If the assessee satisfies those conditions, then the benefit cannot be denied. 18 It was further contended that section 80-IA(9) was not in existence in the year when the assessee set up the eligible unit. As such there operates the principle of estoppel against the denial of relief contemplated in the statute. 19 Reliance was placed on the decision of the Jaipur Bench of the Tribunal rendered in the case of Toshica Creation v. ITO [2006] 150 Taxman 48 (JP). In this case, the Tribunal held that the deduction under section 80HHC should be allowed on income included in gross t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ao v. State of Tamil Nadu [2002] 255 ITR 147. Our attention was invited on the following passage at page 154: "The rival pleas regarding rewriting of statute and casus omissus need careful consideration. It is well-settled principle in law that the court cannot read anything into a statutory provision which is plain and unambiguous. A statute is an edict of the Legislature. The language employed in a statute is the determinative factor of legislative intent. The first and primary rule of construction is that the intention of the legislation must be found in the words used by the Legislature itself. The question is not what may be supposed and has been intended but what has been said. 'Statutes should be construed not as theorems of Euclid' Judge Learned Hand said, 'but words must be construed with some imagination of the purposes which lie behind them' (see Lenigh Valley Coal Co. v. Yensavage 218 FR 547). The view was reiterated in Union of India v. Filip Tiago De Gama of Vedem Vasco De Gama, AIR 1990 SC 981. 23 It was contended that the view taken by the Bangalore Bench of the Tribunal in the case of Mittal Clothing Co. [2005] 4 SOT 626 (Bang) be followed in pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 80HHC. The word "undertaking" in the section is constituent of person. Since section 80-IA benefit is conferred to the industrial undertakings, as such the word "undertaking" is used in the section. From this it cannot be inferred that the restriction is undertaking-based only and the benefit under section 80HHC is beyond the ken of section 80-IA(9). 27 Adverting to fundamental, though unwritten axiom that no Legislature could have at all intended a double deduction in regard to the same business outgoing the learned Departmental Representative invited our attention to the decision of the apex court rendered in the case of Escorts Ltd. v. Union of India [1993] 199 ITR 43 wherein the hon'ble Supreme Court has held that in the absence of clear statutory indication to the contrary statute should not be read so as to permit an assessee two deductions. 28 The theory laid down by the Special Bench in the case of International Research Park Laboratories Ltd. v. Asst. CIT [1994] 50 ITD 37 (SB) (Delhi) that section 80HHC is a complete code by itself was explained with reference to the decision of the hon'ble jurisdictional High Court rendered in the case of CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndertaking by the amount of profits allowed as deduction under section 80-IA while computing the deduction under section 80HHC. 32 The learned Departmental Representative read out the following pas sage from the judgment of the hon'ble Supreme Court rendered in the case of CIT v. Sun Engineering Works P. Ltd. [1992] 198 ITR 297 (page 320): "It is neither desirable nor permissible to pick out a word or a sentence from the judgment of this court, divorced from the context of the question under consideration and treat it to be the complete 'law' declared by this court. The judgment must be read as a whole and the observations from the judgment have to be considered in the light of the questions which were before this court. A decision of this court takes its colour from the questions involved in the case in which it is rendered and, while applying the decision to a later case, the courts must carefully try to ascertain the true principle laid down by the decision . . ." 33 On the aspect of estoppel, it was alleged that there cannot be any estoppel against the statute. Reliance was placed on the decision of the hon'ble Calcutta High Court rendered in the case of CIT v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... theories and precedents. Interpretation postulates the search for the true meaning of the words used in the statute. If the language of the statute is plain, obvious meaning is to be applied. Rules of interpretation are applied only to resolve the ambiguities. The object and purpose of interpretation is to ascertain the mens legis, i.e., the intention of the law, as evinced in the statute. The key to the opening of every law is the reason and spirit of law. To be literal in meaning is to see the body and miss the soul. The judicial key to interpretation is the composite perception of the deha (body) and the dehi (soul) of the provision. 38 The Legislature which processes supreme power in the State, possesses, as incidental thereto, the right to change, modify and abrogate the existing law. With a view to providing suitable statutory safeguards in the Income- tax Act, 1961 and to prevent taxpayers from taking undue advantage of existing provisions of the Act by claiming repeated deductions in respect of the same amount of eligible income, inbuilt restriction in section 80-IA was provided by amending the section, so that unintended benefits may not pass on to assessees. 39 Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n'ble apex court in the case of Britannia Industries Ltd. v. CIT [2005] 278 ITR 546; [2005] 5 RC 619. Learned counsel tried to meet this by way of a round about argument that maintenance of guest house is different from rent and repairs. We further find that though originally the hon'ble Bombay High Court in the case of CIT v. Chase Bright Steel Ltd. (No. 1) [1989] 177 ITR 124 allowed the expenditure incurred in respect of rent and repairs, etc., of the guest house because the same was allowable under sections 30 and 31 and it was observed that the same could not be disallowed because of the provisions of section 37(3). However, while overruling the decision, the hon'ble Supreme Court clearly observed as under (page 558) "The only question which we are called upon to consider in the instant case is whether the expression 'premises and buildings' referred to in sections 30 and 32 and used for the purposes of the business or profession would include within its scope and ambit the expression 'residential accommodation including any accommodation in the nature of guest house' used in sub-sections (3), (4) and (5) of section 37 of the Act. While the two expressions can be simila ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterpretation. This finer aspect cannot be narrowly watched. It is that delicate and important branch of judicial power, the concession of which is dangerous but the denial is disastrous. At one stream stands Lord Denning who said: "We do not sit here to pull the language of Parliament to pieces and make non sense of it. That is an easy thing to do. We sit here to find out the intention of Parliament and carry it out. We do this better by filling in the gaps and making sense of the enactment than by opening to destructive analysis. Viscount Simonds called it 'a naked usurpation of the legislative function under the thin guise of interpretation". 43 In our opinion, the intention of Legislature is a very slippery phrase. When the language of the statute is transparently plain, it is wrong to give it colour according to 'the temper of time. When the language implied by the enactment is dear, there is no question of interpreting the provisions in any manner except by giving them their plain and obvious meaning. Nebulous concept of the legislative intent cannot be used to curtail the explicit provisions in a statute. A statute or any enacting provisions therein must be so construed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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