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TMI Blog2023 (2) TMI 640X X X X Extracts X X X X X X X X Extracts X X X X ..... claim of deduction as the amendment brought in by the legislature in the provisions of section 80HHC(3) of the Act by introducing 3rd 4th proviso is quashed and recompute the deduction accordingly. Hence, this appeal is remitted back to the file of the AO for recomputation of deduction. Therefore, both the appeals of the assessee are allowed in term of the above. - ITA Nos.: 3650 & 3651/MUM/2008 - - - Dated:- 10-2-2023 - Shri Mahavir Singh, Vice President And Shri Manoj Kumar Aggarwal, Accountant Member For the Appellant : Shri R. Vijayaraghavan, Advocate For the Respondent : Shri V. Nandakumar, JCIT ORDER PER MAHAVIR SINGH, VICE PRESIDENT: These two appeals by the assessee are arising out of the orders of Commissioner of Income Tax (Appeals)-III, Mumbai in Appeal Nos.CIT(A)III/ACIT.3(2)/IT.21/06-07 CIT(A)III/DCIT.3(2)/ IT.198/06-07 dated 12.02.2018 13.02.2018. The assessments were framed by the ACIT / DCIT, Range 3(2), Mumbai for the assessment years 2003-04 2004 -05 u/s.143(3) of the Income Tax Act, 1961 (hereinafter the Act ) vide orders dated 27.02.2006 20.10.2006 respectively. 2. The first common issue in these two appeals of assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C of the Act. The ld.counsel for the assessee before us stated that the assessee has rightly claimed the deduction u/s.80HHC amounting to Rs.62 ,01,535/- for the reason that assessee s net profit as per business is Rs.2,48,98,022/- and further claimed deduction u/s.80IB of the Act amounting to Rs.1,34,38,583/- and other disallowances had remained at Rs.1,20,13,797/-. The ld.counsel stated that as per the computation of AO, the profit remains to be allowed is Rs.98,23,750/- whereas assessee s claim u/s.80HHC of the Act is restricted to the extent of Rs.62,01,535/-. For this preposition, the ld.counsel for the assessee relied on the decision of Hon ble High Court of Madras in the case of SCM Creations vs. ACIT, (2008) 304 ITR 319 and he stated that more than the SCM Creations, the Hon ble Bombay High Court in the case of Associated Capsules (P) Ltd., vs. DCIT, (2011) 332 ITR 0042 has considered this issue in elaborate and held that even after the introduction of section 80IA(9) of the Act, deduction u/s.80HHC of the Act has to be computed in the manner specified u/s.80HHC of the Act on the profit of the business computed under the head profits and gains of business as reduced by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to restrict the allowance of deduction and not the computation of deduction under any other sections under heading C of Chapter VI-A of the Act. 33. Wherever the Legislature intended that the deduction allowed under one section should affect the computation of deduction under other provisions of the Act, the legislature has expressly used words to that effect. It may be noted that sections 80HHD(7) and 80-IA(9A) [presently 80-IA(9)] were introduced by Finance Act, 1998 with effect from 1-4-1999. Section 80HHD(7) provides that the deduction allowed under section 80HHD(1) shall not qualify to that extent for deduction under any other provisions of Chapter VI-A under the heading C , whereas, section 80-IA(9A) provides that the deduction allowed under section 80-IA(1) shall not be allowed under any other provisions of Chapter VI-A under heading C . Similarly, in section 80-IC(5), the words used are that notwithstanding anything contained in any other provision of the Act, in computing the total income of the assessee, no deduction shall be allowed under any other section contained in Chapter VIA or section 10A or section 10B in relation to the profits and gains of the undertaki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mbay High Court in the case of Associated Capsules Pvt. Ltd., supra, it is clear that the deduction claimed u/s.80IA as well as the provisions of section HHC of the Act does not exceed the profits and gains of the undertaking i.e., profit declared under the head profits and gains of business or profession . In the present case before us, the assess ee claim u/s.80IB of the Act was Rs.1,34,38,583/- and the claim of deduction u/s.80HHC of the Act was Rs.62,01,535/- as against total profit and gains declared from business or profession at Rs.2,48,98,022/-. According to us, the issue is squarely covered by the decision of Hon ble Madras High Court in the case of SCM Creations, supra and Hon ble Bombay High Court in the case of Associated Capsules (P) Ltd., supra. Respectfully following the same, we allow this issue of assessee s appeals and direct the AO to recompute the deduction accordingly. 9. One more issue in this appeal in ITA No.3651/Mum/2008 for assessment year 2004-05 is as regards to the claim of deduction of DEPB u/s.80IB of the Act. 10. At the outset, the ld.counsel for the assessee filed copy of judgment of Hon ble Supreme Court in the case of CIT vs. M/s.Avani Expo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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