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TMI Blog2003 (5) TMI 189X X X X Extracts X X X X X X X X Extracts X X X X ..... 516 allowed." 3. At the time of hearing before us on behalf of Revenue Shri S.J. Jani, learned Departmental Representative, appeared and relying on the decision of Hon'ble Mumbai High Court in the case of IPCA Laboratories Ltd. vs. Dy. CIT (2001) 170 CTR (Bom) 568 : (2001) 251 ITR 401 (Bom) contended that following the same, the order of learned CIT(A) be set aside and that of AO be restored whereby the AO ignored the negative figure of Rs. 1,49,172 for the purpose of computing deduction under s. 80HHC of the IT Act, 1961. 4. On the other hand Shri Hiren Vepari appeared for the assessee contended that relief under s. 80HHC is to be worked out in two phases as under: (i) After excluding export benefits, balance profit/loss is apportioned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of IPCA Laboratories counsel of the assessee submitted that Mumbai Tribunal, "I" Bench vide order dt. 20th Jan., 2003 in ITA No. 1248/Mum/2002, in the case of Vishal Exports Overseas Ltd. vs. ITO for the asst. yr. 1998-99, after considering the decision of Mumbai High Court in the case of IPCA Laboratories, vide para 13 held as under: "For the above reasons, we are of the view that the judgment of the Bombay High Court in IPCA Laboratories is not of assistance to the Revenue in the present controversy. Since the matter is already concluded in favour of the assessee's claim by the orders of the Ahmedabad Cochin and Mumbai Benches of the Tribunal, respectfully following them, we uphold the assessee's contention and direct the AO to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ersy relates to the interpretation of the proviso to sub-s. (3). The question is whether the loss computed in respect of the export business in accordance with cl. (b) of the sub-section can be adjusted against the amount computed under the proviso to the sub-section so as to restrict the deduction available to the assessee to the excess. This controversy was not before the Bombay High Court as the extract from the judgment would show. The controversy before the High Court was as to the manner in which the export profits have to be computed under cl. (c) of sub-s. (3) where there were more than one type of export business. It should be remembered that cl. (c) makes a distinction between goods manufactured or processed by the assessee himsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peaks of export of own goods. Sub-cl. (ii) speaks of export of trading goods. The main cl. (c) says that the profits derived from the export, in a case where the export consists of both own goods and goods manufactured by others shall be the aggregate of the result of both types of the exports because of the conjunction "and" appearing between the two sub-clauses. Thus, the principle of aggregation is inbuilt in the clause. Therefore, the High Court held that the loss in the export of trading goods cannot be ignored and has to be adjusted against the profits in the export of own goods. The principle is the same as the principle embedded in s. 70 of the Act, where the net result in respect of any source falling under any head of income is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ench in the case of Vipul Exports and Pratibha Syntex Ltd. upheld the view taken by learned CIT(A) that negative figure of Rs. 1,49,172 is to be ignored for the purpose of working out the deduction under s. 80HHC of the IT Act, 1961. We are, therefore, inclined to uphold the order of learned CIT(A) and dismiss the appeal of the Revenue. 5. The only ground of cross-objection in assessee's appeal is that learned CIT(A) erred in confirming the refusal to grant deduction under s. 80HHA of the IT Act. 5.1. The learned authorised representative appeared for the assessee contended that in the impugned order learned CIT(A) upheld the disallowance of deduction under s. 80HHA on the ground that small-scale industrial undertaking would be that under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dustrial undertaking, keeping in view the amendment made in Expln. (b) to s. 80HHA by Finance Act w.e.f. 1st April, 1978. However, where the assessee fulfil various other conditions as laid down in s. 80HHA needs verification at the end of AO. We, therefore, set aside the order of learned CIT(A) and remit the issue to the file of AO with direction that he should verify whether assessee fulfil various other conditions as laid down in s. 80HHA and readjudicate the issue after giving opportunity of being heard to the assessee. 6. Before parting we would like to record our feelings of appreciation for an admirable representation by the young chartered accountant Shri Hiren Vepari. 7. In the result, appeal of the Revenue is dismissed and cross ..... X X X X Extracts X X X X X X X X Extracts X X X X
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