Export profit : Deduction u/s.80HHC r/w S. 10A of Income-tax Act, 1961 : A.Y. 2003-04 : Assessee is entitled to deduction u/s.80HHC for remaining 10% of profit, which was to suffer tax after applying S. 10A/10B.

The assessee, an export
concern was entitled to deduction u/s.10A/10B and u/s.80HHC of the Income-tax
Act, 1961. For the A.Y. 2003-04 the assessee had claimed deduction u/s.10A/10B
of the Act and the same was allowed. The assessee had also claimed deduction
u/s.80HHC for the remaining 10% of the profit, which to suffer tax after
applying S. 10A/10B. The claim was allowed by the Assessing Officer.
Subsequently, the Assessing Officer rectified the assessment order u/s.154 and
withdrew the deduction allowed u/s.80HHC, holding that it amounted to double
deduction. The Tribunal cancelled the rectification order.

On appeal by the Revenue,
the Madras High Court upheld the decision of the Tribunal and held as under :

“(i) According to the
Assessing Authority, such a claim made u/s.80HHC in respect of the remaining
10% of the profits amounted to a claim of double deduction, which was not
permissible. On the said basis, the Assessing Authority took the view that the
said issue was an apparent mistake on the face of the record, which he
rectified by passing his order dated 11-6-2007.

(ii) When we examine the
issue raised in this appeal, at the very outset, it will have to be pointed
out that even u/s.10A(6)(iii) of the Act, there is a specific
provision, which reads as under :

“No deduction shall be
allowed u/s.80HH or u/s.80HHA or u/s.80-I or u/s.80-IA or u/s.80-IB in
relation to the profits and gains of the undertaking; “

(iii) The very statutory
provision prescribing a prohibition in respect of the deductions in relation
to the profits and gains itself, has not specifically included S. 80HHC.
Apparently, it therefore would only mean that there was no prohibition for
claiming any deduction u/s. 80HHC while applying the benefits provided u/s.10A
of the Act. If that is the statutory prescription, by which the assessee was
entitled to claim a benefit u/s.80HHC in relation to the profits and gains
while invoking S. 10A, it will have to be concluded that the assessment order
in having allowed such a deduction of the remaining 10% of the profits earned
by the assessee, was not erroneous.

(iv) In any event, having
regard to such a statutory prescription available for the assessee to claim
the benefit u/s.80HHC in respect of the profits earned from S. 10A of the Act,
there is absolutely no scope for the Assessing Authority to have invoked S.
154 of the Act, in order to state that, that can be considered as an error
apparent, inasmuch as there was no error at all, much less, apparent error to
be rectified by the Assessing Authority.

(v) This conclusion of
ours is apart from the conclusion of the Tribunal in having held that in that
situation what was held by the Assessing Authority in the original assessment
order was a possible view and that cannot be considered as an error apparent
on the face of the records.”