Foreign projects – Deduction u/s. 80HHB – A. Y. 1984-85 – Assessee having more than fifty construction sites in India and abroad – Assessee is entitled to deduction in respect of each project instead of netting up of profits from all overseas projects –

The assessee was engaged in construction activity having more than 50 construction sites in India and abroad. For the A. Y. 1984-85, the assessee computed the claim for deduction u/s. 80HHB of the Income-tax Act, 1961 in respect of each of the foreign projects. The Assessing Officer computed the deductible amount by netting off the profit from all the overseas projects. The Tribunal allowed the assessee’s claim.

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

“i) The Assessing Officer was not justified in computing the income from construction activities undertaken abroad and by process of clubbing or netting. The only issue before the Tribunal was whether the computation of deduction u/s. 80HHB could be made in respect of each unit and that was not prohibited by section 80HHB(1). It was only for the purpose of computation of the deduction and whether the section prohibited computation unit-wise that the Tribunal referred to the judgment of the Supreme Court. Beyond that, it had not considered any wider question or controversy.

ii) The Tribunal had decided the matter essentially in the light of the facts and material placed before it. In such circumstances and considering the provisions of section 80HHB and the order of the Tribunal, the Tribunal was not in error in holding that the assessee was entitled to the deduction u/s. 80HHB in respect of each project instead of netting up of profits from all the overseas projects.

iii) Thus, the Tribunal was in no error in directing the Assessing Officer to allow the deduction as claimed by the assessee without setting off all the losses suffered in other foreign projects.”