By Jagdish D. Shah, Jagdish T. Punjabi, Chartered Accountants
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8 J. B. Chemicals & Pharmaceuticals Ltd.
v. ACIT
ITAT ‘B’ Bench, Mumbai
Before S. V. Malhotra (AM) and
R. S. Padvekar (JM)
ITA No. 6044/Mum./2002
A.Y. : 1999-2000. Decided on : 30-7-2008
Counsel for assessee/revenue : D. R. Rayani/
Mohit Jain
S. 80HHC and S. 80IA of the Income-tax Act, 1961 — Whether
deduction allowed u/s.80IA is to be reduced from the profits of the business in
computing deduction u/s.80HHC — Held, No.
Per S. V. Malhotra :
Facts :
The issue before the Tribunal was whether the deduction
u/s.80HHC(1) and S. 80IA can be independently allowed subject to the overall
ceiling of 100% of profit of the undertaking. According to the AO, in view of
Ss.(9) of S. 80IA, when the assessee had claimed deduction u/s.80IA, then the
deduction u/s.80HHC was not allowable in respect of that portion of income on
which deduction u/s.80IA had been claimed. In the case of the assessee, since
the business profit after reducing eligible profit u/s.80IA worked out negative,
he disallowed the deduction u/s.80HHC.
On appeal, the CIT(A) directed the AO to independently
compute the deduction u/s.80IA and u/s.80 HHC and restrict the profits and gains
to be excluded from business profit for the purpose of S. 80 HHC only to the
extent of amount allowed as deduction u/s.80IA.
Held :
The Tribunal took note of the following and allowed the
appeal filed by the assessee :
(i) In the assessee’s own case for the A.Y. 1999-2000, the
Tribunal relying on the decision of the Mumbai Tribunal in the case of Ifunik
Pharma Ltd. had rejected the appeal filed by the Revenue and the appeal filed
by the assessee was allowed.
(ii) In the case of V. Chinnapandi, the Madras High Court,
relying on the decision of the M. P. High Court in the case of J. P. Tobacco
Products Pvt. Ltd. (SLP filed against which by the Revenue was dismissed by
the Apex Court), had taken the view that both the Sections were independent,
and hence, the deductions could be claimed u/s.80HHC as well u/s.80I on the
gross total income;
(iii) In the case of SCM Creation, which was the intervener
in the case of Rogini Garments before the Special Bench of Chennai Tribunal,
the Madras High Court relying on its own decision in the case of V.
Chinnapandi, had allowed the appeal filed by the assessee;
(iv) The Bombay High Court in the case of Nima Specific
Family Trust, which decision was again based on the decision of the M. P. High
Court in the case of J. P. Tobacco Products Pvt. Ltd., had held that both the
Sections were independent and hence, deduction could be claimed on the gross
total income, subject to ceiling of 100%.
Cases referred to :
1. Ifunik Pharma Ltd. (ITA No. 4389/M/02);
2. CIT v. V. Chinnapandi, (2006) 282 ITR 389 (Mad.);
3. J. P. Tobacco Products Pvt. Ltd. v. CIT, 229 ITR
123 (M.P.);
4. SCM Creation (Tax case Appeal No. 310 & 311 of 2008 —
Madras High Court);
5. Nima Specific Family Trust, 248 ITR 291 (Bom.)
6. ACIT v. Rogini Garments, (2007) 108 ITD 49 (SB)
(Chennai)
