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2005 (6) TMI 480 - ITAT BANGALOREDeductions u/s 80HHC and 80-IB - Profits from undertaking - exporter of garments - Interest receipt from other source - Order u/s 263 passed without any application of the provisions -payments in respect of instalments of employers’ and employees’ contribution to Provident Fund - HELD THAT:- It appears that the CIT has revised the assessment order u/s 263, on two points. Firstly there were late payments of PF dues which was found by the Assessing Officer while giving effect to section 263 order as not correct as payments were made in time. According to the CIT, the second point is that the assessee cannot be allowed deduction u/s 80HHC because he was allowed deduction u/s 80-IB of the Act. We have already noticed that so far as the allowability of the deduction u/s 80HHC is concerned which was the subject-matter of appeal before CIT (Appeals) and decided in favour of the assessee. Therefore, in our considered opinion, CIT by exercising the power u/s 263, cannot withdraw the relief u/s 80HHC because theory of merger will apply which is supported by the decision of Full Bench of the jurisdictional High Court in the case of CIT v. Hindustan Aeronautics Ltd.[1985 (7) TMI 74 - KARNATAKA HIGH COURT] which was confirmed by the decision of Hon’ble Supreme Court in Hindustan Aeronautics Ltd. v. CIT [2000 (5) TMI 3 - SUPREME COURT]. Further, we find that the Commissioner was not justified to hold that once relief u/s 80-IB was allowed to the assessee, no further relief u/s 80HHC can be allowed, the provisions of section 80-IA(9) We are of the view that the provisions of section 80-IA(9) only regulate the deductions allowable under Chapter VI-A and there is no restriction contained therein to regulate other deductions. The provisions of Chapter VI-A are meant to encourage various objects and these incentive provisions must be construed for the benefit of the taxpayer. Thus, we hold that since the assessee has not claimed more than 100 per cent deduction in respect of the profits of the undertaking and since the Assessing Officer has also not allowed more than 100 per cent deduction of the profits under both sections 80-IB and 80HHC, there is no need to interfere with the order of the Assessing Officer. Therefore, the order of assessment passed u/s 143(3) cannot be said to be erroneous in so far as it is prejudicial to the interests of revenue. In the result, the appeal is allowed.
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