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2005 (7) TMI 307 - ITAT JAIPURDeduction u/s 80HHC - whether the deduction u/s 80HHC should be allowed on export income included in gross total income or on the gross total income arrived after allowing deduction under Chapter VI-A of IT Act - HELD THAT:- From the language used in s. 80AB it is clear that deduction under Chapter VI-A should be given on the amount of income of that nature as computed in accordance with the provisions of this Act before making any deduction under Chapter VI-A. We respectfully follow the decision of Hon'ble apex Court in the case of IPCA Laboratory Ltd. vs. Dy. CIT wherein it has been held that the s. 80AB has an overriding effect over all other sections given in Chapter VI-A. Therefore, whatever mentioned in s. 80-IB or 80HHC would be governed by s. 80AB. keeping in mind the ratio laid down in the case of IPCA Laboratory Ltd. vs. Dy. CIT [2004 (3) TMI 9 - SUPREME COURT], we hold that the s. 80AB has an overriding effect over all other sections given in Chapter VI-A and deduction under Chapter VI-A should be given on the amount of income of that nature as computed in accordance with the provisions of this Act before making any deduction under Chapter VI-A. Therefore, we set aside both the orders of the lower authorities and direct the AO to allow the deduction under s. 80HHC at Rs. 20,92,136 on the income included in gross total income before making any deduction under Chapter VI-A, however, the total deduction under ss. 80-IB and 80HHC should be restricted upto gross total income. Sundry expenses written off - We hold that the disallowance made by the AO in respect of telephone expenses and depreciation on telephone is reasonable as element of personal expenses can't be ruled out and we confirm the order of CIT on this issue. However, as regards disallowance of sundry debtors written off, we are in opinion that the disallowance made by the AO is not proper. The position of law in this regard is clear that if the necessary entries are made in the regular books of account regarding the writing off of the amounts, then no further requirement is necessary. The claim regarding written off has been made only after passing the necessary entries in the books of accounts, therefore, no disallowance should be made in this regard. Therefore, we set aside both the orders of the lower authorities and direct the AO to allow the sundry expenses written off. In the result, the appeal filed by the assessee is partly allowed as stated above and announced in the open Court.
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