TMI Blog2014 (1) TMI 1587X X X X Extracts X X X X X X X X Extracts X X X X ..... arsoon, J . These two appeals arise out of a joint order dated 30.10.2008 (Annexure A-1) passed by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar (hereinafter referred to as, the Tribunal) in ITA Nos.327 and 328 (Asr)/2008 pertaining to the assessment years 2001-02 and 2003-04. 2. Both the appeals have been taken up together as question of law involved therein is the same. For convenience and clarity, facts of appeal No.234 of 2009 are being referred to. 3. The appellant-assessee is engaged in the manufacture and export of fence fittings. Assessment for the assessment year 2001-02 was finalised under Section 143(3) of the Income Tax Act, 1961 (for short, the Act) by the Assessing Officer (for short, the AO) on 27.3.2006. The assessee had claimed deduction under Sections 80HHC and 80IB of the Act. The deduction under Section 80HHC of the Act was allowed at Rs.1,48,94,112/- without reducing therefrom the deduction allowed under Section 80IB at Rs.47,35,855/-. The Commissioner of Income Tax, Jalandhar-1, Jalandhar (for short, the CIT) invoking the provisions of Section 263 of the Act issued notices dated 20.3.2008 and 25.3.2008 (Annexure A-5). Vide order dated 28 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) which is bad in law." (iv) Whether the ITAT was justified in concurring with the orders of CIT in holding that the order of AO was erroneous by holding that the decision in the case of Scm Creations v. Asstt.CIT [2008] 10 DTR 247 (Mad.) as reported in part 176 pertains to deduction regarding 80HH and 80I which did not contain any provisions similar to Section 80IA(9A) which is factually incorrect as first of all there is no such provision like 80IA(9A) and even if ITAT meant 80IA(9) even then ITAT is not justified because the decision of the Hon'ble Madras High Court in SCM Creations (supra) was relating to deduction u/s 80IA and 80HHC and not regarding 80HH and 80I as so held by the ITAT. Thus meaning thereby Hon'ble Madras High Court has dealt with the provisions of Section 80IA which does include 80IA(9), so that the holdings of the ITAT while confirming the orders u/s 263 by the CIT is erroneous and needs interference by this Hon'ble Court. (v) That the ITAT has erred in sustaining the order of CIT u/s 263 on altogether different ground which is unwarranted under any provisions of the Income Tax Act, 1961 (vi) That the orders of the Tribunal CIT are leg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,48,94,112/-without reducing therefrom deduction of Rs.47,35,885/- allowed to it under Section 80IB of the Act. The CIT had come to the prima facie conclusion that the order of the AO was erroneous as also was prejudicial to the interest of the revenue. Thus, twin conditions i.e. erroneous nature of the order as also it being prejudicial to the interest of the revenue, had been satisfied by the CIT. Thus, proceedings of CIT under Section 263 of the Act were valid and the Tribunal had rightly upheld the same. 8. We have heard counsel for the parties, while going through the paper books. 9. To adjudicate the matter in controversy, not only provisions of Section 80HHC and 80IB are to be gone into but even provisions of Section 80IB(13) and of Section 80IA(9) are also to be appraised. 10. The AO framing the assessment under Section 143(3) of the Act vide order dated 27.3.2006 had allowed assessee's claim for deduction under Section 80HHC as also under Section 80IB without application of provisions of Section 80IB(13) read with Section 80IA(9) of the Act. 11. A perusal of the order of the Assessing Officer reveals that wittingly or unwittingly, consciously or unconsciously, this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "3. Examination of record further reveals that during the period relevant to the assessment year under consideration the assessee was allowed deduction u/s 80HHC amounting to Rs.1,48,94,112/- without reducing from profit of the business the deduction u/s 80IB allowed to the extent of Rs.47,35,885/-. The law requires that for computation of deduction u/s 80HHC, deduction allowed u/s 80IB is to be deducted from the profits and gains of business as required by the provisions of Section 80IA(9) of the I.Tax Act, 1961. ..." 14. Now reference to order Annexure A-I of ITAT would be of avail, relevant portion whereof, is appended as below: "9. In Section 80-IA of the Act, deduction is allowable in respect of profits and gains from industrial undertaking or enterprises engaged in infrastructure development etc. equal to 100% of profits and gains derived from such business for 10 consecutive assessment years. Sub-section (9) provides for computation of procedure which clearly provides that deduction to the extent of such profits and gains shall not be allowed under other provisions of Chapter VIA on which the assessee has claimed and allowed deduction u/s 80IA. There does not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exceed the total profits and gains, and the restriction that deduction claimed and allowed under Section 80-IA or 80-IB could not be allowed under any other provision should be read in the light of condition of deduction not exceeding total profits and gains. 9. We are unable to accept the submission. 10. The restriction under Section 80-IA(9) is not only that the total deduction should not exceed profits and gains, there is a further restriction that deduction allowed under Section 80-IA or 80-IB will be a bar to claim deduction under any other provision of the Chapter." 18. More recently, this aspect has been dealt with at length in ITA No.312 of 2011 (Commissioner of Income Tax-I, Ludhiana v. M/s Abhishek Industries Limited) decided on 20.12.2012. In this judgment, authority cited as Commissioner of Income Tax v. Honda Siel Power Products Ltd., (2011) 333 ITR 547, cited by the assessee has also been referred to. Discussing Asstt. CIT Vs. Rogni Garments Ors, (2007) 294 ITR 15 (Chennai), Commissioner of Income Tax v. Honda Siel Power Products Ltd (supra) as also Commissioner of Income Tax v. Max India Ltd., (2007) 295 ITR 282 (SC), Coordinate Bench of this Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e decision of ITAT was always subject to challenge either by the department or the assessee before the higher forums." 21. Sequelly, reversing order of the Tribunal, order of CIT was restored holding that deduction under Section 80HHC was to be reduced to the extent it had already been allowed under Section 80IB of the Act. 22. Summing up the entire controversy, in conclusion, it is held that when provisions of Section 80IB(13) are read in conjunction with Section 80IA(9) of the Act, it becomes clear that deduction under Section 80HHC of the Act is to be computed on the eligible business profits only after reducing therefrom the portion of profit on which deduction has already been availed by the assessee under this Section i.e. 80IB. In other words, if an assessee has claimed deduction of profit or gains under Section 80IB, deduction to that extent is not to be allowed under Section 80HHC. 23. From the discussion as made earlier, all the questions posed by the appellant are decided in favour of the revenue and against the assessee. Sequelly, in terms of orders of CIT (Annexure A-2), affirmed by ITAT (Annexure A-1), the Assessing Officer has been rightly directed to recompute ..... X X X X Extracts X X X X X X X X Extracts X X X X
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