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2006 (9) TMI 343 - ITAT MUMBAIInterpretation of statutes - Deduction u/s 80-IA and 80HHC - income derived from industrial undertaking - export incentives - Manufacturing activities Or Not - non-eligibility in respect of scrap sale - HELD THAT:- In our opinion, the Legislature has clearly provided two limbs with reference to the profits and gains of an undertaking or an enterprise which has been claimed and allowed as deduction u/s 80-IA. The word "and" has also been used between these two limbs by the Legislature and therefore, both the limbs are cumulative and mandatory in nature and consequently, the effect of either of the limbs cannot be ignored. Thus, the effect of both the limbs has to be taken into consideration while computing the deductions under the heading "C - Deductions in respect of certain incomes" in Chapter VI-A. Though we have held that in view of the clear language employed by the Legislature, the courts are not required to look into the intention of the Legislature yet on going through the circular mentioned in the decision of Tribunal in the case of Mittal Clothing Co.[2005 (6) TMI 480 - ITAT BANGALORE], we do not find anything to suggest that first limb in section 80-IA(9) is to be ignored. Circular simply refers to the intention of the Legislature in respect of the second limb. Therefore, the circular does not support the case of assessee. The Apex Court in the case of IPCA Laboratory Ltd.[2004 (3) TMI 9 - SUPREME COURT] has clearly held that relief cannot be allowed by ignoring or misreading the provisions of the Act. Therefore, reference to the circular, in this case, is misplaced. We have already referred to the relevant provisions of sub-section (9) of section 80-IA. It clearly provides that where any amount of profit of an undertaking or of an enterprise of an assessee is claimed and allowed under this section then deduction to the extent of such profit shall not be allowed under any other provisions of Chapter VI-A under the heading "C-Deductions in respect of certain incomes". Section 80HHC falls under the above heading in Chapter VI-A. Therefore, while computing the relief u/s 80HHC, the tax authorities duty bound to give effect to both the limbs provided in section 80-IA(9). Therefore, in our opinion, the lower authorities were justified in reducing the profits of business of the undertaking by the amount of profits allowed as deduction u/s 80-IA while computing the deduction u/s 80HHC. Thus, the order of the Learned CIT (Appeals) is upheld - In the result, assessee’s appeal stands dismissed.
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