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2015 (4) TMI 1108 - HC - Income TaxDeduction allowable under Section 80HHC - determination of profit - Held that:- Part C of Chapter VI-A of the said Act provides for deductions in respect of the certain income and one of such Sections which fall within the said part is Section 80HHC which provides for deductions in respect of the profits determinable by the assessee from the export of goods or merchandise. Sub Section (1) of Section 80HHC as it stood then provides that the profit that an assesse Indian company engaged in the business of export of any goods or merchandise to which this section applies, there shall, in accordance with and subject to provisions of Section, a deduction of the profits derived by the assessee from such export of goods or merchandise be allowed in computing the total income of the assessee. Sub- section (3) sets out the manner in which the profits derived from export business of the goods or merchandise is to be determined. In the present case, the respondent by applying the methodology as provided in Section 80HHC(3) has determined the profits derived from the export of goods or merchandise as far as the appellant is concerned to be a sum of ₹ 19,92,39,981/-. Once the respondents themselves have arrived at the said figure after applying the methodology as provided in Section 80HHC(3) of the said Act, such amount of deduction has to be allowed. But however, taking note of the provisions of Section 80A(2) referred to herein above, such deduction has to be restricted to the gross total income which in the present case is a sum of ₹ 19,78,94,900/-. But however, the respondents have restricted the said deduction only to ₹ 17,40,33,719/- by relying upon the provisions of Section 80AB. However, we find that once the income has been determined by applying the methodology as provided in Section 80HHC(3) of the said Act, the question of restricting the deduction in terms of Section 80AB of the said Act would not arise. This is so in terms of Section 80AB of the Act, as the appellant is claiming deductions on its export profits alone, which is included in computing its gross total income. Section 80HHC (3) was introduced when the provisions of Section 80AB were already on the statute. Even upon reading the provisions of Section 80AB of the said Act, the determination of the amount as provided therein would have to be effected for the purpose of computing the deductions under each of the respective sections specified in Part C of the said Act. As such, while computing the deduction under Sections 80HHB, 80HHC, 80HHD, 80I, 80IB, 80IA, 80IB etc., one would have to apply Section 80AB of the said Act. On perusal of Annexure A, we find that the deduction under Section 80HHC to which the appellant was entitled has been arrived at a sum of ₹ 19,92,49,981/- by the respondents themselves. In terms of Section 80AB(2), the restriction of the deduction is to the gross total income and in such circumstances, the restriction to the total profit of business in a sum of ₹ 17,40,33,719/- is not at all justified. The restriction is on the gross total income of ₹ 19,78,94,900/- and as such we find that the restriction effected by the Assessing Officer on the deduction is not at all justified.
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