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2013 (1) TMI 90 - HC - Income TaxRevision of orders prejudicial to revenue by CIT(A) - relief granted u/s 80 IA was not deducted from the profits and gains of the business before computing relief u/s 80 HHC - ITAT quashed the orders of CIT(A) passed u/s 263 - Held that:- As decided in Asstt. CIT Vs. Rogni Garments & Ors [2007 (4) TMI 122 - ITAT, CHENNAI] Section 80HHC is part of Chapter VI-A. CIT v. Sharon Vancers P. Ltd.(2007 (2) TMI 121 - HIGH COURT , MADRAS) has made it clear that it is not correct to say that Section 80HHC is a self contained provision. The deduction cannot be allowed ignoring the restrictive clause contained in Section 80-IA(9). The restrictive clause in Section 80-IA makes it abundantly clear that wherever deduction under any other section of Chapter VI-A(C) is claimed, the computation will be subject to the restrictions laid down in Section 80-IA (9). It precludes 'pro tanto', all the deductions of such profits and gains claimed under Chapter VI-A(C). Section 80HHC is part of Chapter VI-A(C). The respondent-assessee, in the present case, had in its return of income tax, claimed deduction under Section 80IA at Rs. 12.01 crores and Section 80HHC at Rs. 5.75 crores and declared the total income of Rs. 82.47 lacs. The AO allowed the deduction under Section 80IA to the tune of Rs. 14.04 crores and deduction under Section 80HHC to the tune of Rs. 2.42 crores. The CIT on perusal of the assessment order found the assessment order to be both erroneous and prejudicial to the interest of Revenue and rightly so as deduction under Section 80HHC was allowed on eligible profits of business without reducing the profits of business on which deduction under Section 80IA had been allowed. There was, thus, contravention of Section 80IA(9), which clearly indicates the extent of restriction to which the deduction under other provision of Chapter VI-A of IT Act can be allowed in cases where relief has been given on the profits and gains under Section 80IA. As decided in Malabar Industrial Co. Ltd. v. CIT [2000 (2) TMI 10 - SUPREME COURT] an incorrect assumption of facts or an application of law will satisfy the requirement of the order being erroneous. In the same category fall orders passed without applying the principles of natural justice or without application of mind. Thus set aside the order of ITAT and restore that of CIT-I - against assessee.
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