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2007 (9) TMI 302 - AT - Income TaxInterpretation of Statutes - Disallowance of deduction/exemption claimed u/s 10B and 80HHE - Profits derived in Industrial Undertaking - development and export of computer software - loss in initial assessment - In the assessment year under consideration, for the first time, the claim of exemption u/s 10A has been denied, ostensibly on the strength of the provisions of s. 80HHE(5) of the Act - whether the said action of the AO is justified or not. HELD THAT:- In our humble opinion, this interpretation does not emerge from a plain reading of s. 80HHE(5) of the Act. Sub-s. (5) of s. 80HHE merely provides that where a deduction under s. 80HHE has been claimed and allowed in respect of profits of an eligible business, no deduction in relation to such profits be allowed under any other provision of the Act either for the same or any other assessment year. The interpretation placed by the Revenue, in our view, ignores the presence of the words "such profits" in the sub-s. (5) of s. 80HHE of the Act. The restriction sought to be carved out by the sub-section is that the profits which have been subjected to deduction under s. 80HHE should not again be subjected to any other deduction which the assessee may otherwise be entitled to claim, either for the same assessment year or in any other assessment year. The explicit language of sub-s. (5) of s. 80HHE cannot be read so as to mean that the assessee having once claimed deduction u/s 80HHE in respect to profits of an eligible business, would be debarred for all times to claim deduction under any other provisions of the Act in respect of the profits of such business for any other assessment year. It is in this connection, we find that in the case of Legato Systems [2004 (11) TMI 294 - ITAT DELHI-E]. The Tribunal while considering the import of sub-s. (5) of s. 80HHE,observed that it was intended to avoid double deduction inasmuch as the profits calculated in accordance with sub-s. (1) of s. 80HHC for a particular assessment year cannot be claimed as a deduction either for the same or any other assessment year. Similar has been the reasoning adopted in the case of Jindal Exports (P) Ltd.[1989 (8) TMI 108 - ITAT DELHI-A] wherein it was held that deductions u/s 80HHC cannot be denied to the assessee simply because the assessee enjoyed exemption u/s 10A of the Act. Thus, in our considered opinion, the claim of the assessee has been rightly upheld by the CIT(A). In the result, the assessee succeeds on this ground and the Revenue fails. Sales aggregating as export sales - HELD THAT:- We find that the aforesaid factual findings arrived at by the CIT(A) remain uncontroverted by the Revenue in the grounds of appeal preferred by it and even in the course of hearing before us, no material or evidence has been brought on record to negate the factual findings of the CIT(A) on this ground. In fact, the findings of the CIT(A) are in line with the material which has been placed in the paper book filed before us by the assessee in this regard. As a consequence, we hereby affirm the decision of the CIT(A) on this issue. Accordingly, the Revenue fails on this ground. Exemption u/s 10A - Profits earned from its Japan branch - HELD THAT:- Explanation 3 to s. 10A permits exemption u/s 10A on the profits derived by an assessee from a foreign branch with reference to onsite services, for development of computer software provided by the said company. In this light, the CIT(A) factually found the assessee to be eligible for the exemption u/s 10A in relation to the profits derived by the Japan branch, There is nothing to controvert the aforesaid finding of the CIT(A) before us. We, therefore, affirm the conclusion drawn by the CIT(A) on this issue. In the result, the appeal of the Revenue is dismissed.
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