1999 (1) TMI 63 - AT - Income Tax

Summary

Issues:
- Discrepancy in deduction under section 80HHC for assessment year 1989-90.
- Rejection of rectification application under section 154 by Assessing Officer and Commissioner (Appeals).
- Interpretation of circular No. 680 dated 21-2-1994 in relation to computation of deduction under section 80HHC for book profit under section 115J.

Analysis:

Issue 1: Discrepancy in deduction under section 80HHC
The appeal was filed by the assessee against the order confirming the deduction of Rs. 7,14,694 under section 80HHC for the assessment year 1989-90, while the assessee claimed Rs. 8,85,690. The dispute arose from the calculation method used by the Assessing Officer based on the auditor's report in Form No. 10CCAC. The assessee contended that the correct deduction should be Rs. 8,85,690 to compute the book profit under section 115J.

Issue 2: Rejection of rectification application
The assessee filed a rectification application under section 154 to correct the deduction discrepancy, but both the Assessing Officer and the Commissioner (Appeals) rejected the application. The Assessing Officer maintained that the deduction was based on the auditor's certificate and hence no mistake existed for rectification. The Commissioner (Appeals) upheld this decision, leading the assessee to appeal further.

Issue 3: Interpretation of circular No. 680
The appeal focused on the correct interpretation of circular No. 680 dated 21-2-1994, which outlined the procedure for computing the deduction under section 80HHC for arriving at taxable profit under section 115J. The assessee argued that the circular specified a method different from what was applied by the authorities, emphasizing the importance of adhering to the circular's guidelines. The Tribunal noted the relevance of the circular's explanation (iii) under section 115J and directed the allowance of Rs. 8,85,690 under section 80HHC for computing the book profit under section 115J.

In conclusion, the Tribunal allowed the appeal filed by the assessee, directing the correct deduction of Rs. 8,85,690 under section 80HHC for the assessment year 1989-90 to compute the book profit under section 115J of the Income-tax Act, 1961. The decision was based on the interpretation of circular No. 680 and ensuring compliance with the specified computation method for deductions.