TMI Blog2009 (6) TMI 124X X X X Extracts X X X X X X X X Extracts X X X X ..... e applied. Effect and implementation of above provision was neither raised, nor examined nor decided by the Hon'ble Madras High Court. The later decision of Madras High Court in the case of General Optics (Asia) Ltd. v. Dy. CIT(A) [ 2008 (12) TMI 191 - MADRAS HIGH COURT] has made our task easier. In the said case, similar question was raised and the Tribunal, after following the decision of Special Bench in the case of Rogini Garments [ 2007 (4) TMI 122 - ITAT, CHENNAI] had allowed deduction u/s 80HHC after deducting relief allowed u/s 80-IA(9). It is clear from above that application of restrictions as upheld by the Special Bench in the case of Rogini Garments was held to be applicable from assessment year 1999-2000 onward. Thus, we hold that decision of Hon'ble Madras High Court in the case of SCM Creation did not impinge upon the ratio of Special Bench in the case of Rogini Garments. It is accordingly held that benches of the Tribunal, which have taken a view contrary to the view of Rogini Garments case did not correctly appreciate the legal position. The mere fact, that SLP against the decision in the case of J.P. Tobacco and other decisions noted above was not fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cussed above. The Special Bench in the case of Rogini Garments did not find any difficulty in understanding and interpreting sub-section (9) of section 80-IA as words of the provision are plain, clear and unambiguous. On plain reading of the statutory provision, we entirely agree with the view expressed by the Special Bench in case of Rogini Garments. We agree that all the provisions should be read together and given a harmonious construction. All provisions are inter-related and cannot be read de hors one and other. The Special Bench in the case of Rogini Garments has held that the restriction imposed by sub-section (9) on account of section 80-IA is to be read in all the provisions of Chapter VI-A and it is not possible to ignore the restriction that profits and gains claimed and allowed as exempt under sub-section (9), (to the extent allowed) cannot be allowed under any other provision of Chapter 'C'. Above construction in reading restriction in all relevant provisions under Chapter 'C', in our opinion, is leading to no contradiction or absurdity and is reasonable. It is the legislative policy not to allow repeated deduction of same profit under sections of de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd applying decision of superior court. The question involved here is whether decision of SCM Creations can be treated as a precedent. For the reasons already given, the said decision did not lay down that section 80-IA(9) or 80-IB(13) should be disregarded while computing deduction u/s 80HHC or other deduction under Chapter 'C' of VI-A. We accordingly hold that deduction to be allowed under any other provision of Chapter VI-A with the heading 'C' is to be reduced by amount of deduction allowed u/s 80-IB/80-IA of the Income-tax Act. We answer the question referred to the Special Bench in the affirmative i.e. in favour of the revenue. We answer above question and refer the appeals and other grounds for disposal to the regular benches. - Vimal Gandhi President, R. P. Garg Senior Vice-President, G. E. Veerabhadrappa Vice-President, I. P. Bansal And C. L. Sethi Judicial Members For the Appellant : R. S. Meena , L. M. Pandey For the Respondent : Piyush Kaushik and Rajesh Jain For the Interveners : Ajay Vohra , Rohit Jain and Rohit Garg JUDGMENT VIMAL GANDHI (PRESIDENT). 1. This Special Bench was constituted on the recommendatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Delhi Bench in the case of Nodi Exports v. Asst. CIT [2008] 24 SOT 526 where the case of SCM Creations [2008] 304 ITR 319 was held to be not applicable. Several other Benches have held that applicability of the Special Bench decision in the case of Rogini Garments [2007] 294 ITR (AT) 15 was not affected by the decision of the hon'ble Madras High Court in the case of SCM Creations [2008] 304 ITR 319. The referral Bench, in the light of conflict views of different benches, thought it proper to refer the matter to the President for constitution of a larger Special Bench. Accordingly, a Special Bench of five Members was constituted to consider the following question : Whether in view of the provisions of section 80-IA(9) read with section 80-IB(13), the deduction of income under Chapter VI-A can be allowed on the entire profit and gains of an undertaking or an enterprise of an assessee or it is to be allowed on such profits and gains as are reduced by the deduction claimed and allowed under section 80-IB/80-IA. 3. That during the course of hearing, it was agreed between the parties that the referred question be considered in the light of the facts emerging in I.T. A. No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Assessing Officer was challenged by the assessee in appeal before the Commissioner of Income-tax (Appeals) (the CIT(A) ). It was claimed that the view taken by the Assessing Officer was erroneous and his reliance on the decision of the Supreme Court in the case of Cambay Electric Supply Industrial Co. Ltd. v. CIT [1978] 113 ITR 84 misplaced. The learned Commissioner of Income-tax (Appeals), in his order, relied upon the decision of the Allahabad High Court in the case of CIT v. Mentha and Allied Products (P.) Ltd. 7 MTC 625 and other decisions of the same court noted in para 4 of his order. In these cases, it was held that duty drawbacks received by the respondent-assessee could not be treated as profits derived by the assessee and, therefore, the said sum could not be considered for relief under section 80HHA of the Income-tax Act. The learned Commissioner of Income-tax (Appeals) followed the above decision of the Allahabad High Court as far as treatment of duty drawbacks was concerned. 7. That as regards the question of computation of deduction under section 80HHC and section 80-IB, the learned Commissioner of Income-tax (Appeals) referred to in detail to the statut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no case exceed the profits and gains of such eligible business of undertaking or enterprise, as the case may be. Section 80-IB.(13) The provisions contained in sub-section (5) and sub-sections (7) to (12) of section 80-IA shall, so far as may be, apply to the eligible business under this section. 11. Sub-section (13) of section 80-IB is consequential as certain provisions of section 80-IA are imported and made applicable to section 80-IB. We are really concerned with the application of sub-section (9) of section 80-IA which was introduced with effect from April, 1999 by the Finance (No. 2) Act, 1998. 12. In the case of Asst. CIT v. Rogini Garments [2007] 294 ITR (AT) 15 (Chennai) ; [2007] 108 ITD 49 (Chennai), the Special Bench was constituted to consider the following question (page 18 of 294 ITR (AT) : Whether relief under section 80-IA should be deducted from profits and gains of business before computing relief under section 80HHC? 13. The Bench noted the change made by sub-section (9) of section 80-IA. It also considered Circular No. 772 dated December 23, 1998 ([1999] 235 ITR (St.) 35 ). Before the Bench, it was pleaded that section 80-IA(9) did not curtai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s restriction is to be applied since the words used are, any other deduction under Chapter VI-A . Full effect is to be given to this provision and wherever an assessee wants to claim deduction under section 80-IA(9), restriction is to be read in every other provision providing for deduction under C of Chapter VI-A. The Special Bench also observed that the circular relied upon by learned counsel for the assessee nowhere suggests that more than 100 per cent. deduction on the same profit can be granted to the assessee under various sections enumerated in Chapter VI-A. The Bench relied upon the decision in the case of CIT v. Sharon Vaneers (P.) Ltd. (T. C. No. 62 of 2004, dated February 26, 2007 ([2007] 294 ITR 18 (Mad)) to hold that it is not correct to say that section 80HHC of the Act is a self contained provision. A deduction under the above provision cannot be allowed ignoring the restrictive clause contained in section 80-IA(9). The question referred to the Special Bench was accordingly answered. 15. The aforesaid decision of the Special Bench was required to be followed and applied by all regular benches in due course. This, however, did not happen. Different Benches of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uced in section 80-IA, and made applicable to section 80-IB also. He then made a reference to the notes on clauses explaining the various provisions contained in the Bill inserting the aforesaid sub-section (9) where it was explained that the Legislature proposed to insert a new sub-section (9) in section 80-IA so as to provide that where an amount of profits and gains of an industrial undertaking or a hotel, is claimed and allowed under the said section, the profit to that extent shall not be qualified for deduction for that assessment year under any other provisions of Chapter VI-A of the Act and in no case shall exceed the eligible profits of the industrial undertaking or hotel, as the case may be. The learned Departmental representative then made a reference to the Heydon's Rule of Mischief to contend the while considering the meaning and scope of section 80-IA(9), a regard must be had not only to the existing law but also to prior legislation and to the judicial interpretation thereof. He further pleaded that if the whole scheme of the Act and the judicial interpretation thereof are considered, the provisions of section 80-IA(9) would make it clear that profits of the bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d (iv) CIT v. Exportos Apparel Group Ltd. [2008] 299 ITR 176 (Delhi). 20. Having contended so, the learned Departmental representative further submitted that the matter that calls for consideration by this Special Bench has been examined in great detail and at length by the Special Bench, Income-tax Appellate Tribunal, Chennai Bench in the case of Asst. CIT v. Rogini Garments [2007] 294 ITR (AT) 15, where the assessment years involved were 1999-2000 and 2002-03 and it was held by the Special Bench that it is not correct to say that section 80HHC of the Act is a self-contained provision, and that the deduction under section 80HHC cannot be allowed by ignoring the restrictive clause contained in section 80-IA(9), which makes it abundantly clear that wherever deduction under any provisions of Chapter VI-A, under the heading C Deductions in respect of certain incomes , is claimed, the computation will be subject to the restrictions laid down in section 80-IA(9) of the Act. He further submitted that the view taken by the Special Bench in the case of Rogini Garments [2007] 294 ITR (AT) 15 (Chennai) has been followed in the following cases : (i) Bansal Impex v. CIT Income-tax Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 04 ITR 319, the learned Departmental representative submitted that the hon'ble Madras High Court in the case of SCM Creations [2008] 304 ITR 319 merely followed their earlier decision in the case of CIT v. V. Chinnapanti [2006] 282 ITR 389 (Mad), which case, in fact, pertained to the assessment year not covered by the amendment leading to the insertion of section 80-IA(9), though the case of SCM Creations v. Asst. CIT [2008] 304 ITR 319 (Mad) was pertaining to the assessment years 2002-03 and 2003-04, i.e., related to the post amendment period, but this difference was not pointed out by either side to the hon'ble Madras High Court. He submitted that having regard to the specific and unambiguous provisions contained in sub-section (9A) of section 80-IA, the deduction under section 80HHC is to be allowed only after deducting from the profits and gains of the assessee's business the amount of deduction allowed under section 80-IA/80-IB of the Act. In view of the aforesaid submissions, the learned Departmental representative then submitted that the judgment of the hon'ble Madras High Court in the case of SCM Creations [2008] 304 ITR 319 does not lay down the correct pos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so held by the hon'ble Supreme Court in the case of IPCA Laboratory Ltd. v. Deputy CIT [2004] 266 ITR 521 and in the case of CIT v. Shirke Construction Equipment Ltd. [2007] 291 ITR 380 (SC). He then made a reference to the decision of the Income-tax Appellate Tribunal, Jaipur Bench, in the case of Toshica Creation v. ITO [2005] 96 TTJ 651 where the impact of overriding provisions of section 80AB was considered and it was then held therein that deduction under section 80HHC should be allowed on gross basis without reducing from profits eligible for deduction under section 80HHC the deduction claimed and allowed under section 80-IB of the Act. He further pointed out that this vital aspect, i.e., the impact of overriding provisions of section 80AB on the controversy involved in the present cases, was not at all considered and addressed in the case of Rogini Garments [2007] 294 ITR (AT) 15 (Chennai) decided by the Special Bench of the Income-tax Appellate Tribunal. 24. Referring to section 80HHC(1) of the Act, learned counsel for the assessee submitted that the provisions of section 80HHC(1) specifically provides that the deduction under section 80HHC shall have to be computed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de a reference to the rule of interpretation of statute as per commentary on Principle of Statutory Interpretation by Justice G.P. Singh. 26. On the principle of interpretation, learned counsel for the assessee relied upon the following decisions : (i) Raj Krushna Bose v. Binod Kanungo, AIR 1954 SC 202, 203. It is usual, when one section of an Act takes away what another confers to use a 'non-obstante' clause and say that 'notwithstanding anything contained in section so and so, this or that will happen' otherwise, if both sections are clear, there is a head on clash. It is the duty of courts to avoid that and whenever it is possible to do so, to construe provisions which appear to conflict so that they harmonise. (ii) Sultana Begum v. Prem Chand Jain, AIR 1997 SC 1006. When there are two conflicting provisions in an Act, which can not be reconciled with each other, they should be so interpreted that, if possible effect should be given to both. This is the essence of the rule of 'harmonious construction'. The courts have also to keep in mind that an interpretation which reduces one of the provisions as a 'dead letter' or 'usel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of statutes, reliance was placed on the following decisions by learned counsel for the assessee : (i) CCE v. Dhiren Chemical Industries [2002] 254 ITR 554 (SC) (If the circulars placed a different interpretation, that interpretation will be binding upon the Revenue.) (ii) Union of India v. Azadi Bachao Andolan [2003] 263 ITR 706 (SC). (Circulars issued by the Central Board of Direct Taxes are binding on the Department even if they deviate from the provisions of the Act). (iii) CIT v. M. K. Vaidya [1997] 224 ITR 186 (Karn) (Circular issued by the Central Board of Direct Taxes are not only binding on the Income-tax Department but are also in the nature of contemporanea exposition furnishing legitimate aid in the construction of a pro vision.) 30. He then contended that it would be highly unfair and incorrect to stretch section 80-IA(9) to contend that deduction under section 80HHC should always be allowed on net basis, i.e., after reducing the deduction allowed under section 80-IA or 80-IB from the profits eligible for deduction under section 80HHC, even though by claiming deduction on gross basis the total deduction claimed under Chapter VI-A does not exceed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C exceeds total profits of the under taking, however, the assessee had restricted the claim of deduction under Chapter VI-A uptill total profits of the undertaking and has accordingly filed its return of income at nil income and not at a loss figure. Assessment year 2003-04 Particulars Amount Rs. Total profit of undertaking as per assessment order 30,33,713 Deduction under section 80-IB as per assessment order 3,88,593 Deduction under section 80HHC if computed on gross basis 12,92,198 Total of deduction under section 80-IB plus 80HHC 16,80,791 In this year though the deduction under section 80HHC is com puted on a gross basis, however the sum total of deduction under Chapter VI-A is much lower than the profits of the undertaking. Assessment year 2004-05 Particulars Amount Rs. Total profit of undertaking as per assessment order 28,6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lhi) 565; and (iii) Deputy CIT v. Eltek SGS (P.) Ltd. [2006] 10 SOT 178 (Delhi). 36. Learned counsel for the assessee then pointed out that the aforesaid decision of the hon'ble Madhya Pradesh High Court in the case of J. P. Tobacco Products Pvt. Ltd. [1998] 229 ITR 123 has been upheld by the hon'ble Supreme Court in its decision in the case of Joint CIT v. Mandideep Engineering and Packing Industries Pvt. Ltd. [2007] 292 ITR 1, wherein the hon'ble Supreme Court has held that the decision of the hon'ble Madhya Pradesh High Court in the case of J. P. Tobacco Products Pvt. Ltd. [1998] 229 ITR 123 was followed by the same High Court in the case of CIT v. Alpine Solvex P. Ltd. (I. T. A. No. 92 of 1999 decided on May 2, 2000) and the Revenue's special leave petition against the said decision in the case of Alpine Solvex P. Ltd. was dismissed by the Supreme Court as reported in [2001] 247 ITR (St.) 36. 37. Further, the instruction No. 4 dated August 14, 2001, of the Central Board of Direct Taxes clarifying that the deductions under section 80HH and 80-I shall be given independently with reference to the gross total income was also relied upon by the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te non-obstante clause is used by the Legislature in that section which was intended to be given an overriding effect. In this connection, he made reference to sub-section (5) of section 80HHB, sub-section (4) of section 80HHBA, sub-section (5) of section 80-IC, sub-section (4) of section 80-I and sub-section (4) of section 80-IE and then submitted that in all these provisions, the Legislature has specifically used the non-obstante clause with the expression notwithstanding anything contained in any other provisions of the Act . He then highlighted that though section 80HHBA providing for deduction in respect of profits and gains from housing projects and the original sub-section (9) of section 80-IA was inserted by the same Finance (No. 2) Act, 1998, there exists a difference in presentation of restrictive clause in sub-section (4) of section 80HHBA with that of sub-section (9A) of section 80-IA of the Act as would be evident from the different language used in these two sub-sections. He submitted that sub-section (4) of section 80HHBA starts with a non-obstante clause, i.e., it starts with the expression notwithstanding anything contained in any other provision heading C. De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purpose for which these sections were inserted in the statute as no word is added to or subtracted from the statute by the Legislature without any meaning or purpose. He then reiterated that to ascertain the true purport and object of inserting section 80-IA(9)/80-IB(13) in the statute, if Hyden's Mischief Rule of interpretation of statute is to be taken into account, it would be clear that the purpose of inserting section 80-IA(9)/80-IB(13) in the statute was to restrict the allowability of same amount of deduction simultaneously under two or more sections under the Act. 45. We have considered rival submissions of the parties. The first question before us is whether the decision in the case of SCM Creations [2007] 304 ITR 319 has impliedly overruled the Special Bench decision of Rogini Garments [2008] 294 ITR (AT) 15 (Chennai), notwithstanding the provision of section 80-IA(9) of the Income-tax Act noted above. To answer the above question, we make a ready reference to the decision. 46. In the case of SCM Creations [2008] 304 ITR 319, their lordships have recorded as under : K. Raviraja Pandian J. The two appeals are filed by the asses see relating to the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitions were filed meaning thereby that the Department has accepted the view taken in these judgments. See CIT v. Nima Specific Family Trust reported in [2001] 248 ITR 29 (Bom) ; CIT v. Chokshi Contacts P. Ltd. [2001] 251 ITR 587 (Raj) ; CIT v. Amod Stamping [2005] 274 ITR 176 (Guj) ; CIT v. Mittal Appliances P. Ltd. [2004] 270 ITR 65 (MP) ; CIT v. Rochiram and Sons [2004] 271 ITR 444 (Raj) ; CIT v. Prakash Chandra Basant Kumar [2005] 276 ITR 664 (MP) ; CIT v. S. B. Oil Industries P. Ltd. [2005] 274 ITR 495 (P H) ; CIT v. S. K. G. Engineering P. Ltd. [2006] 285 ITR 423 (Delhi) ; [2005] 119 DLT 676 and CIT v. Lucky Laboratories Ltd. [2006] 284 ITR 435; [2006] 200 CTR (All) 305. Since the special leave petitions filed against the judgment of the Madhya Pradesh High Court have been dismissed and the Depart ment has not filed the special leave petitions against the judgments of different High Courts following the view taken by the Madhya Pradesh High Court, we do not find any merit in this appeal. The Department having accepted the view taken in those judgments can not be permitted to take a contrary view in the present case involving the same point. Accordingly, the civil appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Act. It was not disputed that the assessee was entitled to deduction under both the provisions. However, while computing the deduction, the Assessing Officer deducted relief allowed under section 80HH from deduction allowable under section 80-I which was restricted to the balance amount. After noticing the claim of the parties, their lordships of the Madhya Pradesh High Court allowed relief to the assessee observing as under (page 124) : The assessee is a private company engaged in the business of manufacturing and sale of bidis. The assessees were assessed for the assessment year 1984-85 and the Assessing Officer held that the assessee-company was not entitled to deductions under sections 80HH and 80-I of the Act. On appeal, the Commissioner of Income-tax (Appeals) held the assessee to be entitled to deduction of Rs.1,27,818 under section 80HH and Rs. 4,52,211 under section 80-I of the Act. In computing the deduction under section 80-I, the Commissioner of Income-tax (Appeals), however, reduced the amount of Rs. 1,27,818 allowed under section 80HH from the profits and gains from the industrial undertakings of the assessee. The assessee, in his cross-objection before the Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1980, with effect from April 1, 1981, and by the same Finance (No. 2) Act, section 80HH(9) was amended and the words 'section 80-I or' were inserted to make the said provision applicable to section 80-I as well. How ever, no provision was made in section 80-I to provide for deduction of the gross total income by deduction allowed under section 80HH for the purpose of allowing deduction under section 80-I. It would, thus, be seen that when section 80J already existed in sub-section (9) of section 80HH, an amendment was made in section 80J in the year 1974 but no such provision was made in so far as section 80-I was concerned. This clearly contra-indicates that sub-section (9) of section 80HH by itself meant that deduction allowed under section 80HH is to be reduced from the gross total income for granting the benefit of section 80J and, for that matter, of section 80-I. It was provided in section 80J itself by later amendment while no such provision was made in section 80-I even though inserted on a later date. The pro vision of law is, therefore, clear that in so far as the benefit of section 80-I is concerned, it has to be granted on the gross total income and not on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ya Pradesh High Court was followed by the hon'ble Bombay High Court in the case of CIT v. Nima Specific Family Trust [2001] 248 ITR 29. In the said case, the assessee for the assessment year claimed deduction both under sections 80HH and 80-I at 20 per cent. of the total income. The Assessing Officer allowed the deduction claimed by the assessee under section 80-I at 20 per cent. of the total income and on the balance income, he granted deduction under section 80HH at 20 per cent. On further appeal, the Commissioner rejected the appeal of the assessee but the same was allowed by the Appellate Tribunal. This led to reference of the following question to the hon'ble High Court (page 31) : Whether the assessee was entitled to claim 40 per cent. of the profit as deduction (20 per cent. under section 80HH and 20 per cent. under section 80-I) even though section 80HH(9) provides that deduction under section 80HH shall be given first, followed by deduction under section 80-I? 53. Their lordships, after considering the relevant provision of sections 80HH and 80-I, held that section 80HH(9) only referred to priorities in allowing the deduction. In other words, if the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... benefit under all the provisions, deduction under section 80HH is to be made in the first instance which is with an object to promote industrial establishment in backward areas and only there after deduction computed under section 80-I or section 80J shall be given effect to. The assessee was an industrial company manufacturing and selling electrical contacts. For the assessment year 1987-88, the assessee claimed relief under section 80-I as well as under section 80HH for deduction in respect of its gross total income but the computation of relief under section 80-I was made by the Assessing Officer after deducting the relief admissible under section 80HH from the gross total income computed for that purpose. The Tribunal held that the relief under section 80-I was to be computed without deduction of relief under section 80HH in computation of gross profit for that pur pose. On a reference : Held, that the Tribunal was justified in directing deduction under section 80-I without considering the deduction under section 80HH. 55. In the case of CIT v. S. B Oil Industries P. Ltd. [2005] 274 ITR 495, their lordships of the Punjab and Haryana High Court followed the above-refer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 80-IB was not to be allowed under any other provision of the Chapter under the heading C. Deductions in respect of certain incomes (hereinafter deduction under C Chapter VI-A). In other words, deficiency in the provision pointed out by the hon'ble High Court in the case of J. P. Tobacco Products Pvt. Ltd. [1998] 229 ITR 123 and in other cases noted above was covered and a specific provision to the above effect was made. It is not in dispute that in the case of J. P. Tobacco Products Pvt. Ltd. [1998] 229 ITR 123 and other decisions, no question of consideration of the provision (80-IA)(9) arose as these cases pertained to the assessment years earlier than the assessment year 1999-2000. In the case SCM Creations [2008] 304 ITR 319 (Mad), as noted above, the learned representative of the parties did not bring to the notice of their lordships the change in the statutory provision. The case was decided on concession by the learned representative of parties. Applicability of section 80-IA(9) or similar provision under section 80-IB was not considered by the hon'ble court. The case pertained to an assessment year after April 1, 1999, yet the pre-amended law was applied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of the Special Bench in the case of Rogini Garments, had allowed deduction under section 80HHC after deducting relief allowed under section 80-IA(9). Their lordships in the judgment noted the provision of sub-section (9A) as also Circular of the Central Board of Direct Taxes No. 772 and ultimately observed as under (page 403) : The decision in Asst. CIT v. Rogini Garments [2007] 294 ITR (AT) 15 (Chennai) of the Special Bench, which was followed by the Tribunal, relates to the period subsequent to the date when the amendment came into effect. Therefore, the Tribunal erred in applying it to the assessment year 1998-99 when the amendment had not yet come into effect. In these circumstances, the substantial question of law is answered in favour of the assessee, but restricting it only to the assessment year 1998-99. This clarification is necessary since the impugned order was passed for both the assessment years 1998-99 and 1999-2000. Tax case (Appeal) is disposed of accordingly. No costs. Consequently, connect M.Ps. are closed. 64. It is clear from the above that application of restrictions as upheld by the Special Bench in the case of Asst. CIT v. Rogini Garments [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decisions noted above. It was contended that the provisions of section 80AB and other provisions were not correctly appreciated by the Special Bench. 66. After careful consideration of rival submissions, we find that above arguments were considered and rejected in Rogini Garments for good reasons. We are not persuaded to take a view different from the one taken by the Special Bench. On consideration of the provisions of section 80-IA(9), we find that there are two restrictions in the statutory provision under consideration. These are : (a) where an assessee is allowed deduction under this section (80-IA or 80-IB), deduction to the extent of such profits and gains shall not be allowed under any other provision of this Chapter (Heading C. Deduction in respect of certain incomes ), and (b) deduction shall in no case exceed the profits and gains of the undertaking or hotel as the case may be. 67. The contention on behalf of the assessee and intervener is that total deductions under various sections should not exceed profits and gains of undertaking. We are unable to accept this contention. It is seen that the Central Board of Direct Taxes Circular No. 772 clarified and onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ances would arise and section 80AB would have no application. The section provides no solution to the problem where deduction is to be computed under more than one section of Chapter VI-A. It cannot follow that other sections providing modification or change in the manner or mode of computation are to be ignored. There are several sections like section 80HHA, 80HHA(5), 80HHA(6) providing manner of deductions or preferential treatment to one deduction over another when the assessee is entitled to deduction under more than one section of Chapter VI-A. It is provided that effect shall first be given to a particular section. All the sections are to be read together harmoniously. The fact that section 80AB starts with a non-obstante clause does not make any difference as we see no conflict in various provisions. The restriction placed on double deduction of the same eligible profit cannot be read as absurdity or conflict. Having regard to the above provisions, putting ban on allowability of deduction under other sections, computation of deduction under those sections would serve no purpose. It cannot follow from the above that restriction of those sections are not to be given effect to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us, is to be given effect. We are not concerned here with other provision but on plain reading of sections involved, we clearly see the restrictions discussed above. The Special Bench in the case of Rogini Garments [2007] 294 ITR (AT) 15 (Chennai) did not find any difficulty in understanding and interpreting sub-section (9) of section 80-IA as words of the provision are plain, clear and unambiguous. On plain reading of the statutory provision, we entirely agree with the view expressed by the Special Bench in case of Rogini Garments [2007] 294 ITR (AT) 15 (Chennai). 71. It was contended that the provision of section 80HHC was a special provision providing an incentive to exporters earning precious foreign exchange for the country whereas section 80-IA or 80-IB cover a totally different field. Therefore, reading of the provision of section 80-IA(9) in section 80HHC would only lead to an apparent conflict. Such a conflict has to be avoided. It was further submitted that all statutory provisions should be read together and given a harmonious and reasonable construction to avoid contradictions. It was submitted that instead of literal interpretation, a liberal interpretation should b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id to construction is needed when literal reading of the provision leads to ambiguous results or absurdity. Where the language is clear and there is no ambiguity or absurdity, notes on clauses need not be referred to. Therefore, on facts, we do not see any support for the assessee from notes on clauses of the Finance Act. As regards Circular No. 772 dated December 23, 1998, we have already held that the said Circular was dealing with restriction (b) which provided that deduction (under other provision with heading C ), shall in no case exceed profit and gains of business or hotel as the case may be . The above portion of the section is separated from the other portion of the sub-section by word and . It is, therefore, clear that there are two restrictions in the sub-section and circular of the Board is dealing only with the second restriction. It is difficult to accept that circular was issued to do away with first restriction incorporated in the provisions. There is absolutely no justification for allowing repeated deductions on profits and gains on which deduction has been allowed under section 80-IA or 80-IB of the Act. The Special Bench in the case of Rogini Garments [2007] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B operate in different fields inasmuch as section 80HHC is applicable only to all eligible units exporting goods or merchandise whereas section 80-IA or section 80-IB is applicable only to all eligible units even if goods manufactured in those units are not exported, and in that event, the question of reducing deduction allowed under section 80-IA or 80-IB would not arise. Shri Vohra had placed reliance on the decision of the hon'ble Bombay High Court in the case of Godrej Agrovet Ltd. v. Asst. CIT [2007] 290 ITR 252. As far as this limited issue is concerned, we are inclined to agree with the submission advanced by Shri Vohra. The restrictions contained in section 80-IA or 80-IB not to allow repeated deductions are applicable to same profit. This is more than clear from use of word such profit in section 80-IA/80-IB. In other words, there has to be identity of profits on which deduction under more than one provision under Chapter VI-A is claimed by the assessee. The provisions are applicable where on the profit of the undertaking or enterprise, deduction is claimed under section 80-IA or 80-IB and then on the same profit of the undertaking, deduction under other provisions l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Nodi Exports v. Asst. CIT Moradabad, clearly exceeded its jurisdiction. After careful consideration of the decision of the hon'ble Madras High Court in the case of SCM Creations [2008] 304 ITR 319, we have already held that the said decision cannot be treated as a precedent. The issue has been discussed threadbare and those reasons need not be repeated again. Observations of the hon'ble Madras High Court in the later decision dated December 20, 2008, in the case of General Optics (Asia) Ltd. [2009] 315 ITR 400 has put the controversy beyond any shadow of doubt. In the above case, amendment brought with effect from April 1, 1999, introducing sub-section (9) and (9A) in sections 80-IA and 80-IB respectively were clearly noticed. These amendments were not brought to the knowledge of the hon'ble court in the case of SCM Creations [2008] 304 ITR 319 (Mad). Therefore, there is no question of supersession of the Special Bench decision in the case of Rogini Garments [2007] 294 ITR (AT) 15 (Chennai). The said decision is applicable with full force. We do agree that correct propositions in the case Nodi Exports are overstated. There is no question of the Tribunal not foll ..... X X X X Extracts X X X X X X X X Extracts X X X X
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