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TMI Blog2012 (8) TMI 698X X X X Extracts X X X X X X X X Extracts X X X X ..... nover of Rs. 21,18,63,506/-." 2. Claim for deduction u/s. 10B (Ground of Appeal No. 1) has been dealt by the AO as under: "Claim for exemption u/s. 10B Assessee has put up a claim for exemption of income of 4,60,34, 671/- u/s. 10B of the I.T. Act, 1961 on the ground that they have set up a new unit in Mumbai office for production of media content software. Assessee has also furnished Form No. 56G and a separate Profit & Loss Account in respect of E.O.U. division at Mumbai. The profits of Rs. 4,60,34,671/- are said to have been earned in respect of production and export of media content software from the E.O.U. unit." "It is observed from the details and documents submitted by the assessee that assessee is engaged in the business of production of media content software and this is exported on beta-cam tape to the foreign parties. Section 10B of the I.T. Act, 1961 speaks about manufacture and production of an article or a thing and production of a media content program on a beta-cam tape cannot be equated with an article or a thing and therefore, assessee company does not satisfy the basic condition of manufacture and production of an article or a thing prescribed in Section 10B o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble High Court of Madras in the case of CIT v. V.C. Kuganathan [2007] 293 ITR 15. In both the cases, relied upon by the AR, issue of beta-cam tape/export of merchandise or goods have been conclusively decided. Respectfully following the order of the Hon'ble High Courts, we decide the Ground No. 1 against the Revenue. 6. Next Ground of Appeal is about allowance of assessee's claim amounting to Rs. 3.06 lakhs u/s. 80HHF of the Act. From the file, it transpires that the CIT(A) on para 7 of the Order CIT(A) has worked out profits of business. As per the CIT(A) profits for business eligible for deduction u/s. 80HHF was 1.50 Crores. After arriving at the said figure, he worked out the deduction with reference to the sub-section 3 of the section 80HHF(3). We find that in assessee's own case ITAT vide its Order dt. 22-09-2010 in Sri Adhikari Bros. Television Networks Ltd. v. Asstt. CIT [2011] 130 ITD 439/11 taxmann.com 163 (Mum.) has discussed the methodology for computation of deduction u/s. 80HHF (para 16-19). We are of the opinion that in the interests of justice, matter should be remitted back to the file of the A.O for computing the deduction as per the said directions of the Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profits of the business as section 80HHF does not exclude the profits exempt u/s. 10B of I.T. Act, cannot be accepted". AR submitted that from A.Y.2001-02 Sec. 10B was a deduction provision and not an exemption provision, that the assessee was entitled to include 10B export for calculating eligible deduction. AR relied upon cases of Associated Capsules (P.) Ltd. v. Dy. CIT [2011] 332 ITR 42/197 Taxman 84/9 taxmann.com 63 (Bom.) and Hindustan Unilever Ltd. v. Dy. CIT [2010] 325 ITR 102/191 Taxman 119 (Bom.) In short, submission of the AR was that the appellant was entitled to exemption u/s. 10B as well as 80HHF with regard to export proceeds related to Sec. 10B. On the other hand, DR submitted that no assessee was entitled for double deductions and that the CIT(A) had rightly disallowed the claim made by the Assessee. 11. After hearing the rival submissions and perusing the material before us, we are of the opinion that for better understanding of the issue, it will be useful to go through the sections 10B and 80HHF. Amended Section 10B as well as Sec. 10A, 10AA, 10BA were introduced in the Act with a specific purpose. All these sections can be classified as 'special provisions' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 80HH or section 80HHA or section 80-I or section 80-IA or section 80-IB in relation to the profits and gains of the undertaking..." 12.2 It is noteworthy that Sub-section 6(1), 6(ii) and 6(iv) stipulates other prohibitions computing deduction u/s. 80IB. These sub-sections are about depreciation, investment allowance, development allowance, scientific research and other deductions. 12.3 We are of the opinion that as both the sections prohibit to allow deduction other than allowable under the respective sections, so the CIT(A) had rightly rejected the claim of the assessee. The prohibition in the Section is total, it is not discretionary.".......no deduction shall be allowed......."are the words used in both the section. We do not feel that at this juncture, significance and importance of word 'shall' should be emphasised by quoting a dozen of case laws. It is sufficient to hold that words used in both the sections are 'shall not' and that they are mandatory. We are aware that Sub-section 6(iii) talks about deductions under 80HH, 80HHA, 80I, 80IA and 80IB, but when we analyse the over-all scheme of the section, in our opinion, Section 80HHF gets covered by the said S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... units u/s. 10B. Thus, the case is distinguishable on facts and conclusion drawn. In Associated Capsules (P.) Ltd., (supra) Hon'ble Bombay High Court has dealt following question of law: "Whether the Tribunal was justified in holding that section 80-IA(9) of the Income-tax Act, 1961 mandates that the amount of profits allowed as deduction under section 80-IA(1) of the Act has to be reduced from the profits of the business of the undertaking while computing deduction under any other provisions under heading C in Chapter VI-A of the Income-tax Act, 1961 ?" After deliberating upon the issue, legal provision, the Hon'ble High Court, finally held as under: "...we hold that section 80-IA(9) does not affect the computability of deduction under various provisions under heading C of Chapter VI-A, but it affects the allowability of deductions computed under various provisions under heading C of Chapter VI-A, so that the aggregate deduction under section 80-IA and other provisions under heading C of Chapter VI-A do not exceed 100 per cent. of the profits of the business of the assessee. .... the object of section 80-IA(9) being not to curtail the deductions computable under various provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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