TMI Blog2012 (10) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... of the revenue that the profits and gains, permitted to be deducted under Section 80IA or 80IB, should be deducted out of the profits of the business and thereafter the profits and gains of the export business are to be reckoned for the purpose of calculating the benefit under Section 80HHC is contrary to the statutory provisions and the letter and spirit of the Act. The deductions are independent of each other and therefore, full deduction under each Section can be claimed though the overall benefit has to be restricted to the total profits and gains of such eligible business - in favour of assessee. - ITA No. 9 of 2007 a/w ITA Nos. 12, 13 and 24 of 2007 - - - Dated:- 19-9-2012 - Mr. Deepak Gupta, And Mr. Rajiv Sharma, JJ. For the appellant(s): Mr. Vinay Kuthiala, Sr. Advocate with Ms. Vandana Kuthiala, Advocate in all the appeals. For the respondent: Mr. M.M.Khanna, Sr. Advocate with Shri Vayur Gautam, Advocate in ITA Nos.9, 12 and 3 of 2007 Mr. S.K.Mukhi, Advocate in ITA No. 24 of 2007. Per Deepak Gupta, J 1. These four appeals are being disposed of by a common judgement since the following identical questions of law are raised in all the appeals:- 1. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duction under that section, the amount of income of that nature as computed in accordance with the provisions of this Act (before making any deduction under this Chapter) shall alone be deemed to be the amount of income of that nature which is derived or received by the assessee and which is included in his gross total income. 5. For the purpose of deciding these appeals we are also concerned with Section 801A(9), which reads as follows:- Where any amount of profits and gains of an undertaking or of an enterprise in the case of an assessee is claimed and allowed under this section for any assessment year, deduction to the extent of such profits and gains shall not be allowed under any other provisions of this Chapter under the heading C.-Deductions in respect of certain incomes , and shall in no case exceed the profits and gains of such eligible business of undertaking or enterprise as the case may be. 6. Sh. Vinay Kuthiala, learned senior counsel appearing for the revenue mainly relies upon the judgement of the Delhi High Court in Great Eastern Exports vs. Commissioner of Income-tax (2011) 332 ITR 14 wherein the Delhi High Court held as follows:- 41. We have considere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and gains in a particular year. Even a layman who has some proficiency in English would understand the meaning of this provision in the manner we have explained above. It would, therefore, be clear that this provision aims at achieving two independent objectives delineated above. It cannot be limited to second objective alone thereby annihilating the first altogether and making it otiose. If we accept the contention of learned counsel for the assessees, it would lead to this result which has to be avoided. 44. Law on interpretation is clear. If the language of the statute is plain and capable of one and only one meaning, that obvious meaning is to be given to the said provision. Rules of interpretation are applied only if there are ambiguities when the purpose of interpretation is to ascertain the intention of the law i.e. mens legis, it is based on assertion by adopting plain meaning of the statute in the absence of any ambiguity. 7. It is contended on behalf of the revenue that though the Apex Court in IPCA Laboratory Ltd. vs. Deputy Commissioner of Income-tax (2004) 266 ITR 521 had clearly held that Section 80AB has been given overriding effect over all other sections in Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an one section under heading C of Chapter VIA. With a view to prevent the taxpayer taking undue advantage of the existing provisions of the Act, Section 80IA was amended by Finance Act 1998 so that the deductions allowed under Section 80IA and various Sections under heading C of Chapter VIA are restricted to the profits of the business of the undertaking/enterprise. 26. There is no dispute that in the present case, the assessee is an undertaking entitled to deduction under Section 80IA at 30% of the profits and gains derived from the business and deduction under Section 80HHC at 50% of the profits of the business. Further, there is no dispute that the deduction under Section 80IA has to be computed on the total profits derived from the business. However, the dispute is in computing the deduction under Section 80HHC in view of the insertion of Section 80IA(9) by the Finance Act, 1998. According to the Revenue, Section 80IA(9) mandates that the deduction under Section 80HHC has to be computed not only on the profits of the business as reduced by the amounts specified in clause (baa) and clause (4B) of Section 80HHC but also by reducing the amount of profits and gains allowed as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n under other provisions under heading C of Chapter VIA. Thus, Section 80IA(9) seeks to curtail allowance of deduction and not computability of deduction under any other provisions under heading C of Chapter VIA of the Act. xxx xxx xxx 34. If the words used in Section 80IA(9) were shall not qualify , then, probably it could be said that the legislature intended to affect the quantum of deductions computable under other provisions under heading C of Chapter VIA, because the amount that qualifies for deduction alone forms the basis for computing the deduction. The word qualify is an expression relatable to the computation of deduction. The word allowed is relatable to allowing the deduction that is computed. The word allowed cannot be equated with the word qualify . Since Section 80IA(9) uses the words shall not be allowed , in our opinion, the section seeks to restrict the allowance of deduction and not the computation of deduction under any other sections under heading C of Chapter VIA of the Act. 11. Finally, the Bombay High Court held as follows:- 40. We find it difficult to subscribe to the views expressed by the Delhi High Court in interpreting t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons computable under various provisions under heading C of Chapter, it is reasonable to hold that Section 80IA(9) affects allowability of deduction and not computation of deduction. To illustrate, if Rs.100/is the profits of the business of the undertaking, Rs.30/is the profits allowed as deduction under Section 80IA(1) and the deduction computed as per Section 80HHC is Rs.80/, then, in view of Section 80IA(9), the deduction under Section 80HHC would be restricted to Rs.70/, so that the aggregate deduction does not exceed the profits of the business. 12. After giving our careful consideration to the judgements of the Delhi and Bombay High Courts, we respectfully agree with the view of the Bombay High Court. 13. According to us, the Bombay High Court was right in holding that if the argument of the revenue that amount of profits allowed under Section 801A has to be deducted from the profits of business while computing deduction under Section 80HHC is accepted then the section becomes unworkable since deduction under Section 80 HHC is computed not on the profits of business but on the export turnover. 14. The Karnataka High Court in Commissioner of Incometax and another vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at after making the claims in terms of the aforesaid section. However, the overall claim under both sections has to be restricted to the total profits and gains of such eligible business from the gross total income. 15. This Court in a recent judgement delivered in ITA No. 36 of 2008 titled as Commissioner of Income-tax, Shimla vs. M/s Him Teknoforge Ltd. has clearly held that calculations of deduction is different from giving the benefits of the deduction. While calculating the deduction the provisions of the deducting sections have to be followed. There is nothing in Section 801A(9) which lays down that the assessee would not be entitled to claim deduction under Section 80HHC on that portion of the profits of the unit of which benefit has been taken under Sections 801A or 801B. The object of Section 801A(9) is not to curtail the deduction but to avoid double benefits. The total benefits cannot be higher than the gross income and cannot exceed the profits of the priority undertaking. The assessee would be entitled to the benefit of Sections 801A or 801B separately and to that of Section 80 HHC independently and while computing the deduction under Section 80 HHC the profits ..... X X X X Extracts X X X X X X X X Extracts X X X X
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