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TMI Blog2013 (10) TMI 381X X X X Extracts X X X X X X X X Extracts X X X X ..... of that unit had to be taken into account for calculating the deduction admissible to the assessee under section 80HHC of the Income Tax Act, 1961? 2. Whether on the facts and in the circumstances of the case the Income Tax Appellate Tribunal was legally correct in taking the view that by virtue of the provisions of sub section (3) of section 80HHC of the Income Tax Act, 1961, the business of NOIDA and Kanpur Units had to be taken as one business for the allowance of deduction under section 80HHC of the Income Tax Act, 1961? 3. Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was legally correct in holding that the deduction under section 80HHC of the Income Tax Act, 1961 should be worked out by taking the turnover and profit of both the Kanpur Head Office and NOIDA unit together? 4. Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was legally correct in holding that the deduction under section 80HHC of the Income Tax Act, 1961 should be worked out by taking the turnover and profit of both the Kanpur and NOIDA units together, even though (i) the income of the NOIDA unit was excluded from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e took into account the export turn over of NOIDA unit, besides that of Kanpur Head Office claiming it to be total export turnover, including that of NOIDA unit of which income was exempt under Section 10A of the Act. He claimed that the total export turn over of the NOIDA unit should be considered for computing deduction under Section 80HHC of the Act out of profits of Kanpur Head Office. The Assessing Officer observed that income of NOIDA unit did not form part of the assessee's total income within the meaning of Section 80A and 80B of the Act. What was deductible under Section 80HHC of the Act was the income/ profit derived from export business and which was includible in the total income of the assessee. The Assessing Officer came to conclusion that no deduction under Section 80HHC of the Act was allowable with reference to the export turnover of NOIDA unit. He computed the deduction under Section 80HHC of the Act only with reference to the profit, export turnover and total turnover of Kanpur Head Office and worked out the deduction under Section 80HHC at Rs.1,55,971/- as against the deduction of Rs.6,44,791/- claimed by the assessee. In appeal against the assessment order the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C of the Act only with reference to the profit (as worked out in the assessment order), export turn over and total turn over of Kanpur Head Office. The Assessing Officer did not take into account the export turnover of NOIDA unit in computing the deduction under Section 80HHC of the Act. He worked out the deduction under Section 80HHC of the Act at Rs.27,105/- as against a deduction of Rs.12,60,021/- claimed by the assessee. The CIT (A) held as in the previous three years that in respect of income from export of unit located in Free Trade Zone, the operative provisions were in Section 10A of the Act and not in Section 80HHC of the Act. The Tribunal allowed the appeal and directed the Assessing Officer to compute deduction under Section 80HHC by taking turn over and profit of both the units together. For the assessment year 1995-96 the Assessing Officer followed the stand taken on the issue in the assessment order 1992-93 and apportioned the expenses between Kanpur Head Office and NOIDA unit. The Assessing Officer found that the turn over of Kanpur Unit was 61.25% of the total turn over of the assessee company and the turn over of NOIDA unit was 38.75% of the total turn over. The A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmits that the profits and gains derived by an assessee from an industrial undertaking to which Section 10A applies as in the present case, where the NOIDA unit is situated in Free Trade Zone, such profits are not to be included in total income of the assessee. For comparing total income of the assessee, the Act provides for reducing of the entire amount, of deductions and exemptions etc. It is only thereafter total income is to be computed for the purpose of giving benefit under Section 80HHC. Shri Sambhu Chopra submits that Section 80AB inserted by Finance (No.2) Act, 1980 w.e.f. 1.4.1981, is an overriding provision for computation of the deduction in Chapter VIA. Section 80HHC falls in same chapter and thus calculating the benefits under Section 80HHC, the export turn over of the NOIDA unit has to be excluded. He has relied upon IPCA Laboratory Ltd. v. Deputy Commissioner of Income Tax, 2004 (266) ITR 521 in which the Supreme Court considered the scheme under Section 80AB, Section 80B (5), Section 80HHC providing for special deduction for the assessee's exporting goods manufactured by itself as also trading goods of exporting manufacturers. While considering the objection of Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder any Section in this Chapter, which includes Section 80HHC, notwithstanding anything contained in that Section, the computation of the income has to be in accordance with the provisions of the Act. This profit from exports under Section 10A are exempt and thus the turn over of export unit cannot be included for the benefit under Section 80HHC. Shri Ashish Bansal on the other hand has relied upon the judgment of Delhi High Court in CIT v. M/s Dabur India Ltd., ITR 10 of 2000 decided on 17.10.2008 and in which the Delhi High Court held as follows:- "Having considered the arguments advanced by the counsel for the parties, while we agree with what the learned counsel for the revenue states that the provisions of Section 10(A)(4)(iii) would not be applicable for the present assessment year, i.e., 1989-90, we would still not be in a position to agree with his submissions that the export ITR 10/2000 Page No.7 of 9 turnover of the unit in the free trade zone is to be excluded for the purposes of computing deduction under Section 80HHC. The deduction under Section 80HHC is to be computed as per the formula specified in Section 80HHC(3) which speaks of three components. The three compo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... residing in India engaged in the business of export out of India of any goods or merchandise to which this section applies. The exclusion of the profit and gains derived by the assessee from industrial undertaking established in the free trade zone would not amount to excluding turn over, which is basis of calculation under Section 80HHC of the benefits under sub-section (2) and (3). We have considered the submissions and find substance in the contention of Shri Shambhu Chopra that while computing total income of the assessee, engaged in business in Free Trade Zone and also in export of goods or merchandise out of India, the turn over will be reduced by the turn over of the unit of the assessee, having benefit under Section 10A of the Act, and on which profits and gains derived, are not to be included in total income of the assessee. We have drawn benefit of the reasons given by CIT (A) on which reliance has been placed by Shri Shambhu Chopra. Clause (iii) of sub-section (4) of Section 10A of the Act prohibits deduction under Section 80HHA, 80F, 80IA and 80J of the Act in computing total income of the assessee of the previous year to the assessment years. The prohibition under Se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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