TMI Blog2015 (4) TMI 1108X X X X Extracts X X X X X X X X Extracts X X X X ..... profits derived from the export of goods or merchandise as far as the appellant is concerned to be a sum of ₹ 19,92,39,981/-. Once the respondents themselves have arrived at the said figure after applying the methodology as provided in Section 80HHC(3) of the said Act, such amount of deduction has to be allowed. But however, taking note of the provisions of Section 80A(2) referred to herein above, such deduction has to be restricted to the gross total income which in the present case is a sum of ₹ 19,78,94,900/-. But however, the respondents have restricted the said deduction only to ₹ 17,40,33,719/- by relying upon the provisions of Section 80AB. However, we find that once the income has been determined by applying the methodology as provided in Section 80HHC(3) of the said Act, the question of restricting the deduction in terms of Section 80AB of the said Act would not arise. This is so in terms of Section 80AB of the Act, as the appellant is claiming deductions on its export profits alone, which is included in computing its gross total income. Section 80HHC (3) was introduced when the provisions of Section 80AB were already on the statute. Even upon reading ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9,92,39,981/- was it justified to restrict such amount to ₹ 17,40,33,719/- which according to him was the profit of the business. The learned Senior Counsel further pointed out that the appellant is engaged in the business of export of processed iron ore which is manufactured and produced by the appellant as well as ore in which the appellant trades. The learned Senior Counsel further pointed out that there was a first round of litigation in connection with the amount which the appellant is entitled as a deduction in terms of Section 80HHC of Income Tax Act ( herein after referred to as 'the said Act') which this Court had partially modified the directions of the Tribunal though that aspect is not relevant for deciding the above appeals. The learned Senior Counsel further pointed out that thereafter the Assessing Officer by an order dated 05.06.2002 gave effect to the order of the Tribunal dated 28.09.2001 and for the Assessment year 1995-96 the Assessing Officer has determined the income chargeable under the head Profits and gains of business or profession at ₹ 17,63,97,551/-. The learned Senior Counsel further submits that the income chargeable under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B(5). Thereafter, according to the learned Senior Counsel in Chapter VI-A of the Act, the deductions are allowed and sub section (1) of Section 80A provides that in computing the total income of an assessee, there shall be allowed from his gross total income in accordance with and subject to the provisions of the Chapter which are the deductions specified in Section 80C to Section 80U. The learned Senior Counsel further submits that sub section (2) provides that the quantum of deduction allowable is the aggregate amount of deductions under the Chapter which shall not in any case, exceed the gross total income of the assessee. The learned Senior Counsel further pointed out that Part 'C' of the said Chapter determine specified deductions allowable and that in such part, Section 80HHC provides for a deduction in respect of the profits derived from the export of the goods or merchandise. According to the learned Senior Counsel sub -section (1) as it stood then provides that where an assessee is an Indian Company engaged in the business of export out of India of any goods or merchandise, there shall be in accordance with and subject to the provisions of the Section in computing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision and as such upheld the stand of the assessee that it was entitled to a deduction under Sections 80HH and 80I of the profits computed on a standalone basis of the asbestos division. The learned Senior Counsel further pointed out that the Tribunal in para 8 of its order accepts that the deduction is to be allowed is to the extent of the profits and gains of export business but after having said so impliedly restricts it to the income assessed under the head profits and gains of business or profession overlooking that the profits and gains of the export business are computed by the Assessing Officer himself at ₹ 19,92,49,981/- and as such the appellants are entitled for a deduction of the said sum in terms of Section 80A(2) by restricting its claim to ₹ 19,78,94,900/-. The learned Senior Counsel thereafter has taken us through the orders passed by the Commissioner as well as by the Tribunal and pointed out that both the said authorities have misconstrued the relevant provisions of the Income Tax Act and have accordingly erroneously rejected the contentions by restricting the deductions as effected by the Assessing Officer. The learned Senior Counsel as such submits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... force reads thus : 80AB. Where any deduction is required to be made or allowed under any section ( except section 80M) included in this Chapter under the heading C.-Deductions in respect of certain incomes in respect of any income of the nature specified in that section which is included in the gross total income of the assessee, then, notwithstanding anything contained in that section, for the purpose of computing the deduction 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. 7. Section 80B(5) of the said Act defines the gross total income thus : 80B(5) gross total income means the total income computed in accordance with the provisions of this Act, before making any deduction under this Chapter . 8. On going through the said provisions, we find that sub- section (2) of Section 80A clearly provides that the deductions shall not exceed such gross total income. In such circumstances, the only p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the amount as provided therein would have to be effected for the purpose of computing the deductions under each of the respective sections specified in Part C of the said Act. As such, while computing the deduction under Sections 80HHB, 80HHC, 80HHD, 80I, 80IB, 80IA, 80IB etc., one would have to apply Section 80AB of the said Act. On perusal of Annexure A, we find that the deduction under Section 80HHC to which the appellant was entitled has been arrived at a sum of ₹ 19,92,49,981/- by the respondents themselves. In terms of Section 80AB(2), the restriction of the deduction is to the gross total income and in such circumstances, the restriction to the total profit of business in a sum of ₹ 17,40,33,719/- is not at all justified. The restriction is on the gross total income of ₹ 19,78,94,900/- and as such we find that the restriction effected by the Assessing Officer on the deduction is not at all justified. 9. This Court has had occasion to deal with the issue arising herein in the context of Section 80IA and 80O ( also a part of Chapter VI-A of the said Act ) viz. whether the deductions under these provisions are to be restricted to income under the head pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count the calculations made by the Assessing Officer; wherein he has determined the deduction under section 80-O in the sum of ₹ 1,29,41,830/- being the 50% of the income so received or brought into India. This figure is not disputed by the learned counsel for the Revenue. The only question sought to be canvassed is that out of these deductions the admissible deduction under Section 80-O ought to be limited to the extent of ₹ 69,70,127/- which represents business income. In other words, the income from interest and dividend shall not form part of the gross total income as defined under section 80B(5) of the Act. The submission is misconceived. If one turns to the definition of the 'gross total income under section 80B-5, it reads as under : 80B(5) gross total income means the total income computed in accordance with the provisions of this Act, before making any deduction under this Chapter. 3. Considering the definition of the gross total income, it is difficult to hold that the interest income and the dividend income would not form part of the gross total income computed in accordance with the provisions of the Act. The view taken by the Tribunal, i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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