TMI Blog2004 (10) TMI 596X X X X Extracts X X X X X X X X Extracts X X X X ..... ible to the assessee under s. 32AB of the IT Act, 1961 ? 2. The assessee is a forest lessee. It has also commenced production of oxygen plant in January, 1987. It has filed its return of income and claimed relief under s. 80HH to the extent of ₹ 20,61,706 on the total profit from various leases amounting to ₹ 1,03,08,533. The AO, however, noticed that the assessee has been allowed deduction under s. 32AB of the Act. The assessing authority allowed deduction under s. 80HH only on the profit from various leases, as reduced by deduction under s. 80HH [sic-s. 32AB]. According to the assessing authority, the relief under s. 80HH is provided on the profits and gains of the business and these profits and gains were supposed to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion/ concessions to the assessee upto s. 80 and, thereafter, whatever is the balance amount of profit, the deduction under s. 80HH is supposed to be given thereon. Whereas, on the other hand, the argument put forth by Mr. V.U. Eradi, learned counsel appearing for the assessee, is that the deduction under s. 80HH is to be given as per the profit in the P L a/c and, therefore,(sic-before) deduction under s. 32AB while computing relief under s. 80HH. In order to appreciate the rival contentions of the learned counsel appearing for the respective parties, sub-s. (1) of s. 80HH, so far as it is relevant, reads as under : Deduction in respect of profits and gains from newly established industrial undertakings or hotel business in backward a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that under the provisions of s. 32AB of the Act, if the total income of the assessee included income chargeable to tax under the head 'profits and gains of the business' and had out of such income utilized any amount during the previous year, for the purpose of new ship, new machinery or plant, without depositing any amount in the deposit account, such assessee was to be allowed a deduction equal to 20 per cent of the profit of eligible business or profession as computed in the account of the assessee. 7. The assessee, in this case, is admittedly carrying on two industries. It is urged by Mr. D.S. Thakur, learned counsel appearing for the Revenue, that on a true import of s. 80HH, profit earned in one industry must be reduced in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y such industry should be lost or diminished because of a loss suffered by some other industry. It makes no difference that the other industry is also a priority industry. The co-existence of two industries in common ownership was not intended by Parliament to result in the misfortune of one being visited on the other. The legislative intention was to give to the meritorious its full reward. To construe s. 80E to mean that you must determine the net result of all the priority industries and then apply the benefit of the deduction to the figure so obtained will be, in our opinion, to undermine the object of the section. An example will illustrate this. An industry entitled to the benefit of s. 80E could have its profits wholly wiped out on a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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