TMI Blog2004 (11) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Revenue has prayed for issuance of a direction to the Income-tax Appellate Tribunal, Delhi Bench "E", Delhi (for short, "the Tribunal"), to refer the following question of law for the opinion of this court: "Whether, on the facts and in the circumstances of the case and in view of the provisions of section 80HH(9), the Income-tax Appellate Tribunal is right in holding that the deduction under sections 80HH and 80-I are independent deductions and are to be allowed with reference to the gross total income?" The assessee is a private limited company engaged in the manufacture of oil from mustard seeds. For the assessment year 1988-89, it filed the return on July 27, 1988, declaring an income of Rs. 2,33,450. By an order dated September 29, 1989, passed under section 143(3) of the Act, the Assistant Commissioner of Income-tax, Investigation Circle, Hisar (hereinafter described as "the Assessing Officer"), made an addition of Rs. 1,46,752 on account of low yield declared by the assessee. He also rejected the assessee's claim for deduction under section 80-I of the Act on the gross total income and allowed deduction under that section after excluding deduction granted under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for deduction in respect of the profits and gains from newly established industrial undertakings or ships or hotel business in certain cases did not make any provision for reduction of the gross total income by the amount of deduction admissible to the assessee under section 80HH. It was only by an amendment of the said section 80J that the provision for reducing the gross total income by the amount of deduction under section 80HH of the Act by the Direct Taxes (Amendment) Act, 1974, with effect from April 1, 1974, was inserted. Section 80-I was inserted in its present form by the Finance (No. 2) Act, 1980, with effect from April 1, 1981, and by the same Finance (No. 2) Act, section 80HH(9) was amended and the words 'section 80-I or' were inserted to make the said provision applicable to section 80-I as well. However, no provision was made in section 80-I to provide for deduction of the gross total income by deduction allowed under section 80HH for the purpose of allowing deduction under section 80-I. It would, thus, be seen that when section 80J already existed in sub-section (9) of section 80HH, an amendment was made in section 80J in the year 1974 but no such provision was made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n mind that section 80-I was a dead section during the period April 1, 1973, to April 1, 1981. Section 80-I was brought back into the Income-tax Act by the Finance (No. 2) Act, 1980, with effect from April 1, 1981. Under section 80-I, as inserted with effect from April 1, 1981, it was provided that where the gross total income of an assessee included profits derived from an industrial undertaking, after a certain date, to which the section applied, there shall be a deduction from such profits of an amount equal to twenty per cent. This section 80-I was in a way a successor to section 80J. However, section 80J was founded on the concept of capital employed which has been done away with by the successor. Section 80-I is now based on profits as is the case with deductions under section 80HH. Moreover, the concept of shortfall in section 80J(3) was also done away with by section 80-I. Section 80J, however, continued to remain on the statute book till April 1,1989, so that the assessees who had set up new industries before the specified date would get the tax-holiday for the entire period as promised. However, after April 1, 1989, section 80J was deleted. It is for this reason that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without making any deduction under Chapter VI-A. The language and intent of the provisions of sub-section (9) of section 80HH make it clear that the three deductions, viz., under section 80HH, section 80-I and section 80J, are simultaneously permissible and not mutually exclusive. The provision only fixes the priority of order in which deduction under each provision is to be adjusted in the gross total income derived from such industrial undertaking to which section 80HH or section 80-I or section 80J respectively apply simultaneously. In case any industrial undertaking falls in the category of new unit established in a backward area and it is entitled to avail of the benefit under all the provisions, deduction under section 80HH is to be made in the first instance which is with an object to promote industrial establishment in backward areas and only thereafter deduction computed under section 80-I or section 80J shall be given effect to. " The Bench then referred to an earlier judgment of the same court in CIT v. Shree Engineers (D.B.I.T. Reference No. 38 of 1995, decided on January 10, 1996) and observed as under: "Coming to the judgment relied on by learned counsel for th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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