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TMI Blog2007 (7) TMI 226X X X X Extracts X X X X X X X X Extracts X X X X ..... iness loss and unabsorbed investment allowance of the earlier years before grant of depreciation ?" under the following facts and circumstances of the case. 2. The relevant assessment year is 1996-97. The assessee is an exporter of leather footwear. Originally, a 'Nil' return of income was filed by the assessee and the assessment was completed under Section 143(3) of the Income Tax Act, 1961 (in short 'the Act') on a total income of Rs.3,18,715/-, which was reduced to 'nil' after giving setoff of the carried forward loss for the assessment year 1993-94. Later, finding that the assessee has claimed excess deduction resulting in escapement of income, assessment was reopened by issuing notice under Section 148 of the Act.&n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Bombay High Court in Commissioner of Income-tax v. Shirke Construction Equipments Ltd. [(2000) 246 I.T.R. 429 (Bom.)], followed the decision of the Apex Court in IPCA Laboratory Ltd. v. Deputy Commissioner of Income-tax [(2004) 266 I.T.R. 521 (SC)], and held as hereunder (page 187):- " ... Section 80 HHC of the Income-tax Act, 1961, provides for deduction of profits from the gross total income. Sub-section (3) is a machinery provision which lays down the manner of circulating the profits which constitute deduction under section 80 HHC(1). Consequently, section 80 HHC(3) aids in the working of the deduction under section 80 HHC(1). Considering the fact that section 80HHC is a section which comes under Chapte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. When it comes to a deduction, section 80AB further provides that for the purpose of deduction under any of the sections in Chapter VI-A, the amount of income of that nature has to be computed in accordance with the provisions of the Act, which means, necessarily for the purpose of deduction, the income of that nature computed for deduction must have a working in accordance with the provisions of this Act. If that be so, income from profits and gains of business must necessarily conform to the provisions in Part D, including set off and carry forward." 6. While holding as above, the Division Bench in the above case held that the unabsorbed depreciation and unabsorbed investment allowance of earlier years should be set off wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exports of self-manufactured goods plus profits of exports of trading goods. The opening words profit derived from such exports together with the word and clearly indicate that the profits have to be calculated by counting both the exports. Deduction can be permitted under section 80HHC(1) only if there is a positive profit in the exports of both self-manufactured goods as well as trading goods. If there is a loss in either of the two, then the loss has to be taken into account for the purposes of computing the profits. On the other hand, the Section 80AB of the Act, which is also in Chapter VI-A, starting with the words where any deduction is required to be made or allowed under any section of this Chapter would include section 80HHC also. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nbsp; 8. To both the above decisions of this Court, viz., Asvini Cold Storage P. Ltd. v. Commissioner of Income-tax [(2007) 290 I.T.R. 183] and T.C.No.62 of 2004 (between Commissioner of Income Tax-III v. M/s. Sharon Vaneers P. Ltd.) [2007] 294 ITR 18, one of us was a party (P.D.DINAKARAN, J.). 9. That apart, the view taken by the Bombay High Court in Commissioner of Income-tax v. Shirke Construction Equipments Ltd. [(2000) 246 I.T.R. 429 (Bom.)], which is relied upon by the assessee in the case of Asvini Cold Storage and in the case of Sharon Vaneers P. Ltd., [(2007) 290 I.T.R. 183], has now been reversed by the Apex Court in the recent decision reported in Commissioner of Income-tax v. Shirke Construction Equipments L ..... X X X X Extracts X X X X X X X X Extracts X X X X
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