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TMI Blog2025 (5) TMI 1599X X X X Extracts X X X X X X X X Extracts X X X X ..... a Grover, Adv. Mr. Nishant Anshul, Adv. Mr. Ajay Vohra, Sr. Adv. Ms. Kavita Jha, Sr. Adv. Mr. Aniket Deepak Agrawal, AOR Mr. Akash Shukla, Adv. For the Respondent : Mr. Bishwajit Bhattacharyya, Sr. Adv. Mr. Sahil Tagotra, AOR Mr. Sujay Jain, Adv. Mr. Kishore Kunal, AOR Ms. Ankita Prakash, Adv. Mr. Anuj Kumar, Adv. Mr. N Venkatraman, A.S.G. Mr. Raj Bahadur Yadav, AOR Mr. Venkatraman Chandrashekhara Bharathi, Adv. Mr. Udai Khanna, Adv. Mr. H R Rao, Adv. Mr. Annirudh Sharma Ii, Adv JUDGMENT ABHAY S. OKA, J. 1. This group of appeals/petitions has been referred to a Bench of three Judges in view of the Order dated 10th December, 2015 in Assistant Commissioner of Income Tax, Bangalore v. Micro Labs Limited (2015) 17 SCC 96 which records difference of opinion between two Hon'ble Judges of this Court. 2. For the sake of convenience, we are referring to facts of the case in Civil Appeal No. 14318 of 2015. We may note here that some of the appeals in the group have been disposed of by the Order dated 01st August, 2024 due to low tax effect. FACTUAL ASPECT 3. We are referring to the facts of the case in Civil Appeal No. 14318 of 2015. Appellant is a company which filed a return decl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal preferred by the appellant against the said Order was dismissed by Commissioner of Income Tax (Appeals). In appeal preferred by the appellant before the ITAT, the appellant was unsuccessful. Thereafter, an appeal was preferred before the Punjab and Haryana High Court which came to be dismissed by the impugned judgment and order. The High Court relied upon its own decision in the case of Friends Casting (P) Ltd. v. Commissioner of Income Tax (2011) 50 DTR Judgments 61. The High Court took the view that Sub-section (9) of Section 80-IA bars claim for deduction under any other provision of Chapter VI-A, if deduction under Section 80-IA has been allowed. In fact, a decision of Bombay High Court in the case of Associated Capsules (P) Ltd. v. Deputy Commissioner of Income Tax and Anr (2011) SCC Online Bombay 27 was also referred. However, the High Court did not agree with the view taken by Bombay High Court. In addition, the High Court relied upon a decision of Delhi High Court in the case of Great Eastern Exports v. Commissioner of Income Tax (2010) SCC OnLine Del 4195. SUBMISSIONS 8. Learned senior counsel appearing for the appellant invited our attention to Chapter VI-A. He poin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the computation of total income under different sources. Chapter V deals with income of other persons which are to be included in the assessee's total income. Chapter VI provides for aggregation of income from different sources or set off or carry forward of loss to the next assessment year. Chapter VI-A specifically deals with deductions to be made in computing the total income. Thus, the gross total income of the assessee is worked out by applying various provisions upto and inclusive of stage of Chapter VI. 13. Chapter VI-A deals with deductions to be made in computing income. Chapter VI-A contains Sections 80-A to 80-U. It has five heads, head 'A' - General, 'B' - Deductions in respect of certain payments, 'C' - Deductions in respect of certain incomes, 'CA' - Deductions in respect of other incomes and 'D' - Other deductions. 14. Section 80 A under the Heading 'A - General' 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 this Chapter VI, the deductions specified in Section 80-C to 80-U. Section 80-AB provides that where any deduction is required to be made or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by such amount which bears to the total profits derived by the assessee from the export of trading goods, the same proportion as the amount of export turnover specified in the said certificate bears to the total export turnover of the assessee in respect of such trading goods. (1-A)* * * (1-B) For the purposes of sub-sections (1) and (1-A), the extent of deduction of the profits shall be an amount equal to- (i) eighty per cent thereof for an assessment year beginning on the 1st day of April, 2001; (ii) seventy per cent thereof for an assessment year beginning on the 1st day of April, 2002; (iii) fifty per cent thereof for an assessment year beginning on the 1st day of April, 2003; (iv) thirty per cent thereof for an assessment year beginning on the 1st day of April, 2004. and no deduction shall be allowed in respect of the assessment year beginning on the 1st day of April, 2005 and any subsequent assessment year. ......................................." Section 80-HHC provides for a deduction in respect of profits retained for export business. The provision is applicable to a company or a person engaged in business of export out of India of any goods or merca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at in no case, the deduction allowed under any other provision of Chapter VI-A under the heading 'C' shall exceed profits and gains of such eligible business of undertakings or enterprises, as the case may be. 20. Therefore, on plain reading of Sub-section (9) of Section 80-IA, if a deduction of profits and gains under Section 80-IA is claimed and allowed, the deduction to the extent of such profits and gains in any other provision under the heading 'C' is not allowed. The deduction to the extent allowed under Section 80-IA cannot be allowed under any other provision under heading 'C'. Therefore, if deduction to the extent of 'X' is claimed and allowed out of gross total income of 'Y' under Section 80-IA and the assessee wants to claim deduction under any other provision under the heading 'C', though he may be entitled to deduction 'Y' under the said provision, he will get deduction under the other provisions to the extent of (Y-X) and in no case total deductions under heading 'C' can exceed the profits and gains of such eligible business of undertaking or enterprise. 21. Sub-section (9) of Section 80-IA, on its plain reading, does not provide that when a deduction is allowed und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting the deduction provided under other provisions under heading C of Chapter VI-A of the Act. In these circumstances, we find it difficult to concur with the views expressed by the Delhi High Court in the case of Great Eastern Exports [2011] 332 ITR 14. For the same reason, we find it difficult to subscribe to the views expressed by the Kerala High Court in the case of Olam Exports [2011] 332 ITR 40. 41. In the result, we hold that section 80-IA(9) does not affect the computability of deduction under various provisions under heading C of Chapter VI-A, but it affects the allowability of deductions computed under various provisions under heading C of Chapter VI-A, so that the aggregate deduction under section 80-IA and other provisions under heading C of Chapter VI-A do not exceed 100 per cent. of the profits of the business of the assessee. Our above view is also supported by the Central Board of Direct Taxes Circular No. 772 dated December 23, 1998 ((1999) 235 TR (St.) 35), wherein it is stated that section 80-IA(9) has been introduced with a view to prevent the taxpayers from claiming repeated deductions in respect of the same amount of eligible income and that too in excess o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e computed would be Rs 700, and not Rs 1000. 48. On the other hand, the case of the assessee is that the gross total income would not undergo a change or reduction for the purpose of Section 80-HHC. The two deductions will be computed separately, without the deduction allowed under Section 80-IA being reduced from the gross total income for computing the deduction under Section 80-HHC. The reason being that sub- section (9) of Section 80-IA does not affect computation of deduction under Section 80- HHC, but postulates that the deduction computed under Section 80-HHC so aggregated with the deduction under Section 80-IA does not exceed the profits of the business." In paragraphs 53 and 54 of the same decision, it is held thus:- "53. The first part of sub-section (9) of Section 80-IA refers to the computation of profits and gains of an undertaking or enterprise allowed under Section 80-IA in any assessment year and the amount so calculated shall not be allowed as a deduction under any other provisions of this Chapter. It is in this context that the Bombay High Court has rightly pointed out that there is a difference between allowing a deduction and computation of deduction. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as on assumed total turnover of Rs 10,000 which includes export turnover of Rs 5000 and the deduction allowable under Section 80-IA was 30% and the deduction allowable under Section 80- HHC was 80% of the eligible profits as computed under Section 80-HHC(3). The stand of the Revenue is that without alteration or modification of the figures of total turnover and the export turnover, the gross total income would undergo a reduction from Rs 1000 to Rs 700 as Rs 300 has been allowed as a deduction under Section 80-IA. This would result in anomaly for the said figure would not be the actual and true figure or the true gross total income or profit earned on the total turnover including export turnover and, therefore, would give a somewhat unusual and unacceptable result. There is no logic or rationale for making the calculation in the said impracticable and unintelligible manner." 24. In view of what we have held above, we find that the interpretation made by the Bombay High Court in the case of Associated Capsules (P) Ltd. v. Deputy Commissioner of Income Tax and Anr4 appears to be logical and correct. 25. We accordingly, answer the reference and direct the Registry to place the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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