M/s. Microlabs Limited, Bangalore V. DCIT, Bangalore

ITA 1253/BANG/2008

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 2062 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2009
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 14-12-2009
• Assessment Year: 2002-2003
• Appeal Filed On: 08-10-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: JACINTA ZIMIK VASHAI
• Assessee Lawyers: MURALIDHAR
• Keywords: Business income
• Section: 143(3); 80HHC; 80IB; 80HH; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI GEORGE GEORGE K., JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO.1253/BANG/2008 ASSESSMENT YEAR : 2001-02 M/S. MICROLABS LIMITED, NO.3, QUEENS ROAD, BANGALORE 560 001. : APPELLANT VS. THE DEPUTY COMMISSIONER OF INCOME-TAX, L.T.U., BANGALORE. : RESPONDENT APPELLANT BY : SHRI MURALIDHAR RESPONDENT BY : SMT. JACINTA ZIMIK VASHAI O R D E R PER GEORGE GEORGE K., JUDICIAL MEMBER THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER OF THE CIT(APPEALS)-II, BANGALORE DATED 21.7.2008 FOR THE ASSESSMENT YEAR 2002- 03. 2. THE SOLITARY ISSUE RAISED IN THIS APPEAL IS THAT THE LD. CIT(APPEALS) ERRED IN CONFIRMING THE DECISION OF THE ASSESSING O FFICER IN RESTRICTING THE CLAIM U/S. 80HHC BY REDUCING DEDUCTION ALLOWED U/S. 80IB(13). 3. THE BRIEF FACTS OF THE CASE ARE THE ASSESSEE IS A COMPANY ENGAGED IN THE MANUFACTURE OF PHARMACEUTICAL PRODUCTS. FOR THE CONCERNED ITA NO.1235/B/08 PAGE 2 OF 5 ASSESSMENT YEAR, IT FILED RETURN OF INCOME ON 31.10 .02, DECLARING TOTAL INCOME OF RS.31,35,032. ASSESSMENT U/S. 143(3) R.W. S. 147 WAS COMPLETED ON 22.3.06 DETERMINING THE TOTAL INCOME AT RS.67,16 ,949. IN THE ASSESSMENT COMPLETED ON 22.3.06 THE AO NOTED THAT T HE ASSESSEE HAD CLAIMED DEDUCTION U/S. 80HHC IN ADDITION TO THE DED UCTION U/S. 80IB OF THE ACT. THE CLAIM FOR DEDUCTION U/S. 80HHC WAS MADE A T RS.47,13,371 AND DEDUCTION U/S. 80IB WAS MADE AT RS.2,26,04,698 WITH REFERENCE TO ASSESSEES UNIT AT PONDICHERRY. THE AO OBSERVED TH AT BY VIRTUE OF SECTION 80IA(9), DEDUCTION ALLOWABLE UNDER ANY PROVISION OF CHAPTER VIA SHOULD FIRST BE REDUCED FROM THE BUSINESS INCOME OF AN ASS ESSEE AND THEREAFTER ELIGIBLE DEDUCTION U/S. 80HHC SHOULD BE ALLOWED. T HEREFORE HE FIRST DEDUCTED THE CLAIM U/S. 80IB FROM THE BUSINESS INCO ME AND THEREAFTER COMPUTED DEDUCTION ALLOWABLE U/S. 80HHC FROM THE BA LANCE INCOME. IN DOING SO, THE AO RESTRICTED THE DEDUCTION U/S. 80HH C TO RS.11,31,454 AS AGAINST THE CLAIM OF THE ASSESSEE AT RS.47,13,371. 4. THE ASSESSEE APPEALED BEFORE THE CIT(APPEALS) CO NTENDING THAT DEDUCTIONS CLAIMED U/.S 80HHC AND 80IB(13) ARE IN R ESPECT OF DIFFERENT UNDERTAKINGS OF THE ASSESSEE AND THE CLAIM U/.S 80H HC CANNOT BE RESTRICTED BY FIRST ALLOWING DEDUCTION U/.S 80IB(13 ). IT WAS SUBMITTED THAT THE DEDUCTION U/S. 80HHC WAS IN RESPECT OF ITS BANG ALORE UNIT WHEREAS DEDUCTION U/S. 80IB(13) WAS IN RESPECT OF ITS PONDI CHERRY UNIT. THE CIT(APPEALS) DISMISSED THE APPEAL OF THE ASSESSEE B Y FOLLOWING THE RATIO OF DECISION IN THE CASE OF ACIT V. ROGINI GARMENTS (2007) 294 ITR (AT) 15 (CHN) (SB) . THE ASSESSEE BEING AGGRIEVED IS IN APPEAL BEFOR E THE TRIBUNAL. ITA NO.1235/B/08 PAGE 3 OF 5 5. AT THE OUTSET THE LD. DR SUBMITTED THE ISSUE IN QUESTION IS COVERED BY THE DECISION BY THE TRIBUNAL IN ASSESSEES OWN C ASE FOR A.Y. 2001-02 IN ITA NO.704/B/08 DATED 30.10.09. A COPY OF THE ORDE R OF THE TRIBUNAL WAS PLACED ON RECORD. THE LD. AR REITERATED THE SUBMIS SIONS MADE BEFORE THE CIT(APPEALS). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THE TRIBUNAL VIDE ORDER DATED 30.1 0.09 (SUPRA) ON IDENTICAL FACTS IN ASSESSEES OWN CASE DECIDED THE ISSUE AGAI NST THE ASSESSEE BY HOLDING AS UNDER: 6.3.1. TURNING TO THE CLAIM OF THE ASSESSEE TH AT THE DEDUCTION U/S 80HHC OF THE ACT WAS TO BE GRANTED ON THE ELIGIBLE BUSINESS PROFITS AND NOT ON THE ELIGIBLE BUSINESS PROFITS LESS DEDUC TION U/S 80-IB OF THE ACT, THE LEGAL PRECEDENTS ON THIS POINT ARE CLA RIFIED BY THE HONBLE I.T.A.T. (CHENNAI SPECIAL BENCH), IN THE CA SE OF ACIT V. ROGINI GARMENTS REPORTED IN 294 ITR (A.T) 15, WHEREIN IT WAS OBSERVED THUS IN VIEW OF THE SPECIFIC RESTRICTION PROVIDED UNDER SECTION 80- IA(9), THE DEFINITION OF BUSINESS PROFIT AS CONTAIN ED IN CLAUSE (BAA) OF THE EXPLANATION BELOW SECTION 80HHC(4C) HA S TO BE CONSTRUED IN THE LIGHT OF THE RESTRICTIONS. CIRCULAR NO.772, DATED DECEMBER 23, 1998 [SEE (1999 ) 235 ITR (ST.)35] NOWHERE SUGGESTS THAT MORE THAN 100 PR CEN T DEDUCTION ON THE SAME PROFIT CAN BE GRANTED TO THE ASSESSEE U NDER VARIOUS SECTIONS ENUMERATED IN CHAPTER VI-A. SECTION 80HHC IS PART OF CHAPTER VI-A. THE DEDUCTION CANNOT BE ALLOWED IGNO RING THE RESTRICTIVE CLAUSE CONTAINED IN SECTION 80-IA(9). THE RESTRICTIVE CLAUSE IN SECTION 80-IA MAKES IT ABUNDANTLY CLEAR T HAT WHEREVER DEDUCTION UNDER ANY OTHER SECTION OF CHAPTER VI-A(C ) IS CLAIMED, THE COMPUTATION WILL BE SUBJECT TO THE RES TRICTIONS LAID DOWN IN SECTION 80-IA(9). THERE IS ABSOLUTELY NO A MBIGUITY ON THIS ASPECT. RELIEF UNDER SECTION 80-IA SHOULD BE DEDUCTED FROM THE PROFITS AND GAINS OF THE BUSINESS BEFORE COMPUT ING RELIEF UNDER SECTION 80HHC OF THE ACT. THEREFORE, THE RELIEF UNDER SECTION 80-IA SHOULD BE DEDUCTED FROM PROFITS AND GAINS OF BUSINESS BEFORE COMPUTING RELIEF UNDER SECTION 80HHC. ITA NO.1235/B/08 PAGE 4 OF 5 6.3.2. YET AN ANOTHER FINDING, THE HONBLE I.T.A.T . DELHI SPECIAL BENCH IN THE CASE OF ACIT V. HINDUSTAN MINT AND AGRO PRODUCTS P.LTD REPORTED IN (2009) 315 ITR (AT) 401 (DELHI) [SB] HAD OBSERVED THAT, THE DEDUCTION TO BE ALLOWED UNDER ANY OTHER PROVISION OF CHAPTER VI-A OF THE INCOME-TAX ACT, 19 61, WITH THE HEADING C IS TO BE REDUCED BY THE AMOUNT OF DEDUC TION ALLOWED UNDER SECTION 80-IB OR SECTION 80-IA OF THE ACT. 6.3.3. IN THE LIGHT OF THE FINDINGS OF THE HONBLE TRIBUNALS REFERRED SUPRA, WE ARE OF THE CONSIDERED OPINION TH AT THE CASE LAWS ON WHICH THE LD. A.R PLACED RELIANCE ARE OF NO HELP TO THE ASSESSEE. 6.3.4. IN VIEW OF THE FOREGOING FACTS AN D CIRCUMSTANCES OF THE ISSUE, WE ARE OF THE UNANIMOUS VIEW THAT THE AO WAS JUSTIFIED ON THIS COUNT . IT IS ORDERED ACCORDINGLY. 7. THE FACTS BEING IDENTICAL FOR THE A.Y. 2001-02 A ND FOR THE YEAR UNDER CONSIDERATION, WE ARE INCLINED TO FOLLOW THE DECISI ON OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE CITED SUPRA. THEREFORE, WE HOLD THAT THE ORDER OF THE CIT(APPEALS) IS CORRECT AND IN ACCORDANCE WITH LAW AND DOES NOT CALL FOR ANY INTERFERENCE ON THIS COUNT. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS 18 TH DAY OF DECEMBER, 2009. SD/- SD/- ( A. MOHAN ALANKAMONY ) (GEORGE GEORGE K . ) ACCOUNTANT MEMBER JUDICIAL MEMB ER BANGALORE, DATED, THE 18 TH DECEMBER, 2009. DS/- ITA NO.1235/B/08 PAGE 5 OF 5 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE (1+1) BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.