The DCIT(OSD), Circle-8, Ahmedabad V. Shree Rama Multi Tech Limited, Ahmedabad

ITA 1346/AHD/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 6150 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2010
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 17-06-2010
• Assessment Year: 2000-2001
• Appeal Filed On: 04-04-2007
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SHELLEY JINDAL
• Assessee Lawyers: S N SOPARKAR
• Section: 80HHC; 80IA; 80HH

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, C-BENCH, AHMEDABAD. BEFORE: SHRI D.T. GARASIA, JUDICIAL MEMBE R, AND SHRI A.N. PAHUJA, ACCOUNTANT MEMBER. ITA NO.1346/AHD/2007 (ASSESSMENT YEAR 2000-2001) DEPUTY COMMISSIONER OF INCOME TAX (OSD) CIRCLE-8, AHMEDABAD. VERSUS SHREE RAMA MULTI-TECH LTD. 603, SHIKHAR BUILDING, NAVRANGPURA, AHMEDABAD. (APPELLANT) (RESPONDENT) PAN: AAABS 0322 F FOR THE APPELLANT: SMT. SHELLEY JINDAL, CIT DR FOR THE RESPONDENT SHRI. S.N. SOPARKAR ORDER PER D T GARASIA (JUDICIAL MEMBER): THE ONLY EFFECTIVE GROUND IN THIS APPEAL IS GROUND NO.1. 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THE DEDUCTION U/S.80HHC AND 80IA SHOULD BE GRANTED INDEPENDENTLY ON THE GROSS TOTAL INCOME. THE ASSESSEE HAS CLAIMED DEDUCTION UNDER SECTION 80 HHC AND 80IA ON THE SAME GROSS TOTAL INCOME WITHOUT REDUCING THE DE DUCTION GRANTED UNDER SECTION 80HHC WHILE CALCULATING THE DEDUCTION UNDER OTHER SECTION. IT IS THE CASE OF ASSESSEE THAT HE HAS FURNISHED ALL THE NECESSARY DOCUMENTS. THE ASSESSING OFFICER HAS GIVEN DEDUCTION UNDER 80H HC AFTER REDUCING THE DEDUCTION UNDER SECTION 80IA. THE ASSESSEE CLA IMED THAT BOTH DEDUCTION ARE INDEPENDENT AND THEREFORE IT MAY BE A LLOWED INDEPENDENTLY. THE LD. COMMISSIONER OF INCOME TAX(APPEALS) HAS ALL OWED THE CLAIM. 2 ITA NO.1346/AHD/2007 (ASSESSMENT YEAR 2000-2001) 2. DURING THE COURSE OF HEARING, LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT ISSUE AND CONTROVERSY IS COVERED AGA INST THE ASSESSEE BY DECISION OF SPECIAL BENCH IN CASE OF 301 ITR 401. THE DEDUCTION TO BE ALLOWED UNDER ANY OTHER PROVIS ION OF CHAPTER VI-A OF THE INCOME-TAX ACT, 1961, WITH THE HEADING 'C', IS TO BE REDUCED BY THE AMOUNT OF DEDUCTION ALLOWED UN DER SECTION 80-IB OR SECTION 80-IA OF THE ACT. ASST. CIT V. ROGINI GARMENTS [2007] 294 ITR (AT) 15 (CHENNAI) [SB] APPROVED. IN THE CASE OF SCM CREATIONS [2008] 304 ITR 319, T HE MADRAS HIGH COURT MERELY FOLLOWED AND APPLIED THE EARLIER DECISIONS AS CONCEDED BY THE PARTIES AND IN ACCORDANCE WITH THE PRAYER MADE BEFORE THE COURT BY THE PARTIES. NO REFERENCE WAS M ADE TO THE STATUTORY PROVISION NOR WAS THE COURT CALLED UPON T O DECIDE ANY ISSUE. THE DEPARTMENT HAD CONCEDED THE ISSUE WITHOU T TAKING INTO ACCOUNT OR WITHOUT BRINGING TO THE NOTICE OF THE CO URT, THE CHANGE MADE IN STATUTORY PROVISIONS OF SUB-SECTION (9) OF SECTION 80-IA OF THE INCOME-TAX ACT, 1961, WITH EFFECT FROM APRIL 1, 1999. THE COURTS HAVING ELABORATELY DISCUSSED THAT UNDER SUB-SECTION (9) OF SECTION 80HH AND OTHER PROVISIONS ONLY PRIORITIE S OF DEDUCTION UNDER DIFFERENT SECTIONS WERE FIXED, IN ORDER TO ME ET THE LACUNA POINTED OUT BY THE HIGH COURTS, THE LEGISLATURE ADD ED SUB-SECTION (9) IN SECTION 80-IA AND SUB-SECTION (13) WITH A SI MILAR EFFECT IN SECTION 80-IB OF THE ACT. TO THE EXTENT OF DEDUCTIO N ALLOWED UNDER SECTION 80-IA OR FOR THAT MATTER IN SECTION 80-IB, DEDUCTION WAS NOT TO BE ALLOWED UNDER ANY OTHER PROVISION OF THE CHAP TER UNDER THE HEADING 'C.-DEDUCTIONS IN RESPECT OF CERTAIN INCOME S'. THE DECISION OF THE MADRAS HIGH COURT IS THEREFORE NOT AN AUTHORITY FOR THE PROPOSITION AS TO HOW THE PROVISIONS OF SECTION 80-IA(9) MADE APPLICABLE WITH EFFECT FROM THE ASSESSMENT YEAR 199 9-2000 ARE TO BE APPLIED. THE EFFECT AND IMPLEMENTATION OF THE AB OVE PROVISION WAS NEITHER RAISED, NOR EXAMINED NOR DECIDED BY THE MADRAS HIGH COURT. THE DECISION OF THE MADRAS HIGH COURT IN THE CASE O F SCM CREATIONS DOES NOT AFFECT THE RATIO OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF ROGINI GARMENTS [2007] 294 ITR (AT) 15 (CHENNAI). 3 ITA NO.1346/AHD/2007 (ASSESSMENT YEAR 2000-2001) THE TWO RESTRICTIONS IN THE STATUTORY PROVISION ARE (A) WHERE AN ASSESSEE IS ALLOWED DEDUCTION UNDER THIS SECTION ( 80-IA OR 80-IB ), DEDUCTION TO THE EXTENT OF SUCH PROFIT AND GAIN SHA LL NOT BE ALLOWED UNDER ANY OTHER PROVISION OF THIS CHAPTER (HEADING 'C.-DEDUCTION IN RESPECT OF CERTAIN INCOMES'), AND (B) DEDUCTION SHALL IN NO CASE EXCEED THE PROFIT AND GAIN OF THE UNDERTAKING OR HO TEL AS THE CASE MAY BE. CBDT CIRCULAR NO. 772 ([1999] 235 ITR (ST.) 35) CLARIFIED AND ONLY DEALT WITH (B) ABOVE AND DID NOT DEEM IT N ECESSARY TO MAKE A REFERENCE TO RESTRICTION (A). IT IS NOT POSS IBLE TO IGNORE THE RESTRICTION AT (A) NOR IS IT POSSIBLE TO ACCEPT THA T IN CIRCULAR NO. 772, THERE IS A SUGGESTION TO IGNORE RESTRICTION (A ). RESTRICTION (A) ABOVE HAS TO BE RESPECTED AND FOLLOWED. ALTHOUGH THE PROVISIONS OF SECTION 80AB PROVIDE THA T DEDUCTION UNDER EACH SECTION OF CHAPTER VI-A IS TO BE COMPUTE D INDEPENDENTLY, NOT ONLY THE TOTAL SCHEME OF THE STA TUTE BUT THE SCHEME OF EVERY SECTION IS TO BE READ AND INTERPRET ED AND EVERY WORD GIVEN PROPER MEANING. IN SEVERAL SECTIONS UNDE R CHAPTER VI- A, IT IS PROVIDED THAT IF DEDUCTION IS ALLOWED UNDE R THAT SECTION, THEN NO DEDUCTION UNDER ANY OTHER SECTION UNDER CHA PTER VI-A WOULD BE ALLOWED. THEREFORE, NO QUESTION OF COMPUTI NG DEDUCTION IN THE ABOVE CIRCUMSTANCES WOULD ARISE AND SECTION 80AB WOULD HAVE NO APPLICATION. THE SECTION PROVIDES NO SOLUTI ON TO THE PROBLEM WHERE DEDUCTION IS TO BE COMPUTED UNDER MOR E THAN ONE SECTION OF CHAPTER VI-A. IT CANNOT FOLLOW THAT OTHE R SECTIONS PROVIDING MODIFICATION OR CHANGE IN THE MANNER OR M ODE OF COMPUTATION ARE TO BE IGNORED. THE FACT THAT SECTIO N 80AB STARTS WITH A NON OBSTANTE CLAUSE DOES NOT MAKE ANY DIFFER ENCE. THE RESTRICTION PLACED ON DOUBLE DEDUCTION OF THE SAME ELIGIBLE PROFIT CANNOT BE READ AS ABSURDITY OR CONFLICT. THE LEGISLATURE ADOPTS DIFFERENT WAYS TO ACHIEVE IT S GOAL AND THERE IS NO JUSTIFICATION FOR INSISTENCE ON IDENTICAL LAN GUAGE. WHAT IS REQUIRED TO BE SEEN IS THE LANGUAGE EMPLOYED, WHICH , IF CLEAR AND UNAMBIGUOUS, IS TO BE GIVEN EFFECT. THE WORDS OF SUB-SECTION (9) OF SECTION 80-IA ARE P LAIN, CLEAR AND UNAMBIGUOUS. ON A PLAIN READING OF THE STATUTORY PR OVISION, THE RESTRICTION IMPOSED BY SUB-SECTION (9) ON ACCOUNT O F SECTION 80-IA IS TO BE READ IN ALL THE PROVISIONS OF CHAPTER VI-A AND IT IS NOT POSSIBLE TO IGNORE THE RESTRICTION THAT PROFIT AND GAINS CLAIMED AND ALLOWED AS EXEMPT UNDER SUB-SECTION (9), (TO THE EX TENT ALLOWED) CANNOT BE ALLOWED UNDER ANY OTHER PROVISION OF CHAP TER 'C'. THIS CONSTRUCTION LEADS TO NO CONTRADICTION OR ABSURDITY AND IS 4 ITA NO.1346/AHD/2007 (ASSESSMENT YEAR 2000-2001) REASONABLE. IT IS THE LEGISLATIVE POLICY NOT TO ALL OW REPEATED DEDUCTION OF THE SAME PROFIT UNDER SECTIONS IN CHAP TER VI-A. THERE IS, THEREFORE, NO CONFLICT OR CONTRADICTION IN GIVI NG EFFECT TO THE LEGISLATIVE MANDATE. DOING OTHERWISE WOULD DO VIOLE NCE TO THE CLEAR LANGUAGE. THE NOTES ON OBJECTS AND ACCOMPANYING REASONS ARE O NLY AN AID TO CONSTRUCTION. SUCH AID TO CONSTRUCTION IS NEEDED WH EN LITERAL READING OF THE PROVISION LEADS TO AMBIGUOUS RESULTS OR ABSURDITY. WHERE THE LANGUAGE IS CLEAR AND THERE IS NO AMBIGUI TY OR ABSURDITY, NOTES ON CLAUSES NEED NOT BE REFERRED TO . THE RESTRICTIONS CONTAINED IN SECTION 80-IA OR 80-I B NOT TO ALLOW REPEATED DEDUCTIONS ARE APPLICABLE TO THE SAME PROF IT. THIS IS MORE THAN CLEAR FROM USE OF WORDS 'SUCH PROFIT' IN SECTI ON 80-IA / 80-IB . IN OTHER WORDS, THERE HAS TO BE IDENTITY OF PROFI TS ON WHICH DEDUCTION UNDER MORE THAN ONE PROVISION UNDER CHAPT ER VI-A IS CLAIMED BY THE ASSESSEE. THE PROVISIONS ARE APPLICA BLE WHERE ON THE PROFIT OF THE UNDERTAKING OR ENTERPRISE, DEDUCT ION IS CLAIMED UNDER SECTION 80-IA OR 80-IB AND THEN ON THE SAME P ROFIT OF THE UNDERTAKING, DEDUCTION UNDER OTHER PROVISIONS LIKE 80HHC IS CLAIMED. IN SUCH CASES, THE RESTRICTIONS CONTAINED IN THE ABOVE PROVISIONS WOULD APPLY. IF THE PROFITS ARE DERIVED FROM A SEPARATE UNDERTAKING, THE RESTRICTION CONTAINED IN THE ABOVE PROVISION WOULD NOT BE APPLICABLE. 3. RESPECTFULLY FOLLOWING THE SAME, WE ALLOW THE DE PARTMENTS APPEAL. THIS ORDER IS PRONOUNCED IN OPEN COURT ON DATED 17 TH JUNE, 2010. SD/- SD/- (A.N. PAHUJA) (D.T. GARASIA) ACCOUNTANT MEMBER JUDICIAL MEM BER AHMEDABAD; DATED: 17/06/2010 ANKIT* COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 5 ITA NO.1346/AHD/2007 (ASSESSMENT YEAR 2000-2001) 3. THE CIT(A) CONCERNED 4. THE CIT, 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, ASSTT. REGISTRAR/ DEPUTY REGISTRAR ITAT, AHMEDABAD BENCHES, AHMEDABAD.