ACIT 11(1), MUMBAI V. M/s. ADHIKARI BROTHERS TELEVISION NETWORK LTD., MUMBAI

ITA 6187/MUM/2004

• Counselvise Citation: 618719914 RSA 2004
• Duration Of Justice: 7 year(s) 8 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2012
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 12-04-2012
• Assessment Year: 2001-2002
• Appeal Filed On: 30-08-2004
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RUPINDER BRAR
• Assessee Lawyers: MADHUR AGARWAL
• Keywords: Business income; Depreciation; Question of law
• Section: 10; 80IB; 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D MUMBAI BEFORE SHRI D.K. AGARWAL, JUDICIAL MEMBER AND SHRI RAJENDRA, ACCOUNTANT MEMBER ITA NO. 6187/MUM/2004 ASSESSMENT YEAR 2001-02 THE ASST. COMMISSIONER OF INCOME TAX, 11(1), AYAKAR BHAVAN, ROOM NO. 439, 4 TH FLOOR, M.K. MARG, MUMBAI 400 020 VS. M/S. SRI ADHIKARI BROTHERS TELEVISION NETWORK LTD., ADHIKARI CHAMBERS, OBEROI COMPLEX, NEW LINK ROAD, ANDHERI (W), MUMBAI 400 053 PAN: AAACS 7546Q (APPELLANT) (RESPONDENT) ITA NO. 5867/MUM/2004 ASSESSMENT YEAR 2001-02 M/S. SRI ADHIKARI BROTHERS TELEVISION NETWORK LTD., ADHIKARI CHAMBERS, 6 TH FLOOR, OBEROI COMPLEX, NEW LINK ROAD, ANDHERI (W), MUMBAI 400 053 PAN: AAACS 7546Q VS. THE ASST. COMMISSIONER OF INCOME TAX, 11(1), 4 TH FLOOR, AAYAKAR BHAVAN, M.K. MARG, MUMBAI. (APPELLANT) (RESPONDENT) REVENUE BY : MS. RUPINDER BRAR, DR ASSESSEE BY : SHRI MADHUR AGARWAL DATE OF HEARING : 12-04-2012 DATE OF PRONOUNCEMENT : 16-05-2012 ORDER PER RAJENDRA, A.M. CROSS APPEALS HAVE BEEN FILED BY THE ASSESSEE AND T HE REVENUE FOR THE ASSESSMENT YEAR 2001-02 CHALLENGING THE ORD ER DT. 18-06-2004 OF CIT(A)-XI, MUMBAI. ITA NO. 6187 - 5867MUM/2004 M/S. SRI ADHIKARI BROTHERS, 2 GROUNDS OF APPEAL FILED BY THE REVENUE READ AS UNDE R: 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED THAT CIT (A)-XI, MUMBAI HAS ERRED IN DIRECT ING THE ASSESSING OFFICER TO ALLOW THE ASSESSEES CLAIM FOR EXEMPTION OF INCOME OF ` 4,54,57,270/- U/S. 10B(4) OF THE I.T. ACT, 1961. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED THAT CIT (A)-XI, MUMBAI HAS ERRED IN ALLOWI NG THE ASSESSEES CLAIM FOR DEDUCTION U/S. 80HHF OF ` 3,06,754/- IN ADDITION TO TREATING THE SUM OF ` 4,54,57,270/- AS EXEMPTION U/S. 10B OF THE I.T. AC T BY APPLYING THE PROVISIONS OF SECTION 80 HHC TO THE EX PORT TURNOVER OF ` 21,18,63,506/-.' 2. CLAIM FOR DEDUCTION U/S. 10B (GROUND OF APPEAL N O.1) HAS BEEN DEALT BY THE AO AS UNDER: CLAIM FOR EXEMPTION U/S. 10B ASSESSEE HAS PUT UP A CLAIM FOR EXEMPTION OF INCOME OF 4,60,34, 671/- U/S. 10B OF THE I.T. ACT, 1961 ON THE GROUND THAT THEY HAVE SET UP A NEW UNIT IN MUMBAI OFFICE FOR PRODUCTION OF ME DIA CONTENT SOFTWARE. ASSESSEE HAS ALSO FURNISHED FORM NO. 56G AND A SEPARATE PROFIT & LOSS ACCOUNT IN RESPECT OF E.O.U. DIVISION AT MUMBAI. THE PROFITS OF ` 4,60,34,671/- ARE SAID TO HAVE BEEN EARNED IN RESP ECT OF PRODUCTION AND EXPORT OF MEDIA CONTENT SOFTWARE FRO M THE E.O.U. UNIT. ' IT IS OBSERVED FROM THE DETAILS AND DOCUMENTS SUBM ITTED BY THE ASSESSEE THAT ASSESSEE IS ENGAGED IN THE BUSINESS O F PRODUCTION OF MEDIA CONTENT SOFTWARE AND THIS IS EXPORTED ON BETA -CAM TAPE TO THE FOREIGN PARTIES. SECTION 10B OF THE I.T.ACT,1961 SP EAKS ABOUT MANUFACTURE AND PRODUCTION OF AN ARTICLE OR A THING AND PRODUCTION OF A MEDIA CONTENT PROGRAM ON A BETA-CAM TAPE CANNOT BE EQUATED WITH AN ARTICLE OR A THING AND THEREFORE, ASSESSEE COMPANY DOES NOT SATISFY THE BASIC CONDITION OF MANUFACTURE AND PRODUCTION OF AN ARTICLE OR A THING PRESCRIBED IN SECTION 10B OF THE I.T.ACT, 1961, AND HENCE IT IS NOT ENTITLED FOR EXEMPTION OF INCOME U/S. 10B OF THE I. T.ACT, 1961. 3. ASSESSEE TOOK THE MATTER TO THE CIT(A), WHO AFTE R CONSIDERING SUBMISSION MADE BY THE ASSESSEE DECIDED THE ISSUE I N FAVOUR OF THE ASSESSEE. FOLLOWING ARE HIS OBSERVATIONS IN THIS R EGARD: I HAVE CONSIDERED THE ARGUMENTS OF THE APPELLANT A ND CONTENTIONS OF THE ASSESSING OFFICER. THE FACT THAT THE APPELLANT ESTABLISHED A 100% EXPORT ORIENTED UNIT IS NOT DISPUTED. NECESSARY AP PROVALS AS REQUIRED UNDER THE STATUE HAVE BEEN OBTAINED AND EVIDENCE TO THAT EFFECT HAVE BEEN PRODUCED BEFORE THE A.O. THE A.O. HAS ALSO NO T DISPUTED THE FACT THAT THE APPELLANT HAD PRODUCED AND EXPORTED THE BE TA-CUM TAPES CONTAINING THE T.V SERIALS NOR THE EXPORT OF TELECA ST RIGHTS IS DISPUTED. ITA NO. 6187 - 5867MUM/2004 M/S. SRI ADHIKARI BROTHERS, 3 IT IS CLEAR THAT THE APPELLANT HAS PRODUCED BETA-C AME TAPES WHICH HAVE BEEN HELD TO BE GOODS OR MERCHANDISE BY HONBLE MUMBAI HIGH COURT IN THE CASE OF A.A. NADIADWALA.THE TERM GOODS DEF INITELY ENCOMPASSES THE TERMS ARTICLE OR THINGS. THEREFORE, THE APPELLANT PRODUCING BETA CAME TAPES IS HELD TO BE ENTITLED FOR DEDUCTION U/S. 10 B OF I.T.ACT IN RESP ECT OF THE PROFITS FROM THE EOU. THEREFORE, IN ACCORDANCE WITH SEC. 10B(4) OF I.T.ACT, THE DEDUCTION OF ` 4,54,57,270/- AS WORKED OUT BY THE APPELLANT DESER VES TO BE ALLOWED. THE APPELLANT GETS RELIEF OF ` 4,54,57,270/-. 4. BEFORE US,DR SUBMITTED THAT CONTENTS OF EXPO RTED BETA-CAM TAPE COULD NOT BE TERMED MANUFACTURING,THAT NO NEW THING WAS PRODUCED OR EXPORTED BY THE ASSESSEE THAT THE ASSESSEE WAS N OT ENTITLED FOR DEDUCTION U/S.10B OF THE ACT. AUTHORISED REPRESENTA TIVE (AR) OF THE ASSESSEE SUBMITTED THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF A.A.NADIYADWALA (267ITR488) HAS HELD THAT THE ASSES SEE WAS ENTITLED TO DEDUCTION U/S. 80 HHC IN RESPECT OF EXPORT OF BETA-CAM TAPES OF FILMS TO A SATELLITE TELEVISION CHANNEL UNDER AN AG REEMENT FOR TRANSFER OF TELECASTING RIGHTS, THAT THE BETA-CAM TAPE, WHIC H HAD INCORPOREAL RIGHTS IS GOODS OR MERCHANDISE, THAT THE TRANSACTIO N IN QUESTION INVOLVED EXPORT OF GOODS OUT OF INDIA,THAT THERE WA S SALE INVOLVING CLEARING AT THE CUSTOM STATION. 5. AFTER HEARING BOTH THE PARTIES WE ARE OF TH E OPINION THAT DECISION OF THE CIT(A) SHOULD BE UPHELD.BESIDES THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT, SAME ISSUE WAS ALSO CON SIDERED BY THE HONBLE HIGH COURT OF MADRAS IN THE CASE OF V.C.KUG ANATHAN (293ITR 15).IN BOTH THE CASES, RELIED UPON BY THE AR,ISSUE OF BETA-CAM TAPE/ EXPORT OF MERCHANDISE OR GOODS HAVE BEEN CONCLUSIVE LY DECIDED. RESPECTFULLY FOLLOWING THE ORDER OF THE HONBLE HIG H COURTS,WE DECIDE THE GROUND NO.1 AGAINST THE REVENUE. 6. NEXT GROUND OF APPEAL IS ABOUT ALLOWANCE OF ASSE SSEES CLAIM AMOUNTING TO ` 3.06 LAKHS U/S. 80 HHF OF THE ACT. FROM THE FILE, IT TRANSPIRES THAT THE CIT(A) ON PARA 7 OF THE ORDER C IT(A) HAS WORKED OUT PROFITS OF BUSINESS. AS PER THE CIT(A) PROFITS FOR BUSINESS ELIGIBLE FOR DEDUCTION U/S.80 HHF WAS 1.50 CRORES. AFTER AR RIVING AT THE SAID FIGURE, HE WORKED OUT THE DEDUCTION WITH REFERENCE TO THE SUB-SECTION 3 OF THE SECTION 80 HHF (3).WE FIND THAT IN ASSESSE ES OWN CASE ITAT VIDE ITS ORDER DT. 22-09-2010 (ITA NO.3175/MUM/2004 ,A.Y. 2000-01) HAS DISCUSSED THE METHODOLOGY FOR COMPUTATION OF DE DUCTION U/S. 80 HHF(PARA16-19).WE ARE OF THE OPINION THAT IN THE IN TERESTS OF JUSTICE, MATTER SHOULD BE REMITTED BACK TO THE FILE OF THE A .O FOR COMPUTING THE DEDUCTION AS PER THE SAID DIRECTIONS OF THE TRIBUNA L. ITA NO. 6187 - 5867MUM/2004 M/S. SRI ADHIKARI BROTHERS, 4 7. LAST GROUND OF APPEAL IS ABOUT DEPRECIATION A LLOWED BY THE CIT(A) @ 10% ON OFFICE PREMISES WHICH IS NOT OWNED BY THE ASSESSEE. ON PG. 8 PARA 7,CIT(A) HAS DISCUSSED THE ISSUE AS UNDER:- DURING THE APPELLATE PROCEEDINGS IT WAS POINTED OU T THAT THE A.O. HAS REDUCED THE CLAIM FOR DEPRECIATION WITHOUT ASSIGNIN G ANY REASON AND THE WORKING OF DEPRECIATION ALLOWED BY THE A.O IS N OT FURNISHED. THOUGH THE APPEAL HAD FURNISHED DETAILS OF DEPRECIA TION CLAIMED ALONG WITH THE RETURN OF INCOME. THE A.O. HAS NOT ALLOWED THE DEPRECIATION AS PER TH E WDV OF THE ASSETS RESULTING FROM THE ORDER GIVING EFFECT TO APPELLATE ORDER IN A.Y. 2000-01. I HAVE CONSIDERED THE ARGUMENTS OF THE APPELLANT. THE AO IS DIRECTED TO WORK OUT THE DEPRECIATION ON THE BASIS OF CORRECT W DV. THE APPELLANT MAY MOVE APPROPRIATE PETITION BEFORE THE A.O. 8. AR POINTED OUT THAT THE SAID ISSUE WAS DEC IDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL IN THE APPEAL FILED FOR TH E AY 2000-01(ITA NO.3175/MUM/2004).WE FIND THAT IN PARA 21 -23 OF TH E SAID ORDER OF THE TRIBUNAL, ISSUE HAS BEEN DISCUSSED AT LENGTH AN D BEEN DECIDED IN FAVOUR OF THE ASSESSEE. RESPECTFULLY FOLLOWING THE ORDER OF THE COORDINATING BENCH, WE DISMISS THE GROUND FILED BY THE REVENUE. GROUND NO.3 IS DECIDED AGAINST THE REVENUE. APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED. ITA NO. 5867MUM/2004 9. IN THE APPEAL FILED BY THE ASSESSEE, FOLLOWING ARE THE GROUNDS OF APPEAL: THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) [ CIT (A)] HAS ERRED IN REDUCING PROFIT OF ` 4,54,57,270/- DERIVED BY EXPORT ORIENTED UNIT (EOU) OF THE APPELLANT WHILE COMPUTING PROFI T ELIGIBLE FOR DEDUCTION U/S. 80 HHF OF THE ACT ON THE GROUND THAT THE PROFIT DERIVED BY EOU IS EXEMPT FROM TAX U/S. 10B. THE LEARNED CIT (A HAS ERRED IN CONFIRMING THE ACT ION OF ASSESSING OFFICER OF COMPUTING THE DEDUCTION U/S. 80 HHF OF T HE ACT BY TREATING, MEDIA CONTENT SOFTWARE BUSINESS I.E., SALE OF TELEC ASTING RIGHTS & SPONSORED TELECAST BUSINESS I.E., SALE OF TIME SLOT ON DOORDARSHAN AS COMPOSITE BUSINESS ACTIVITIES & THEREBY INCLUDING T HE TURNOVER OF SPONSORED TELECAST BUSINESS IN TOTAL TURNOVER WHILE COMPUTING THE DEDUCTION U/S. 80 HHF OF THE ACT. 10. GROUNDS NO.1 IS THE RESULT OF THE OBSERVATIONS MADE BY THE CIT(A) IN HIS ORDER AT PG.7, THAT READS AS UNDER: ITA NO. 6187 - 5867MUM/2004 M/S. SRI ADHIKARI BROTHERS, 5 . DEDUCTION U/S. 80 HHF OF I.T. ACT MUST BE ALLO WED IN ACCORDANCE WITH SEC. 80 HHF(3) ON THE ENTIRE PROFITS OF THE BU SINESS AS SECTION 80 HHF DOES NOT EXCLUDE THE PROFITS EXEMPT U/S. 10B OF I.T. ACT, CANNOT BE ACCEPTED. AR SUBMITTED THAT FROM A.Y.2001-02 SEC. 10B WAS A DEDUCTION PROVISION AND NOT AN EXEMPTION PROVISION,THAT THE A SSESSEE WAS ENTITLED TO INCLUDE 10B EXPORT FOR CALCULATING ELIG IBLE DEDUCTION. AR RELIED UPON CASES OF ASSOCIATED CAPSULES P. LTD.,(3 32 ITR 42) AND HINDUSTAN UNILEVER LTD.(325 ITR102).IN SHORT, SUBMI SSION OF THE AR WAS THAT THE APPELLANT WAS ENTITLED TO EXEMPTION U/ S. 10B AS WELL AS 80 HHF WITH REGARD TO EXPORT PROCEEDS RELATED TO SE C. 10B.ON THE OTHER HAND, DR SUBMITTED THAT NO ASSESSEE WAS ENTIT LED FOR DOUBLE DEDUCTIONS AND THAT THE CIT(A) HAD RIGHTLY DISALLOW ED THE CLAIM MADE BY THE ASSESSEE. 11. AFTER HEARING THE RIVAL SUBMISSIONS AND PERUSIN G THE MATERIAL BEFORE US, WE ARE OF THE OPINION THAT FOR BETTER UN DERSTANDING OF THE ISSUE, IT WILL BE USEFUL TO GO THROUGH THE SECTIONS 10 B AND 80 HHF. AMENDED SECTION 10 B AS WELL AS SEC.10A,10AA,10BA W ERE INTRODUCED IN THE ACT WITH A SPECIFIC PURPOSE. ALL THESE SECTI ONS CAN BE CLASSIFIED AS SPECIAL PROVISIONS WITH REGARD TO ALLOWABLE DE DUCTIONS IN CERTAIN AREAS-0A,10AA AND 10B ARE IN RESPECT OF NEWLY ESTAB LISHED UNITS/ UNDERTAKINGS IN FREE TRADE ZONES(FTZ),SPECIAL ECONO MIC ZONES(SEZ), 100% EOUS RESPECTIVELY, WHERE AS SEC.10 BA IS ABOUT MANUFACTURING CERTAIN ARTICLE OR THING. SAID SECTIONS CONTAIN AN IN-BUILT MECHANISM FOR COMPUTING THE PROFITS ARISING OUT OF THE BUSINE SS ACTIVITIES OF THE UNITS/UNDERTAKINGS. 12. IT IS A FACT THAT ABOVE SECTIONS, INCLUDIN G SEC 10 B TALK ABOUT DEDUCTIONS,BUT IT IS ALSO A FACT THAT STILL THEY ARE PART OF CHAPTER III I.E.,THE CHAPTER THAT DEALS WITH INCOME WHICH DO NOT FORM PART OF TOTAL INCOME .ON THE OTHER HAND, SECTION 80 HHF IS PART OF CHAPT ER VI THAT DEALS WITH DEDUCTIONS IN RESPECT OF CERTAIN INCOMES . NO DOUBLE TAXATION AND NO DOUBLE EXEMPTIONS/DEDUCTION/REBATES IS CONSIDERED TO BE ONE OF THE FUNDAMENTAL PRINCIPLES OF TAX- JURISPRUDENCE. SEC.80 HHF ALLOWS DEDUCTION IN RESPECT OF PROFIT AN D GAINS FROM EXPORT OR TRANSFER OF FILM SOFTWARE. EXP LANATION TO THE SECTION DEFINES CERTAIN WORDS THAT HAVE BEEN USED I N THE SECTION LIKE OTHER SUB-SECTION OF 80HH.HERE,WE WOULD LIKE TO DIS CUSS THE OTHER PROVISIONS OF SEC.80 HHF SUB-SEC. 1 AND (1A) DEAL WITH ALLOWABLE DEDUCTION A ND EXTENT OF DEDUCTION. SUB-SEC. 2 IS ABOUT PERIOD AND RECEIPT OF CONSIDERA TION IN CONVERTIBLE FOREIGN EXCHANGE. SUB-SEC. 3 DEFINES PROFITS DERIVED FROM THE BUSINES S. ITA NO. 6187 - 5867MUM/2004 M/S. SRI ADHIKARI BROTHERS, 6 SUB-SEC. 4 STIPULATES CONDITION OF FURNISHING OF A REPORT FOR CLAIMING THE DEDUCTION. SUB-SEC. 5 AND 6 ARE ABOUT CERTAIN RESTRICTIONS IN ALLOWING THE DEDUCTIONS. SUB-SECTION 5 READS AS UNDER: WHERE A DEDUCTION UNDER THIS SECTION IS CLAIMED AND ALLOWED IN RESPECT OF PROFITS OF THE BUSINESS REFERRED TO IN SUB-SECTI ON (1) FOR ANY ASSESSMENT YEAR, NO DEDUCTION SHALL BE ALLOWED IN RELATION TO SUCH PROFITS UNDER ANY OTHER PROVISION OF THIS ACT FOR THE SAME OR ANY OTHER ASSESSMENT YEAR. 12.1 SIMILAR KIND OF PROHIBITION WE FIND IN SUB-SEC TION 6(III) OF SECTION 10B OF THE ACT ALSO. SAID SECTION READS AS UNDER: NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PR OVISION OF THIS ACT, IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE OF TH E PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR IMMEDIATELY SUCCEED ING THE LAST OF THE RELEVANT ASSESSMENT YEARS ENDING BEFORE THE 1ST DAY OF APRIL 2001, OR OF ANY PREVIOUS YEAR, RELEVANT TO ANY SUBSEQUENT AS SESSMENT YEAR, (III)NO DEDUCTION SHALL BE ALLOWED UNDER SECTION 80 HH OR SECTION 80HHA OR SECTION 80-I OR SECTION 80-IA OR SECTION 80-IB I N RELATION TO THE PROFITS AND GAINS OF THE UNDERTAKING 12.2. IT IS NOTEWORTHY THAT SUB-SECTION 6(1), 6(II) AND 6(IV) STIPULATES OTHER PROHIBITIONS COMPUTING DEDUCTION U/S.80 IB.TH ESE SUB-SECTIONS ARE ABOUT DEPRECIATION, INVESTMENT ALLOWANCE, DEVEL OPMENT ALLOWANCE, SCIENTIFIC RESEARCH AND OTHER DEDUCTIONS. 12.3. WE ARE OF THE OPINION THAT AS BOTH THE SECTIO NS PROHIBIT TO ALLOW DEDUCTION OTHER THAN ALLOWABLE UNDER THE RESPECTIVE SECTIONS, SO THE CIT(A) HAD RIGHTLY REJECTED THE CLAIM OF THE ASSESS EE. THE PROHIBITION IN THE SECTION IS TOTAL, IT IS NOT DISCRETIONARY. .NO DEDUCTION SHALL BE ALLOWED. ARE THE WORDS USED IN BOTH THE SECTION. WE DO NOT FEEL THAT AT THIS JUNCTURE, SIGNIFICANCE AND IMPORT ANCE OF WORD SHALL SHOULD BE EMPHASISED BY QUOTING A DOZEN OF CASE LAW S. IT IS SUFFICIENT TO HOLD THAT WORDS USED IN BOTH THE SECTIONS ARE S HALL NOT AND THAT THEY ARE MANDATORY. WE ARE AWARE THAT SUB-SECTION 6 (III) TALKS ABOUT DEDUCTIONS UNDER 80 HH, 80 HHA, 80I, 80 IA AND 80IB ,BUT WHEN WE ANALYSE THE OVER-ALL SCHEME OF THE SECTION, IN OUR OPINION, SECTION 80 HHF GETS COVERED BY THE SAID SUB-SECTION. SEC.80 HH AND HHA ALLOW DEDUCTION IN RESPECT OF PROFITS AND GAINS FROM NEWL Y ESTABLISHED INDUSTRIAL UNDERTAKINGS OR HOTEL-BUSINESS IN BACKWA RD AREAS AND DEDUCTION IN RESPECT OF PROFITS AND GAINS FROM NEWL Y ESTABLISHED SMALL SCALE INDUSTRIAL UNDERTAKINGS IN CERTAIN AREAS RESP ECTIVELY. IF SECTION 80 HH TO 80 HHF ARE ANALYSED IN LOGICAL PERSPECTIVE , THEN IT BECOME CLEAR THAT BLANKET BAN ON DEDUCTION, AS ENVISAGED B Y SEC.80HHF,IS NOT THERE IN OTHER SECTIONS OF 80HH.IF,THE LEGISLAT URE IN ITS WISDOM HAS PROVIDED THAT DEDUCTIONS SHOULD/SHOULD NOT BE ALLOW ED IN PARTICULAR ITA NO. 6187 - 5867MUM/2004 M/S. SRI ADHIKARI BROTHERS, 7 SECTION, THEN TAXATION AUTHORITIES HAVE TO ACT AS P ER THE SCHEME OF THE ACT. IN THESE CIRCUMSTANCES, IN OUR HUMBLE OPINION, FIRS T GROUND OF APPEAL DESERVES TO BE DISMISSED. 12.4. WE WOULD ALSO LIKE TO DISCUSS THE CASES RELIE D UPON BY THE AR. IN THE MATTER OF HINDUSTAN UNILEVER LTD.THE ISSUE B EFORE THE HONBLE BOMBAY HIGH COURT WAS WHETHER LOSS IN ELIGIBLE UNIT COULD BE SET OFF AGAINST PROFITS OR OTHER ELIGIBLE UNITS OR NOT? SE COND ISSUE WAS ABOUT RE-OPENING OF ASSESSMENT. DEALING WITH THE AMENDED PROVISIONS OF SEC.10 B HONBLE HIGH COURT HELD AS UNDER: ..IT IS EVIDENT THAT THE BASIS ON WHICH THE ASSES SMENT HAS SOUGHT TO BE REOPENED IS BELIED BY A PLAIN READING OF THE PRO VISION. THE ASSESSING OFFICER WAS PLAINLY IN ERROR IN PROCEEDING ON THE B ASIS THAT BECAUSE THE INCOME IS EXEMPTED, THE LOSS WAS NOT ALLOWABLE. ALL THE FOUR UNITS OF THE ASSESSEE WERE ELIGIBLE UNDER SECTION 10B. THREE UNI TS HAD RETURNED A PROFIT DURING THE COURSE OF THE ASSESSMENT YEAR, WH ILE THE CRAB STICK UNIT HAD RETURNED A LOSS. THE ASSESSEE WAS ENTITLED TO A DEDUCTION IN RESPECT OF THE PROFITS OF THE THREE ELIGIBLE UNITS WHILE THE LOSS SUSTAINED BY THE FOURTH UNIT COULD BE SET OFF AGAINST THE NOR MAL BUSINESS INCOME. IN THESE CIRCUMSTANCES, THE BASIS ON WHICH THE ASSE SSMENT IS SOUGHT TO BE REOPENED IS CONTRARY TO THE PLAIN LANGUAGE OF SE CTION 10B. CLEARLY, FACTS AND ISSUE DEALT BY THE HONBLE HIGH COURT WERE TOTALLY DIFFERENT FROM THE FACTS AND ISSUES OF THE CASE UND ER CONSIDERATION. WE HAVE CLARIFIED THAT THOUGH THE SEC.10B IS PART O F CHAPTER III,YET IT IS ABOUT DEDUCTIONS AND NOT ABOUT EXEMPTIONS. AFTER PERUSING THE PROVISIONS OF SECTION 10B AND 80 HHF, WE HAVE ARRIV ED AT A CONSCIOUS DECISION THAT DECISION OF THE CIT(A) WAS AS PER LAW . SECONDLY, BEFORE US ISSUE WAS NOT SETTING OFF OF LOSSES OF ELIGIBLE UNITS U/S.10 B. THUS, THE CASE IS DISTINGUISHABLE ON FACTS AND CONCLUSION DRAWN. IN ASSOCIATED CAPSULES P. LTD., (332 ITR 42) HONBL E BOMBAY HIGH COURT HAS DEALT FOLLOWING QUESTION OF LAW: WHETHER THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT SECTION 80-IA(9) OF THE INCOME-TAX ACT, 1961 MANDATES THAT THE AMOUNT O F PROFITS ALLOWED AS DEDUCTION UNDER SECTION 80-IA(1) OF THE ACT HAS TO BE REDUCED FROM THE PROFITS OF THE BUSINESS OF THE UNDERTAKING WHIL E COMPUTING DEDUCTION UNDER ANY OTHER PROVISIONS UNDER HEADING C IN CHAPTER VI-A OF THE INCOME-TAX ACT, 1961 ? AFTER DELIBERATING UPON THE ISSUE, LEGAL PROVISION, THE HONBLE HIGH COURT, FINALLY HELD AS UNDER: 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 COMPU TED 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 ITA NO. 6187 - 5867MUM/2004 M/S. SRI ADHIKARI BROTHERS, 8 CHAPTER VI-A DO NOT EXCEED 100 PER CENT. OF THE PRO FITS OF THE BUSINESS OF THE ASSESSEE. . THE OBJECT OF SECTION 80-IA(9) BEING NOT TO CURTAIL THE DEDUCTIONS COMPUTABLE UNDER VARIOUS PROVISIONS UNDE R HEADING C OF CHAPTER VI-A, IT IS REASONABLE TO HOLD THAT SECTION 80-IA(9) AFFECTS ALLOW- ABILITY OF DEDUCTION AND NOT COMPUTATION OF DEDUCTI ON ACCORDINGLY, THE APPEAL IS ALLOWED BY ANSWERING THE QUESTION RAI SED HEREIN IN THE NEGATIVE, THAT IS, IN FAVOUR OF THE ASSESSEE AND AG AINST THE REVENUE. IN THE ABOVE REFERRED MATTER ISSUE, HONBLE HIGH CO URT HAS EXAMINED THE ALLOWABILITY OF DEDUCTION UNDER HEADING C OF CHAPTER VI A OF THE ACT. SECONDLY, SEC. 80 HHC NOWHERE STIPULATES THAT DEDUCTION WILL NOT BE ALLOWABLE UNDER ANY OTHER SECTION OF THE ACT . WE WOULD LIKE TO REFER TO PG.53 OF THE SAME ORDER RELIED UPON BY THE AR. PARA 35 OF THE ORDER READS AS UNDER: WHEREVER THE LEGISLATURE INTENDED THAT THE DEDUCTI ON ALLOWED UNDER ONE SECTION SHOULD AFFECT THE COMPUTATION OF DEDUCT ION UNDER OTHER PROVISIONS OF THE ACT, THE LEGISLATURE HAS EXPRESSL Y USED WORDS TO THAT EFFECT. IT MAY BE NOTED THAT SECTIONS 80HHD(7) AND 80-IA(9A) (PRESENTLY 80-IA(9)WERE INTRODUCED BY FINANCE (NO. 2) ACT, 199 8, WITH EFFECT FROM APRIL 1,1999.SECTION 80HHD (7) PROVIDES THAT THE DE DUCTION ALLOWED UNDER SECTION 80HHD(1) SHALL NOT QUALIFY TO THAT EX TENT FOR DEDUCTION UNDER ANY OTHER PROVISIONS OF CHAPTER VI-A UNDER TH E HEADING C, WHEREAS, SECTION 80-IA(9A) PROVIDES THAT THE DEDUCT ION ALLOWED UNDER SECTION 80-IA(1) SHALL NOT BE ALLOWED UNDER ANY OTH ER PROVISIONS OF CHAPTER VI-A UNDER HEADING C. SIMILARLY, IN SECTION 80-IC(5), THE WORDS USED ARE THAT NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISION OF THE ACT, IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE, NO DEDUCTION SHALL BE ALLOWED UNDER ANY OTHER SECTION CONTAINED IN CHAPTER VI-A OR SECTION 10A OR SECTION 10B IN RELAT ION TO THE PROFITS AND GAINS OF THE UNDERTAKING. THUS, THE LEGISLATURE HAS USED SPECIFIC WORDS WHENEVER IT INTENDED TO AFFECT THE COMPUTATION OF D EDUCTION. WE ARE OF THE OPINION THAT THE EXPRESS INTENTION OF THE LEGISLATURE WITH REGARD TO SUB-SECTION10B 6(III) AND 80 HHF WAS NOT TO ALLOW DEDUCTION UNDER BOTH THE SECTIONS. IN SHORT, CASES RELIED UPO N BY THE AR ARE OF NO HELP TO RESOLVE THE ISSUE UNDER CONSIDERATION. GROUND NO.1 IS DECIDED AGAINST THE ASSESSEE. 13. NEXT GROUND IS ABOUT TREATING MEDIA CONTENT SOF TWARE BUSINESS AND SALE OF TIME SLOT AS COMPOSITE BUSINESS.AR FAIR LY ADMITTED THAT THE ISSUE WAS DECIDED AGAINST HIM VIDE ITAT ORDER DT. 2 2-09-2010 (130 ITD439-ITA NO.3175/MUM/2004 A.Y. 2000-01).FOLLOWING THE SAID ORDER OF THE TRIBUNAL,WE DECIDE THE ISSUE AGAINST T HE ASSESSEE. GROUND NO.2 IS DECIDED AGAINST THE ASSESSEE. ITA NO. 6187 - 5867MUM/2004 M/S. SRI ADHIKARI BROTHERS, 9 14. GROUND NO.3 CLAIM OR DEPRECIATION ON OFFICE PRE MISES WAS DECIDED IN FAVOUR OF THE ASSESSEE. FOLLOWING THE DE CISION OF THE COORDINATING BENCH, ISSUE IS DECIDED IN FAVOUR OF T HE ASSESSEE. APPEAL FILED BY THE ASSESSEE STANDS PARTLY ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH MAY, 2012. SD/- SD/- (D.K. AGARWAL) (RAJENDRA) JUDICIAL MEMBER AC COUNTANT MEMBER MUMBAI, DATE 16 TH MAY 2012 TNMM COPY TO: 1. APPELLANT 2. RESPONDENT 3. THE CONCERNED CIT (A) 4. THE CONCERNED CIT 5. DR D BENCH, ITAT, MUMBAI 6. GUARD FILE (TRUE COPY) BY ORDER ASST. REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI