Deputy Commissioner of Income-tax, V. Chicago Pneumtic India Ltd., Pune

ITA 895/PUN/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2861 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 8 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 1995-1996
• Appeal Filed On: 02-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIDYA SAGAR R PATIL
• Assessee Lawyers: R MURALIDHAR
• Section: 143(3); 80HHC; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA , AM . / ITA NO. 894 /PN/201 4 / ASSESSMENT YEAR : 1989 - 1990 THE DY. COMMISSIONER OF INCOME TAX, SPECIAL RANGE 45, BOMBAY . / APPELLANT VS. CONSOLIDATED PNEUMATIC INDIA LTD., (NOW KNOWN AS ATLAS COPCO (INDIA) LTD., MUMBAI - PUNE ROAD, DAPODI, PUNE 411012 . / RESPONDENT PAN: AAACA4074D . / ITA NO. 89 5 /PN/201 4 / ASSESSMENT YEAR : 19 95 - 96 THE ADDL . COMMISSIONER OF INCOME TAX, SPECIAL RANGE 22 , MUMBAI . / APPELLANT VS. C HICAGO PNEUMATIC INDIA LTD., (NOW MERGED WITH ATLAS COPCO (INDIA) LTD., MUMBAI - PUNE ROAD, DAPODI, PUNE 411012 . / RESPONDENT PAN: AAACA4074D 2 ITA NO S . 894, 895 & 1043 /PN/20 1 4 ATLAS COPCO (INDIA) LTD . / ITA NO. 1043 /PN/201 4 / ASSESSMENT YEAR : 19 97 - 199 8 THE JT . COMMISSIONER OF INCOME TAX, SPECIAL RANGE 22 , MUMBAI . / APPELLANT VS. CHICAGO PNEUMATIC INDIA LTD., (NOW MERGED WITH ATLAS COPCO (INDIA) LTD., MUMBAI - PUNE ROAD, DAPODI, PUNE 411012 . / RESPONDENT PAN: AAAC C5667L / APPELLANT BY : S HRI VIDYASAGAR R. PATIL, JCIT / RESPONDENT BY : SHRI R. MURALIDHAR / DATE OF HEARING : 1 2 . 0 1 .201 6 / DATE OF PRONOUNCEMENT: 20 . 0 1 .201 6 DATE OF HEARING : 1 2 . 0 1 .201 6 DATE OF PRONOUNCEMENT: 20 . 0 1 .201 6 / ORDER PER SUSHMA CHOWLA, JM : OUT OF THIS BUNCH OF THREE APPEALS , TWO APPEALS FILED BY THE REVENUE ARE AGAINST CONSOLIDATED ORDER OF CIT(A) - I , NASHIK , DATED 25 . 0 2 .20 14 RELATING TO ASSESSMENT YEARS 1989 - 90 & 1995 - 96 AGAINST RESPECTIVE ORDER S PASSED UNDER SECTION 143(3) AND 143(3) R.W.S. 250 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) . THE REVENUE IS ALSO IN APPEAL AGAINST THE ORDER OF CIT(A) - I, NASHIK , DATED 03 .03.2005 , RELATING TO ASSESSMENT YEAR 1997 - 98 AGAINST ORDER PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 3 ITA NO S . 894, 895 & 1043 /PN/20 1 4 ATLAS COPCO (INDIA) LTD 2. THIS BUNCH OF THREE APPEALS RELATING TO THE SAME ASSESSEE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 3. THE REVENUE IS AGGRIEVED AGAINST THE CONSOLIDATED ORDER OF CIT(A) RELATING TO ASSESSMENT YEAR 1989 - 90 AND 1995 - 96 IN DELETING THE DISALLOWANCE MADE ON ACCOUNT OF THIRD PARTY COMMISSION PAID BY THE ASSESSEE, IN TURN RELYING ON THE DECISION OF TRIBUNAL IN ASSESSEES OWN CASE. THE GRIEVANCE OF THE REVENUE WAS THAT THERE WAS NO JUSTIFICATION IN THE ORDER OF CIT(A) IN ALLOWING THE THIRD PARTY COMMISSION PAID TO VARIOUS BUSINESS AGENTS IN RESPECT OF ORDER S OBTAINED FROM GOVERNMENT AGENCIES AMOUN TING TO RS.23,44,400/ - , WHICH IN TURN, WAS INCLUDED IN THE TOTAL PAYMENT OF RS. 35,26,887/ - . THE REVENUE IN ITA NO.894/PN/2014 HAS RAISED THE SAID ISSUE BY WAY OF GROUNDS OF APPEAL NO.1 AND 2. SIMILARLY, IN ITA NO.895/PN/2014 , THE REVENUE HAS ALSO AGGRIEVED BY THE ORDER OF CIT(A) IN DELETING THE DISALLOWANCE OF RS.32,79,650/ - BEING THIRD PARTY COMMISSION PAID BY DELETING THE DISALLOWANCE OF RS.32,79,650/ - BEING THIRD PARTY COMMISSION PAID BY THE ASSESSEE, IN TURN, RELYING ON THE ORDER OF TRIBUNAL IN ASSESSEES OWN CASE. FURTHER, THE APPEAL HAS BEEN FILED BY THE REVENUE AGAINST SEPARATE ORDER OF CIT(A) RELATING TO ASSESSMENT YEAR 1997 - 98 ON IDENTICAL ISSUE OF ALLOWANCE OF THIRD PARTY COMMISSION PAID BY THE ASSESSEE AMOUNTING TO RS. 39,34,928/ - . AN ADDITIONAL GROUND OF APPEAL BY WAY OF GROUND OF APPEAL NO.3 HAS BEEN RAISED BY THE REVENUE AGAINST THE ORDER OF CIT(A) IN ALLOWING THE DEDUCTION UNDER SECTION 80IA OF THE ACT WITHOUT REDUCING DEDUCTION UNDER SECTION 80HHC OF THE ACT, SUBJECT TO THE CONDITION THAT THE DEDUCTION UNDER CHAPTER VIA DOES NOT EXCEED 100% OF THE ELIGIBLE PROFIT S. 4. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE AFTER TAKING US THROUGH THE FACTS OF THE CASE, POINTED OUT THAT THE ISSUE RAISED IN THE PRESENT BUNCH OF APPEALS IS IDENTICAL TO THE ISSUE DECIDED BY THE TRIBUNAL IN ASSESSEES OWN CASE 4 ITA NO S . 894, 895 & 1043 /PN/20 1 4 ATLAS COPCO (INDIA) LTD IN THE E ARLIER YEARS VIDE SEPARATE ORDERS. IT WAS FURTHER POINTED OUT BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT THE HONBLE BOMBAY HIGH COURT IN ASSESSEES OWN CASE HAS DISMISSED THE APPEALS FILED BY THE REVENUE I N RESPECT OF SECOND ISSUE RAISED IN ITA NO.1043/PN/2014 . T HE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE SAID ISSUE IN GROUND OF APPEAL NO.3 IN ASSESSMENT YEAR 2007 - 08 IS DECIDED BY THE HONBLE BOMBAY HIGH COURT IN ASSOCIATED C APSULES (P.) LTD. VS. DCIT (2011) 197 TAXMAN 84 (BOM) . 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE POINTED OUT THAT THE SLP WAS PENDING AGAINST THE ORDER OF HONBLE HIGH COURT AND CONSEQUENTLY, THERE WAS NO MERIT IN THE ORDER OF CIT(A) IN T HIS REGARD. FURTHER, HE STRESSED THAT IN RESPECT OF THE ALLOWANCE OF DEDUCTION UNDER SECTION 80IA AND 80HHC OF THE ACT, THE DEDUCTION SHOULD BE RE - COMPUTED . 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING IN THE PRESEN T APPEAL S IS SQUARELY COVERED BY THE ORDERS OF THE TRIBUNAL IN ASSESSEES OWN CASE RELATING TO ASSESSMENT YEARS 1986 - 87, 1988 - 89, 1991 - 92, 1992 - 93, 1993 - 94 AND 1995 - 96 IN ITA NOS.5141, 5142/MUM/1994 , ITA NOS.7280 TO 7282/MUM/1995, 1978/MUM/1997, 3315/MUM/1999 & 152/MUM/2003 AND ITA NO.4335/MUM/2004 RELATING TO ASSESSMENT YEAR 2000 - 01. FURTHER, PUNE BENCH OF TRIBUNAL IN ITA NO.409/PN/2010 IN CROSS APPEALS WITH LEAD ORDER IN ITA NO.448/PN/2010 I.E. APPEAL FILED BY THE ASSESSEE VIDE ORDER DATED 30.0 1.2012 CONSIDERED THE FACTUAL ASPECTS AND HELD AS UNDER: - 23. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. WE HAVE ALSO PERUSED THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE ASSESSEES WRITTEN SUBMISSIONS AND OTHER MATERIAL PLACED ON RECORD, WHICH HAS BEEN REFERRED TO IN THE COURSE OF THE HEARING BEFORE US. BRIEFLY PUT, AS PER THE MATERIAL ON RECORD, IT EMERGES THAT THE ASSESSEE COMPANY HAS CUSTOMERS SPREAD ALL OVER INDIA AND IN ORDER TO SERVE SUCH CUSTOMERS AT VARIOUS LOCATIONS, ASSESSEE APPO INTS DEALERS FOR ITS VARIOUS PRODUCTS, NAMELY, COMPRESSORS, CONSTRUCTION AND MINING EQUIPMENT, SPARES AND ACCESSORIES. 5 ITA NO S . 894, 895 & 1043 /PN/20 1 4 ATLAS COPCO (INDIA) LTD IT HAS BEEN EXPLAINED THAT THE DEALERS ALSO UNDERTAKE DIRECT SALES AND ORDERS ARE ALSO BOOKED BY THE DEALERS 12 AND PRODUCTS ARE INVOICED /SUPPLIED TO THE CUSTOMERS. ON THE LATTER ACTIVITIES OF THE DEALER, ASSESSEE PAYS COMMISSION. IT HAS ALSO BEEN EXPLAINED THAT THE DEALERS ARE MAINLY RESPONSIBLE FOR FOLLOW UP FOR THE QUOTATIONS AND TO HELP THE COMPANY IN PROCURING THE ORDERS AND ALSO FOR E FFECTING RECOVERIES AND COLLECTION OF C FORM ETC. EVEN WITH REGARD TO THE GOVERNMENT CUSTOMERS, ASSESSEES PERSONNEL AT THE REGIONAL OFFICES ARE SUPPORTED BY THE NETWORK OF DEALERS WHO ARE BASED AT A CLOSER LOCATION TO THE CUSTOMERS SITE. IN SUCH CASES, THE RESPONSIBILITY OF THE DEALER IS TO PROVIDE NECESSARY LOGISTIC AND COMMUNICATION SUPPORT TO THE ASSESSEES STAFF. THE WARRANTY SERVICES OF THE PRODUCT, WHICH INCLUDE REGULAR SERVICE VISITS TO ENSURE SMOOTH OPERATION OF THE EQUIPMENT AT THE CUSTOMERS S ITE IS ALSO ARRANGED THROUGH THE DEALER - ENGINEER AND AS A PART OF THE APPOINTMENT TERMS OF THE DEALERS, THEY ARE REQUIRED TO STOCK SUFFICIENT PARTS AT THEIR END, SO THAT TIMELY DELIVERY OF PARTS AND SERVICES IS OFFERED. IN ORDER TO COMPENSATE THE DEALER FO R THE ABOVE SERVICES, THE ASSESSEE GIVES SERVICE COMMISSION TO COVER ALL THE COSTS THAT THE DEALER INCURS TOWARDS TRAVELLING, BOARDING AND LODGING, STOCKING OF PARTS AS WELL AS TRAINING OF THE PERSONNEL. 24. ALL THE AFORESAID FACTUAL ASPECTS OF THE MATTE R HAVE NOT BEEN FOUND TO BE NON - EXISTENT BY THE EITHER OF THE AUTHORITIES BELOW DURING THE YEAR UNDER CONSIDERATION. IT IS ALSO NOT THE CASE OF THE REVENUE THAT THE COMMISSION EXPENSES HAVE NOT BEEN REGULARLY INCURRED BY THE ASSESSEE AS IN THE PAST YEARS. IN FACT, ONE OF THE POINTS RAISED BY THE ASSESSING OFFICER IS WITH REGARD TO THE COMMISSION PAID TO DEALERS WHERE THE CUSTOMERS INCLUDE GOVERNMENT AGENCIES. IN THIS REGARD, WE FIND THAT THE ASSESSEE SPECIFICALLY EXPLAINED IN ITS WRITTEN SUBMISSIONS, COPY OF WHICH HAS BEEN PLACED 182 - 183 OF THE PAPER BOOK, THAT GENERALLY THE ORDERS RECEIVED FROM THE GOVERNMENT AGENCIES ARE FROM THE REMOTE LOCATIONS, VIZ . BORDER ROADS ORGANIZATION OR MINING CUSTOMERS FROM REMOTE LOCATIONS. THE COMPANY HAS ITS REGIONAL OFFICE S WITH ITS TEAM OF 13 SALES AND SERVICE PERSONNEL WHO LOOK AFTER A LARGE AREA COVERING 4 TO 5 STATES AND THIS TEAM IS SUPPORTED BY THE NETWORK OF DEALERS WHO ARE LOCATED CLOSE TO THE REMOTE SITES OF THE CUSTOMERS. IN THIS SITUATION, THE DEALER RESPONSIBILI TY CLOSE TO THE REMOTE SITES OF THE CUSTOMERS. IN THIS SITUATION, THE DEALER RESPONSIBILI TY FOR SUCH GOVERNMENT CUSTOMER IS TO PROVIDE LOGISTICS AND COMMUNICATION SUPPORT FOR FOLLOW UP AND SECURING THE ORDERS FROM THE VARIOUS DEPARTMENTS, ETC. WE DO NOT FIND ANY MATERIAL ADVERSE TO THE AFORESAID EXPLANATION OF THE ASSESSEE. EVEN OTHERWISE, IT HAS BEEN POINTED OUT THAT COMMISSION PAYMENT TO DEALERS WITH RESPECT TO THE ORDERS FROM A GOVERNMENT AGENCY WAS A SUBJECT MATTER OF CONSIDERATION BY THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 1985 - 86 VIDE ITA NO 114/M/03 DATED 25.7.2007. I N THIS PRECEDENT, THE TRIBUNAL HAS ALLOWED THE DEDUCTION AFTER BEING SATISFIED OF THE PRACTICE OF COMMISSION PAYMENT. IN THIS BACKGROUND OF THE MATTER, AND WITH NO ADVERSE MATERIAL ON RECORD, WE DO NOT FIND ANY MERIT IN THE OBJECTIONS RAISED BY THE ASSESSI NG OFFICER WITH REGARD TO COMMISSION PAYMENT TO DEALERS RELATING TO THE ORDERS FROM THE GOVERNMENT AGENCIES. AT THIS POINT, WE MAY ALSO OBSERVE THAT EVEN WITH REGARD TO THE VERIFICATION EXERCISE CARRIED OUT BY THE ASSESSING OFFICER, WE FIND NOTHING ADVERSE SO AS TO INFER THAT THE IMPUGNED COMMISSION PAYMENTS WERE INGENUINE. THE ASSESSING OFFICER ISSUED SUMMONS TO 17 RANDOMLY SELECTED PARTIES, OUT OF WHICH 12 REPLIES WERE RECEIVED AND 4 SUMMONS CAME BACK UNSERVED. IN RELATION TO ONE PARTY, NO RESPONSE WAS RE CEIVED IN - SPITE OF SERVICE OF SUMMONS. WITH REGARD TO SUCH SOLITARY PARTY, LEARNED COUNSEL FOR THE ASSESSEE REFERRED TO PAGE 215 OF THE PAPER BOOK WHEREIN NECESSARY CONFIRMATION HAS BEEN PLACED, THOUGH THE PARTY HAD NOT RESPONDED TO THE SUMMONS ISSUED BY T HE ASSESSING OFFICER. IN FACT THE FACTUAL SCENARIO OF THE VERIFICATION EXERCISE WOULD REVEAL THAT OVERWHELMING NUMBER OF PARTIES RANDOMLY CHOSEN BY THE ASSESSING OFFICER HAS ACKNOWLEDGED THE COMMISSION PAYMENTS AND IN ANY CASE, THERE IS NO DENIAL OF THE PA YMENT IN ANY OF THE CASE. CONSIDERING THE ENTIRETY OF THE FACTS AND CIRCUMSTANCES OF THE 14 INSTANT YEAR AS ALSO THE PRECEDENT IN THE ASSESSEES OWN CASE WHEREIN THE PRACTICE OF PAYING COMMISSION TO DEALERS/AGENTS, STAND ESTABLISHED, WE FIND NO REASONS TO 6 ITA NO S . 894, 895 & 1043 /PN/20 1 4 ATLAS COPCO (INDIA) LTD INTERFERE WITH THE ULTIMATE CONCLUSION OF THE COMMISSIONER OF INCOME - TAX (APPEALS) OF HAVING DELETED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. RESULTANTLY, GROUND NOS. 1 & 2 ARE DISMISSED. 7. THE ISSUE IN THE PRESENT SET OF APPEALS BEFORE US IS IDENTICAL TO THE ISSUE BEFORE THE TRIBUNAL IN EARLIER YEARS AND FOLLOWING THE SAME PARITY OF REASONING AND APPLYING THE RATIO LAID DOWN BY THE TRIBUNAL IN ITA NO.409/PN/2010, VIDE ORDER DATED 30.01.2012 , WE UPHOLD THE ORDER OF CIT(A). FURTHER, THE HON BLE BOMBAY HIGH COURT HAS UPHELD THE ORDER OF TRIBUNAL RELATING TO ASSESSMENT YEAR S 2000 - 01 AND 2001 - 02 VIDE SEPARATE ORDERS BOTH DATED 01.02.2013 . FOLLOWING THE ORDERS OF JURISDICTIONAL HIGH COURT AND THE SAME PARITY OF REASONING LAID DOWN B Y THE TRIBUN AL, WE DISMISS THE GROUNDS OF APPEAL NO.1 AND 2 RAISED BY THE REVENUE IN RELAT ION TO THIRD PARTY COMMISSION IN ALL THE APPEALS . 8. NOW, COMING TO THE GROUND OF APPEAL NO.3 RAISED BY THE REVENUE IN ASSESSMENT YEAR 1997 - 98 I.E. COMPUTATION OF DEDUCTION UNDE R SECTION 80IA OF THE ACT , WHERE THE ASSESSEE HAD ALREADY CLAIMED DEDUCTION UNDER SECTION 80HHC OF THE ACT. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAS PLACED RELIANCE ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN ASSOCIATED CAPSULES (P.) LTD. VS. DCIT (2011) 197 TAXMAN 84 (BOM) . THE HONBLE HIGH COURT VIDE PARA 35 OBSERVED AS UNDER: - 35. IN THESE CIRCUMSTANCES, IN OUR OPINION, THE REASONABLE CONSTRUCTION OF SECTION 80IA(9) WOULD BE THAT WHERE DEDUCTION IS ALLOWED UNDER SECTION 80IA(1), THEN THE DEDUCTION COMPUTED UNDER OTHER PROVISIONS UNDER HEAD C' OF CHAPTER VI - A HAS TO BE RESTRICTED TO THE PROFITS OF THE BUSINESS THAT REMAINS AFTER EXCLUDING THE PROFITS ALLOWED AS DEDUCTIONS UNDER SECTION 80IA, SO THAT THE TOTAL DEDUCTION ALLOWED UND ER THE HEAD C' OF CHAPTER VI - A DOES NOT EXCEED THE PROFITS OF THE BUSINESS. 9. FOLLOWING THE ABOVE SAID PARITY OF REASONING, WHERE THE ASSESSEE HAD CLAIMED DEDUCTION UNDER SECTION 80IA OF THE ACT, THEN THE DEDUCTION UNDER SECTION 80HHC OF THE ACT IS TO BE RESTRICTED TO THE PROFITS OF BUSINESS THAT REMAINS AFTER EXCLUDING THE PROFITS ALLOWED AS DEDUCTION UNDE R SECTION 80IA OF THE ACT. THE 7 ITA NO S . 894, 895 & 1043 /PN/20 1 4 ATLAS COPCO (INDIA) LTD HONBLE HIGH COURT HAD FURTHER VIDE PARA 26 HAD ELABORATED THE PROVISIONS OF SECTION 80IA(9) OF THE ACT TO HOLD THAT THE DEDUCTION ALLOWABLE UNDER CHAPTER VI - A IS TO BE COMPUTED AS UNDER: - 26. TO ILLUSTRATE, IF THE PROFITS AND GAINS OF THE ELIGIBLE UNDERTAKING IS RS.100, THE DEDUCTION ALLOWABLE UNDER SECTION 80IB(10) OF THE ACT - IA(1) IS 30 PER CENT AND THE DEDUCTION ALLOWABLE UNDER SECTION 80HHC IS 80 PER CENT, THEN ACCORDING TO THE REVENUE, DEDUCTION TO BE ALLOWED UNDER SECTION 80 - IA WOULD BE RS.30 (30 PER CENT OF RS.100) AND IN VIEW OF SECTION 80IA(9), THE DEDUCTION UNDER SECTION 80HHC HAS TO BE COMPUTED NOT ON THE PROFITS OF THE BUSINESS OF RS.100 BUT ON RS.70 BEING THE PROFITS OF THE BUSINESS REDUCE D BY THE AMOUNT OF PROFITS ALLOWED UNDER SECTION 80IA(1). ACCORDING TO THE ASSESSEE, DEDUCTION UNDER SECTION 80HHC HAS TO BE COMPUTED ON THE PROFITS OF THE BUSINESS OF RS.100 AND NOT ON RS.70 AS CONTENDED BY THE REVENUE, BECAUSE, ACCORDING TO THE ASSESSEE , SECTION 80IA(9) DOES NOT AFFECT THE COMPUTATION OF DEDUCTION UNDER SECTION 80HHC BUT AFFECTS THE ALLOWANCE OF DEDUCTION COMPUTED UNDER SECTION 80HHC, SO THAT THE AGGREGATE DEDUCTION DOES NOT EXCEED THE PROFITS OF THE BUSINESS. 10. THE HONBLE HIGH COUR T VIDE PARA 39 OBSERVED AS UNDER: - 39. 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 VAR IOUS 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 C. B. D.T. CIRCULAR NO. 772 DATED 23 - 12 - 1998, WHEREIN IT IS STATED THAT SECTION 80IA(9) B. D.T. CIRCULAR NO. 772 DATED 23 - 12 - 1998, WHEREIN IT IS STATED THAT SECTION 80IA(9) HAS BEEN INTRODUCED WITH A VIEW TO PREVENT THE TAX - PAYERS FROM CLAIMING REPEATED DEDUCTIONS IN RESPECT OF THE SAME AMOUNT OF ELIGIBLE INCOME AND THAT T OO IN EXCESS OF THE ELIGIBLE PROFITS. THUS, THE OBJECT OF SECTION 80 - IA(9) BEING NOT TO CURTAIL THE DEDUCTIONS COMPUTABLE UNDER VARIOUS PROVISIONS UNDER HEADING 'C' OF CHAPTER, IT IS REASONABLE TO HOLD THAT SECTION 80 - IA(9) AFFECTS ALLOWABILITY OF DEDUCTION AND NOT COMPUTATION OF DEDUCTION. TO ILLUSTRATE, IF RS. 100 IS THE PROFITS OF THE BUSINESS OF THE UNDERTAKING, RS. 30 IS THE PROFITS ALLOWED AS DEDUCTION UNDER SECTION 80 - IA(1) AND THE DEDUCTION COMPUTED AS PER SECTION 80HHC IS RS. 80, THEN, IN V IEW OF SECTION 80 - IA(9), THE DEDUCTION UNDER SECTION 80HHC WOULD BE RESTRICTED TO RS.70, SO THAT THE AGGREGATE DEDUCTION DOES NOT EXCEED THE PROFITS OF THE BUSINESS. 11. IN VIEW OF THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN ASSOCIATED CAPSUL ES (P.) LTD. VS. DCIT (SUPRA) , WE MODIFY THE DIRECTIONS OF THE CIT(A) AND DIRECT THE ASSESSING OFFICER TO FIRST COMPUTE THE DEDUCTION UNDER SECTION 80IA OF THE ACT AND RESTRICT THE DEDUCTION UNDER SECTION 80HHC OF THE ACT TO THE PROFITS OF BUSINESS THAT RE MAINS AFTER EXCLUDING THE PROFITS ON WHICH DEDUCTION UNDER SECTION 80IA OF THE ACT IS ALLOWED . FURTHER, THE ASSESSING OFFICER IS DIRECTED TO RESTRICT THE TOTAL DEDUCTION TO BE ALLOWED UNDER SECTION S 80IA AND 80HHC OF THE ACT 8 ITA NO S . 894, 895 & 1043 /PN/20 1 4 ATLAS COPCO (INDIA) LTD TO THE EXTENT OF 100% OF THE E LIGIBLE PROFITS AS DIRECTED BY THE HONBLE BOMBAY HIGH COURT IN ASSOCIATED CAPSULES (P.) LTD. VS. DCIT (SUPRA). THE GROUND OF APPEAL NO.3 RAISED BY THE REVENUE IS ALLOWED. 12. IN THE RESULT, APPEALS OF THE REVENUE IN ITA NOS.894/PN/2014, 895/PN/2014 ARE DISMISSED AND APPEAL OF THE REVENUE IN ITA NO.1043/PN/2014 IS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 20 TH DAY OF JANUARY , 201 6 . SD/ - SD/ - (PRADIP KUMAR KEDIA) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 20 TH JANUARY , 201 6 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) - I , NASHIK ; 4. / THE CIT - V, PUNE ; 5. , , / DR A , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE