M/S. ROHA DYECHEM PVT. LTD., V. ACIT CEN. CIR 43,

MA 73/MUM/2011

• Counselvise Citation: [2011] 123 COUNSELVISE.COM (IT) 6444 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 12 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 20-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2001-2002
• Appeal Filed On: 08-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K SINGH
• Assessee Lawyers: SNEHAL J SHAH
• Section: 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI A BENCH BEFORE SHRI N.V.VASUDEVAN, JUDICIAL MEMBER & SHRI T.R.SOOD, ACCOUNTANT MEMBER M.A.NO.73/MUM/2011 A.Y 2001-02 (ARISING OUT OF I.T.A.NO.398/MUM/2010) ROHA DYECHEM PVT. LTD., A 44-45 MIDC, 2 ND STREET, MAROL, ANDHERI (E), MUMBAI 400 092. PAN NO.AAACR 4974 P VS. ASST. COMMISSIONER OF I.T., CENTRAL CIRCLE 43, MUMBAI (APPLICANT) (RESPONDENT) APPLICANT BY : MR. SNEHAL J. SHAH. RESPONDENT BY : MR. S.K.SINGH. O R D E R PER T.R.SOOD, AM: THROUGH THIS MISCELLANEOUS APPLICATION ASSESSEE HA S SOUGHT RECTIFICATION OF A MISTAKE WHICH HAS ARISEN BECAUSE OF THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF ASSOCI ATED CAPSULES PVT. LTD. VS. DCIT IN I.T.APPEAL NO.3036 OF 2010, IN GRO UND NO.3. 2. THE LD. COUNSEL OF THE ASSESSEE POINTED OUT THAT GROUND NO.3 HAS BEEN ADJUDICATED BY THE TRIBUNAL VIDE PARAS 9 T O 12, AND FOLLOWING THE DECISION OF 5 MEMBERS SPECIAL BENCH OF THE TRIB UNAL IN THE CASE OF ACIT VS. HINDUSTAN MINT & AGRO PRODUCTS PVT. LTD. 3 15 ITR (AT) 401 (DEL) (S.B), THE ISSUE WAS DECIDED IN FAVOUR OF THE REVENUE. NOW THE DECISION OF 5 MEMBERS SPECIAL BENCH HAS BEEN REVERS ED BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF ASSOCIATED CAPSULE S PVT. LTD. VS. 2 DCIT [SUPRA] AND, THEREFORE, A MISTAKE HAS CREPT IN TO THE ORDER OF THE TRIBUNAL. 3. ON THE OTHER HAND, LD. DR SUPPORTED THE ORDER OF THE TRIBUNAL. 4. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE FIND THAT THE ISSUE RAISED IN GROUND NO.3 REGARDING REDUCTION OF DEDUCT ION U/S.80HHC WHILE COMPUTING THE DEDUCTION U/S.80IB(10) IN VIEW OF PROVISIONS OF SEC.80IB(13) R.W.S. 80IA(9). THE TRIBUNAL DECIDED T HE ISSUE AGAINST THE ASSESSEE BY FOLLOWING THE DECISION OF 5 MEMBERS SPE CIAL BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. HINDUSTAN MINT & A GRO PRODUCTS PVT. LTD. [SUPRA]. WE FURTHER FIND THAT WHEN THIS ISSUE CAME UP FOR CONSIDERATION OF THE HON'BLE BOMBAY HIGH COURT IN T HE CASE OF ASSOCIATED CAPSULES PVT. LTD. VS. DCIT [SUPRA], THE DECISION OF 5 MEMBERS OF THE SPECIAL BENCH WAS REVERSED AND THE I SSUE WAS DECIDED BY THE HON'BLE HIGH COURT VIDE PARA-39 AS UNDER: 39. IN THE RESULT, WE HOLD THAT SECTION 80IA(9) D OES NOT AFFECT THE COMPUTABILITY OF DEDUCTION UNDER VARIOUS PROVISIONS UNDER HEADING C OF CHAPTER VIA, BUT IT AFFECTS THE ALLOWABILITY OF DEDUCTIONS COMPUTED UNDER VARIOUS PROVISIONS UNDER HEADING C OF CHAPT ER VIA, SO THAT THE AGGREGATE DEDUCTION UNDER SECTION 80IA AND OTHER PR OVISIONS UNDER HEADING C OF CHAPTER VIA DO NOT EXCEED 100% OF TH E PROFITS OF THE BUSINESS OF THE ASSESSEE. OUR ABOVE VIEW IS ALSO SU PPORTED BY THE C.B.D.T. CIRCULAR NO.772 DATED 23121998, WHEREIN IT IS STATED THAT SECTION 80IA(9) HAS BEEN INTRODUCED WITH A VIEW TO PREVENT THE TAXPAYERS FROM CLAIMING REPEATED DEDUCTIONS IN RESP ECT OF THE SAME AMOUNT OF ELIGIBLE INCOME AND THAT TOO IN EXCESS OF THE ELIGIBLE PROFITS. THUS, THE OBJECT OF SECTION 80IA(9) BEING NOT TO CU RTAIL THE DEDUCTIONS COMPUTABLE UNDER VARIOUS PROVISIONS UNDER HEADING C OF CHAPTER, IT IS REASONABLE TO HOLD THAT SECTION 80IA(9) AFFECTS ALLOWABILITY OF DEDUCTION AND NOT COMPUTATION OF DEDUCTION. TO ILLU STRATE, IF RS.100/IS THE PROFITS OF THE BUSINESS OF THE UNDERTAKING, RS. 30/IS THE PROFITS ALLOWED AS DEDUCTION UNDER SECTION 80IA(1) AND THE DEDUCTION COMPUTED AS PER SECTION 80HHC IS RS.80/, THEN, IN V IEW OF SECTION 80IA(9), THE DEDUCTION UNDER SECTION 80HHC WOULD BE RESTRICTED TO 3 RS.70/, SO THAT THE AGGREGATE DEDUCTION DOES NOT EX CEED THE PROFITS OF THE BUSINESS. THEREFORE, A MISTAKE HAS CREPT INTO THE ORDER OF TH E TRIBUNAL AND, ACCORDINGLY, WE SUBSTITUTE THE PARA NOS.9 TO 12 BY THE FOLLOWING: 9. GROUND NO.3 : AFTER HEARING BOTH THE PARTIES, WE FIND THAT THE AO REDUCED DEDUCTION U/S.80HHC, WHILE COMPUTING DEDUCTION U/S.80IB(10) IN VIEW OF THE PROVISIONS OF SECTION 80IB(13) R.W.S. 80IA(9). THE ACTION OF THE AO HAS B EEN CONFIRMED BY THE LD. CIT[A]. 10. THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISIO N OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF ASSOCIATED CAPSULES PVT. LTD. VS. DCIT IN I.T.APPEAL NO.3036 OF 2010, D ATED 10 TH JANUARY, 2011. 11. ON THE OTHER HAND, LD. DR RELIED ON THE ORDER O F THE CIT[A]. 12. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE FIN D THAT THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF ASSOCIATED CAPSULES PVT. LTD. VS. DCIT [SUPRA], HAS DECIDED THE ISSUE V IDE PARA-39 WHICH READS AS UNDER: 39. IN THE RESULT, WE HOLD THAT SECTION 80IA(9) D OES NOT AFFECT THE COMPUTABILITY OF DEDUCTION UNDER VARIOUS PROVISIONS UNDER HEADING C OF CHAPTER VIA, BUT IT AFFECTS THE ALLOWABILITY OF DED UCTIONS COMPUTED UNDER VARIOUS PROVISIONS UNDER HEADING C OF CHAPTER VIA , SO THAT THE AGGREGATE DEDUCTION UNDER SECTION 80IA AND OTHER PROVISIONS U NDER HEADING C OF CHAPTER VIA DO NOT EXCEED 100% OF THE PROFITS OF TH E BUSINESS OF THE ASSESSEE. OUR ABOVE VIEW IS ALSO SUPPORTED BY THE C .B.D.T. CIRCULAR NO.772 DATED 23121998, WHEREIN IT IS STATED THAT SECTION 8 0IA(9) HAS BEEN INTRODUCED WITH A VIEW TO PREVENT THE TAXPAYERS FRO M CLAIMING REPEATED DEDUCTIONS IN RESPECT OF THE SAME AMOUNT OF ELIGIBL E INCOME AND THAT TOO IN EXCESS OF THE ELIGIBLE PROFITS. THUS, THE OBJECT OF SECTION 80IA(9) BEING NOT TO CURTAIL THE DEDUCTIONS COMPUTABLE UNDER VARIOUS PRO VISIONS UNDER HEADING C OF CHAPTER, IT IS REASONABLE TO HOLD THAT SECTI ON 80IA(9) AFFECTS ALLOWABILITY OF DEDUCTION AND NOT COMPUTATION OF DE DUCTION. TO ILLUSTRATE, IF RS.100/IS THE PROFITS OF THE BUSINESS OF THE UNDERT AKING, RS.30/IS THE PROFITS ALLOWED AS DEDUCTION UNDER SECTION 80IA(1) AND THE DEDUCTION COMPUTED AS PER SECTION 80HHC IS RS.80/, THEN, IN VIEW OF SECTI ON 80IA(9), THE DEDUCTION UNDER SECTION 80HHC WOULD BE RESTRICTED TO RS.70/, SO THAT THE AGGREGATE DEDUCTION DOES NOT EXCEED THE PROFITS OF THE BUSINE SS. RESPECTFULLY FOLLOWING THE SAID DECISION, WE DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE AND DIRECT THE ASSESSING OFFICER TO COMPUTE THE 4 DEDUCTION AS HELD BY THE HON'BLE BOMBAY HIGH COURT IN PARA-39 ABOVE. 5. IN THE RESULT, MISCELLANEOUS APPLICATION IS ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 2 0/5/2011. SD/- SD/- (N.V.VASUDEVAN) (T.R.SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 20/5/2011. P/-*