Gross total income basis for Chapter VI-A deductions upheld despite prior 80HHC relief

Deduction under section 80-IA was held allowable on gross total income even though deduction under section 80HHC had already been granted on the same income. The Court relied on sections 80A(1) and 80B(5), which permit Chapter VI-A deductions from gross total income before any such deductions are made, and found no express restriction in section 80-IA or section 80HHC requiring 80-IA to be limited to the balance remaining after 80HHC. The later insertion of section 80-IA(9A) from 1 April 1999 did not apply to assessment year 1995-96, so the Revenue's challenge failed.

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Issues: Whether deduction under section 80-IA of the Income-tax Act, 1961 is to be computed on the gross total income despite deduction under section 80HHC having already been allowed on the same gross total income.

Analysis: Section 80A(1) permits deductions under Chapter VI-A from the gross total income, and section 80B(5) defines gross total income as income computed before making any deduction under that Chapter. The Court found no provision in section 80-IA or section 80HHC requiring the deduction under section 80-IA to be confined to the balance remaining after allowing deduction under section 80HHC. The later insertion of section 80-IA(9A) with effect from 1 April 1999 did not govern assessment year 1995-96.

Conclusion: Deduction under section 80-IA was allowable on the gross total income and not merely on the balance after deduction under section 80HHC, and the Revenue's appeal failed.

Final Conclusion: The decision affirms that, for the relevant assessment year, simultaneous deductions under the two provisions could be computed on gross total income, and the departmental challenge was rejected.

Ratio Decidendi: In the absence of an express statutory restriction, deductions under Chapter VI-A are allowable on gross total income, and a subsequently inserted curtailment provision cannot be applied retrospectively to an earlier assessment year.

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