Assessees entitled to deduction under s. 80HHC for book profit in IT Act.

The Court held that assessees are entitled to deduction under s. 80HHC in the computation of book profit under s. 115JB of the IT Act. It clarified that the restriction under s. 80AB or s. 80B(5) should not disentitle assessees from the deduction. The Court directed the Assessing Officer to recompute the book profit by allowing the deduction under s. 80HHC in accordance with specified methods and provisions, vacating the lower authorities' orders.

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Issues:
- Entitlement to deduction under s. 80HHC in the computation of book profit under s. 115JB of the IT Act.

Analysis:
1. Background and Contentions:
- The appeals by the Revenue questioned the entitlement of assessees to deduction under s. 80HHC in the computation of book profit under s. 115JB of the IT Act.
- The Revenue argued that if the total income is negative after setting off business loss and depreciation, assessees should not be entitled to deduction under s. 80HHC.
- Assessees relied on Supreme Court decisions and contended that they are eligible for the deduction.

2. Interpretation of Relevant Provisions:
- The Court examined the provisions of s. 115JB of the Act, specifically focusing on the computation of book profit and the eligibility for deduction under s. 80HHC.
- The Court analyzed the Supreme Court's decision in A/onto. Phorma Ltd. vs. CIT, emphasizing that the ceiling under s. 80HHC(1B) does not apply to the computation of book profit.
- The Court clarified that the deduction of export profit under s. 80HHC in book profit computation must align with the method specified in sub-ss. (3) and (3A) of s. 80HHC.

3. Decision and Rationale:
- The Court held that assessees are entitled to deduction under s. 80HHC in accordance with sub-ss. (3) and (3A) of s. 80HHC, as explicitly provided in cl. (iv) of s. 115JB(2) of the Act.
- The Court emphasized that the restriction under s. 80AB or s. 80B(5) should not be applied to disentitle assessees from the deduction, as per the Supreme Court's decision.
- Rejecting the argument to determine export profit with reference to the Companies Act, the Court affirmed that the relief should be granted based on the method specified in s. 80HHC.

4. Outcome and Directions:
- The Court disposed of the appeals by vacating the lower authorities' orders and directed the Assessing Officer to recompute the book profit by allowing deduction under s. 80HHC in line with the Supreme Court's decision in A/onto. Phorma Ltd.'s case.

This judgment clarifies the entitlement of assessees to deduction under s. 80HHC in the computation of book profit under s. 115JB of the IT Act, emphasizing adherence to the specified methods and provisions outlined in the relevant sections.

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