Assessee's Appeals Allowed for Statutory Verification of Deductions under Section 80HHC

The Tribunal allowed the appeals of the assessee for statistical purposes, directing the Assessing Officer to verify the computation of deductions for Unit-II and Unit-III. The Revenue's appeal was dismissed, affirming that deductions under section 80HHC should not be reduced by the amount allowed under section 80IB. The judgment emphasized the principle that deductions under section 80HHC can be computed unit-wise where separate books of accounts are maintained.

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Issues Involved:
1. Aggregation of results of three units for computing relief under section 80HHC.
2. Application of section 80IB read with section 80IA(9) in computing deductions under section 80HHC.
3. Verification of the veracity of the computation of deductions claimed by the assessee.

Detailed Analysis:

1. Aggregation of Results of Three Units for Computing Relief under Section 80HHC:
The primary issue was whether the results of three units should be aggregated for computing relief under section 80HHC. The assessee maintained separate books of accounts for each unit and claimed deductions based on the individual results of Unit-II and Unit-III, excluding Unit-I which primarily dealt with domestic sales. The Assessing Officer aggregated the results of all three units, arguing that the units were not independent and the deduction under section 80HHC is "assessee specific" and not "unit specific."

The Tribunal referred to various judicial pronouncements, including the Delhi High Court's decision in CIT vs. Padmini Technologies Ltd., which supported unit-wise computation of deductions where separate books are maintained. The Tribunal concluded that the deduction under section 80HHC should be computed separately for Unit-II and Unit-III, excluding Unit-I. The matter was remanded back to the Assessing Officer to verify the computation based on this principle.

2. Application of Section 80IB Read with Section 80IA(9) in Computing Deductions under Section 80HHC:
The Revenue's appeal contended that deductions under section 80HHC should be computed after reducing the deduction allowed under section 80IB, as per section 80IA(9). The CIT(A) had ruled that the deduction under section 80HHC should not be reduced by the amount allowed under section 80IB.

The Tribunal upheld the CIT(A)'s decision, relying on the Bombay High Court's ruling in Associated Capsules (P) Ltd. vs. DCIT, which stated that for computing the deduction under section 80HHC, the deduction under section 80IB should not be reduced. However, the total deduction should not exceed the taxable profit and gross total income. The Tribunal dismissed the Revenue's appeal on this ground.

3. Verification of the Veracity of the Computation of Deductions Claimed by the Assessee:
The Tribunal directed the Assessing Officer to verify the correctness of the computation of deductions claimed by the assessee for Unit-II and Unit-III. This included checking the profit, export turnover, and total turnover figures for these units, excluding Unit-I. The Tribunal emphasized that the veracity of the books of accounts for Unit-II had been accepted by the Assessing Officer for the purpose of section 80IB, indicating their reliability.

Conclusion:
The Tribunal allowed the appeals of the assessee for statistical purposes, directing the Assessing Officer to verify the computation of deductions for Unit-II and Unit-III. The Revenue's appeal was dismissed, affirming that deductions under section 80HHC should not be reduced by the amount allowed under section 80IB. The judgment emphasized the principle that deductions under section 80HHC can be computed unit-wise where separate books of accounts are maintained.

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