Chapter VI-A double deduction restriction applies only from assessment year 1999-2000, not assessment year 1998-99.

The restriction against claiming repeated deduction of the same profit under Chapter VI-A was introduced by the Finance (No. 2) Act, 1998, effective from 1 April 1999, and therefore applied only from assessment year 1999-2000 onwards. For assessment year 1998-99, the amended bar in section 80-IA(9A) could not be applied to reduce the deduction under section 80HHC after allowing section 80-IA. The later Special Bench view, which concerned the post-amendment period, was not governing for that year.

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Issues: Whether the deduction under section 80-IA had to be reduced from the profits and gains of business before computing the deduction under section 80HHC, and whether the amended restriction in section 80-IA(9A) applied to assessment year 1998-99.

Analysis: The restriction against claiming repeated deduction of the same profit under Chapter VI-A was introduced by the Finance (No. 2) Act, 1998 with effect from 1 April 1999, as reflected in the statutory amendment and the CBDT circular. The amendment was therefore applicable only from assessment year 1999-2000 onwards. The special bench decision relied on by the Tribunal related to the post-amendment period and could not govern assessment year 1998-99.

Conclusion: The Tribunal was not right in applying the amended restriction to assessment year 1998-99. The substantial question of law was answered in favour of the assessee for that year alone, while leaving the position for assessment year 1999-2000 unaffected by this answer.

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