Adjusted book profit governs section 80HHC deduction under MAT, with fresh recomputation directed on remand.

MAT computation under the book profit provisions preserves the benefit of deduction under section 80HHC, and the deduction is to be worked out with reference to adjusted book profit rather than regular income computation. Following the principles in Bhari Information Technology Systems and Syncome Formulations, the Tribunal treated the deduction as admissible for MAT purposes. Because the computation issues had not been properly examined earlier, the matter was remitted to the Assessing Officer for fresh quantification after giving the assessee an opportunity of hearing.

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Issues: Whether deduction under section 80HHC, for purposes of computation of book profit under the MAT provisions, is to be worked out on the basis of adjusted book profit, and whether the matter should be remanded to the Assessing Officer for fresh computation.

Analysis: The Tribunal followed the binding principle applied in the Supreme Court's decision in Bhari Information Technology Systems and the Special Bench decision in Syncome Formulations, holding that the MAT scheme does not take away the benefit of deduction under section 80HHC and that the deduction has to be computed with reference to adjusted book profit. As the additional grounds concerning the computation had not been properly adjudicated earlier, the Tribunal directed fresh consideration by the Assessing Officer for recomputation in accordance with those rulings, with an opportunity of hearing to the assessee.

Conclusion: The deduction under section 80HHC was held admissible for MAT computation on the basis of adjusted book profit, and the matter was remitted to the Assessing Officer for fresh computation.

Final Conclusion: The assessee obtained substantive relief on the core MAT computation issue, but the quantification was restored to the Assessing Officer for reconsideration.

Ratio Decidendi: Where MAT provisions specifically permit deduction of export profits, the deduction under section 80HHC is to be computed on the basis of adjusted book profit and not on the basis of regular income computation.

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