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Issues: (i) Whether deduction under Section 80HHC of the Income-tax Act, 1961 was to be allowed without reducing the deduction under Section 80IB of the Income-tax Act, 1961. (ii) Whether scrap sale proceeds were includible in total turnover for computing deduction under Section 80HHC of the Income-tax Act, 1961.
Issue (i): Whether deduction under Section 80HHC of the Income-tax Act, 1961 was to be allowed without reducing the deduction under Section 80IB of the Income-tax Act, 1961.
Analysis: The question was covered by binding precedent which approved the view that the deduction under Section 80HHC is to be computed without first reducing the deduction under Section 80IB.
Conclusion: The question was answered in the affirmative, in favour of the assessee.
Issue (ii): Whether scrap sale proceeds were includible in total turnover for computing deduction under Section 80HHC of the Income-tax Act, 1961.
Analysis: Binding precedent held that proceeds from sale of scrap do not form part of total turnover for the purpose of computing deduction under Section 80HHC.
Conclusion: The question was answered in the affirmative, in favour of the assessee.
Final Conclusion: Both substantial questions of law were answered against the Revenue, and the appeal failed.
Ratio Decidendi: Deduction under Section 80HHC of the Income-tax Act, 1961 is to be computed without reducing deduction under Section 80IB, and scrap sale proceeds are not includible in total turnover for that computation.
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