TaxTMI 
TaxTMI 
2008 (7) TMI 455
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.... 3. The facts of the case stated in brief are that the assessee is a manufacturer and exporter of aluminum art wares, brass art wares, EPNS wares and other Indian handicrafts. The assessee claimed deduction under ss. 80HHC and 80-IB on business profits derived by the assessee. The AO referring to provisions of ss. 80-IB(13), 80-IA(9) and 80HHC(4B) held that once deduction under s. 80-IB had been allowed, the deduction on the same income would not be allowable under other provisions of IT Act. Similar directives are also received from reading of s. 80HHC(4B). The AO, therefore, for the purpose of computing deduction under s. 80HHC reduced the amount of deductions under s. 80-IB and on the balance he allowed deduction under s. 80HHC of the Act. On appeal the learned CIT(A) upheld the stand taken by the AO. 4. Before us the learned Authorised Representative of the assessee relying on the decision of Hon'ble Madras High Court in the case of SCM Creations vs. Asstt. CIT, ITA Nos. 310 and 311 of 2008 [reported at (2008) 218 CTR (Mad) 126-Ed.] submitted that M/s SCM Creations was one of the interveners in the case of Asstt. CIT vs. Rogini Garments (2007) 111 TTJ (Chennai)(SB) 27....
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....e case of an assessee is claimed and allowed under this section for any assessment year, deduction to the extent of such profits and gains shall not be allowed under any other provisions of this Chapter under the heading 'C.-Deductions in respect of certain incomes', and shall in no case exceed the profits and gains of such eligible business of undertaking or enterprise, as the case may be." 6. From the language of s. 80-IA(9) it is clear that deduction to the extent of profits and gains allowed under s. 80-IA shall not be allowed under any other provisions of Chapter VI-A under the heading "C.-Deductions in respect of certain incomes". Sec. 80HHC falls under the heading "C.-Deductions in respect of certain incomes" of Chapter VI-A. Therefore, where an assessee is entitled to both the deductions under, ss. 80HHC and 80-IA, deduction under s. 80HHC will be available on profits derived from export business after reducing the amount of deduction allowed under s. 80-IA of the Act. Since provisions of s. 80-IA(9) are applicable to s. 80-IB by virtue of provisions of s. 80-IB(13), the amount of deduction allowable under s. 80-IB will be reduced from profits derived from export....
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....been decided in favour of the assessee in TC No. 344 of 2004 [reported as Dy. CIT vs. Chola Textiles (P) Ltd. (2008) 218 CTR (Mad) 123-Ed.]. Hon'ble Madras High Court in TC No. 344 of 2004 held as under: "5. It is submitted across the Bar by the learned counsel appearing for either side that the very issue has been considered and held against the Revenue by the Madhya Pradesh High Court in the case of J.P. Tobacco Products (P) Ltd. vs. CIT (1997) 140 CTR (MP) 329 : (1998) 229 ITR 123 (MP). It has also been further submitted that the Bombay High Court also has taken the same view in the case of CIT vs. Nima Specific Family Trust (2001) 165 CTR (Bom) 518 : (2001) 248 ITR 29 (Bom). The judgment of the Madhya Pradesh High Court has been taken to the Supreme Court and the Supreme Court in Jt. CIT vs. Mandideep Eng. & Pkg. Ind. (P) Ltd. (2007) 210 CTR (SC) 614 : (2007) 292 ITR 1 (SC) has rejected the SLP by giving the following reasons: '.... 2. The Madhya Pradesh High Court in J.P. Tobacco Products (P) Ltd. vs. CIT (1997) 140 CTR (MP) 329 : (1998) 229 ITR 123 (MP) took the view that both the sections are independent and therefore, the deductions could be claime....
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....otal income. Since Special Leave Petitions filed by the Revenue were dismissed by the Supreme Court on various occasions and subsequently no Special Leave Petitions were preferred against the judgments deciding the issue relating to deduction under ss. 80HH and 80-I. Hon'ble Madras High Court following the ratio of aforesaid decisions held that the Department having accepted the view taken in the judgments cannot be permitted to take a contrary view in subsequent appeals involving the same point. However no discussion was made on allowability of deduction under ss. 80-IA and 80HHC. 10. We have gone through the decisions referred to by the Hon'ble Madras High Court in the case of SCM Creations. We find that in the decisions relied upon by Hon'ble Madras High Court, the issue before various High Courts related to deduction under ss. 80HH and 80-I which did not contain any provisions similar to s. 80-IA(9A). In the case of CIT vs. Rochi Ram & Sons, the issue before their Lordships of Hon'ble Rajasthan High Court related to deduction under ss. 80-IA and 80HHC, but since the assessment year involved was 1995-96 and the amendment in s. 80-IA was made w.e.f. 1st April, ....
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....sue may constitute a precedent, no matter for what reason, and the precedent by long recognition may mature into rule of stare decisis. It is the rule deducible from the application of law to the facts and circumstances of the case which constitutes ratio decidendi. 12. A decision passes sub silentio, in the technical sense that has come to be attached to that phrase, when the particular point of law involved in the decision is not perceived by the Court or present to its mind. The Court may consciously decide in favour of one party because of point A, which it considers and pronounces upon. It may be shown, however, that logically the Court should not have decided in favour of the particular party unless it also decided point B in his favour, but point B was not argued or considered by the Court. In such circumstances although point B was logically involved in the facts and although the case had a specific outcome, the decision is not an authority on point B. Point B is said to pass sub silentio (Salmond on Jurisprudence, 12th Edition. Editor. Prof P. J. Fitzgerald). Precedents sub silentio (in silence) and without argument are of no moment. This rule has ever since been follow....
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....999. At the same time we cannot overlook the insertion of sub-s. (9A) of s. 80-IA for the purpose of computation under S. 80HHC. Tribunal, Special Bench, Chennai in the case of Rogini Garments had examined the provisions of s. 80-IA(9A) and has held that the relief allowed under s. 80-IA should be deducted from profits and gains of assessee's business before computing relief under s. 80HHC of the Act. The decision of the Special Bench is binding on us. Respectfully following the decision of the Special Bench, in the case of Rogini Garments, it is held that the deduction claimed and allowed under s. 80-IB(13) will be reduced from eligible profits of business for computation of deduction under s. 80HHC of the Act. 19. The next issue for consideration relates to deduction under s. 80-IB in respect of duty drawback/DEPB. The relevant grounds of appeal are reproduced as under: "4. That the CIT(A) has erred on facts and in law in determining deduction admissible to the appellant under s. 80-IB of the IT Act at Rs. 5,49,124 against the deduction of Rs. 28,72,489 claimed by the appellant. 5. That the CIT(A) has erred on facts and in law in holding that the duty dra....
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....ble for deduction under ss. 80-I and 80HH of the Act. What is true for s. 80-IA is true for s. 80-IB. Therefore, the duty drawback and DEPB receipts have to be taken into consideration for the purpose of deduction under s. 80-IB of the Act. 22. On the other hand, the learned Departmental Representative submitted that from the language of sub-s. (3) of s. 80-IB it is clear that the deduction under s. 80-IB(1) is to be allowed on profits and gains derived from industrial undertaking. Therefore, there should be a direct nexus between the profits and gains earned by the assessee and the industrial activities of the assessee. The decision of Hon'ble Supreme Court in the case of CIT vs. Sterling Foods will still be applicable and the deduction will be available on income derived from industrial undertaking. He further submitted that the expression "any profits and gains" derived from any business cannot be read in isolation without reading the provisions together with sub-ss. (3) to (11B) of the Act which defines the scope of profits and gains derived from various industrial activities. 23. We have heard both the parties. The AO has not allowed deduction under s. 80-IB of the A....
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....ess referred to in sub-ss. (3) to (11A) (such business being hereinafter referred to as eligible business, there shall, in accordance with and subject to provisions of this section, be allowed in computing the total income of the assessee, a deduction from such profits and gains of an amount equal to such percentage and for such number of assessment years as is specified in this section." 24. On comparison of language employed in s. 80-IA of the Act prior to amendment by the Finance Act, 1999 the legislature used words "includes any profits and gains derived from any business of an industrial undertaking......." The existing s. 80-IB contains words "includes any profits and gains derived from any business referred to in sub-ss. (3) to (11A)". On comparison of phraseology used in s. 80-IA as stood prior to the amendment by the Finance Act, 1999 and s. 80-IB, we find that the words used convey the same meaning that any profits and gains derived from any business of undertaking will be eligible for deduction. These words are common in both the sections. Therefore, for eligibility of deduction under these sections, the profits and gains derived by the undertaking should have the nex....
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....B in respect of duty drawback and DEPB receipts. Tribunal, Delhi Bench "G" in the case of Anil Kumar Rastogi distinguished the case of Hon'ble Allahabad High Court in the case of Mentha & Allied Products (P) Ltd. by observing as under: "6. Coming now to the judgment of the Hon'ble Allahabad High Court in the case of Mentha & Allied Products (P) Ltd., it is seen that it was concerned with the deduction under s. 80HHA, which uses language that is identical with ss. 80HH, 80-I etc., viz., 'profits and gains derived from a small scale industrial undertaking to which this section applies'. Thus, for the purpose of s. 80HHA, as in the case of ss. 80HH, 80-I etc. it is necessary that the industrial undertaking itself should be the direct source for the income in question and not one or more steps removed. As already noticed, the language employed in s. 80-IB is wider, though not as wide as 'attributable to'. The statutory provision considered by the Hon'ble jurisdictional High Court is different having different language." After considering the decision of jurisdictional High Court, the Bench further held as under: "7. In the light of the a....
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....(SC) and in case of Ashok Leyland Ltd. vs. CIT (1997) 138 CTR (SC) 287 : (1997) 224 ITR 122 (SC). Tribunal in assessee's own case in asst. yrs. 1996-97 and 1997-98 had considered the issue relating to DEPB and QBAL licences and noted the changes in s. 80-IA in the relevant years when the eligible profit was defined as 'profit derived from the business of industrial undertaking'. The judgments of Hon'ble Supreme Court in the case of Sterling Foods and Ashok Leyland had been delivered in the context of old provisions of ss. 80HH and 80-I in which words used were 'profits derived from industrial undertaking' and, therefore, such receipts were not held as directly derived from industrial undertaking and thus not held eligible for ss. 80-I and 80HH. The Tribunal had accordingly held that the assessee was entitled to deduction under s. 80-IA. In view of phraseology in s. 80-IA as it stood at the relevant time. The other receipts under consideration in this appeal are similar in nature and the interpretation of the Tribunal given in the context of DEPB and QBAL will be equally applicable. Other Benches of Tribunal as mentioned in para 3.4.1 have also taken a simila....