TaxTMI 
TaxTMI 
2011 (3) TMI 980
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....ssee was computed by the Assessing Officer at Rs. 10,19,30,410/- under the normal provisions of the Act and at Rs.22,47,70,079/- under section 115JA of the Act. On appeal, the learned CIT(A) allowed certain relief to the assessee and vide an order passed on 15.03.2005, after giving effect to the learned CIT(A)'s order, the total income of the assessee was determined by the Assessing Officer at 'Nil' under the normal provisions of the Act and at Rs. 22,47,70,079/- u/s. 115JA. In the original order passed under section 143(3) on 20.03.2002, no deduction u/s.80HHC was allowed by the Assessing Officer while computing the income of the assessee under section 115JA. The learned CIT(A) vide his order dated 24.03.2003, however, directed the Assessing Officer to compute the deduction u/s.80HHC on the book profit u/s.115JA only with reference to the profit as per the accounts and not to restrict the same to the amount allowable under the normal provisions of the Act. This direction was not initially followed by the Assessing Officer while giving effect to the order of the learned CIT(A). This mistake, however, was subsequently rectified by the Assessing Officer by an order dated 24.07.2006 b....
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....was thus no mistake in the order passed by the Assessing Officer while giving effect to the appellate order of the learned CIT(A) on this issue. It was also contended that the rectification proposed by the Assessing Officer involved a debatable point of law involving more than one possible interpretation of the relevant provision and the same was, therefore, beyond the scope of rectification permissible u/s.154. 4. The Assessing Officer did not find merit in the submissions made on behalf of the assessee during the course of rectification proceedings u/s. 154. According to him, the direction given by the learned CIT(A) in this context was to allow the deduction u/s.80HHC on the profit as per the accounts and not on the profit computed as per the normal provisions of the Act, but there was nothing in the order of the learned CIT(A) to suggest that adjustment as per Explanation (baa) to section 80HHC would not be applicable while computing the deduction of book profit. He also noted that while computing the deduction u/s.80HHC out of book profit, the assessee company itself has reduced 90% of the rate and, therefore, the stand now taken by the assessee company that 90% of int....
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....d, therefore, he is invoking explanation (baa) is a highly debatable issue. It is debatable because on the face of it, the adjustments as specified in the explanation can only be made to profits calculated under the head 'Profit and gains of Business and Profession'. In the computation being made by Assessing Officer, this profit has not been calculated at all. The profit being considered is profit as per accounts of the assessee. Therefore, prima facie, the adjustments specified in explanation cannot be invoked. Yet, it is a fact that in the preceding para, on merits, I have held that adjustments specified in the explanation can still be invoked in the computation being made by Assessing Officer. Thus, the debate is between what is apparent from the explanation and what the real intent of the explanation is. To my mind, this is a highly debatable issue and is definitely outside the scope of section 154. Further, that explanation (baa) can still be invoked when deduction u/s.80HHC is being calculated on the basis of accounts of assessee can be concluded only after following detailed arguments. Not only this, that the conclusion of mine is emerging from an interpretation of first of....
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....ee on the ground that there was a mistake committed by him in the order dated 24.07.2006 while giving effect to the order of the learned CIT(A) in not reducing the profits of the business by 90% of other income such as interest, profit from sale of investments, etc. As rightly contended on behalf of the assessee before the learned CIT(A) as well as before us, a specific direction was given by the learned CIT(A) in his order dated 24.3.2003 to the Assessing Officer to compute deduction u/s.80HHC for determining the book profit of the assessee u/s.115JA with reference to the profit as per the accounts and not to restrict the same to the amount computed and allowed under the normal provisions of the Act. Keeping in view this specific direction given by the learned CIT(A), it cannot be said that there was any mistake in the order dated 29.07.2006 passed by the Assessing Officer while giving effect to the order of the learned CIT(A) in not reducing the profits of the business by 90% of the other income for the purpose of computing deduction u/s.80HHC calling for any rectification u/s.154. In our opinion, there was thus no mistake in the order passed by the Assessing Officer on 24.07.200....
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....infructuous as agreed even by the learned counsel for the assessee. The same are accordingly dismissed as having become infructuous. 10. Now we shall take up the appeal of the Revenue for the assessment year 2000-01 being ITA No. 192/M/2009, which is directed against the order of the learned CIT(A) - III, Mumbai, dated 23.10.2008. 11. As regards ground No. 1 taken by the revenue in this appeal, it is observed that the issue raised therein relating to deletion by the learned CIT(A) of the addition made by the Assessing Officer by restricting deduction u/s.80-HHC for determining the book profit of the assessee by way of rectification under section 154 is similar to the one involved in the assessment year 1999-2000. Since all the material facts relevant to the said issue as involved in the assessment year 2000- 01 are similar to the assessment year 1999-2000, we follow our decision rendered in the assessment year 1999-2000 and dismiss ground No.1 of the revenue's appeal. 12. As regards ground No. 2, it is observed that the issue raised therein relating to levy of levy under section 234D is similar to the one involved in ground No.2 of the Revenue's appeal for t....
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....ion u/s. 80HHC(3). and, section 115JB clause (iv) categorically specifies that all conditions of section 80HHC have to be invoked. In Explanation (baa) the operative part of the condition is the specified adjustments. That the adjustments have to be made with reference to profits as computed under the head of income "Profit and Gains of Business and Profession', is a methodology of computation relevant for computing deduction u/s.80HHC under normal computation. The moment a diversion is taken from normal computation. The moment a diversion is taken from normal computation, to section 115JB, that methodology becomes irrelevant but not the conditions specified. In accordance with clause (iv) of section 115JB then the specified condition holds, is relevant and has to be invoked for calculating the book profit. To my mind, there is not an iota of doubt on that Clause (iv) of section 115JB requires all conditions of section 115JB to be invoked. Therefore, the 'condition' contained in explanation (baa) of section 80HHC has necessarily to be invoked. There is no doubt about it. Therefore, in calculating deduction u/s.80HHC(3) for the purpose of section 115JB, clause (iv) of section 115JB ....
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....HHC in isolation whereas as per clause (iv) of the Explanation to section 1125JB, it is clears that the book profit shall be reduced by the amount of profits eligible for deduction under section 80HHC as computed under clause (a) or clause (b) or clause (c) of sub-section (3) of sub-section (3A), as the case may be of that section and subject to the conditions specified in that section, thereby mean that the deduction allowable would be only to the extent of deduction computed in accordance with the provisions of section 80HHC. Thus, according to the Department, both "eligibility" as well as "deductibility" of the profit have got to be considered together for working out the deduction as mentioned in clause (iv) of the Explanation to section 115JB. We find no merit in this argument. If the dichotomy between "eligibility" of profit and "deductibility" of profit is not kept in mind then section 115JB will cease to be a self-contained code. In section 115JB, as in section 115JA, it has been clearly stated that the relief will be computed under section 80HHC(3)/(3A), subject to the conditions under sub-sections (4) and (4A) of that section. The conditions are only that the relief shoul....
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....see for the assessment year 2001-02 being ITA no. 73/Mum/2009 is accordingly allowed. 18. As regards the appeal of the revenue for the assessment year 2001-02 being ITA No. 193/Mum/2009, it is observed that the solitary issue raised therein relating to levy of interest under section 234D is similar to the one involved in ground No.2 of the revenue's appeals for the assessment year 1999-2000 and 2000-01. Following our decision rendered in the assessment years 1999-2000 and 2000-01, we restore this issue to the file of the Assessing Officer for deciding the same as per the same direction as given in Assessment years 1999-2000 and 2000-01. This appeal of the revenue is accordingly treated as allowed for statistical purposes. 19. Now we shall take up the appeal of the assessee for the assessment year 2002-03 being ITA No. 74/Mum/2009, which is directed against the order of the learned CIT(A)-III, Mumbai, dated 23.10.2008. 20. After considering the rival submissions and perusing the relevant material on record, it is observed hat the main issue involved in this appeal for the assessment year 2002-03 as well as all the material facts thereto are similar to the ass....