TaxTMI 
TaxTMI 
TaxTMI 
2015 (1) TMI 526
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....deduction under Section 80-HH. This view was affirmed by the Commissioner of Income Tax (Appeals) who was of the opinion that both Sections i.e., Sections 80-HH and 80-I were independent provisions and consequently, the assessee was entitled to deduction under Section 80-I on the total amount without it having suffered any deduction under Section 80- HH. The Revenue unsuccessfully appealed to the ITAT and consequently has approached this Court. 3. It is argued on behalf of the Revenue that the ITAT as well as the Commissioner (Appeals) completely overlooked Section 80-HH (9) which is in imperative terms and stipulates expressly that before the benefit of Section 80-I could be claimed, or some other benefit - under Section 80-J, could be claimed - the total profits had to be deducted in the manner provided in the Section i.e. in terms of Section 80-HH (I). The submission of the Revenue in this regard may be noticed by its contention in the grounds of appeal to the following effect:- "The language of Section 80-HH(9) is clear and specifically stipulates that where the assessee is entitled to deduction u/s 80- HH and 80-I, the assessee is first entitled to deduction u/s 80-HH and th....
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.... the total income of the assessee, a deduction from such profits and gains of an amount equal to twenty per cent thereof : Provided that in the case of an assessee, being a company, the provisions of this sub-section shall have effect [in relation to profits and gains derived from an industrial undertaking or a ship or the business of a hotel] as if for the words "twenty per cent", the words "twenty-five per cent" had been substituted. [(1A) Notwithstanding anything contained in sub-section (1), in relation to any profits and gains derived by an assessee from- (i) an industrial undertaking which begins to manufacture or produce articles or things or to operate its cold storage plant or plants; or (ii) a ship which is first brought into use; or (iii) the business of a hotel which starts functioning, on or after the 1st day of April, 1990, [but before the 1st day of April, 1991], there shall, in accordance with and subject to the 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 twenty-five per cent thereof : Provided that in the case of an assessee, being a company, the provisions ....
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.... in India; (b) such machinery or plant is imported into India from any country outside India; and (c) no deduction on account of depreciation in respect of such machi-nery or plant has been allowed or is allowable under the provisions of this Act in computing the total income of any person for any period prior to the date of the installation of the machinery or plant by the assessee. Explanation 2.-Where in the case of an industrial undertaking, any machinery or plant or any part thereof previously used for any purpose is transferred to a new business and the total value of the machinery or plant or part so transferred does not exceed twenty per cent of the total value of the machinery or plant used in the business, then, for the purposes of clause (ii) of this subsection, the condition specified therein shall be deemed to have been complied with. Explanation 3.-For the purposes of this sub-section, "smallscale industrial undertaking" shall have the same meaning as in clause (b) of the Explanation below sub-section (8) of section 80HHA. (3) This section applies to any ship, where all the following conditions are fulfilled, namely :- (i) it is owned by an Indian company and is....
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....as the initial assessment year) and each of the seven assessment years immediately succeeding the initial assessment year : Provided that in the case of an assessee, being a co-operative society, the provisions of this sub-section shall have effect as if for the words "seven assessment years", the words "nine assessment years" had been substituted : [Provided further that in the case of an assessee carrying on the business of repairs to ocean-going vessels or other powered craft, the provisions of this sub-section shall have effect as if for the words "seven assessment years", the words "four assessment years" had been substituted:] [Provided also that in the case of- (i) an industrial undertaking which begins to manufacture or produce articles or things or to operate its cold storage plant or plants; or (ii) a ship which is first brought into use; or (iii) the business of a hotel which starts functioning, on or after the 1st day of April, 1990 [but before the 1st day of April, 1991], provisions of this sub-section shall have effect as if for the words "seven assessment years", the words "nine assessment years" had been substituted : Provided also that in the case of an asse....
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.... in the accounts of the business of the industrial undertaking or the hotel or the operation of the ship [or the business of repairs to ocean-going vessels or other powered craft] does not correspond to the market value of such goods as on the date of the transfer, then, for the purposes of the deduction under this section, the profits and gains of the industrial undertaking or the business of the hotel or the operation of the ship [or the business of repairs to ocean-going vessels or other powered craft] shall be computed as if the transfer, in either case, had been made at the market value of such goods as on that date : Provided that where, in the opinion of the [Assessing] Officer, the computation of the profits and gains of the industrial undertaking or the business of the hotel or the operation of the ship [or the business of repairs to ocean-going vessels or other powered craft] in the manner hereinbefore specified presents exceptional difficulties, the [Assessing] Officer may compute such profits and gains on such reasonable basis as he may deem fit. Explanation.-In this sub-section, "market value", in relation to any goods, means the price that such goods would ordinarily....
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.... Tax vs. Mandideep Engineering and Packaging Ind. Pvt. Ltd. (2007) 292 ITR (1) SC. The relevant part of the discussion by the Supreme Court is as follows:- "2. The Madhya Pradesh High Court in J.P.Tobacco Products P. Ltd. v. CIT reported in [1998] 229 ITR 123 took the view that both the sections are independent and, therefore, the deductions could be claimed both under sections 80HH and 80I on the gross total income. Against this judgment a special leave petition was filed in this court which was dismissed on the ground of delay on July 21, 2000 (see[2000] 245 ITR (St.) 71). The decision in J.P.Tobacco Products P. Ltd. [1998] 229 ITR 123 (MP) was followed by the same High Court in the case of CIT v. Alpine Solvex P. Ltd. in I.T.A. No. 92 of 1999 decided on May 2, 2000. Special leave petition against this decision was dismissed by this court on January 12, 2001, (see [2001] 247 ITR (St.) 36). This view has been followed repeatedly by different High Courts in a number of cases against which no special leave petitions were filed meaning thereby that the Department has accepted the view taken in these judgments. See CIT v. Nima Specific Family Trust reported in [2001] 248 ITR 29 (Bom)....