TaxTMI 
TaxTMI 
2016 (10) TMI 400
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....rt on 17.07.2006 for the following substantial question of law: "Whether on the facts and in the circumstance of the case, the Tribunal was right in holding that relief under Section 80-HHC is allowable while arriving at the book profits as per Clause (vii) of Explanation to Section 115-JA(1), when the assessee itself had not claimed the deduction under Section 80-HHC in the normal computation, since it had filed "NIL" Return ? " 3. The respondent-assessee-Company has Returned for the assessment year 1998-1999 on 27.11.1998 admitting 'Nil' income under normal computation as well as under Section 115-JA of the Income Tax Act. The Return was processed under Section 143(1)(a) on 20.05.1999. The excess claim of Rs. 24,370/- und....
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....as dismissed. The assessee approached the Income Tax Appellate Tribunal, which by the impugned order, dated 11.11.2005, allowed the appeal of the assessee. In paragraph 7 of its order, the Tribunal relied on a judgment rendered earlier by the Tribunal in the case of DCIT Vs. Govind Rubber (P) Ltd. (MUM) and faithfully extracted paragraph 16 of the judgment in Govind Rubber (P) Ltd. case thereunder. 4. Heard Mr.T.Ravi Kumar, learned Senior Standing Counsel of the Income Tax, appearing for the appellant/Revenue and Mr.A.S.Sriraman, learned counsel appearing for Mr.S.Sridhar, learned counsel for the respondent/assessee. 5. Learned Senior Standing Counsel appearing for the Revenue brought to our notice the judgment of the Supreme Court ....
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.... downward adjustments, which are required to be made for arriving at the book profits under Section 115-JA together with the Explanation contained therein. In paragraph 10 of the judgment of the Supreme Court, the contention that both eligibility as well deductibility of the profits have to be considered together for working out the deduction as stipulated under Clause (iv) of Explanation to Section 115-JB of the Act, was specifically rejected, finding no merit in that contention. Ultimately, the Supreme Court concluded the issue in the following words: "10..... If the dichotomy between "eligibility" of profit and "deductibility" of profit is not kept in mind then S.115-JB will cease to be a self-contained code. In S.115-JB, as in S.115-J....
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....for example trading goods) then both are to be clubbed together to arrive at net profits or losses for the purpose of applying the provisions of section 80HHC of the Act. If the net result was loss from the export business, then the deduction under the aforesaid Act is not permissible. As a fortiori, if there is net profit from the export business, after adjusting the lossess from one type of export business from other type of export business, the benefit of the said provision would be granted. 19. However, the appellant-assessee relies upon section 80HHC(3)(b), as existed at the relevant time, to contend that the profits of the business as a whole, i.e., including profits earned from the goods or merchandise within India will also be tak....
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..... In the above view of the matter, what follows is, for the purpose of providing the incentive contemplated under Section 80-HHC, the profits earned from the export business, which might include, in a given case, exports carried out of the goods manufactured by the assessee as well as by trading the goods manufactured by others, and the lossess sustained in any one of these branches of exports business, are liable to be adjusted against the profits earned by the other branch of export business. 8. A reading of the principles enunciated by the Supreme Court in the cases of Ajanta Pharma Ltd. (cited supra) and Jeyar Consultant and Investment Pvt. Ltd. (cited supra), it becomes crystal clear that the Tribunal has arrived at an incorrect compr....