2007 (5) TMI 194

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....ue. The issue involved in this appeal relates to the provisions of the Income-tax Act, 1961 (for short "the Act"). The High Court framed the following two questions of law for its determination : 1. Whether section 80AB can be applied to section 80HHC of the Act? 2. Whether, in determination of business profit under section 80HHC, the unabsorbed business losses of the earlier years under section 72 of the Act should be set off? The High Court has decided both the questions against the Revenue and in favour of the assessee. On the first point, the High Court has held that section 80HHC is independent of section 80AB and section 80AB does not control section 80HHC of the Act. On the second point, it has been held that unabsorbed b....

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....The judgment impugned in the present case, which, as indicated herein, was relied upon has been noticed by this court in paragraph 7 of the judgment in IPCA Laboratory Ltd. case, thus: "Mr. Dastur also relied upon the case of CIT v. Shirke Construction Equipments Ltd. [2000] 246 ITR 429 (Bom). In this case the Bombay High Court has held that section 80HHC is a complete code in itself and that it is not controlled by section 80AB. It was held that profits had to be computed under section 29 and section 72 was not applicable. It was held that carry-forward losses could not be set off for computing profits for the purpose of section 80HHC. In this case it was also noticed that the object was to encourage exports." The judgment of the Ker....

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....e to prevail over section 80AB or over any other provision of the Act. Section 80HHC would thus be governed by section 80AB. The decisions of the Bombay High Court and the Kerala High Court to the contrary cannot be said to be the correct law. Section 80AB makes it clear that the computation of income has to be in accordance with the provisions of the Act. If the income has to be computed in accordance with the provisions of the Act, then not only profits but also losses have to be taken into consideration." As stated above, this court has taken a contra view to that of the High Court of Bombay, in CIT v. Shirke Construction Equipments Ltd. [2000] 246 ITR 429 (Bom) (the impugned judgment) and the decision of the High Court of Kerala in C....