TaxTMI 
TaxTMI 
TaxTMI 
2017 (2) TMI 598
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....d, hence the assessee is before us. 5. The first ground relates to the exclusion of excise duty and sales tax from total turnover while computing deduction u/s. 80HHC after insertion of section 145A. The assessee strongly contends that despite of the insertion of Section 145A components of sales tax and central excise do not form part of sale proceeds for the purpose of section 80HHC of the Act. We find that an identical issue was considered by the Hon'ble Jurisdictional High Court of Gujarat in the case of Dyntex Dyechem Ltd. in Tax Appeal No. 1364 of 2008 224 taxmann.com 224. We find that the Hon'ble Jurisdictional High Court had decided this issue in favour of the assessee considering the provisions of Section 145A of the Act. The relevant findings of the Hon'ble High Court read as under:- 7. Applying ratio laid down by the Hon'ble Supreme Court in the case of Lakshmi Machine Works (supra) and Shiva Tex Yarn Ltd. (Supra} as well as recent decision of this Court in Tax Appeal No. 884 of 2006 and other allied appeals, to the facts of the case on hand the question raised in the present Tax Appeal is answered against the revenue and it is held that the learned Tribunal ....
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....998-99 and 1997-98 and ITA Nos. 3351 & 3352/Ahd/2002 (by Assessee) for Assessment Years 1997-98 & 1998-99 dated 17/11/2006. We find that the Tribunal while deciding the issue has observed as under:- '8. Regarding Ground No.-3, learned counsel for the assessee contended that issue is covered in favour of the assessee by Tribunal decision in assessee's own case by order dated 20/10/2006 in ITA No.1774/Ahd/2003 for A.Y. 1999-2000 by holding as under "5.2. In the present case in hand, the Assessing Officer has held that deduction under section 80HHC is not available on division/unitewise profits of the business and the same is available on the entire business profit without differentiating between units engaged in export and units engaged in domestic sales. Therefore, by following the said decision of the Tribunal, we reverse the finding of the CIT(A) and restore the matter to the file of the Assessing Officer to decide the issue in the light of the decision of the ITAT, in the case of Madhusudan Ind. (supra)." Further reliance was placed on - i) Eastern Leather Products P.Ltd., 68 ITD 358 (Del); (ii) J.H. Soni Vs. ITO, 105 Taxman 197 (Ahd); (iii) CIT Vs....
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....r: "37. We have considered the facts and circumstances of the present case and the law laid down by the apex court and the decision of the Delhi High Court referred hereinabove. It is not the case of the assessing authority that the gross income of the company was nil. From a perusal of the income disclosed to all the three units it appears that the gross income was not nil and therefore, the assessee was eligible to claim the deduction under sections 80HH and 80-I of the Act. After becoming eligible to claim the deduction, the question for consideration is that whether deduction is eligible to the income derived to each industrial undertaking independently or on a consideration of losses suffered by the service unit. Sections 80HH and 80-I of the Act contemplate the deduction from the income derived by the undertaking. The Commissioner of Income-tax (Appeals) has rightly held that income of the undertaking shall be calculated on a consideration of an unabsorbed business losses, etc. in respect of each individual unit and thereafter on the profit derived by the unit the deduction is to be allowed. This view of the Commissioner of Income-tax (Appeals) confirmed by the Tribunal is ....
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....cer, no doubt, has to treat the profits derived from an industrial unit as the only source of income in order to arrive at a deductions under chapter VI. It was further observed that section 80I(6)deals with actual computation of deduction whereas section 80I deals with treatment to be given to such deductions in order to arrive at total income of the assessee and therefore, while interpreting section 80I(1) as also the gross total income, one has to read expression "gross total income" as defined under section 80B(5). It was therefore,concluded that the loss from oil division was required to be adjusted before determining gross total income and as gross total income was nil, the assessee was not entitled to claim deduction under sections 80I(6) which includes section 80I also. 8. This judgment nowhere provides that while computing the deduction under section 80HH or 80I or any other similar provision, loss of another unit is first to be set off. It only provides and in fact, reinforces that such deduction has to be computed as if the unit was an isolated industry. However, thereafter while computing gross total income, even the loss has to be accounted for and only i....
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....our of the revenue and against the assessee by the decision of the Hon'ble Supreme Court in the case of IPCA Laboratory Ltd. 266 ITR 521 wherein the Hon'ble Apex Court has held in page 529:- "We are unable to accept the submission of Mr. Dastur. Undoubtedly section 80HHC has been incorporated with a view to providing incentive to export houses. Even though a liberal interpretation has to be given to such a provision the interpretation has to be as per the wording of this section. If the wordings of the section are clear then benefits, which are not available under the section, cannot be conferred by ignoring or misinterpreting words in the section. In this case we are concerned with the wordings of sub-section (3)(c) of section 80HHC. As noted earlier sub-section (3)(a) deals with case where the export s only of self manufactured goods. Subsection 3(b) deals with the case where the export is only of trading goods. Thus when the Legislature wanted to take exports from self manufactured goods or trading goods separately, it has already so provided in sub-sections (3)(a) and (3)(b). In arriving at the figure of positive profit, both the profits and the losses will have to be c....
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....on 80AB is also in Chapter VI-A. It starts with the words "where any deduction is required to be made or allowed under any section of this Chapter". This would include Section 80HHC. Section 80AB further provides that "notwithstanding anything contained in that section". Thus section 80AB has been given an overriding effect over all other sections in Chapter VI-A. Section 80HC does not provide that its provisions are 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." 15. Respectfully following the Hon'ble Apex Court's decision (supra), we decide this issue in favour of the revenue and against the assessee. Ground no. 3 is dismissed. 16. Ground no. 4 relates to the denial of granting deduction u/s. 80HHC on DEPB inco....
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....ction u/s.80HHC of the I.T.Act, 1961, if condition laid down in that proviso are not satisfied. The face value of the DEPB licence will be covered u/s.28(iiib) of the I.T.Act, 1961 and, therefore, 90% thereof would be added to the export profits as per first proviso to section 80HHC(3) of the I.T.Act.1961. 10. In order to compute deduction u/s.80HHC of the I.T.Act, 1961 in accordance with the decision of the Special Bench in the case of M/s.Topman Exports (supra), we restore the matter to the file of Assessing Officer." 4.1. There is no dispute with regard to the fact that the decision of the Special Bench rendered in the case of Topman Exports vs. ITO(supra) has been upheld by the Hon'ble Supreme Court. Therefore, the issue remains to be examined whether the AO has computed the deduction as per the decision of the Special Bench rendered in the case of Topman Exports(supra). The contention of the ld.counsel for the assessee is that the computation of "profit of the business" as per Explanation(baa) of Section 80HHC, whether made on the basis of the judgment of Topman Exports or on the basis of Kalpataru Colours and Chemicals, will not make any difference because whatever am....
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.... Ground no. 5 becomes infructuous. 23. Ground no. 6 relates to the reduction of gross interest income as against net interest for computing deduction u/s. 80HHC of the Act. 24. This issue is no more res integra as the same has been decided in favour of the assessee and against the revenue by the Hon'ble Supreme Court in the case of ACG Associated Capsules Pvt. Ltd. in 343 ITR 89. The Relevant part reads as under:- For the purpose of section 80HHC of the Income-tax Act, 1961, it is not the entire amount received by the assessee on sale of DEPB credit, but the sale value less the face value of the DEPB that will represent profit on transfer of DEPB credit by the assessee. Topman Exports v. CIT [2012] 342 ITR 49 (SC) followed. Under clause (1) of Explanation (baa) to section 80HHC of the Act, ninety per cent. of any receipts by way of brokerage, commission, interest, rent, charges or any other receipt of a similar nature included in any such profits are to be deducted from the profits of the business as computed under the head "Profits and gains of business or profession". The expression "included any such profits" would mean only such receipts by way of brok....