2004 (11) TMI 31

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....facts and in the circumstances of the case, the Tribunal is justified in holding that the Assessing Officer was correct in adjusting the brought forward business loss of the earlier year(s) against the business profit of the current year and since after such adjustment the gross total income was computed at nil, the assessee was not entitled to deduction under section 80HHC of the Income-tax Act, 1961?" In order to answer the question referred supra, the facts as stated in the statement of case drawn by the Tribunal need to be taken note of infra. The question relates to the assessment years 1985-86 and 1986-87. It relates to the manner in which the deduction is required to be calculated under section 80HHC as it stood in the year 1985-86....

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....es suffered in export business? The Supreme Court had a close look at section 80HHC as it existed after April 1, 1986. Their Lordships, inter alia, held that though section 80HHC has been incorporated in the Income-tax Act, 1961, with a view to provide incentive for earning foreign exchange and a liberal interpretation of such provision may be called for the plain language of the said section being clear, the benefits which are not available cannot be conferred by ignoring or misinterpreting the words in the section. Their Lordships considering the word "profit" occurring in sub-sections (1) and (3) (a) and (b) of section 80HHC held that the said word "profit" means a positive profit and that if there is a loss in the business then no deduc....

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....ssee. 3. Section 80AB. - Where any deduction is required to be made or allowed under any section (***) included in this Chapter under the heading 'C-Deductions in respect of certain incomes' in respect of any income of the nature specified in that section which is included in the gross total income of the assessee, then, notwithstanding anything contained in that section, for the purpose of computing the deduction under that section, the amount of income of that nature as computed in accordance with the provisions of this Act (before making any deduction under this Chapter) shall alone be deemed to be the amount of income of that nature which is derived or received by the assessee and which is included in his gross total income. 4. Sectio....

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....ns "total income computed in accordance with the provisions of this Act before making any deductions under this Chapter". Then comes, section 2(45) which defines the word "total income". This means, the total amount of income referred to in section 5 computed in the manner laid down in this Act. Then comes section 80AB. This section provides as to how the deduction is to be calculated in respect of any income of the nature specified in those sections which fall in heading C of Chapter VI-A. In other words, the cases arising out of sections which are part of heading C are governed by section 80AB. One such section which falls in heading C is 80HHC. In our opinion, the use of the expression "computed in accordance with the provisions of the....