TaxTMI 
TaxTMI 
2001 (6) TMI 42
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.... under section 80J of the Act the amount of deduction under section 80HH of the Act?" The circumstances in which the questions have been referred to this court, in a nutshell, are as under: The assessee established a new industrial undertaking in a backward area and therefore it was getting benefit of deduction under the provisions of sections 80HH and 80J of the Act. For the assessment year 1981-82, the assessee was entitled to deduction of Rs.55,518 under the provisions of section 80HH whereas it was entitled to deduction of Rs.62,515 under the provisions of section 80J of the Act. The Assessing Officer, while assessing the income of the assessee, took the following course for the purpose of determining the taxable income of the assessee. First of all, he allowed the deduction under the provisions of section 80HH of the Act to the assessee. The Assessing Officer did not allow deduction of Rs.62,515 under the provisions of section 80J in toto. He deducted Rs.55,518, the amount which the assessee was entitled to for deduction under section 80HH, from Rs.62,515 and thereby allowed deduction of only Rs.6,997 (Rs.62,515 less Rs.55,518 = Rs.6,997) under the provisions of section ....
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.... The relevant provisions with which we are concerned are reproduced hereinbelow: "80HH. Deduction in respect of profits and gains from newly established industrial undertakings or hotel business in backward areas.-(1) Where the gross total income of an assessee includes any profits and gains derived from an industrial undertaking, or the business of a hotel, to which this section applies, 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 per cent. thereof." "80J. Deduction in respect of profits and gains from newly established industrial undertakings or ships or hotel business in certain cases.-(I) Where the gross total income of an assessee includes any profits and gains derived from an industrial undertaking or a ship or the business of a hotel, to which this section applies, 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 (reduced by the deduction, if any, admissible to the assessee under s....
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....ital employed in the industry by the assessee. It has been submitted by him that upon a reading of the provisions of section 80J(1) it is clear that the deduction from the profits and gains should be reduced by the deduction, if any, admissible to the assessee under section 80HH or section 80HHA as stated in the said subsection. He has relied upon the following portion of the said sub-section so as to submit that the Legislature wanted to clarify the fact that the benefit of deduction to be given under the provisions of section 80J should be reduced by the benefit of deduction given under the provisions of section 80HH: "a deduction from such profits and gains (reduced by the deduction, if any, admissible to the assessee under section 80HH or section 80HHA), of so much of the amount thereof as does not exceed the amount calculated at the rate of six per cent. per annum on the capital employed in the industrial undertaking or ship or business of the hotel, as the case may be, computed in the manner specified in sub-section (1A) . . ." On the other hand, Mr. Bhargav Karia, learned advocate appearing for the respondent-assessee, has submitted that the Tribunal was absolutely jus....
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....nabove, the deductions under sections 80HH and 80J are based on different considerations. The benefit of deduction under section 80HH is given to those industrial units which establish their industries in a backward area whereas so far as section 801 is concerned, the benefit under the said section is given to new industrial units. Moreover, the manner in which the benefit of deduction is to be given under the said sections is also absolutely different. So far as section 80HH is concerned, it depends upon the amount of gross profits whereas deduction under the provisions of section 80J is based upon the quantum of capital employed in the new industry. Otherwise also, we do not find anything to justify the submission of Mr. Joshi. Even if we look at the legislative history, section 80J was brought into force with effect from April 1, 1968, so as to give benefit to those who establish new industries. It is clear that the Government wanted to see that new industries are set up and for the purpose of encouraging industrialists to set up new industries, etc., the said section was enacted. It appears that the Government was more keen to see that new industries are set up in backward area....