TaxTMI 
TaxTMI 
2013 (3) TMI 896
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.... Commissioner of Income Tax (Appeals), LTU erred in confirming the exclusion of 90% of Duty Draw Back, Labour Charges and Weighment charges and Dividend income, interest income and Profit on sale of fixed assets from book profits u/s. 115JA while computing deduction u/s. 80HHC. 1.1 The Commissioner of Income Tax (Appeals), LTU ought to have appreciated that such adjustments are not permissible while computing book profits u/s. 115JA having regard to the Hon'ble Apex Court decision in the case of Apollo Tyres Ltd. v. CIT (255 ITR 273) (S.C). 2. The Commissioner of Income Tax (Appeals), LTU erred in confirming the inclusion of Duty Draw back and Labour charges in the total turnover while computing deduction u/s. 80HHC. ....
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....ncluded in the total turnover of the assessee relying on the decision of Hon'ble Supreme Court in the case of CIT v. K. Ravindranathan Nair (295 ITR 228) Aggrieved of the action of the Assessing Officer in excluding 90% of the said incomes and including the said income in the total turnover, the assessee filed appeal before Commissioner of Income Tax (Appeals) contending that the Assessing Officer is not correct in reducing 90% of the incomes applying clause (baa) of Explanation to sec. 80HHC of the I.T. Act while arriving at the profits under sec. 115JA of the Act. The assessee also contended that such incomes shall not be included in total turnover in computing the deduction. However, the Commissioner of Income Tax (Appeals) held that....
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.... and subject to the conditions specified in sub sec. (4) & (4A) only. Therefore, he submits that clause (baa) has no application while computing book profits of sec. 115JA of the Act. 5. The Departmental Representative submits that the decision of Mumbai Special Bench of the Tribunal in the case of DCIT v. Syncom Formulations (I) Ltd. (supra) which was confirmed by Hon'ble Supreme Court in the case of Ajanta Pharma Ltd. v. CIT (supra) has no application to the facts of the case. The Departmental Representative submits that the question before the Special Bench of the Tribunal and the Hon'ble Supreme Court was whether deduction under sec. 80HHC has to be computed with reference to the income assessable under the regular provisions....
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.... clause (viii) provided in Explanation to sec. 115JA which reads as under :- "[(viii) the amount of profits eligible for deduction under section 80HHC computed under clause (a), (b) or (c) of sub-section (3) or sub-section (3A), as the case may be, of that section, and subject to the conditions specified in sub-sections (4) & (4A) of that Section." 8. As could be seen from the above clause (viii), deduction under sec. 80HHC has to be computed under clause (a), (b) or (c) of sub sec. (3) or (3A) subject to condition specified in sec. (4) and (4A) of sec. 80HHC of the Act. Explanation provided in Sec. 80HHC of the Act after sub section (4) and (4A) defines what is convertible Foreign Exchange, Export out of India, Export turnover,....
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....tion (3) or sub-section (3A) of section 80HHC." 10. As could be seen from the above question formulated, the question before Special Bench was whether deduction is allowable under sec. 80HHC as the profits eligible for deduction actually computed under clause (a),(b),(c) of sub sec. (3) or sub sec. (3A) or profits eligible for deduction under sec. 80HHC computed with reference to book profits after adjustments in the manner specified in sub sec. (3) of sub sec. (3A) of sec. 80HHC of the Act. The Tribunal held as under :- "66. The deduction under section 80HHC in a MAT scheme is from the taxable income, which is otherwise the adjusted book profit. If no deduction is available to an assessee, the gross total income itself is the t....
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.... sub sec. (3) or (3A) of sec. 80HHC including the adjustments specified in Explanation to Sec. 80HHC containing clause (baa). The Special Bench did not specify that clause (baa) of Explanation to Sec. 80HHC has no application while computing deduction under sec. 80HHC of the Act with reference to book profits. In the circumstances, we up hold the action of the Assessing Officer in excluding 90% of the said incomes while computing deduction under sec. 80HHC and arriving at the book profits under sec. 115JA of the Act. We confirm the order of the Commissioner of Income Tax (Appeals) and dismiss the grounds raised by the assessee on this issue. 12. The next issue in the grounds of appeal of the assessee is that the Commissioner of Income Ta....