TaxTMI 
TaxTMI 
2026 (1) TMI 911
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....f income. (3) The grounds on the basis of which the deduction u/s.80HHC has been scaled down are factually incorrect and not in accordance with law and the Ld.CIT(A) erred in law and on facts in accepting the deduction u/s.80HHC as allowed by the Assessing Officer in assessment order instead of Rs. 25,90,947/-, as claimed by the assessee. (4) Your assessee craves leave to add, alter, amend or withdraw any of the grounds stated here above." 3. The facts of the case which can be stated quite shortly are as follows: The return of income was filed by the assessee, under consideration, on 01.11.2004, declaring NIL income claiming deductions u/s. 80HHC of the I.T. Act at Rs. 25,90,947/- and u/s. 80IB at Rs. 1,81,465/-. The return of income so filed by the assessee, was accompanied with Audit Report in Form No. 3CB, 3CD, 10CCB & 10CCAC. The return of income was processed u/s 143(1) of the I.T. Act on 27.01.2005, without any modification. The notice u/s. 143(2) of the I.T. Act dated 07.02.2005, was issued and served upon the assessee by RPAD. The notices u/s 143(2) and 142(1) of the Act, along with a questionnaire, all dated 05.05.2006 were also issued and served upon ....
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.... computation under clause (a) or clause (b) or clause (c) of this sub-section is a loss, such loss shall be set off against the amount which bears to ninety per cent of -- (a) any sum referred to in clause (iiia) or clause (iiib) or clause (iiic), as the case may be, or (b) any sum referred to in clause (iiid) or clause (iiie), as the case may be, of section 28, as applicable in the case of an assessee referred to in the second or the third or the fourth proviso, as the case may be, the same proportion as the export turnover bears to the total turnover of the business carried on by the assessee. Therefore, the deduction u/s. 80HHC of the I.T. Act was worked out as under after setting off the loss against the 90% of the Export Incentives allowable to the assessee: 90% of Export Incentives income as per Form No. 10CCAC (90% of Rs. 95,96,101/-) 86,36,490 x 5,25,19,979 / 5,25,19,979 86,36,490/- Total Profit of the business as per Form No. 10CCAC (-) 79,10,629 x 5,25,19,979 / 5,25,19,979 (-)79,10,629/- 7,25,862/- Deduction u/s. 80HHC allowable @30% of Rs. 7,25,862/- 2,17,759/- From the above facts, the assessing officer concluded th....
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....(3) of the Act may be referred to while calculating the eligible deduction of Rs. 2,17,759/- u/s.80HHC of the Act, the AO as per his working as given on page No.4 of the assessment order has considered 90% of the exports, Incentives income as per form No.10CCAC in view of the amended provisions of section 80HHC as amended by Taxation Law (Amendment) Act., 2005. Considering these facts, it was held by ld.CIT(A) that the AO as per his working of deduction u/s.80HHC of the Act, as given on page Nos.3 & 4 of the assessment order, has correctly calculated the eligible deduction of Rs. 2,17,759/- being 30% of the profit of Rs. 7,25,862/- and therefore such action of the AO was confirmed by ld. CIT(A). 6. Aggrieved by the order of the Ld. CIT(A), assessee is in further appeal before this Tribunal. 7. The Learned Counsel for the assessee submitted that the amendment in Section 80HHC of the Act came in 2005, however, the said amendment which came in 2005 is not retrospectively applicable. Moreover, the turnover is less than Rs. 10 Crore. Therefore, Ld. Counsel for the assessee submitted that the deduction claimed in the return of income may be allowed, for that, Ld. Counsel for the as....
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....e writ petitions challenging conditions mentioned in third and fourth proviso to Section 80HHC(3). In fact it was their precise contention that these conditions are severable and therefore these two conditions should be declared ultra vires and severed. The rationale behind seeking such a prayer was obvious inasmuch as the writ petitioners did not want entire Notification to be declared ultra vires which was to their advantage. What they wanted was that the benefit of amended provision be accorded, without insisting on the aforesaid conditions. The High Court vide impugned judgment has decided the issue in favour of the writ petitioners by concluding as under: "26. On consideration of the entire materials on record, we, therefore, find substance in the contention of the learned counsel for the petitioners that the impugned amendment is violative for its retrospective operation in order to overcome the decision of the Tribunal, and at the same time, for depriving the benefit earlier granted to a class of the assessees whose assessments were still pending although such benefit will be available to the assessees whose assessments have already been concluded. In other....