Case Law Details
RELEVANT EXTRACTS:
1. This Special Bench was constituted on the recommendation of the regular Bench which was hearing above appeals. The controversy relates to the computation of deduction u/s 80HHC to an assessee (industrial undertaking) after it has been allowed deduction u/s 80-IB of the Income Tax Act. In other words, the effect of provision of Section 80-IA(9) introduced w.e.f. 1.4.1999 is to be seen.
2. Earlier Special Bench (ITAT ‘D’ Bench) at Chennai in the case of ACIT Vs Rogini Garments (2007) 108 ITD 49 was constituted to consider similar controversy when conflict of views between different benches of ITAT was found. The Special Bench after hearing both the parties had held that where deduction u/s 80HHC as also u/s 80-IA are claimed for AYs 1999-2000 and 2002-03, then relief allowed u/s 80-IA is to be deducted from profits and gains of assessee’s business on which relief u/s 80HHC of the Act is to be computed. After the above Special Bench, the Hon’ble Madras High Court in the case of SCM Creations decided the same question and took a view which some benches thought was different from the view taken by Special Bench in the case of Rogini Garments. It was thought by these benches that Rogini Garments is no more applicable after the decision of SCM Creations (supra). The referral Bench hearing these appeals noticed that Delhi ‘F’ Bench of the Tribunal, in case of Sarla Fashions & Modi Exports (ITA No. 1799 & 1085/D/06 for AY 2001-02 and 2002-03), decided a similar view in favor of the assessee in the light of above decision of Hon’ble Madras High Court. Similarly, Delhi Bench of the Tribunal in the case of Anil Kumar Rastogi Vs ACIT and Stanrose Mesowares (P) Ltd. Vs ACIT (ITA No. 2465/D/07 and ITA No. 1567/D/07) respectively took a similar view in favour of the taxpayer. Above case fell under the jurisdiction of Allahabad High Court. The Revenue had submitted before the referral Bench that Delhi Tribunal in above cases committed an error in not properly considering the decision of the Hon’ble Madras High Court in the case of SCM Creations. The revenue further relied upon the decision of the Delhi Bench in the case of Modi Exports Vs ACIT 24 SOT 526 where the case of SCM Creations (supra) was held to be not applicable. Several other Benches have held that applicability of Special Bench decision in the case of Rogini Garments was not affected by decision of Hon’ble Madras High Court in the case of SCM Creations. The referral Bench, in the light of conflict of views of different benches, thought it proper to refer the matter to the President for constitution of a larger special bench. Accordingly, a Special Bench of five Members was constituted to consider the following question:-
“Whether in view of the provisions of Section 80-IA(9) read with Section 80IB(13), the deduction of income under Chapter VI-A can be allowed on the entire profit and gains of an undertaking or an enterprise of an assessee or it is to be allowed on such profit and gains as are reduced by the deduction claimed and allowed under section 80IB/80IA.”
18. The legislature by Finance (No.2) Act 1998 w.e.f. April 1, 1999 introduced the following provision as sub-section (9) of section 80-IA:-
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