Deduction u/s 80IA can be claimed without excluding Deduction u/s 80HHC

M/s. Indian Gum Industries Ltd. Vs  JCIT (Bombay High Court)

Facts of the Case

For the previous year relevant to the subject Assessment year, the Appellant in its return of income claimed 100% deduction in respect of profits earned by the two new factories derived from its exports under Section 80HHC of the Act. Besides, the Appellant also claimed the benefits of deduction under the Section 80IA of the Act to the extent of 30% of the profits and gains derived from its two new factories at Ahmedabad. The aggregate of deductions claimed was less than its Gross Total Income as defined under Section 80B(5) of the Act. The Appellant in its return of income claimed benefits of Section 80HHC of the Act to the extent of its earning from exports. Thereafter it claimed deduction at 30% of its profits and gains under Section 80IA of the Act. This 30% deduction under Section 80IA of the Act was computed without deducting / excluding the deduction allowed under Section 80HHC of the Act on profits derived from exports by the two new units. However, the Assessing Officer did not accept the same, as he was of the view that the Appellant would be entitled to deduction under Section 80IA of the Act only on the profits and gains of the two units after deducting the amount availed of as deduction under Section 80HHC of the Act was claimed. The basis of the above conclusion was the reliance upon the decision of the Supreme Court in Escorts Ltd. v/s Union of India, 199 ITR 43,which dealt with the double claim for deduction under Section 32 and Section 35 of the Act. Thus, the Assessing Officer on the above basis by his order dated 31^st August, 1999 restricted the claim to Rs.87.96 lakhs as against Rs.104.88 lakhs claimed under Section 80IA of the Act for Assessment Year 1997-­98.

Held by ITAT

In the present case, we are dealing with the deduction claimed by the appellant assessee in respect of the same income under two heads falling under Chapter VI­A Part ‘C’ of the Act. Prior to 1^st April, 1999, there was no specific prohibition in an assessee taking benefit of deduction on the same income both under Section 80HHC as well as under Section 80IA of the Act, provided the total deduction claimed was less than the gross total income as defined in Section 80B(5) of the Act. Admittedly, in this case, the total deduction claimed is less than the gross total income. In the present facts, Section 80IA was amended w.e.f. 1^st April, 1999 by introduction of Sub­Section 9A therein which is in accord with the observations made by the Apex Court in Escorts Ltd. (supra). However, it is to be noted that when the Finance (No.2) Bill of 1998 (Bill No.51 of 1998) introduced, it provided that the amendment should have retrospective effect from the year 1990. However, when the Parliament passed the bill and made it into an Act, it made the amendment prospective w.e.f. 1^st April, 1999. Thus, this would indicate that the Parliament was of the view that the deductions taken under Section 80IA and 80HHC of the Act even if it does amount to double benefit it would be allowed prior to 1^st April, 1999 i.e. Assessment Year 1999-2000. It was in its wisdom that the Parliament made the amendment prospective even though the bill as introduced by the Finance Minister sought to make the amendment retrospective. This would indicate that the Parliament did not seek to disturb and / or affect cases where deduction is taken twice over i.e. under Section 80IA and 80HHC of the Act on the same profit, provided it was less than the gross total income as defined in Section 80IB(5) of the Act.

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