Case Law Details
Brief of the Case
Supreme Court held In the case of ACIT vs. M/s. Micro Labs Ltd. that – As per first thought of opinion, Section 80-IA (9) is quite unambiguous, which clearly provides that if an assessee claims any deduction under the provisions of Section 80-IA, then the assessee cannot claim deduction to the extent of such profits and gains under heading ‘C’ of Chapter VIA of the Act, which, in the present case, was claimed and wrongly allowed to the Assessee. Section 80HHC, which pertains to deduction in respect of profits and gains from export business, is included under heading ‘C’, of Chapter VIA of the Act.
As per second thought of opinion, Bombay High Court has rightly pointed out that there is a difference between allowing a deduction and computation of deduction. The two have separate and distinct meanings. Computation of deduction is a stage prior and helps in quantifying the amount, which is eligible for deduction. Sub-section (9) to Section 80IA does not bar or prohibit the deduction allowed under Section 80IA from being included in the gross total income, when deduction under Section 80HHC (3) is computed. The expression “shall not be allowed” cannot be equated with the words “shall not qualify” or “shall not be allowed” in computing deduction. The effect thereof would be that while computing deduction under Section 80HHC, the gross total income would mean the gross total income before allowing any deduction under Section 80IA or other sections of part C of Chapter VIA of the Act. But once the deduction under Section 80HHC has been calculated, it will be allowed, ensuring that the deduction under Section 80HHC and 80IA when aggregated do not exceed profits and gains of such eligible business of undertaking and enterprise.
Facts of the Case
The question which had to be considered by the Tribunal as well as by the High Court was whether, while considering the deduction under the provisions of Section 80-IA or/and 80-IB, the Assessee is also entitled to the deduction in respect of the profits and gains under the provisions of Section 80HHC or whether the Assessee is entitled to deductions under all the three Sections in respect of the same profits. Upon perusal of the Sections and looking at the facts of the case, the Tribunal had come to the conclusion that the Assessee was not entitled to deductions under Sections 80HHC and 80-IB but the High Court did not agree with the said conclusion arrived at by the Tribunal and decided in favour of the Assessee. The case of the Revenue is that looking at the provisions of the sections; the Assessee is not entitled to the deductions under all the 3 Sections of the Act.
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