Tata International Limited Vs ACIT (Madras High Court)
In the case of Tata International Limited Vs ACIT, the Madras High Court examined the method of computing deductions under Sections 80IB and 80HHC of the Income Tax Act for Assessment Year 2003-04.
The assessee, a private limited company engaged in the manufacture and export of leather goods including shoe uppers and full shoes, filed its return declaring income of Rs.16,53,065/-. It claimed deductions of Rs.72,77,912 under Section 80HHC and Rs.58,27,020 under Section 80IB.
The Assessing Officer completed the assessment under Section 143(3) by first deducting the amount claimed under Section 80IB from the business profits and then allowing deduction under Section 80HHC only on the remaining income. Consequently, deduction under Section 80HHC was restricted to Rs.39,29,201.
The assessee challenged this computation before the Commissioner of Income Tax (Appeals), arguing that the Assessing Officer had wrongly applied Sections 80IB and 80IA to reduce the deduction under Section 80HHC. However, the CIT(A) upheld the assessment by relying on decisions of the ITAT Special Bench. The Income Tax Appellate Tribunal also dismissed the assessee’s appeal and held that deduction under Section 80IB must first be granted and only thereafter deduction under Section 80HHC could be computed on the remaining income.
