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Commissioner of Income-tax-III, Ludhiana v/s Preet Forgings (P.) Ltd.

    IT Appeal No. 534 of 2008 (O&M)

    Decided On, 10 October 2012

    At, High Court of Punjab and Haryana


    For the Appellant: Rajesh Katoch, Advocate. For the Respondent: Pankaj Jain, Advocate.

Judgment Text

Ajay Kumar Mittal, J.

1. This appeal has been preferred by the revenue under Section 260A of the Income Tax Act, 1961 (in short, "the Act") against the order dated 26.12.2007, Annexure A.3 passed by the Income Tax Appellate Tribunal, Chandigarh Bench 'B', Chandigarh (for brevity "the Tribunal") in ITA No.986/CHANDI/2007, for the assessment year 2004-05, claiming following substantial question of law:-

"Whether on the facts and in the circumstances of the case, the Hon'ble ITAT is justified in allowing deduction under Section 80HHC without reducing the deduction under Section 80IB from the profits of the business?"

2. Briefly, the facts as narrated in the appeal may be noticed. The assessee is a private limited company engaged in the export of manufactured Tractor Linkage parts and spanners and trading of miscellaneous items. It filed its return of Income for the previous year relevant to assessment year 2004-05 showing income of Rs. 9,81,154/- on 31.10.2004. During the course of assessment proceedings, it was noticed by the Assessing Officer that the assessee had claimed deduction under Sections 80HHC and 80IB of the Act at Rs. 27,07,091/- and Rs. 29,14,392/-respectively. While computing deduction under Section 80HHC of the Act, the Assessing Officer deducted an amount of Rs. 3,62,172/- which was allowed as deduction under Section 80IB of the Act from the profits of the business. Assessment was framed under Section 143(3) of the Act at an income of Rs. 50,05,765/- vide order dated 22.12.2006, Annexure A.1. Aggrieved by the order, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)]. Vide order dated 28.9.2007, Annexure A.2, the appeal was partly allowed and a direction was issued to the Assessing officer to allow deduction under Section 80HHC of the Act without reducing the deduction allowed under Section 80IB of the Act from the profits of the business. Not satisfied with the order, the revenue went in appeal before the Tribunal. Vide order dated 26.12.2007, Annexure A.3, the Tribunal dismissed the appeal. Hence the present appeal by the revenue.

3. We have heard learned counsel for the parties and perused the record.

4. The issue arising for consideration in this appeal is whether deduction allowable under Section 80HHC of the Act is to be worked out without reducing the deduction under Section 80IB of the Act from the profits of the business.

5. The matter is no longer res integra. This Court in Asian Exim International v. CIT [IT Appeal No. 469 of 2010, dated 18-4-2011], considering similar issue had come to the conclusion that Section 80-IA(9) barred claim for deduction under any other provision of Chapter VI-A if deduction under Section 80I of the Act had been allowed. Relying upon the judgments of the Kerala High Court in Olam Exports (India) Ltd. v. CIT [2011] 332 ITR 40/[2009] 184 Taxman 373 and Delhi High Court in Great Eastern Exports v. CIT [2011] 332 ITR 14/196 Taxman 145, i

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t was held that while calculating deduction under section 80HHC of the Act, the deduction under Section 80IB of the Act was required to be reduced from the profits of the business. 6. In view of the above, the substantial question of law is answered in favour of the revenue and against the assessee. The appeal is allowed.