Deduction u/s 80IA allowable without excluding Deduction u/s 80HHC: Bombay HC [Read Judgment]

EOU - Income Tax Deduction - Taxscan

A division bench of the Bombay High Court recently held that the deduction under Section 80IA of the Income Tax Act is allowable without excluding the deduction of profits from export business of two new industrial undertakings under section 80HHC of the Income Tax Act.

The Appellant Assessee is engaged in the manufacture of industrial gums, has factories situated at Mumbai, Jodhpur and Ahmedabad. In Ahmedabad, it has four factories, out of which two factories are new factories. For the relevant year, they 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 without deducting / excluding the deduction allowed under Section 80HHC of the Act on profits derived from exports by the two new units.

However, the AO rejected the claim and held that they are eligible for 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 bench noted that in an identical fact situation, the Rajasthan and Madras High Court in Rochiram & Sons and General Optics (Asia) Ltd. have held that prior to Assessment Year 1999-2000, the benefit of Section 80IA of the Act is available without exclusion of the deduction claimed under Section 80HHC of the Act.

It was also noted that even on being specifically asked, the Revenue was not able to inform the Court whether the above two decisions have been appealed to the Apex Court and the result thereof, if any.

It was therefore held that “In the above view, for the period prior to Assessment Year 1999-2000, the appellant would be entitled to claim deduction under Section 80IA of the Act on its entire profits without excluding the deduction available under other heads of Chapter VI A Part ‘C’ of the Act.”

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