Income Tax Deduction u/s 80IB and 80HHC Can Be Computed Independently Without Exceeding Eligible Profits: ITAT [Read Order]
ITAT held that deductions under Sections 80IB and 80HHC of the Income Tax Act could be computed independently, provided the aggregate deduction did not exceed the eligible profits.
![Income Tax Deduction u/s 80IB and 80HHC Can Be Computed Independently Without Exceeding Eligible Profits: ITAT [Read Order]](https://images.taxscan.in/h-upload/2026/05/30/2138584-income-tax-deduction-computed-independently-eligible-profits-itat-delhi-taxscan.webp "Income Tax Deduction u/s 80IB and 80HHC Can Be Computed Independently Without Exceeding Eligible Profits: ITAT [Read Order]")
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, set aside revision proceedings under Section 263 of the Income Tax Act after holding that deduction under Section 80IB need not be reduced by the deduction allowed under Section 80HHC while computing eligible deductions. The assessee, Sarla Fashion Garments, had been allowed deduction under Section 80IB on the full gross...
The Income Tax Appellate Tribunal (ITAT), Delhi Bench, set aside revision proceedings under Section 263 of the Income Tax Act after holding that deduction under Section 80IB need not be reduced by the deduction allowed under Section 80HHC while computing eligible deductions.
The assessee, Sarla Fashion Garments, had been allowed deduction under Section 80IB on the full gross total income without reducing the deduction already allowed under Section 80HHC.
Subsequently, the Commissioner of Income Tax invoked revisionary jurisdiction under Section 263 and held that deduction under Section 80IB ought to have been recomputed after reducing the deduction already allowed under Section 80HHC. Relying on Sections 80IA(9) and 80IB(13) of the Act, the Commissioner directed the AO to recompute the deduction.
Aggrieved, the assessee preferred an appeal before the Tribunal.
Before the Tribunal, the assessee contended that Section 80IA(9) restricted only the aggregate deduction that could be allowed and did not require recomputation of deduction under Section 80IB.
However, the Revenue supported the revision order passed under Section 263 of the Act.
The Tribunal comprising Challa Nagendra Prasad (Judicial Member) and Sanjay Awasthi (Accountant Member) observed that the controversy had been settled by the Supreme Court in Shital Fibers Ltd. v. CIT (2025), wherein it was held that deductions under different provisions of Chapter VI-A could be computed independently, provided the aggregate deduction did not exceed 100% of the eligible profits.
Accordingly, the Tribunal held that the Commissioner had incorrectly interpreted the provisions of Sections 80IA(9) and 80IB(13) of the Act and that the assessment order could not be regarded as erroneous or prejudicial to the interests of the Revenue.
The Tribunal therefore quashed the order passed under Section 263 of the Act.
The assessee’s appeal was allowed.
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