Assessee held within his rights to make claim for deduction u/s 80HHC (of Income Tax Act, 1961), HC

Facts in Brief:

1. The relevant facts of the case are that the assessee in the year under consideration declared NIL income after adjusting the brought forward unabsorbed depreciation u/s 115JA (of Income Tax Act, 1961) income offered for taxation was Rs.1,74,83,870/-.

2. Apart from that long term capital loss had been shown as Rs.7,36,63,180/-. The said return was filed on 30.11.2000 and was duly processed u/s 143(1) (of Income Tax Act, 1961).

3. Thereafter it was selected for scrutiny assessment wherein certain additions were made. As a resulting these additions the normal income of the assessee was assessed at Rs.1,74,83,870/-. However since the returned income u/s 115JA (of Income Tax Act, 1961) was higher than the assessed income, the income of the assessee was taken at Rs.1,74,83,870/-.

4. The additions were unsuccessfully challenged by the assessee in appeal before the CIT(A).

On appeal Tribunal held,

5. This decision of the Hon'ble Supreme Court has now settled that section 80A (of Income Tax Act, 1961), 80AB (of Income Tax Act, 1961) & 80B(5) are the governing sections for deductions available under Chapter VIA of the Act. Section 80HHC (of Income Tax Act, 1961) is only a machinery section. For the purposes of deduction under Chapter VI A, first the gross total income is to fee computed under the Act, after setting off brought forward business losses, unabsorbed depreciation etc and other deficiencies.

6. Thereafter, the deduction under section 80HHC (of Income Tax Act, 1961), will be allowed, from the resultant positive income, if any, arrived at after setting off the brought forward deficiencies. The arguments of the appellant therefore, fail; and this ground of appeal is accordingly dismissed.

7. There is however, merit in the submission of the appellant that, in case after the appeal and giving effect to the provisions of section 80A (of Income Tax Act, 1961), 80AB (of Income Tax Act, 1961) and 80B (5) (emphasis added) positive income survives, then the appellant would be within his rights to make a claim for deduction u/s 80HHC (of Income Tax Act, 1961).

8. Considering the position of law as finally settled by the Apex Court in IPCA Laboratories in 266 ITR 521 (SC) the Ld. AR though relied on the ground advanced no further arguments. The Ld. DR placed reliance upon the impugned order. Accordingly having heard the rival submissions and perused the material available on record wherein admittedly the issue is no longer res integra as the judgement of the Hon'ble Bombay High Court has been set aside by the afore-I.T.A .No.-2698/Del/2004 mentioned decision of the Hon'ble Apex High Court which fact has been taken into consideration by the well-reasoned and speaking order passed by the Ld. CIT(A). Being satisfied by the reasoning and finding arrived at in the impugned order, Ground No.3 of the assessee is dismissed.

9. In the result, the appeal of the assessee is partly allowed for statistical purposes. 

Case Reference - Srf Ltd.,, vs Assessee