Income Tax Appellate Tribunal - Bangalore
Income Tax Officer vs Amalgamated Bean Coffee Trading Co. ... on 7 September, 2007
ORDER
K.K. Gupta, A.M.
1. The revenue is in appeal agitating the action of the learned Commissioner of Income Tax (Appeals) in allowing the claim of deduction under Section 80HHC read with Section 115JB.
2. The learned Departmental Representative pointed out that the order of learned CIT(A) is opposed to law and facts and circumstances of the case. He erred in holding that there are no radical changes between Sections 115JA on the one hand and Section 115JB on the other.
He erred in holding that the assessee is eligible for the claim of deduction under Section 80HHC from the profits computed under the provisions of Section 115JB, overlooking the fact that in Expl. (iv) to Section 115JB, reference is made to profits eligible for deduction under Section 80HHC and no reference is made to book profits. He erred in not observing that since the assessee had not considered the DEPB claim for computing the deduction under Section 80HHC as per the amended provision, the claim made is erroneous on this count also. He erred in directing that the decisions of Kerala High Court reported in 164 CTR 105 and of ITAT, Mumbai in 89 ITD 457 have to be followed although those decisions have been rendered in the context of Section 115J. He overlooked the fact that there is a specific definition provided for what and how the "profits and business" are to be computed under Section 80HHC. He erred in allowing the computation of book profit as per Companies Act to arrive at the eligible profits of the business for deduction under Section 80HHC for the purpose of reducing this while computing income under Section 115JB.
3. He also submitted that the decision of the Hon'ble Kerala High Court and decision of Mumbai Income Tax Appellate Tribunal reported in 89 ITD 457 (DCIT v. Govind Rubber (P) Ltd.) supported the case of the Assessing Officer.
4. Learned Counsel for the assessee, at the outset, submitted that the issue is now squarely settled by the Income Tax Appellate Tribunal, Mumbai Special Bench reported at 292 ITR (AT) 144 (Bhushan Steel and Strips Ltd. v. CIT) delivered on 14.3.2007. He pointed out that the confusion in the mind of revenue as stated above has been set at rest by the learned CIT(A) in his order as observed in his order at para 1.3 which exactly was brought on record by the Special Bench decision. Therefore, he pointed out that the decisions of the Hon'ble Kerala High Court and the ITAT Bench of Mumbai which has been incorporated in the said decision, the eligible profits remain for the computation of export business deduction under Section 80HHC which the assessee had claimed in the returns so filed before the Assessing Officer. He fully supported the order of learned CIT(A).
5. We have heard the rival contentions and on our careful perusal of the facts and circumstances, we are inclined to hold that the issue agitated by the revenue before us stands squarely covered by the decision of the ITAT, Special Bench in so far as the Special Bench covered the case of Bhushan Steel and Strips Limited (supra) wherein the assessment year involved was 2003-04 as applicable to the assessee before us and had also noted the applicability of Section 115JB which discussion is out of contention as was agitated before the Special Bench.
6. The deduction under Section 80HHC in a minimum alternate tax scheme is from the taxable income, which is otherwise the adjusted book profit. If no deduction is available to an assessee, the gross total income itself is the taxable income of the assessee. The minimum alternate tax scheme does not provide for deductions. Therefore, the interpretation is that the adjusted book profit of a company itself is the gross total income of that assessee company. The deduction under Section 80HHC is in that way given out of the gross total income in a case falling under minimum alternate tax. This in turn means that Section 80HHC should be computed on the adjusted book profit. Sections 115J, 115JA and 115JB come into operation, as the regular profits have been substituted by the book profit. Once the substitution is over, there is no way to go back to the normal computation process of statutory profit, which has already been overwhelmed by Sections 115J, 115JA and 115JB. Therefore, the deduction under Section 80HHC in a case of minimum alternate tax assessment is to be worked out on the basis of the adjusted book profit and not on the basis of the profit computed under the regular provisions of law applicable to the computation of profits and gains of business or profession.
Therefore, in our considered view, we are of the opinion that the learned CIT(A) dealt with the issue on hand in apt manner confirming to the facts as has been dealt with by the Special Bench holding the issue in favour of the assessee which we are inclined to uphold in the order of learned CIT(A). The revenue has not put-forth any controverting material in support thereof. In the result the appeal of revenue is dismissed.