Income Tax Appellate Tribunal - Chandigarh
Drish Shoes Ltd. vs Asstt. Cit on 7 January, 2003
Equivalent citations: (2004)91TTJ(CHD)440
ORDER
Joginder Pall, A.M.:
By this order we shall dispose of this appeal of the assessee filed against the order of Commissioner (Appeals), Shimla, for the assessment year 1992-93.
2. The only grievance of the assessee projected through this appeal is that the Commissioner (Appeals) was not justified in holding that deductions under sections 80HH and 80-I should be allowed in respect of income that remains after allowing deduction under section 80HHC. The facts of the case are that the assessee had claimed deductions under sections 80HHC, 80HH and 80-I. The deductions under sections 80HH and 80-I were claimed in respect of gross total income computed as per provisions of the Act before claiming deduction under section 80HHC. However, while completing assessment, the assessing officer allowed deduction under sections 80HH, 80-I in respect of income that remained after allowing deduction under section 80HHC. Thereafter, the assessee moved an application under section 154 requesting the assessing officer to rectify the order under section 154 as the assessee was entitled to deduction under sections 80HH and 80-I in respect of income before allowing deduction under section 80HHC. This claim was rejected by the assessing officer.
3. Aggrieved, the assessee carried the matter in appeal before the Commissioner (Appeals). The submissions made before the assessing officer were reiterated. However, these submissions did not find favour with the Commissioner (Appeals), who upheld the order of assessing officer on the ground that almost entire income was claimed exempt under section 80HHC. Therefore, the assessee was entitled to deduction under sections 80HH and 80-I only in respect of remaining income after allowing deduction under section 80HHC. The Commissioner (Appeals) further observed that it was disputed issue which was not covered by the provisions of section 164. Aggrieved the assessee has now come up in appeal before us.
4. The submissions made before the tax authorities below, were reiterated on behalf of the assessee.
5. Learned departmental Representative, on the other hand, relied on the orders of tax authorities below.
6. We have heard both the parties and carefully considered the rival submissions with reference to facts, evidence and material on record. Sections 80HH and 80-I are incentives given for setting up industry in the backward areas and setting up industry after certain date. The deductions under sections 80HH and 80-I are to be allowed @ 20 per cent each in respect of profits and gains derived from an industrial undertaking which are included in the gross total income of the assessee. The gross total income has been defined in sub-section (5) of section 80B, which means the total income computed in accordance with the provisions of the Act before making any deduction under this chapter. Section 80HHC, also forms part of the same chapter and provides deductions in respect of profits and gains derived from export of goods and merchandise. There is no restriction imposed in the Act that where deductions under sections 80HH and 80-I are also claimed along with deduction under section 80HHC, the deduction under sections 80HH and 80-I should be allowed in respect of income as it remained after allowing deduction under section 80HHC. Even if the entire income is claimed exempt under section 80HHC, the deduction under sections 80HH and 80-I are required to be computed in respect of gross total income as defined under section 80B(5) before allowing deduction under section 80HHC. Thus, the assessing officer was not correct in allowing deduction under sections 80HH and 80-I in respect of income as it remained after allowing deduction under section 80HHC. This was a mistake of law apparent from record for which the assessee has rightly moved an application under section 154. Thus, the Commissioner (Appeals) was not justified in confirming the order of assessing officer in rejecting the application of the assessee under section 154. Accordingly, we set aside the order of Commissioner (Appeals) and direct the assessing officer to allow deduction under sections 80HH and 80-I in respect of gross total income computed as per provisions of the Act before allowing deduction under section 80HHC. The grounds of appeal are allowed.
7. In the result, appeal filed by the assessee is allowed.