The present appeal preferred by the Revenue is directed against order dated 06.02.2009 of the Income Tax Appellate Tribunal, Ahmedabad Bench `A' in I.T.A. No. 1151 of 2006. 2. On 01.08.2011, this court issued notice in the appeal for considering the question No.2 only. The question No.2 formulated by the appellant in the Memorandum of Appeal is reproduced hereunder:
“Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that while computing book profit under section 115JB, deduction under section 80HHC is allowable though the returned income is a loss?”
3. We heard learned advocate Mr. K.M. Parikh for the appellant as well as learned advocate Mr. Manish J. Shah for the respondent.
4. The relevant facts in brief may be noted. The assessee company claimed deduction in its return of income for the assessment year 2000-01 under section 80HHC of the Income Tax Act, 1961 (hereinafter referred to as `the Act' for sake of brevity) for Rs.94,65,636/- from the income as computed as per the provision of section 115JB of the Act on the basis of the book profit. The Assessing Officer did not accept the claim for deduction, as according to him, a plain reading of section 80HHC(4)(haa) of the Act showed that the `profits of the business' would mean the profits of the business as computed under the head `profits and gains of business and profession'. The Assessing Officer was of the view that such deduction would not be available against the book profit computed under section 115JB. As in the return of income, the assessee had declared loss, the Assessing Officer concluded that the deduction under section 80HHC was not admissible.
4.1 The aggrieved assessee filed the appeal before the Commissioner of Income Tax, but his appeal was dismissed. Thereafter it approached the Income Tax Appellate Tribunal by preferring an appeal, which culminated into the impugned order.
5. With regard to the aforementioned second question, learned advocate fairly submitted that the same was covered against the Department by the Apex Court decision in Commissioner of Income-tax v. Bhari Information [340 ITR 593]. By that decision, the Supreme Court confirmed the judgment of the Tribunal in Deputy CIT v. Syncome Formulations (I) Ltd. [(2006) 106 ITD 193 = (2007) 292 ITR (AT) 144 (Mum) (SB)].
5.1 Though in that judgment, the apex Court was dealing with the deduction under Section 80HHE of the Act, the principle laid down would squarely apply in respect of deduction under section 80HHC as well. The Supreme Court referred to the Special bench decision of the Tribunal in Syncome Formation (supra) and held as under:
“... the Special Bench of the Tribunal which, following the judgment of the Special Bench Deputy CIT v. Syncome Formulations (I) Ltd. [(2006) 106 ITD 193], took the view that the MAT scheme which includes section 115JA did not take away the benefits given under section 80HHE. The said judgment of the Special Bench was with regard to computation of deduction under section 80HHC which, like section 80HHE, falls under Chapter VI-A of the Income-tax Act, 1961. In the said judgment of Special Bench, which squarely applies to the facts of the present case, the Tribunal held that the deduction under section 80HHC (section 80HHE also falls in Chapter VI-A) is to be worked out not on the basis of the regular income-tax profits but it has to be worked out on the basis of the adjusted book profits in a case where section 115JA is applicable. In the said judgment, the dichotomy between regular income-tax profits and adjusted book profits under section 115JA is clearly brought out. The Tribunal in the said judgment rightly held that in section 115JA relief has to be computed under section 80HHC (3)(3A). According to the Tribunal, once the law itself declares that the adjusted book profit is amenable for further deductions on specified grounds, in a case where section 80HHC (80HHE in the present case) is operational, it becomes clear that computation for the deduction under those sections needs to be worked out on the basis of the adjusted book profit. In the present case, we are concerned with section 80HHE which is referred to in the Explanation to section 115JA, clause (ix). In our view, the judgment of the Special Bench of the Tribunal in Syncome Formulations squarely applies to the present case. Following the view taken by the Special Bench in Syncome Formulations, the Tribunal in the present case came to the conclusion that deduction claimed by the assessee under section 80HHE has to be worked out on the basis of adjusted book profit under section 115JA and not on the basis of the profits computed under regular provisions of law applicable to computation of profits and gains of business.”
5.2 The Tribunal in the impugned order relied on its decision in assessee's own case in the assessment year 2002-03, wherein it had held against the Revenue as well as on Tribunal's decision in Syncome Formulations (supra) which was confined by the Supreme Court in Bhari Information (supra).
6. As noted in the beginning, since the notice was issued limited to question No.2 only, no other question or issue is required to be gone into. The court has satisfied itself that no substantial question of law arises from the facts on any other count. The question No.2 having been covered by the apex decision as above against the Revenue, the appeal is meritless.
7. Accordingly, the appeal is dismissed.
(V.M. SAHAI, J.)
(N.V. ANJARIA, J.)
(sn devu pps