s. 80-IA relief has to be deducted before computing s. 80-HHC relief
In ACIT Vs Rogini Garments 108 ITD 49 the Special Bench at Chennai held that relief allowed u/s 80-IA had to be deducted from profits and gains of assessee’s business on which relief u/s 80HHC of the Act is to be computed. Subsequently, the Madras High Court in SCM Creations 304 ITR 319 took a contrary view. The question whether Rogini Garments was impliedly overruled was referred to a five Member Special Bench which upheld the correctness of Rogini Garments and held:
(1) SCM Creations is not an authority on how s. 80-IA (9) is to be applied because the effect and implementation of above provision was neither raised, nor examined nor decided by the Court. A decision is an authority for the proposition that it decides and not what can logically be deduced there from. A point not raised nor argued at the Bar cannot be said to be the ratio of the decision. Accordingly SCM Creation does not impinge upon the ratio of Rogini Garments.
(2) On merits, Rogini Garments was correctly decided and did not require reconsideration. The language of s. 80-IA (9)/80-IB (9A) was clear and unambiguous and was required to be given effect to. Deduction of profit and gains allowed u/s 80-IA/80-IB had to be deducted from profits and gains of assessee’s business on which deduction u/s 80HHC had to be computed.