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For s. 115JA/JB s. 80HHC deduction to be computed as per normal provisions & not on P&L profits
Though the assessee was not entitled to any deduction u/s 80HHC under the normal provisions of the Act owing to losses, it claimed that in computing the book profits u/s 115JA/115JB, deduction u/s 80HHC ought to be computed having regard to the profits as per the P&L A/c as held in GTN Textiles 248 ITR 372 (Ker). On appeal, the matter was referred to the Full Bench. HELD by the Full Bench:
(i) The assessees’ contention that export profit has to be computed with reference to the P&L A/c prepared under the Companies Act is not acceptable because there is no such provision in s.80HHC to determine export profit with reference to P&L A/c. Clause (iv) of s. 115JB (2) provides that the “amount of profit eligible for deduction u/s 80HHC as computed u/s 80HHC (3)” has to be deducted in computing the book profits. Accordingly, only the deduction u/s 80HHC as computed under the normal provisions is allowable;
(ii) However, in accordance with Ajanta Pharma 327 ITR 305 (SC), the restriction in s. 80AB or s. 80B(5) should not be applied and deduction u/s 80HHC should be allowed for s. 115JA/JB even if the carry forward of business loss or depreciation reduces the gross total income to Nil.
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