80 HHC and 80 IA(9) or 80 IB

[sdave]

The Bombay High Court has directed that appeals involving the following issues should be grouped and placed for hearing at an early date:  80HHC AND 80IA(9)

Whether for purposes of section 80 HHC, "profits of business" have to be arrived at after reducing the deduction under section 80 IB?

Shall appreciate if someone can me what is the status of above step of Bombay High Court?  Are there any judgments in this matter in Bombay or any other High Court after 1st January 2010?

[pawansingla]

[2009] 184 TAXMAN 373 (KER.)
HIGH COURT OF KERALA
Olam Exports (India) Ltd.
v.
Commissioner of Income-tax*
C.N. RAMACHANDRAN NAIR AND C.K. ABDUL REHIM, JJ.
IT APPEAL NO. 169 OF 2008†
MAY 29, 2009

Section 80HHC, read with section 80-IB, of the Income-tax Act, 1961 - Deductions - Exporters - Whether while computing deduction under section 80HHC deduction granted under section 80-IB has to be excluded - Held, yes
Section 80HHC of the Income-tax Act, 1961 - Deductions - Exporters - Whether an assessee acting as supporting manufacturer would be entitled to deduction of export profit arising from export of goods made through export houses on submission of disclaimer certificate issued by export houses - Held, yes - Whether in view of decision of Supreme Court in CIT v. Shirke Construction Equipment Ltd. [2007] 291 ITR 380/161 Taxman 212 deduction under section 80HHC cannot be determined before excluding carry forward or set-off of loss - Held, yes

JUDGMENT
C.N. Ramachandran Nair, J. - In the appeal filed by the assessee, the questions raised pertain to computation of deduction for export profit under section 80HHC of the Income-tax Act. The assessee having its  industry in a backward area was entitled to deduction under section 80-IB of the Income-tax Act. However, by virtue of section 80-IB(13), read with section 80-IA(9) of the Act the assessee will not be entitled to claim deductions both under section 80-IB and under section 80HHC of the Act. Tribunal following their Full Bench decision upheld the disallowance under section 80-IB(13) of the Act, but granted deduction under section 80HHC of the Act. Even though senior counsel appearing for the assessee contended that deduction under section 80HHC is a full code by itself and no exclusion would be made while computing eligible deduction, we notice that section 80-IB and under section 80HHC come under Chapter VI-A and by virtue of specific exclusion under section 80-IB(13) of the Act the assessee is not entitled to simultaneous deduction of both. In other words, while computing deduction under section 80HHC deduction granted under section 80-IB cannot be reckoned or has to be excluded. We find the order of the Tribunal is consistent with the statutory provisions and, therefore, appeal on this issue is rejected.
2. So far as computation of relief under section 80HHC is concerned, we find that assessment requires reconsideration because by virtue of the decision of the Supreme Court in Janatha Cashew Exporting Co. v. CIT [2009] 309 ITR 4401 the assessee is entitled to deduction of export profit arising from export of goods made through Export Houses, the assessee acting as supporting manufacturer. However, it is on condition of availability of disclaimer certificate issued by the Export Houses. It is for the assessee to produce disclaimer certificate in revised assessment proceedings before the officer. So far as assessee's claim for determination of deduction before excluding carry forward or set-off loss is concerned, the decision of the Supreme Court in CIT v. Shirke Construction Equipment Ltd. [2007] 291 ITR 3802 is against the proposition canvassed by the assessee. Therefore, assessment on this does not warrant any modification. Appeal is consequently disposed of partly allowing the claim and directing the Assessing Officer to re-work relief under section 80HHC in terms of the decision above referred after giving an opportunity of hearing to the assessee.
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