Full Judgment
2. First, we shall take up for consideration the appeal by the assessee. Ground No. 3, 4 & 5 raised by the assessee is with regard to computation of deduction Under Section 80HHC after reducing deduction Under Section 80IA of the Act in view of the provisions of Section 801A(9) of the Act.
8. The Assessing Officer determined the amount of deduction allowable to the assessee Under Section 80HHC at Rs. 86,11,472/-. The assessee was also entitled to claim deduction Under Section 80IA of the Act and this was determined by the Assessing Officer at a sum of Rs. 32,03,747/-. While computing total income, the assessing Officer reduced from the figure of deduction allowable Under Section 80HHC as determined by him the deduction that was allowed to the assessee Under Section 80IA of the Act i.e., Rs. 86,11,472/- Less Rs. 32,03,747/- and allowed deduction of only Rs. 54,07,725/- Under Section 80HHC of the Act. The Assessing Officer did so because of the provisions of Section 80IA(9) of the Act, which provides that deduction allowed Under Section 80IA, shall not be allowed under any other provisions of chapter VI-A of the Act. Action of the Assessing Officer was confirmed by learned CIT (A), who followed the decision in assessee's own case by ITAT in A.Y. 1999-2000.
10. Before us, learned Counsel for the assessee submitted that there is no restriction in Section 80HHC that the deduction Under Section 80IA should be reduced before allowing deduction Under Section 80HHC. It was further submitted that the purpose of Section 80IA(9) was to restrict an assessee from claiming deduction under Chapter VI-A more than 100% of the profits and this is clear from a combined reading of Section 80HHC & 80IA(9) of the Act. In this regard, he also pointed out that the decision of the Tribunal in assessee's own case for A.Y. 99-2000 was based on the decision of the Special Bench ITAT Chennai in the case of Rohini Garments reported in 108 ITD 49 (SB). It was further pointed out by him that Hon'ble Madras High Court in the case of SCM Creation v. ACIT (unreported) has reversed the decision of the Special Bench in the case of Rohini Garments (supra). He further pointed out that Mumbai Tribunal has been taking a consistent view that Under Section 80IA should not be reduced while allowing deduction Under Section 80HHC of the Act. It was submitted that since later decision of the Special Bench holding a contrary view has been overruled by Hon'ble Madras High Court, the earlier decision on the issue rendered by the Mumbai Tribunal should prevail. It was also submitted that the decision of a High Court has to be followed in preference to the decision of the Tribunal and in this regard, our attention was drawn to the decision of the Pune Bench in the case of ACIT v. Aurangabad Holiday Resorts P.Ltd. 111 TTJ 741 (Pune).
12. We have considered the rival submissions. The Mumbai Bench of the Tribunal has been taking a consistent view on the above issue to the effect that deduction Under Section 80HHC should not be determined after reducing deduction Under Section 80IA of the Act. This position is not disputed before us. In assessee's own case in A.Y. 1999-2000, contrary view was taken because of the decision of the Special bench of the (Chennai) Tribunal in the case of Rohini Garments (supra). That decision of the Special Bench is no longer good law in view of the decision of the Hon'ble Madras High Court in the case of SCM Creation (supra). In the given circumstances, decision of the Tribunal prior to the decision of the Special Bench should be followed. In this regard, we have also perused the decision of the Mumbai Bench of the Tribunal in the case of ACIT v. Iflunik Pharmaceuticals Ltd.; wherein it has been held that the deduction Under Section 80IA & 80HHC should be computed independently and with a only rider that the total deduction should not exceed more than 100% of the eligible profit computed under any of the provisions independently as well cumulatively. The decision of Hon'ble Madras High Court referred to above is also to the same effect. In view of the above, we hold that deduction Under Section 80IA should not be reduced from the deduction allowable Under Section 80HHC.Grounds of the appeal of the assessee are allowed.
79. While deciding an identical ground in A.Y. 2002-03 in ITA No.644/Mum/06, we have already upheld similar order of learned CIT (A) for the reasons stated therein. This ground of the appeal of the revenue is dismissed.
80. Ground No. 3 of the revenue is with regard to excluding excise duty and sales tax from the total turnover while allowing deduction Under Section 80HHC of the Act.
81. While deciding the similar ground in A.Y. 2002-03 in ITA No.644/Mum/06, we have already dismissed similar ground of the appeal of the revenue for the reasons stated therein. This ground of the appeal of the revenue is dismissed.
82. In the result, the appeal by the revenue is dismissed. Order has been pronounced on 8th Day of July, 2008.