Judgment: This appeal has been filed by the department against the order of the Commissioner (Appeals)-II, Rajkot, for assessment year 1990-91. The only ground of appeal filed by the department reads as follows : "The learned Commissioner (Appeals) erred in law and on facts in directing the assessing officer to allow deduction under section 80-I on the total income not reduced by the deduction under section 80HHA. " During the course of hearing, the learned counsel of the assessee contended that the deduction should be allowed without reducing the profit by the deduction allowed under section 80HHA. The learned Departmental Representative, however, relied on the findings of the assessing officer.
After hearing both the parties, we find force in the arguments of the learned authorized representative of the assessee. The various Tribunal Benches have held that the deduction under sections 80HHA (sic) and 80-I should be allowed on the gross profits and not on the net profits computed after deducting the deductions allowed under section 80HHA.Following the decisions of the Tribunal Benches, we are of the considered opinion that the deduction has to be allowed on the gross profits without reducing the profits by the deduction allowed under section 80HHA. Therefore, we do not find any infirmity with the order of the learned Commissioner (Appeals) and his findings are upheld.