Section 115JB, Section 80HHC(1B) of the Income Tax Act 1961

Last updated: 15 September 2010

Court :
SC

Brief :
Assessee was a MAT company at the relevant time. On 30.10.2001, it filed its return of income for assessment year 2001-02. The said return was accompanied by statutory audit report claiming deduction under Section 80HHC of the Income-tax Act, 1961 (for short, “the 1961 Act”). While computing the “book profits” under Section 115- JB of the 1961 Act, the assessee claimed reduction, under clause (iv) of Explanation to Section 115JB, of 100% export profits. Vide assessment order dated 27.2.2004 the AO allowed only 80% of the export profits in terms of Section 80HHC(1B), as being allowed for reduction of “book profits” under clause (iv) of Explanation to Section 115JB of the 1961 Act. Being aggrieved by the assessment order, assessee moved before the CIT(A). Vide order dated 30.7.2004, the CIT(A) held that 100% export profits earned by the assessee as computed under Section 80HHC(3) was eligible for reduction under clause (iv) of Explanation to Section 115JB. This order of CIT(A) was upheld by the Tribunal which took the view that the amount of profit eligible for deduction would not be governed by Section 80HHC(1B) since there is no reference to the said sub-section in clause (iv) of the Explanation to Section 115JB. Against the concurrent finding the Department carried the matter in appeal to the Bombay High Court. By the impugned decision dated 7.5.2009 the Department’s appeal under Section 260A of the 1961 Act stood allowed. Hence this civil appeal.

Citation :
Ajanta Pharma Ltd. Versus Commissioner of Income Tax-9, Mumbai