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Section 80HHC of the Income-tax Act, 1961 - Deductions - Exporters - Assessment year 1998-99 - Whether deduction under section 80HHC must be allowed after adjusting unabsorbed business losses and unabsorbed depreciation - Held, yes FACTS For the relevant assessment year, the assessee-company claimed deduction under section 80HHC before adjusting unabsorbed business losses and unabsorbed depreciation. The Tribunal allowed the assessee's claim. On reference : HELD From a reading of section 80HHC(1), it appears that for computing the total income of the assessee, a deduction to the extent of profits referred to in sub-section (1B) may be granted to the assessee. The expression 'total income' occurring in section 80HHC(1) obviously has reference to section 80A and that has to be read in conjunction with section 80B(5). Consequently, for obtaining any benefit under section 80HHC(1), the gross total income of the assessee has to be computed and thereafter, the assessee will get an adjustment of a deduction under section 80HHC(1) for the purpose of calculating the total income. [Para 7] A similar issue of interpretation had arisen in CIT v. Kotagiri Industrial Co-operative Tea Factory Ltd. [1997] 224 ITR 604/ 91 Taxman 214 (SC) in the context of section 80P which also is a part of Chapter VI-A of the Act. In that case, it was held that the gross total income must be determined by setting-off against the income the business losses of the earlier years as required under section 72, before allowing deduction under section 80P. [Para 8] In view of aforesaid decision of the Supreme Court, the Tribunal was not correct, in law, in holding that the assessee was entitled to deduction under section 80HHC before adjusting unabsorbed business losses and unabsorbed depreciation. CASE REVIEW CIT v. Kotagiri Industrial Co-operative Tea Factory Ltd. [1997] 224 ITR 604/ 91 Taxman 214 (SC), followed. [Para 8]. CASES REFERRED TO CIT v. Kotagiri Industrial Co-operative Tea Factory Ltd. [1997] 224 ITR 604/ 91 Taxman 214 (SC) [Para 8] and CIT v. Gogineni Tobacco Ltd. [1999] 238 ITR 970 (AP) [Para 9]. ORDER Admit. 1. The following question of law is framed for consideration :- "Whether the…

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