Law:

Section:

Section 80-IA of the Income-tax Act, 1961 - Deductions - Profits and gains from infrastructure undertakings - Assessment year 2003-04 - Whether section 80-IA(9) does not affect computability of deduction under various provisions under heading 'C' of Chapter VI-A, but it affects allowability of deductions computed under various provisions under heading 'C' of Chapter VI-A, so that aggregate deductions under section 80-IA and other provisions under heading 'C' of Chapter VI-A do not exceed 100 per cent of profits of business of assessee - Held, yes - Whether reasonable construction of section 80-IA(9) would be that where deduction is allowed under section 80-IA(1), then deduction computed under other provisions under heading 'C' of Chapter VI-A has to be restricted to profits of business that remain after excluding profits allowed as deduction under section 80-IA, so that total deduction allowed under heading 'C' of Chapter VI-A does not exceed profits of business - Held, yes Circulars and Notifications : CBDT Circular No. 772, dated 23-12-1998 FACTS In the assessment year in question, the assessee claimed deduction under section 80-IA at 30 per cent of the profits and gains derived from the business and deduction under section 80HHC at 50 per cent of the profits derived from the export of goods or merchandise determined on the basis of the formula set out in section 80HHC. The Assessing Officer disagreed with the quantum of deduction computed by the assessee under section 80HHC. He held that if the assessee was entitled to deduction under sections 80-IA and 80HHC, then deduction under section 80-IA(1) had to be computed and allowed on the profits of the business and the deductions allowable under section 80HHC had to be computed on the profits of the business as reduced by the profits allowed as deduction under section 80-IA. The Commissioner (Appeals) allowed the assessee's appeal. According to the Commissioner (Appeals), where the assessee is entitled to deduction under section 80-IA and section 80HHC, then the deductions under both the sections have to be computed independently and thereafter, the deduction computed under section 80-IA has to be allowed in…

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