Law:

Section:

- Sections 80HHC & 115JA - Income-tax Act, 1961 CASES REFERRED TO Apollo Tyres Ltd. v. CIT [2002] 255 ITR 273 (SC) (para 4), CIT v. Rajanikant Schnelder and Associates (P.) Ltd.[2008] 302 ITR 22 (Mad) (para 4) and Surana Steels (P.) Ltd. v. Deputy CIT [1999] 237 ITR 777 (SC) (para 4). Mrs. Pushya Sitaraman for the Appellant. J. Balachandar for the Respondent. JUDGMENT K. Raviraja Pandian, J. - By formulating the following substantial question of law, the Revenue is on appeal against the order of the Income-tax Appellate Tribunal, Madras "C" Bench, dated May 25, 2007 made in I.T. A. No. 2733/Mds/2005. The relevant assessment year is 2000-01. "Whether, in the facts and circumstances of the case, the Tribunal was right in allowing deduction under section 80HHC on the basis of book profits under section 115JA and not on the basis of eligible profits under section 80HHC as per normal computation ?" 2. The facts as culled out from the statement of facts in the memorandum of grounds are as follows : 3. The assessee-company is engaged in the business of computer training, overseas consultancy and software development. The assessee filed its return of income under regular computation of income and income of Rs.1,56,50,386 under section 115JA on November 29, 2000. Subsequently, the Assessing Officer noticed that though there is no profit available to the assessee, after setting off, brought forward loss of the earlier years, the assessee had claimed deduction under section 80HHC to the tune of Rs.1,56,33,179 against the book profit of Rs. 3,07,84,105 and offered the balance book profit of Rs. 1,51,20,386 for taxation under section 115JA. Therefore, the Assessing Officer held that the relief under section 80HHC could only be calculated on the actual profits and not on the book profits. Aggrieved by the order of the Assessing Officer, the assessee filed an appeal before the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals) confirmed the order of the Assessing Officer. However, the Income-tax Appellate Tribunal on appeal being taken to it held that the computation of deduction under section 80HHC of the Act is to be worked out on the basis…

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