1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.135 OF 2006 Extrusion Priceless Pvt. Ltd. ..Appellant. V/s. The Commissioner of Income Tax ..Respondent. Mr. K. Gopal with Jitendra Singh and B. Amin i/b. B.Amin & Co. for appellant. Mr. Suresh Kumar for respondent. CORAM : DR. D.Y.CHANDRACHUD AND J.P.DEVADHAR, JJ. DATED : 25TH JANUARY, 2010 P.C. :- 1. The following questions of law have been formulated by the assessee against the judgment of the ITAT dated 16th September, 2005:- i) Whether on the facts and circumstances of the case, the Tribunal was justified in law in reducing the claim of the appellant to the extent of amount of unabsorbed depreciation of Rs.15,41,546/- from the profit & gains of the business, for the purpose of allowing deduction u/s.80 HHC ? ii) Whether on the facts and circumstances of the case, the Tribunal was justified in law in reducing the claim of the appellant to the extent of the amount of unabsorbed investment allowance of Rs.27,47,703/- from the profits & gains of the business for the purpose of allowing deduction u/s.80HHC ? 2. The appeal before the Tribunal relates to the assessment year 2 1991-92. The Commissioner of Income Tax (A) held that for the purpose of computing the relief under the provisions section 80HHC of the Income Tax Act, 1961, profits and gains of business will have to be computed in accordance with the provisions of section 28 of the Act. Hence, unabsorbed depreciation and unabsorbed investment allowance of the earlier years were allowed deduction under section 32(2) and 32A(3) respectively. 3. The Tribunal, in appeal, relied upon the judgment of the Supreme Court in IPCA Laboratories Ltd. V/s. Deputy Commissioner of Income Tax [(2004) 266 ITR 521] and upon the judgment of the Madhya Pradesh High Court in Vippi Solvex Products Ltd. V/s. Commissioner of Income Tax [(2005) 273 ITR 107]. In IPCA Laboratories, the Supreme Court held that under section 80 HHC(1) the deduction is to be given in computing the total income of the assessee and that in computing it, both profits as well as losses will have to be taken into consideration. The Supreme Court referred to the provisions of section 80AB which commence with the words “where any deduction is required to be made or allowed under any section of this Chapter” and held that this would include section 80HHC. The provisions of section 80AB have been given overriding effect over all sections in Chapter VIA and hence section 80HHC would be governed by section 80AB. The judgment of the Supreme Court in IPCA Laboratories was followed by the Madhya Pradesh High Court in Vippy Solvex Products (supra) where the Court held that the use of the expression “computed in accordance with the provisions of the Act” was significant and would imply that if the assessee has income falling in sections 60 to 64 of Chapter V it is required to be included. The Madhya Pradesh High Court also held that if 3 the case of the assessee falls under sections 70 & 71, it being because of the set off of loss from one source of income against income from another source and as also carry forward and set off of business loss then the same has to be given effect to while computing the total income of the assessee. 4. Following the law laid down by the Supreme Court and the Madhya Pradesh High Court and its own unreported judgment in the case of M/s. Shree Hari Chemicals Exports Ltd., the Tribunal held that in computing the income under the head of profits and gains of business and profession, both the unabsorbed depreciation and unabsorbed investments returns will have to be set off against the profits before allowing the deduction under section 80HHC. This finding is consistent with the judgment of the Supreme Court. In these circumstances, the appeal does not raise any substantial question of law and is dismissed. No order as to costs. (J.P.DEVADHAR, J.) (DR. D.Y.CHANDRACHUD, J.)