IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 08.02.2011 CORAM: THE HONOURABLE MR. JUSTICE F.M. IBRAHIM KALIFULLA and THE HONOURABLE MR.JUSTICE N.KIRUBAKARAN Tax Case (Appeal) Nos.1442 and 1443 of 2010 The Commissioner of Income-tax-I .. Appellant in Tiruchirapalli. all the appeals. vs. M/s. C.P.S.Textiles P. Ltd. No.143, Salai Road Lakshmi Complex, Thillainagar .. Respondent in Tiruchirapalli – 620 018. all the appeals. Tax Case Appeals filed under Section 260A of the Income Tax Act, 1961, against the common order of the Income Tax Appellate Tribunal, Madras 'A' Bench, Chennai dated 18.06.2010 passed in I.T.A.Nos.404 & 405/Mds/2010 for the assessment years 2003-2004 and 2000-2001 (ITA.No.41/08-09 and 167/07-08, respectively dated 07.01.2010 on the file of the Commissioner of Income-Tax (Appeals) Tiruchirappalli against PAN AAACC 262 OD dated 10.04.2008 and PAN/GIR.No.AAACC262 OD dated 13.12.2007 respectively on the file of the Assistant Commissioner of Income-Tax, Company Circle - II, Tiruchirappalli. For Appellant : Mr.K.Subramaniam Senior Standing Counsel for Income-tax Common Judgment (Judgment of the Court was delivered by F.M.IBRAHIM KALIFULLA,J.) The Revenue has come forward with these appeals and seeks to raise the following question of law as substantial question of law: "Whether on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in holding that in the computation of book profits u/s.115JA / 115JB, the deduction u/s.80HHC had to be allowed on the basis of book profits and not by applying the normal provisions of the Act, for computation of the deduction?" https://hcservices.ecourts.gov.in/hcservices/ 2. It was fairly brought to our notice that this very question came up for consideration before the Hon'ble Supreme Court in the decision reported in (2010) 327 ITR 305 (Ajanta Pharma Limited vs. Commissioner of Income-tax). The Hon'ble Supreme Court posed the question, namely, "whether for determining the "book profits" in terms of Section 115JB, the net profits as shown in the P&L account have to be reduced by the amount of profits eligible for deduction under Section 80HHC or by the amount of deduction under Section 80HHC?" 3. While examining the said question, the Hon'ble Supreme Court has observed as under in paragraph 9: "..... Thus, Section 80HHC(IB) deals not with "eligibility", but with the "extent of deduction". As stated earlier, Section 115JB is a self-contained code. It taxes deemed income. It begins with a non obstante clause. Section 115JB refers to computation of "book profits" which have to be computed by making upward and downward adjustments. In the downward adjustment, vide cl.(iv) it seeks to exclude "eligible" profits derived from exports. On the other hand, under Section 80HHC (IB) it is the extent of deduction which matters. The word "thereof" in each of the items under Section 80HHC (IB) is important. ......" 4. Then, again in paragraph 10, the Hon'ble Supreme Court concluded as under: ".... Thus, according to the Department, both "eligibility" as well as "deductibility" of the profit have got to be considered together for working of the deduction as mentioned in cl.(iv) of Explanation to Section 115JB. We find no merit in this argument. If the dichotomy between "eligibility" of profit and "deductibility" of profit is not kept in mind then Section 115JB will cease to be a self-contained code. In Section 115JB as in Section 115JA, it has been clearly stated that the relief will be computed under Section 80HHC(3)/(3A), subject to the conditions under sub-cls. (4) and (4A) of that section. The conditions are only that the relief should be certified by the chartered accountant. Such condition is not a qualifying condition, but it is a compliance condition. Therefore, one cannot rely upon the last sentence in cl. (iv) of Explanation to Section 115JB [subject to the conditions specified in sub-cls, (4) and (4A) of that section] to obliterate the difference between "eligibility" and "deductibility" of profits as contended on behalf of the Department." https://hcservices.ecourts.gov.in/hcservices/ 5. Having regard to the above dictum of Hon'ble Supreme Court and as the question raised is covered by the above referred to decision, these appeals fail and the same are dismissed. No costs. Consequently, M.P.No.1 of 2010 is also dismissed. Sd/ Asst.Registrar /true copy/ Sub Asst.Registrar ATR To 1. The Assistant Registrar, Income Tax Appellate Tribunal Madras 'A' Bench, Rajaji Bhavan, 5th Floor, Besant Nagar, Chennai - 90. 2. The Commissioner of Income-Tax (Appeals) No.44, Williams Road, Cantonment Tiruchirapalli-620001. 3. The Commissioner of Income-Tax I, Tiruchirappali. 4. The Assistant Commissioner of Income-tax Company Circle-II, Tiruchirapalli. 1 cc To Mr.K.Subramanian, Sr.Standing Counsel for Income-Tax, SR.9504. T.C.(A) Nos.1442 & 1443 of 2010 JRG(CO) RVL 23.02.2011 https://hcservices.ecourts.gov.in/hcservices/