- (1.) We have heard Sri Dhananjai Awasthi for the appellant-department. Shri Bhoopesh Jain and Sri R.S. Agarwal appears for the respondent-assessee.
(2.) This appeal was admitted on the following questions of law:- "(1) Whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that for purposes of computing relief u/s 80 I, relief granted u/s 80 HH cannot be deducted from the gross total income? (2) Whether on facts and in the circumstances of the case, the ld. ITAT was legally justified in directing the A.O to recompute the allowable deduction in view of the decision of the Hon'ble High Court of M.P. in the case of J.P. Tobacco Products (P) Ltd Vs. C.I.T.,1997 140 CTR 329 whereas provisions of sub-section (9) of Section 80 HH provide that where the assessee is entitled for deduction both u/s 80 HH and 80 I/80 J, the effect first is to be given to Section 80 HH of I.T. Act? (3) Whether on the facts and in the circumstances of the case, the Ld. ITAT was legally justified in holding that the change in method of charging depreciation from straight line to WDV method is approved under the Company Act and there is no specific prohibition u/s 115 J of I.T. Act whereas the assessee has arbitrarily short computed its tax liability under Section 115 J and depreciation charged to books was considerably swelled by adopting methods not permissible under relevant provisions of I.T. Act, 1961?"
(3.) The facts, giving rise to this appeal, as given in the assessment order, are as follows:- "The assessee is engaged in manufacture of Steel Pipes Synthetic Filament Yarn and Polyster Clips. During the year under consideration total sales have been shown at Rs.109.1 crores as against Rs.39.67 crores of last year giving g.p. rates of Steel Unit and PPFY Unit at 10.56 % and 20.12 % respectively whereas last year's rates were 14.06 % and 13.64 %. The consolidated g.p. rate comes to 15.34 % as against 13.91 % of last year. Though there is fall in g.p rate in Steel Unit by 0.5 % the consolidated g.p. rate has increased by 1.43 % owing mainly to a substantial increase in the g.p rate of PPFY Unit. During the year under consideration the assessee has also set up a new W.D.S. unit for manufacturing of Polyster Clips. Gross profit from this new unit has been shown at Rs.12.20 lacs giving g.p. rate at 3.94 %.";