R.P.NAGRATH, J. - (1.) THIS appeal filed by Commissioner of Income Tax-I, Ludhiana under Section 260A of the Income Tax Act, 1961 (for brevity 'IT Act') challenges the order dated 29.04.2011 passed by the Income Tax Appellate Tribunal, Bench 'A', Chandigarh (ITAT).
(2.) THE facts of the case in brief are that Joint Commissioner, Income Tax, Range-I, Ludhiana, the Assessing officer (AO) passed the assessment order dated 28.12.2006 under Section 143(3) of the IT Act in respect of the respondent-assessee for the assessment year 2004-05. The Commissioner of Income Tax (CIT) exercising his revisional powers under Section 263 of IT Act, found the assessment order to be prima-facie erroneous and prejudicial to the interest of revenue as the relief granted under Section 80 IA, was not deducted from the profits and gains of the business before computing relief under Section 80 HHC of the IT Act. The respondent-assessee was, thus, served with a show cause notice dated 18/20.02.2009 under Section 263 of IT Act. After hearing the respondent-assessee by the Revisional Authority in its order dated 18.03.2009 (Annexure A-2) observed as under:- "3.1.1 For the sake of coherence second arguments put forth by the assessee company is discussed at first place. Sub Section 9 of Section 80IA is reproduced as under:- "(9) Where any amount of profits and gains of an (undertaking) or of an enterprise in the case of an assessee is claimed and allowed under this section for any assessment year, deduction to the extent of such profits and gains shall not be allowed under any other provisions of this Chapter under the heading "C. - Deductions in respect of certain incomes", and shall in no case exceed the profits and gains of such eligible business of (undertaking) or enterprise, as the case may be. 3.1.2 Very plain reading of sub Section makes it amply clear that where any amount of profits and gains in the case of an assessee is claimed and allowed u/s 80IA deduction to the extent of such profits and gains shall not be allowed under this Chapter i.e. Chapter VI-A. Section 80HHC also falls in Chapter VI-A, therefore, deduction u/s 80HHC is not to be computed on profits and gains of an industrial undertaking on which deduction u/s 80IA has been allowed."
(3.) IT was also found that due to non-application of correct law, deduction under Section 80HHC has been allowed in excess, which has resulted into lesser taxable income and thus the order is prejudicial to the interest of revenue. To this extent the order of AO was set aside and it was directed to compute the deduction under Section 80HHC after giving due opportunity of being heard to the assessee.;