Madras HC upholds ITAT
order for AY 1998-99, holds that while computing 'eligible profit' for allowing
deduction u/s 80HHD(1) (available to companies running hotels) loss from
ineligible units/hotels cannot be deducted; Rejects Revenue’s stand that the
expressions ‘business profits’ and ‘total receipts’ used in Sec. 80HHD(3) [prescribing
formula for computing ‘eligible profits’], should take into account the
gains/losses of ineligible entities as well; Noting that Sec. 80HHD is a
‘beneficial provision’, HC opines that “full benefit of the provision
should be extended to an eligible assessee without there being an attempt to
whittle down the same.”; HC rules that “sub-section (3) has to be read
along with sub-section (1) by statutory prescription and in such an event, all
parameters of the formula should relate solely to the receipts/profits/income
of the eligible unit alone and none other.”; Cites Karnataka HC ruling in
ITC Hotels Ltd., holds that the deduction should be granted qua eligible
unit/units only, clarifies that Revenue cannot draw support from Sec. 80HHC
provisions and the two provisions (i.e Sections 80HHC and 80HHD) are not
analogous:HC
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