Deduction under sec. 80HHB when no separate books in respect of a foreign project is being maintained

IN THE INCOME TAX APPELLATE TRIBUNAL
“C” BENCH : BANGALORE

BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT
AND SHRI B. R. BASKARAN, ACCOUNTANT MEMBER

 ITA No.790 and 791/Bang/2008
Assessment Year : 2002-03 and 2003-04

M/s. ABB Ltd.,
II Floor, East Wing,
Khanija Bhavan,
Race Course Road,
Bengaluru-560 001.
PAN : AAACA 3834 B
APPELLANT 

Vs. 

The Deputy Commissioner of
Income Tax (LTU),
Bengaluru.
RESPONDENT

ITA No.896 and 897/Bang/2008
Assessment year : 2002-03 and 2003-04

The Assistant Commissioner of
Income Tax (LTU),
Bengaluru.
APPELLANT 

Vs.

M/s. ABB Ltd.,
Bengaluru-560 001.
PAN : AAACA 3834 B
RESPONDENT

Assessee by : Shri. Percy Pardiwala, Sr. Advocate
Revenue by : Shri. K. V. Aravind, Standing Counsel

Date of hearing : 15.07.2021
Date of Pronouncement : 23.07.2021

O R D E R

Per Bench

ITA No.896/Bang/2008 a0 n appeal by the Revenue while ITA No.790/Bang/2008 is an appeal by the assessee. Both these appeals are directed against the order of the CIT(A), LTU, Bengaluru, relating to Assessment Year 2002-03.

2. ITA No.896/Bang/2008 (Revenue’s Appeal): Ground Nos.1 and 10 of the grounds of appeal raised by the Revenue are general in nature and does not call for any specific adjudication. Ground No.2 raised by the Revenue reads as follows:

2. The Id. CIT(A) erred in directing the AO to allow deduction under sec. 80HHB when no separate books in respect of foreign project were maintained.

3. The assessee is a company engaged in the business of various engineering, fabrication and manufacturing and trading of mechanical, electrical and other engineering items. At the time of hearing, learned Counsel for the assessee submitted that the issue raised by the Revenue in Ground No.2 is identical to the issue raised by the Revenue in Assessment Year 2001-02 in ITA No.3959/Mum/2004 which has already been decided by this Tribunal by order dated 18.03.2020. The facts in relation to the aforesaid ground are that the assessee claimed deduction of a sum of Rs.10 lakhs under section 80HHB of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The aforesaid deduction is allowed to assessee executing foreign projects in pursuance to foreign contracts entered into by it with a foreign enterprise. The expression foreign project is defined in clause (b) of subsection 2 to section 80HHB of the Act to inter alia to mean a project for the assembly or installation of any machinery or plant outside India. The AO did not allow the claim for the assessee by following his own order in Assessment Year 1999-2000 and 2000-01 on similar claim made by the assessee. In those Assessment Years, the deduction under section 80HHB of the Act was not allowed to the assessee for the reason that the assessee did not maintain separate books of accounts in respect of the profits and gains derived from the business of executing foreign projects. On appeal by the assessee, the CIT(A) allowed the claim of the assessee by following his predecessors’ order on an identical issue for Assessment Year 2001-02. The conclusion of the CIT(A) was that it is enough if separate accounts are maintained and it is not necessary that separate books of accounts are to be maintained.

4. Aggrieved by the order of the CIT(A), the Revenue has raised ground No.2. Learned Counsel for the assessee pointed out that identical issue was decided by this Tribunal in Assessment Year 2001-02 in ITA No.755/Bang/2007, order dated 04.03.2021 and the Tribunal in paragraph 57 of the order, followed the Tribunal’s decision for Assessment Year 1999-2000 in ITA No.3330/Mum/2004. The Tribunal noticed that though separate books of accounts were not maintained separate accounts were maintained in respect of each foreign project and audit certificates in Form No.10CCAH have also been furnished in respect of each project. In these circumstances, we are of the view that the decision rendered by the Tribunal in assessee’s own case for the earlier Assessment Years on identical ground would apply and therefore the assessee cannot be denied the benefit of deduction under section 80HHA of the Act on the ground that separate books of accounts were not maintained for the foreign projects. Ground No.2 raised by the Revenue is accordingly dismissed.

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