R.P. GARG, VICE PRESIDENT: This is appeal by Revenue against order of CIT(A) for asst. yr. 2001-02. addition disputed in this appeal is Rs. 1,44,190 under s. 80HHC on account of direction to allow claim of assessee under s. 80HHC without excluding deduction allowed under ss. 80-I and 80G of Act. Though appeal was filed by Revenue on 21st June, 2005 when limit for filing appeal was prescribed by CBDT at Rs. 1 lakh, assessee s contention is that said limit has been increased by subsequent Circular of Board dt. 24th Oct., 2005 and therefore, appeal should not be entertained in view of Bombay High Court decision in case of CIT vs. Pithwa Engg. Works (2005) 197 CTR (Bom) 655: (2005) 276 ITR 519 (Bom). Department has, however, contended that new limit applies only to appeals filed after 30th Oct., 2005 and decision in case of Pithwa Engg. Works (supra) has no application for increased limit under new circular. It was further contended by learned Departmental Representative that present case, in any case, is covered by exception provided in cl. 3 of circular as there involved substantial question of law as well as question of law which will repeatedly arise in such like cases. We have heard parties and considered their rival contentions. It is true that Bombay High Court decision was not dealing with new limit of Board s Circular, dt. 24th Oct., 2005. It was with reference to earlier circular where reference was required to be filed to High Court if tax effect was less than Rs. 2 lakhs. contention of Revenue in that case was that Rs. 2 lakhs limit was increased by Circular dt. 27th March, 2000 and prior to that, limit was only Rs. 50,000 and contention of Revenue was that new limit would not be applicable to old references. High Court rejected said contention of Revenue: "One fails to understand how Revenue can contend that so far as new cases are concerned, circular issued by Board is binding on them and in compliance with said instructions, they do not file references if tax effect is less than Rs. 2 lakhs. But same approach is not adopted with respect to old referred cases even if tax effect is less than Rs. 2 lakhs. In our view, there is no logic behind this approach. This Court can very well take judicial notice of fact that by passage of time money value has gone down, cost of litigation expenses has gone up, assessees on file of Departments have increased; consequently, burden on Department also increased to tremendous extent. corridors of superior Courts are choked with huge pendency of cases. In this view of matter, Board has rightly taken decision not to file references if tax effect is less than Rs. 2 lakhs. same policy for old matters needs to be adopted by Department. In our view, Board s circular dt. 27th March, 2000, is very much applicable even to old references which are still undecided. Department is not justified in proceeding with old references wherein tax impact is minimal. Thus, there is no justification to proceed with decades old references having negligible tax effect." In these circumstances, though said High Court decision does not deal with Circular of Board dt. 24th Oct., 2005, but it has dealt with earlier circular and limits of that circular was applied even to cases which were prior to old circular. Therefore, ratio of this decision is applicable in present case as well. Board has taken policy decision not to file appeals in such type of cases and circular is binding on Revenue even to appeals filed before 31st Oct., 2005 and Department would not be justified in proceeding with these appeals within monetary limit of tax effect prescribed in Board s Circular dt. 24th Oct., 2005. contention of learned Departmental Representative that case of assessee is covered by exception has also no force inasmuch as said exception reads as under: "3. Board has also decided that in cases involving substantial question of law of importance as well as in cases where same question of law will repeatedly arise, either in case concerned or in similar cases, should be separately considered on merits without being hindered by monetary limits." In present case, dispute is whether s. 80HHC deduction is to be allowed without excluding deductions allowed under ss. 80-I and 80G of Act. Sec. 80HHC deduction is to be allowed on income derived from exports. income is to be computed as per provisions of sub-s. (3) which reads as under: "(3) For purposes of sub-s. (1) (a) where export out of India is of goods or merchandise manufactured or processed by assessee, profits derived from such export shall be amount which bears to profits of business, same proportion as export turnover in respect of such goods bears to total turnover of business carried on by assessee; (b) where export out of India is of trading goods, profits derived from such export shall be export turnover in respect of such trading goods as reduced by direct costs and indirect costs attributable to such export; (c) where export out of India is of goods or merchandise manufactured o r processed by assessee and of trading goods, profits derived from such export shall (i) in respect of goods or merchandise manufactured or processed by assessee, be amount which bears to adjusted profits of business, same proportion as adjusted export turnover in respect of such goods bears to adjusted total turnover of business carried on by assessee; and (ii) in respect of trading goods, be export turnover in respect of such trading goods as reduced by direct and indirect costs attributable to export of such trading goods; Provided that profits computed under cl. (a) or cl. (b) or cl. (c) of this sub-section shall be further increased by amount which bears to ninety per cent of any sum referred to in cl. (iiia) (not being profits on sale of license acquired from any other person), and cls. (iiib) and (iiic) of s. 28, same proportion as export turnover bears to total turnover of business carried on by assessee." "profits of business" which is starting point for computing deduction under sub-s. (3) of s. 80HHC is defined in Expln. (baa) below sub-s. (4C) as under: (baa) "profits of business" means profits of business as computed under head "Profits and gains of business or profession" as reduced by (1) ninety per cent of any sum referred to in cls. (iiia), (iiib) and (iiic) of s. 28 or of any receipts by way of brokerage, commission, interest, rent, charges or any other receipt of similar nature included in such profits; and (2) profits of any branch, office, warehouse or any other establishment of assessee situate outside India. Nowhere in these provisions is there any mention that while computing deduction under s. 80HHC, profit is to be reduced by deductions under ss. 80-I and 80G which are allowed to assessee. Therefore, contention of learned Departmental Representative that substantial question of law or question of law arises has no merits. Even on merits, assessee s case has merit and was rightly allowed by CIT(A) as aforesaid. In view of above discussion, appeal is to be rejected. In result, appeal of Revenue is dismissed. *** ASSISTANT COMMISSIONER OF INCOME TAX v. RAJOO ENGINEERS LTD.