2004 (1) TMI 15 - HC - Income Tax

Deduction under section 80-I - Whether the Appellate Tribunal is right in law and on facts in confirming the order passed by the Commissioner of Income-tax (Appeals) holding that the deduction under section 80-I should be given without any deduction under section 80HH from the total income? - we have no manner of doubt that while computing the profits for the purpose of availing of deduction under section 80-I the profits and gains of the assessee s business are not required to be reduced by the deduction admissible under section 80HH. - Hence our answer to the question is in the affirmative i.e. in favour of the assessee and against the Revenue.

Summary

Issues: Interpretation of deductions under sections 80-I and 80HH for the assessment year 1989-90.

Analysis:
The court was tasked with determining whether the deduction under section 80-I should be given without any deduction under section 80HH from the total income for the assessment year 1989-90. The court considered a previous decision where it was established that the benefit of deduction under section 80HH is to be given to the assessee first, and if profits are not sufficient, then the deduction under section 80J is to be carried forward. The court noted that the same principle would apply to deductions under section 80-I, as it also allows for carry forward of deductions. The absence of specific bracketed words in section 80-I, as present in section 80J, led the court to conclude that profits for availing deduction under section 80-I need not be reduced by the deduction under section 80HH. The court ultimately ruled in favor of the assessee and against the Revenue, stating that the deduction under section 80-I should be given without any deduction under section 80HH from the total income.

The court highlighted the legislative history and the scheme of provisions under sections 80HH and 80J, emphasizing the geographical limitations for deductions under section 80HH and the broader scope of deductions under section 80J for new industrial units. The court also pointed out that section 80J allows for carry forward of deductions if the assessee is unable to avail complete deduction due to insufficient profits. In the absence of specific language in section 80-I requiring reduction of profits by deductions under section 80HH, the court concluded that such reduction is not necessary for computing profits for availing deduction under section 80-I.

The court's analysis focused on the interpretation of the provisions of section 80-I in comparison to section 80J, highlighting the absence of bracketed words in section 80-I that mandate reduction of profits by deductions under section 80HH. By examining the legislative history and the specific language of the relevant sections, the court concluded that profits for availing deduction under section 80-I should not be reduced by the deduction under section 80HH. This interpretation led to the court ruling in favor of the assessee and against the Revenue, resolving the controversy regarding deductions under sections 80-I and 80HH for the assessment year 1989-90.