2006 (11) TMI 364 - AT - Income Tax

Summary

Issues Involved:

1. Deduction u/s 80HHC after deducting unabsorbed depreciation.
2. Reduction of loss from export of trading goods from the deduction claimed from the profit on export of manufactured goods.
3. Inclusion of export incentives in the business profits for computing deduction u/s 80-IA.
4. Levy of interest u/s 234B and 234C on tax payable u/s 115JA.

Summary:

Issue 1: Deduction u/s 80HHC after deducting unabsorbed depreciation

The assessee contested the deduction u/s 80HHC after deducting unabsorbed depreciation of Rs. 52,41,254. The Tribunal dismissed this ground, citing the decisions of the Hon'ble Supreme Court in IPCA Laboratory Ltd. v. Dy. CIT [2004] 266 ITR 521 and the Hon'ble Bombay High Court in Synco Industries Ltd. v. Assessing Officer [2002] 254 ITR 6082, which were against the assessee.

Issue 2: Reduction of loss from export of trading goods from the deduction claimed from the profit on export of manufactured goods

The assessee did not press this ground during the hearing. Consequently, the Tribunal dismissed ground No. 2 as not pressed.

Issue 3: Inclusion of export incentives in the business profits for computing deduction u/s 80-IA

The assessee argued that export incentives should be considered as profits derived from the business of an industrial undertaking for computing deduction u/s 80-IA. The Tribunal referred to the decision in CIT v. Sterling Foods [1999] 237 ITR 5791, where it was held that profits from the sale of import entitlements are not profits derived from an industrial undertaking. Thus, the Tribunal concluded that export incentives cannot be treated as profits derived from the business of an industrial undertaking and dismissed ground No. 3.

Issue 4: Levy of interest u/s 234B and 234C on tax payable u/s 115JA

The additional ground raised by the assessee concerned the levy of interest u/s 234B and 234C on tax payable u/s 115JA. The Tribunal examined the provisions of section 115JA and the applicability of sections 234B and 234C. It concluded that the total income computed u/s 115JA is liable for advance tax and interest for defaults or deferment in payment of advance tax. The Tribunal upheld the Assessing Officer's action in charging interest under sections 234B and 234C, referencing the decision of the Hon'ble Karnataka High Court in Jindal Thermal Power Co. Ltd. v. Dy. CIT [2006] 286 ITR 182. The additional ground was dismissed.

Conclusion:

The appeal filed by the assessee was dismissed in its entirety.