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Issues Involved:
The judgment involves the challenge to the disallowance of deduction claimed by the assessee for its share of income from advertisements, specifically related to the new industrial unit at Trivandrum under section 80-I(1) of the Income-tax Act for the assessment years 1990-91 and 1991-92. Details of the Judgment: The appellant, a publishing company, claimed deduction under section 80-I(1) for its new unit at Trivandrum based on the income from advertisements and sale of newspapers. The assessing authority disallowed a portion of the claimed deduction for both years, citing that the benefit of advertisements is derived solely by the advertisers. The Commissioner of Income-tax (Appeals) allowed the appeals, stating that the newspaper itself benefits from advertisements. However, the Income-tax Appellate Tribunal ruled in favor of the Department, disagreeing with the Commissioner's decision. Legal Analysis: The High Court analyzed the provisions of section 80-I of the Income-tax Act and the nature of the benefit derived from advertisements. It concluded that the benefit of advertisements is mutual, as the newspaper's circulation and readership directly impact the revenue generated from advertisements. The Court emphasized that the newspaper's efforts to increase circulation and coverage, especially through new units like the one at Trivandrum, contribute to attracting advertisers and increasing revenue. Therefore, the Court set aside the Tribunal's decision and reinstated the Commissioner's order in favor of the assessee. This judgment clarifies the interpretation of section 80-I in the context of claiming deductions for income from advertisements, highlighting the mutual benefit between newspapers and advertisers based on circulation and readership.
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