2012 (9) TMI 1083 - HC - Income Tax

Summary

Issues involved:
The judgment addresses various questions of law raised by the revenue in the appeal, including the computation of deduction u/s 80HHC, treatment of deduction u/s 80IA, exclusion of insurance receipts, netting off interest receipts, and allowance of deduction on delayed payments and insurance claims.

Question (i):
The Tribunal's decision to compute deduction u/s 80HHC for each unit instead of the assessee was upheld, as per the directions in the case of Associated Capsules P. Ltd. The matter was remanded for fresh consideration.

Question (ii):
The issue regarding the reduction of deduction u/s 80IA from business profits for computing deduction u/s 80HHC was remanded for fresh consideration based on the decision in Associated Capsules P. Ltd.

Question (iii):
The insurance receipts of Rs. 10.08 lakhs were not excluded from profits for the purpose of deduction u/s 80IA, as they had a direct nexus with the income of the undertaking and were not challenged by the revenue in earlier years.

Questions (iv) & (v):
The ITAT's decision to allow netting off interest receipts and exclude a portion of interest receipts from profits for the purpose of deductions under sections 80IA and 80HHC was upheld based on the Supreme Court's ruling in ACG Associated Capsules Pvt. Ltd. v. CIT.

Question (vi):
The deduction u/s 80HHC on interest of Rs. 23.74 lakhs received on delayed payments from debtors was allowed, following the decision in CIT v. Grindwell Norton Ltd.

Question (vii):
The insurance claim of Rs. 84.07 lakhs was not excluded from business profits for computing the deduction u/s 80HHC, in line with the decision in CIT v. Pfizer Ltd.

The appeal was admitted on the question related to the computation of deduction u/s 80HHC for each unit, and the respondent waived service.