2015 (3) TMI 1275 - HC - Income Tax

Deduction under Section 80I on gross total income before reducing deduction under Section 80HH - Held that - The question of law has since been decided by Hon ble Supreme Court in Joint Commissioner of Income-Tax Vs. Mandideep Eng. and Pkg.Ind. P. Ltd. 2006 (4) TMI 75 - SUPREME Court - Decided in favour of the assessee and against the Department.

Summary

Issues:
Interpretation of Sections 80HH and 80-I of the Income-tax Act, 1961 for claiming deductions independently or after reducing the benefit taken under Section 80HH.

Analysis:
The High Court addressed the issue of whether a new industrial unit can claim deductions under both Sections 80HH and 80-I on the gross total income independently or if the deduction under Section 80-I should be taken on the reduced balance after considering the benefit under Section 80HH. The Supreme Court, in a previous judgment, clarified that the two sections are independent of each other. The Madhya Pradesh High Court's decision in J.P. Tobacco Products P. Ltd. v. CIT, which allowed deductions under both sections on gross total income, was upheld by various High Courts. The Supreme Court noted that the Department did not challenge these decisions, indicating acceptance of the interpretation. Consequently, the High Court ruled in favor of the assessee based on the Supreme Court's judgment and dismissed the Income Tax Appeal filed by the Commissioner of Income Tax, Alwar. The Court emphasized that the Department cannot take a contrary view when it has accepted a consistent interpretation by various High Courts on the same issue. The appeal was dismissed, and no costs were awarded.

This judgment provides clarity on the interpretation of Sections 80HH and 80-I of the Income-tax Act, 1961, ensuring that new industrial units can claim deductions independently under both sections on the gross total income. The decision is based on the Supreme Court's ruling and the consistent approach taken by various High Courts, which the Department has accepted by not challenging those judgments. The High Court's decision reaffirms the principle that the Department cannot adopt a different stance on the same issue once it has acknowledged and acquiesced to a particular interpretation. The ruling ultimately favors the assessee by upholding their right to claim deductions under both sections on the gross total income, in line with the prevailing legal understanding established by previous judgments.