9911796707
|
Home
Issues:
The judgment involves the interpretation of section 80HH of the Income-tax Act, 1961, specifically regarding the allowance of relief on gross income versus net income for a private limited company engaged in the manufacture and sale of pesticides in a backward area for the assessment years 1979-80 and 1980-81. Interpretation of Section 80HH: The assessee claimed relief under section 80HH for its newly set up liquid section in a backward area, arguing that the relief should be granted on gross income, not net income, citing the Cloth Traders (P.) Ltd. v. Addl. CIT case. However, the Income-tax Officer, following the Cambay Electric Supply Industrial Co. Ltd. v. CIT case, concluded that relief under section 80HH should be based on net income. This decision was upheld by the Commissioner of Income-tax (Appeals) and the Income-tax Tribunal. Legal Arguments: The assessee contended that prior to the introduction of section 80AB, deduction had to be allowed on the basis of gross income, not net income. The assessee relied on various decisions, including Cloth Traders case, which were subsequently overruled by the Supreme Court in Distributors (Baroda) P. Ltd. v. Union of India. The Supreme Court held that deduction under section 80HH should be granted based on net income, not gross income, aligning with its decisions in other cases like Cambay Electric Supply Industrial Co. Ltd. and P. K. Jhaveri. Court's Decision: Given the similarity in the provisions of sections 80M, 80K, and 80HH, the court ruled that the allowance of deduction under section 80HH should be on the basis of net income, as defined in section 80B(5) of the Income-tax Act. Citing the Supreme Court's precedents, the court held in favor of the Revenue, affirming that the relief under section 80HH should be granted on net income from the liquid section. The court made the decision without awarding any costs in the matter.
|
