2011 (4) TMI 364 - HC - Income Tax

Deduction u/s 80-I - The matter is covered against the assessee by judgment of the Hon ble Supreme Court in Liberty India v. CIT 2009 -TMI - 34471 - SUPREME COURT - Hence, appeal is dismissed.

Summary

Issues Involved:
1. Interpretation of Section 80-I of the Income Tax Act, 1961 regarding exemption from tax on income received by the assessee.
2. Determination of whether income received by the assessee qualifies as income derived from the industrial undertaking within the meaning of Section 80-I.
3. Assessment of whether profits from the sale of import entitlements are of the same nature as other exempted income.
4. Clarification on the exemption from tax under Section 80-I for profits obtained from the sale of manufactured goods.
5. Evaluation of whether interest income earned on fixed deposits can be considered as income derived from the assessee's undertaking under Section 80-I and 80 HHC.
6. Examination of whether interest income from fixed deposit receipts for L/Cs or guarantees falls under the profits and gains of the business of the assessee under Section 80 HHC.

Analysis:

1. The appellant raised substantial questions of law related to the interpretation of Section 80-I of the Income Tax Act, specifically concerning the exemption from tax on income received. The Tribunal's decision was challenged based on the proper construction of the section and the Supreme Court's decision in the case of Sterling Foods. The Tribunal's ruling was upheld, citing the judgment in Liberty India v. CIT (2009) 317 ITR 218, which was unfavorable to the assessee.

2. The issue of whether the income received by the assessee qualifies as income derived from the industrial undertaking within the scope of Section 80-I was also addressed. The Tribunal had determined that the additional price for exports received by the assessee could not be considered as income derived from the industrial undertaking. The appellant's contentions were dismissed based on the precedent set by the Supreme Court.

3. The Tribunal's decision regarding the nature of profits from the sale of import entitlements in comparison to other exempted income was examined. The Tribunal's ruling was upheld, indicating that profits or sales of import entitlements were treated similarly to other exempted income, in line with the provisions of Section 80-I.

4. The exemption from tax under Section 80-I for profits obtained from the sale of manufactured goods was clarified. The Tribunal's interpretation that only profits from the sale of manufactured goods were exempt from tax under Section 80-I was supported, leading to the dismissal of the appellant's arguments.

5. The assessment of whether interest income earned on fixed deposits could be considered as income derived from the assessee's undertaking under Section 80-I and 80 HHC was discussed. The Tribunal's decision that interest income from fixed deposits did not qualify as income derived from the assessee's undertaking was affirmed, based on the specific circumstances and legal provisions.

6. Lastly, the issue of whether interest income from fixed deposit receipts for L/Cs or guarantees fell under the profits and gains of the business of the assessee under Section 80 HHC was examined. The Tribunal's ruling that such interest income would not be construed as profits and gains of the business of the assessee under Section 80 HHC was upheld, leading to the dismissal of the appellant's contentions.