1992 (8) TMI 32 - HC - Income Tax

Summary

Issues:
Interpretation of deduction under section 36(1)(viii) of the Income-tax Act, 1961.

Detailed Analysis:
The judgment pertains to references made by the Revenue regarding the entitlement of the assessee, Kerala Financial Corporation Limited, to deduction under section 36(1)(viii) of the Income-tax Act, 1961, on the total income before making any deduction under the same section. The court noted that previous decisions in the assessee's cases had concluded that the deduction should be on the total income before any deduction under section 36(1)(viii). These decisions were based on precedents like Kerala State Industrial Development Corporation Ltd. v. CIT and others, which were upheld despite attempts for reconsideration.

The Revenue sought reconsideration of the previous decisions in light of the Cambay Electric Supply Industrial Co. Ltd. v. CIT case and the Karnataka State Financial Corporation v. CIT case. However, the court rejected the need for reconsideration, stating that the deduction under section 36(1)(viii) should be on the total income before any deduction under that section and Chapter VI-A. The court emphasized that the provision is clear, and there is no need for a different interpretation or formula.

The court referred to the Gujarat State Finance Corporation case, where a similar issue was considered, and the court held that the deduction under section 36(1)(viii) should be worked out on the total income before any deduction under that section and Chapter VI-A. The court agreed with this interpretation, stating that it aligns logically with the context of the provision. The court also endorsed the reasoning of the Gujarat High Court and found no need to reconsider the previous decisions based on the discussions held in the Patna and Madhya Pradesh High Courts.

Ultimately, the court answered the references in the affirmative, favoring the assessee and rejecting the Revenue's contentions. The judgment will be forwarded to the Income-tax Appellate Tribunal for information and compliance.