2013 (9) TMI 752 - HC - Income Tax

Whether sections 80 HH and 80-I of the Income-tax Act, 1961, are independent of each other and therefore a new industrial unit can claim deductions under both the sections on the gross total income independently or that deduction under section 80-I can be taken on the reduced balance after taking into account the benefit taken under section 80 HH Held that - Reliance has been placed upon the judgment in the case of J.P. Tobacco Products P. Ltd v. CIT reported 1996 (8) TMI 29 - MADHYA PRADESH High Court , wherein it has been held that both the sections are independent and, therefore, the deductions could be claimed both under sections 80-HH and 80-I on the gross total income Decided against the Revenue.

Summary

Issues:
1. Interpretation of Section 80 HH of the Income Tax Act regarding deduction on interest received from debtors of customers on delayed payment.
2. Legal justification for re-computation of allowable deduction under Sections 80 HH and 80 I/80 J of the IT Act.

Analysis:
1. The first issue involves the interpretation of Section 80 HH of the Income Tax Act concerning the deduction on interest received from debtors of customers on delayed payment. The High Court examined whether the interest income derived from the Industrial Undertaking was eligible for deduction under Section 80 HH. The Tribunal's decision was challenged, questioning the justification for allowing the deduction under this provision. The Court referred to a previous judgment in a similar case and held that the interest income should be considered for deduction under Section 80 HH. The Court dismissed the appeal, ruling in favor of the respondent-assessee based on the previous judgment's precedent.

2. The second issue pertains to the re-computation of allowable deduction under Sections 80 HH and 80 I/80 J of the IT Act. The Court analyzed whether the Assessing Officer (A.O.) was legally justified in directing the re-computation of the deduction, considering the interaction between Sections 80 HH and 80 I. The Court referred to a decision by the Madhya Pradesh High Court, which clarified that both sections are independent, and deductions can be claimed on the gross total income separately. The Court further cited various judgments from different High Courts and the Supreme Court affirming this interpretation. Consequently, the Court dismissed the appeal, emphasizing that the Department cannot take a contrary view when previous judgments have established a consistent interpretation. The Court ruled in favor of the respondent-assessee based on the legal precedents and dismissed the appeal, citing the acceptance of the interpretation by various High Courts and the Supreme Court.

This detailed analysis of the judgment highlights the Court's interpretation of the Income Tax Act provisions and the application of legal principles to resolve the issues raised in the appeal.