2013 (10) TMI 877 - SC - Income Tax

Whether the issue framed is a question of law to be heard before supreme court of india - Purchases of internal manufactured assets for the purposes of deduction under Section 32AB of the Act Held that - This is a substantial question of law which needs to be decided by the High Court in the pending appeal.

Summary

Issues involved:
1. Inclusion of write-off of assets and loss on sale/write off of fixed assets as profit of business for computing allowable deduction under Section 32AB of the Income Tax Act.
2. Consideration of purchases of internal manufactured assets for the purposes of deduction under Section 32AB of the Act.
3. Addition made on account of disallowance of expenditure on temporary construction of site office and building.
4. Allowance of deduction of interest claimed on borrowings for payment of taxes.

Analysis:

1. The appeal before the High Court raised four questions regarding the computation of allowable deduction under Section 32AB of the Income Tax Act. The first issue was whether the Income Tax Appellate Tribunal (ITAT) was correct in directing to consider the inclusion of write-off of assets and loss on sale/write off of fixed assets as profit of business for the deduction, despite not being covered under the adjustments specified in Section 32AB(3) of the Act. The High Court admitted the appeal on this substantial question of law.

2. The second issue involved the consideration of purchases of internal manufactured assets for the deduction under Section 32AB. The High Court held that this question was covered by a previous decision and needed to be decided in the pending appeal. The Supreme Court set aside this part of the order, stating that it is a substantial question of law to be decided by the High Court along with other issues in the appeal.

3. The third issue concerned the addition made on account of disallowance of expenditure on temporary construction of site office and building. The High Court observed that this was capital expenditure. However, the Supreme Court did not find this issue arising from the impugned order of the ITAT.

4. The fourth issue was regarding the allowance of deduction of interest claimed on borrowings for payment of taxes. The High Court did not consider this question to arise from the ITAT's order. Therefore, the Supreme Court disposed of the appeal, stating that the parties shall bear their own costs.

In conclusion, the Supreme Court addressed the various issues raised in the appeal concerning the computation of deductions under the Income Tax Act, setting aside certain parts of the High Court's order for further consideration and disposing of the appeal accordingly.