2014 (10) TMI 149 - HC - Income Tax

Sales tax set off u/s 43B disallowed Exclusion of distribution cost from computation of deduction u/s 80HHC Held that - Following the decision in Commissioner of Income Tax-I, Mumbai Versus M/s. Hindustan Lever Ltd. 2014 (4) TMI 1012 - BOMBAY HIGH COURT the question with respect to sales tax set off involves is not a substantial question of law The Tribunal has considered the grievance of the assessee that the AO excluded from the total turnover excise duty and recovery of distribution costs credited to the distribution expenses while computing its eligible deduction u/s 80HHC of the Act Decided against revenue. Adjustment of brought forward losses and unabsorbed depreciation in respect of the same unit u/s 80HHC Held that - As decided in assessee s own case Income Tax Appeal No.1440 of 2011 - the court confirmed the order in relation to the deduction under section 80HH Decided against revenue.

Summary

Issues:
1. Disallowance of sales tax setoff under section 43B
2. Exclusion of distribution cost for computing deduction under section 80 HHC
3. Reassessment of deductions under section 80HH without adjusting brought forward losses and unabsorbed depreciation

Analysis:

1. The judgment dealt with three substantial questions of law arising from the Tribunal's order related to the assessment year 1989-90. The first issue was whether the ITAT was correct in deleting disallowances of sales tax setoff under section 43B. The Court referred to a previous judgment in a similar case and ruled in favor of the Assessee against the Revenue on this matter.

2. The second issue involved the exclusion of distribution cost for computing the deduction under section 80 HHC. The Court noted that a Division Bench had previously ruled in favor of the Assessee on this issue, following a specific judgment. Both sides agreed that this issue was answered in favor of the Assessee.

3. The third issue was regarding the reworking of deductions under section 80HH for a specific unit without adjusting brought forward losses and unabsorbed depreciation. The Tribunal had upheld the directions of the Commissioner of Income Tax (Appeals) in this regard. The Court found that the factual position was identical to a previous assessment year, and since no distinguishable features were pointed out, the Court applied the same reasons as in a previous order and concluded that this issue also could not be termed as a substantial question of law.

4. Based on the above analysis, the Court dismissed the Appeals, citing that the reasons provided in previous orders applied to the current case as well. The judgment concluded that there would be no orders as to costs in this matter.