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2015 (1) TMI 471 - HC - Income TaxDeduction under 80I - whether should be allowed on the eligible profits without reducing the deduction given under 80 HH even though interest on TDRs favouring TNPCB were not receipts arising in the course of business nor were the said income derived from the industrial undertaking? Held that - As decided in Mandideep Eng. & Pkg. India (P) Ltd. case 2006 (4) TMI 75 - SUPREME Court Section 80 HH and 80 I of the Income Tax Act are independent of each other and, therefore, new industrial undertakings can claim deduction under both the sections on the gross total income independently. This appeal fails and the same is dismissed, answering the issue raised in favour of the assessee and against the department.
Issues:
1. Interpretation of deduction under Section 80I and 80HH for the assessment year 1995-96. 2. Relevance of interest on term deposits and TDRs in claiming deductions under Section 80I and 80HH. 3. Applicability of deductions under Section 80I and 80HH on eligible profits. Issue 1: Interpretation of deduction under Section 80I and 80HH The High Court was approached by the Revenue challenging the order of the Appellate Tribunal that dismissed their appeal. The Court framed substantial questions of law regarding whether the deduction under Section 80I should be allowed on eligible profits without reducing the deduction under Section 80HH for the assessment year 1995-96. The Court found that the questions framed were irrelevant to the case and not considered by the Tribunal, thus rendering them unnecessary to be answered. Issue 2: Relevance of interest on term deposits and TDRs The assessment for the year 1995-96 was completed, determining a taxable income that was subsequently revised under Section 154 of the Act. The excessive deductions allowed under Sections 80I and 80IA were reopened under Section 147 due to certain incomes not being deducted. The Court observed that the Tribunal granted benefits under Section 80HHC and held that deductions under Section 80I should be made from the gross total income before allowing deductions under 80HHC. The issue raised was whether the benefits under Section 80I and 80HH could be taken together or separately. Issue 3: Applicability of deductions under Section 80I and 80HH The Supreme Court's decision in Joint Commissioner of Income Tax Vs Mandideep Eng. & Pkg. India (P) Ltd. clarified that Sections 80HH and 80I of the Income Tax Act are independent of each other. New industrial undertakings can claim deductions under both sections on the gross total income independently. The High Court followed this precedent in DCIT Vs Chola Textiles (P) Ltd. based on the Supreme Court's ruling. Consequently, the appeal was dismissed, favoring the assessee and against the department, in line with the legal interpretation provided by the Supreme Court. This detailed analysis of the judgment addresses the interpretation of deductions under Sections 80I and 80HH, the relevance of interest on term deposits and TDRs, and the applicability of these deductions on eligible profits for the assessment year 1995-96 as decided by the Madras High Court.
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