2015 (5) TMI 822 - HC - Income Tax

Eligibility of Deduction u/s 80IB - profits derived from industrial undertaking on job work contract - whether sub-section (13) of Section 80IA can be made applicable in respect of a claim made by the assessee in terms of Section 80IB? - Held that - Assuming for a moment that certain clauses of Section 80IA was made applicable by virtue of sub-section(13) of Section 80IB, we find that the said provision is applicable only in respect of sub-section (5) and sub-sections (7) to (12) of Section 80IA and not in relation to sub-sections (4) and (13) of Section 80IA. Therefore, there cannot be any controversy on this issue, as the claim of the respondent/assessee does not fall under Explanation to sub-section (13) of Section 80IA of the Income Tax Act. The provisions contained in sub-section (5) and sub-sections (7) to (12) of Section 80-IA alone are applicable and not sub-section (4) or (13) of Section 80-IA of the Income Tax Act. Tribunal was right in holding that the deduction under Section 80IB on profits derived from industrial undertaking on job work contract is to be allowed - Decided against revenue.

Summary

Issues:
1. Interpretation of deduction under Section 80IB on profits derived from industrial undertaking on job work contract.

Analysis:
The appellant, engaged in manufacturing automotive components, claimed deduction under Section 80IB of the Income Tax Act for works contract. The Assessing Officer initially completed the assessment denying the deduction, which was later reopened, and the claim was rejected. The Commissioner of Income Tax (Appeals) allowed the deduction under Section 80IA after considering evidence of manufacturing activities, power connection, excise duty payment, and control over the manufacturing process. The Tribunal upheld this decision.

The Revenue challenged the order before the High Court, arguing that sub-section (13) of Section 80IA should apply to the claim made under Section 80IB. The Court analyzed the provisions of Section 80IA and Section 80IB, noting that sub-section (13) of Section 80IA applies to specific clauses and does not cover sub-sections (4) and (13) of Section 80IA. Therefore, the Court concluded that the claim did not fall under the Explanation to sub-section (13) of Section 80IA.

The Court further clarified that sub-section (5) and sub-sections (7) to (12) of Section 80IA are applicable to the eligible business under Section 80IB, excluding sub-sections (4) and (13) of Section 80IA. Consequently, the Court held that no question of law arose for consideration in the appeals and dismissed the Tax Case (Appeals) along with associated motions.