2018 (5) TMI 1828 - HC - Income Tax

Deduction u/s.80IA - netting of interest for disallowance - Held that - This issue came up for consideration in case of this very assessee in the earlier assessment year in Tax Appeal No.655 of 2012. The question was not maintained, though appeal was admitted for some other question. - Appeal dismissed.

Summary

Issues:
1. Appeal against the judgment of the Income Tax Appellate Tribunal regarding deduction under section 80IA of the Income Tax Act, 1961.

Analysis:
The High Court of Gujarat, comprising Honourable Mr. Justice Akil Kureshi and Honourable Mr. Justice B.N. Karia, addressed an appeal by the Revenue challenging the Income Tax Appellate Tribunal's decision dated 27.06.2017. The primary question raised for consideration was whether the Tribunal erred in allowing the claim for deduction under section 80IA of the Income Tax Act, 1961. The issue at hand specifically concerned the netting of interest for disallowance under section 80IA. This matter had previously arisen in the case of the same assessee in an earlier assessment year, where the Court referred to a Supreme Court decision in the case of ACG Associated Capsules Pvt. Ltd. vs. Commissioner of Income Tax. The Court noted that the Supreme Court had settled the issue of netting interest for deduction under a different section of the Act, emphasizing that only the net interest, excluding the expenditure incurred in earning such income, should be considered for deduction purposes. Applying this principle, the High Court concluded that the Tribunal had not erred in allowing the deduction under section 80IA. Consequently, the Tax Appeal was dismissed, affirming the Tribunal's decision.

This judgment underscores the importance of correctly interpreting provisions of the Income Tax Act, particularly concerning deductions like section 80IA. The Court's reliance on a precedent set by the Supreme Court highlights the significance of established legal principles in resolving tax disputes. The decision provides clarity on the treatment of interest income for deduction purposes, emphasizing the exclusion of expenditure related to earning such income. By upholding the Tribunal's decision, the High Court ensures consistency in the application of tax laws and reinforces the principle of adhering to judicial precedents for resolving similar issues.