2018 (2) TMI 1857 - HC - Income Tax

Deduction u/s 80I - deduction given on profit without reducing the deduction u/s. 80HH - HELD THAT - The impugned order of the Tribunal held that the Respondent Assessee is entitled to the simultaneous benefit of Section 80I and Section 80HH of the Act. This by following the decision of the Supreme Court in the case of JCIT Vs. Mandideep Eng. & Pag. Ind. P. Ltd. 2006 (4) TMI 75 - SUPREME COURT . No substantial question of law. Appeal is admitted on the substantial questions of law at 2 & 3.

Summary

Issues Involved:
1. Interpretation of Section 80I and Section 80HH of the Income Tax Act for simultaneous benefit.
2. Allowability of additional bonus under the Payment of Bonus Act without satisfying Section 43B requirements.
3. Treatment of assets transferred as a going concern for depreciation purposes.

Analysis:

Issue 1: Interpretation of Section 80I and Section 80HH
The appeal challenges the Tribunal's order allowing the simultaneous benefit of Section 80I and Section 80HH of the Income Tax Act to the Assessee. The Tribunal relied on the Supreme Court's decision in JCIT Vs. Mandideep Eng. & Pag. Ind. P. Ltd. 293 ITR 001 to support its decision. The High Court, considering the precedent set by the Apex Court, found no substantial question of law arising from this issue and thus upheld the Tribunal's decision.

Issue 2: Allowability of Additional Bonus under the Payment of Bonus Act
The Revenue raised a question regarding the allowance of an additional bonus of ?1,25,47,000 payable to employees under the Payment of Bonus Act, 1965, without meeting the requirements of Section 43B of the Income Tax Act. The Tribunal had allowed this expense, and the High Court admitted this issue as a substantial question of law for further consideration, indicating a potential discrepancy in the interpretation of the law.

Issue 3: Treatment of Transferred Assets for Depreciation
The third question raised concerned the treatment of assets forming part of the Shamnagar undertaking, which was transferred to another entity for a lump sum consideration, for depreciation purposes. The Tribunal had held that the block of assets need not be reduced by the written down value of the transferred assets. The High Court admitted this issue as a substantial question of law, signaling a need for clarity on the treatment of transferred assets for depreciation calculations.

In conclusion, the High Court admitted the appeal on the substantial questions of law related to the simultaneous benefit of Section 80I and Section 80HH, the allowance of additional bonus under the Payment of Bonus Act, and the treatment of transferred assets for depreciation purposes. The Tribunal's decisions on these matters will be further scrutinized based on the legal interpretations and precedents presented during the appeal process.