2009 (2) TMI 86 - HC - Income Tax

Whether Tribunal was justified in rejecting the Appellant s claim that for the purposes of calculation of deduction u/s. 80I of I.T. Act the profits derived from the Industrial Undertaking should be reduced by the claim of Investment Deposit u/s. 32AB in view of the decision of Hon ble Supreme Court in the case of CIT vs Kotagiri Industrial Co-op. Tea Factory Ltd. - question is answered in the affirmative i.e. in favour of the revenue and against the assessee

Summary

Issues involved:
1. Interpretation of deduction under section 80I of the Income-tax Act.
2. Relevance of Investment Deposit under section 32AB of the Income-tax Act in calculating deduction.
3. Consideration of earlier High Court order on a similar issue.

Detailed Analysis:
1. The judgment addressed the interpretation of deduction under section 80I of the Income-tax Act for the Assessment Year 1988-89. The Income-tax Appellate Tribunal referred a question regarding the justification of rejecting the claim that profits derived from the Industrial Undertaking should be reduced by the claim of Investment Deposit under section 32AB of the Income-tax Act. The Tribunal's decision was based on the case of CIT vs Kotagiri Industrial Co-op. Tea Factory Ltd. (224-ITR-604).

2. The Senior Standing Counsel for the respondent-revenue highlighted a previous order by the High Court in Tax Appeal cases related to the same issue, where the appeals filed by the applicant-assessee were dismissed. The Senior Counsel for the respondent-assessee in the present case tried to distinguish the earlier order by emphasizing the provisions of Sections 80I and 32AB of the Income-tax Act, along with the Investment Deposit Account Scheme framed under Section 32AB. However, the Court, after hearing arguments from both sides, maintained its stance and did not deviate from the previous decision.

3. Ultimately, the Court answered the referred question in the affirmative, favoring the revenue and ruling against the assessee. The judgment disposed of the reference accordingly, with no specific order regarding costs. The decision reaffirmed the position taken in the earlier High Court order on a similar issue, indicating consistency in the interpretation and application of relevant provisions of the Income-tax Act.