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2021 (10) TMI 560 - AT - Income TaxDeduction u/s. 80IA(4)(iv) on gross total income - computing the total income of the assessee - gross total income of eligible business including income from capital gain and Income from other sources - in assessee's case includes income from capital gain and income from other sources whereas as per sec. 80IA(1), the said deduction is envisaged out of profit and gains from the eligible business only - whether CIT(A) has erred in concluding that gross total income of eligible business includes also income from capital gain and Income from other sources? - non-obstente clause appearing in section 80IA(5) - HELD THAT - Once income had been determined by applying the methodology as provided in Section 80HHC(3), the question of restricting the deduction in terms of Section 80AB would not arise. That in Section 80AB(2) of the Act, the restriction of deduction is on gross total income and in such circumstances, restriction on the total profit of business was not at all justified. This decision of the Hon‟ble Bombay High Court squarely covers the issue in favour of the assessee and in view thereof, the Ld. CIT(Appeal) has provided relief to the assessee. That even before us, the Ld. DR fairly conceded that the issue is covered by the aforesaid decisions of the Hon‟ble Bombay High Court in V M Salgaocar Brothers 2015 (4) TMI 1108 - BOMBAY HIGH COURT in favour of the assessee.
Issues involved:
Appeal by Revenue challenging allowance of deduction u/s. 80IA(4)(iv) on gross total income including capital gain and other sources. Interpretation of section 80IA(1) regarding deduction from profit and gains of eligible business only. Consideration of non-obstante clause in section 80IA(5) superseding other provisions. Application of Bombay High Court decisions on deduction restrictions under section 80IA and similar provisions. Analysis: The appeals by the Revenue before the Appellate Tribunal ITAT Pune challenged the allowance of deduction u/s. 80IA(4)(iv) on the assessee's gross total income, which included income from capital gains and other sources. The Revenue contended that as per Section 80IA(1), the deduction should be limited to profits and gains from the eligible business only. The Revenue also raised concerns about the non-obstante clause in section 80IA(5) of the Income Tax Act, which they argued supersedes other provisions. The Tribunal consolidated the appeals due to similar facts and issues presented. In the lead case for adjudication, concerning the assessment year 2010-11, the Assessing Officer observed that the assessee claimed deduction u/s. 80IA(4)(iv) at a certain amount, including income from sources other than the eligible business. The Assessing Officer held that such claims were not allowable under section 80IA(5) and restricted the deduction accordingly. The Tribunal referred to a decision by the Mumbai Bench regarding the independent nature of the activities claimed for deduction under section 80IA. Before the Ld. CIT(Appeal), the assessee relied on the Bombay High Court decision in CIT Vs. Tridoss Laboratories Ltd., emphasizing that the total income for deduction under section 80IA is not restricted to income derived from the eligible business alone. The Ld. CIT(Appeal) upheld the assessee's position based on the cited decision, directing the AO to allow the deduction on the gross total income. The Tribunal concurred with the Ld. CIT(Appeal) and dismissed the Revenue's appeal for the assessment year 2010-11. The Tribunal also referenced another Bombay High Court decision in V M Salgaocar & Brothers (P) Ltd., which supported the assessee's position on deduction restrictions under section 80IA. The Tribunal found no reason to interfere with the Ld. CIT(Appeal)'s decision, sustaining the relief provided to the assessee. The Tribunal applied the same reasoning to dismiss the Revenue's appeals for the assessment years 2011-12 and 2014-15, as the facts and issues were similar to the lead case for adjudication. Ultimately, all appeals by the Revenue were dismissed by the Tribunal.
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