2023 (7) TMI 853 - AT - Income Tax

Deduction u/s 80IE - Gross total income of an assessee which includes any profits and gains derived by an undertaking on the eligible business prescribed - HELD THAT - The recent supreme court judgment in the case of Reliance Energy 2021 (4) TMI 1237 - SUPREME COURT has held that the scope of sub-sec(5) of 80IA is limited to determination of quantum deduction under sub sec.(1) of sec. 80IA by treating eligible business as the only source of income and sub-section (5) cannot be pressed into service for reading a limitation of deduction under sub-sec. (1) only to business income Further as it can be seen from the Ld. CIT(A) order and the regular assessment passed u/s. 143(3) AO followed the Hon ble Supreme Court judgment in the case of Reliance Energy Ltd. and granted deduction under 80IE on the Gross Total Income of the Assessee. Decided against revenue.

Summary

Issues involved:
The judgment deals with the disallowance of deduction u/s. 80IE of the Income Tax Act, 1961 for Assessment Years 2018-19 and 2019-20.

For Assessment Year 2018-19:
The appeals were filed by the Revenue against separate Appellate orders passed by the Commissioner of Income Tax (Appeals) arising from intimation under section 143(1) of the Act. The primary issue was the disallowance of deduction u/s. 80IE of the Act by the CPC. The assessee contended that the adjustment made was without jurisdiction and claimed that the deduction should be allowed on the Gross Total Income. The Ld. CIT(A) deleted the disallowance, citing the Supreme Court judgment in the case of Reliance Energy Ltd. and the Bombay High Court judgment in V.M. Salgaocar & Brother Pvt. Ltd. The Revenue appealed against this decision, arguing that the specific provisions of Sec. 80IE should be considered. The Tribunal upheld the Ld. CIT(A)'s decision, emphasizing the Supreme Court's interpretation of sub-section (5) of 80IA and the allowance of deduction on Gross Total Income.

For Assessment Year 2019-20:
The claim of deduction u/s. 80IE was also restricted for this year. The Tribunal applied the same reasoning as in the previous year, following the judgments and dismissing the Revenue's appeal. The appeals filed by the Revenue for both years were ultimately dismissed based on the consistent application of the Supreme Court's interpretation regarding the deduction under section 80IE.

This judgment highlights the importance of interpreting tax provisions in line with relevant judicial precedents and ensuring consistency in applying deductions based on Gross Total Income.