1979 (4) TMI 38 - AT - Income Tax

Summary

Issues:
1. Interpretation of Section 80HH and Section 80M for calculating relief.
2. Application of judicial precedents in determining the allowable deduction.
3. Consideration of gross income without adjustment of carry forward losses and unabsorbed depreciation for relief under Section 80HH.

Analysis:
1. The case involved a company's claim for relief under Section 80HH, where the Income Tax Officer (ITO) calculated the company's income at Rs. 10,68,299 and allowed a deduction based on this figure. The Appellate Assistant Commissioner (AAC) upheld the ITO's decision, citing a Gujarat High Court precedent. However, the appellant argued that a Supreme Court decision had reversed the Gujarat High Court's ruling in a similar case under Section 80M. The Tribunal noted the similarity between Sections 80HH and 80M and emphasized that relief should be granted on the gross income without adjusting for carry forward losses or unabsorbed depreciation.

2. The Tribunal considered various judicial decisions, including the Supreme Court's ruling in Cloth Traders Pvt. Ltd. vs. Addl. CIT, which reversed the Gujarat High Court's decision. The Tribunal highlighted that the relief under Section 80HH should be based on gross income without adjustments, as seen in other sections like 80M. It emphasized that the assessee has the discretion to forego certain adjustments and that the IT Authorities cannot compel an assessee to make adjustments they do not desire. The Tribunal concluded that relief should be granted based on the income from the undertaking without considering adjustments from previous years.

3. Ultimately, the Tribunal accepted the assessee's claim for relief under Section 80HH and allowed the appeal. The judgment clarified that relief under Section 80HH should be calculated based on the gross income from the undertaking without adjusting for carry forward losses or unabsorbed depreciation. The decision highlighted the importance of considering gross income and granting relief accordingly, in line with the provisions of the Income Tax Act.