2006 (4) TMI 75 - SC - Income Tax

Whether sections 80HH and 80-I are independent of each other and therefore a new industrial unit can claim deductions under both the sections on the gross total income independently or that deduction u/s 80-I can be taken on the reduced balance after taking into account the benefit taken under section 80HH - Department having accepted the view taken in those judgments cannot be permitted to take a contrary view in the present case involving the same point - revenue s appeal dismissed

Summary

Issues:
Interpretation of sections 80HH and 80-I of the Income-tax Act, 1961 regarding deductions for new industrial units.

Analysis:
The main issue in this case was the interpretation of sections 80HH and 80-I of the Income-tax Act, 1961, and whether a new industrial unit can claim deductions under both sections independently or if the deduction under section 80-I should be taken on the reduced balance after considering the benefit under section 80HH. The Madhya Pradesh High Court held in previous cases that both sections are independent, allowing deductions under both on the gross total income. This view was followed by other High Courts as well, and the Department did not file special leave petitions against these judgments, indicating acceptance of the interpretation.

The Supreme Court noted that special leave petitions filed against the Madhya Pradesh High Court's judgment were dismissed, and the Department did not challenge the judgments of other High Courts following the same interpretation. Therefore, the Court found no merit in the appeal, stating that the Department cannot take a contrary view in the present case when it has accepted the interpretation in previous judgments. As a result, the civil appeal was dismissed with no costs awarded.

This judgment clarifies that new industrial units can claim deductions under sections 80HH and 80-I independently on the gross total income, as established by the consistent interpretation by various High Courts. The decision emphasizes the importance of consistency in legal interpretation and the principle that the Department cannot take a different stance on the same issue after accepting a particular interpretation in previous cases.