1986 (11) TMI 137 - AT - Income Tax

Summary

Issues involved: The deduction to be allowed under section 80-I and the quantum of deduction permissible under the Income Tax Act.

Summary:
In the appeal before the Appellate Tribunal ITAT Jaipur, the assessee contested the restriction imposed by the Department on the deduction under section 80-I, arguing that it should be calculated at 20 per cent of the profits and gains of the undertaking, similar to section 80-HH deduction under Chapter 6A. The Department, however, limited the deduction under section 80-I to 20 per cent of the income after deduction of the relief under section 80-HH. The Tribunal carefully considered the arguments presented by both parties and observed that sections 80HH(1) and 80-I(1) focus on the amount to be allowed as a deduction from the profits and gains of the undertaking, without specifying that it should be based on income computed after relief under Chapter 6A. The Tribunal highlighted that section 80HH(9) clarifies the order of deduction when multiple reliefs are applicable, emphasizing that the deduction under section 80-I should be based on commercial profits, excluding certain elements like depreciation and income-tax provisions. The Tribunal directed the Income Tax Officer to recalculate the deduction under section 80-I accordingly. Consequently, the appeal of the assessee was allowed.