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2015 (1) TMI 660 - HC - Income TaxDeduction u/s 80IB - Net interest exclusion while working out deduction instead of gross income as held by ITAT - Held that - As decided in case of ACG Associated Capsules Pvt. Ltd. v. Commissioner of Income Tax 2012 (2) TMI 101 - SUPREME COURT OF INDIA ninety per cent of not the gross rent or gross interest but only the net interest or net rent, which had been included in the profit of business of the assessee as computed under the head Profits and gains of business of profession , was to be deducted under clause (1) of Explanation (baa) to section 80HHC for determining the profit of the business. - Decided in favour of the assesseee.
Issues:
1) Interpretation of deduction u/s.80IB of the Income Tax Act, 1961 regarding exclusion of net interest vs. gross income. Analysis: The Tax Appeal before the Gujarat High Court challenged the judgment of the Income Tax Appellate Tribunal, which had partly allowed the appeal filed by the assessee for statistical purposes. The case revolved around the assessment year 1995-96, where the assessee initially declared a total income of &8377; 28,400. The Commissioner of Income Tax (Appeals) partially allowed the appeal filed by the assessee against the assessing officer's order. Subsequently, the revenue filed an appeal before the Tribunal, which also partly allowed the appeal, leading to the current appeal by the revenue. In framing the substantial question of law, the High Court considered whether the Tribunal was correct in excluding net interest instead of gross income while calculating the deduction u/s.80IB of the Act. The appellant's counsel relied on the decision of the Apex Court in ACG Associated Capsules Pvt. Ltd. v. Commissioner of Income Tax, (2012) 343 ITR 89 B, arguing that the issue in the present appeal was covered by this precedent. After hearing arguments from both parties and examining the Apex Court's decision, the High Court concluded that only the net interest or net rent, not the gross amounts, should be deducted under clause (1) of Explanation (baa) to section 80HHC for determining the profit of the business. The Court noted that the issue was settled by the Apex Court's decision cited by the appellant's counsel. Therefore, without delving into detailed reasons, the High Court dismissed the appeal, upholding the decision in favor of the assessee based on the established legal precedent.
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