2015 (5) TMI 481 - HC - Income Tax

Deduction under Section 80I - Tribunal holding that deduction under Section 80I is allowable without taking note of the deduction under Section 80HH - Held that - In respect of the issue of allowability of deduction under Section 80HH and 80I, the ITAT noted the previous decision of the Madhya Pradesh High Court in J.P. Tobacco Products (P) Ltd. v. CIT 1996 (8) TMI 29 - MADHYA PRADESH High Court . The ITAT also noted that the said decision of the Madhya Pradesh High Court was affirmed by the Supreme Court in Joint Commissioner of Income Tax v. Madideep Engineering and Packaging India (P) Ltd. ( 2006 (4) TMI 75 - SUPREME Court). The said decision was confirmed by a previous judgment of this Court in Commissioner of Income Tax v. SKG Engineering (P) Ltd. (2005 (5) TMI 37 - DELHI High Court) and several other judgments of various High Courts on the issue. - Decided in favour of the assessee. Admissibility of 1/7th of the premium amount payable on redemption of debentures after seven years - Held that - The issue has been decided for the previous year i.e. 1990-91 by the Division Bench of this Court in 2013 (9) TMI 988 - DELHI HIGH COURT whereby the appeal of the Revenue has been dismissed. We further notice that for other previous years, the Division Bench of this Court had followed the decision in Commissioner of Income Tax vs. Jagatjit Industries Ltd. (2006 (5) TMI 72 - DELHI High Court) and allowed the 1/7th of the premium amount payable on redemption of debentures after seven years for that particular year. - Decided in favour of the assessee.

Summary

Issues:
1. Whether deduction under Section 80I is allowable without considering the deduction under Section 80HH?
2. Whether 1/7th of the premium amount payable on redemption of debentures after seven years is admissible?

Analysis:
1. The respondent, a company operating a spinning mill in Rajasthan and leasing a factory in Jammu, sought a deduction of Rs. 2,85,715 as expenditure on debentures redemption premium for the assessment year 1991-92. The Assessing Officer disallowed the claim, stating that deductions under Section 80HH and 80I could only be allowed after reducing the deduction. The AO also carried forward the loss for Section 80I, rejecting the contention that losses could be set off as per Section 80HH(9).

2. The CIT(A) upheld the Revenue's stance, but the ITAT ruled in favor of the assessee. Referring to the Madhya Pradesh High Court's decision in J.P. Tobacco Products case, the ITAT supported the assessee's position. Additionally, the ITAT cited the Supreme Court's affirmation of the Madhya Pradesh High Court's decision in the Madideep Engineering case, along with this Court's judgment in SKG Engineering case and other High Courts' rulings on the matter.

3. Consequently, the question of allowing deductions under Section 80HH and 80I was resolved in favor of the assessee against the Revenue based on the precedents and legal interpretations highlighted by the ITAT.

4. Addressing the second issue, the Court noted a previous judgment regarding the admissibility of 1/7th of the premium amount payable on debenture redemption after seven years. The Division Bench's decision in a prior case and following the decision in Commissioner of Income Tax vs. Jagatjit Industries Ltd., the Court answered this question in favor of the assessee against the Revenue.

5. Ultimately, both questions of law were answered in favor of the assessee, leading to the dismissal of the appeal. The judgment relied heavily on legal precedents, interpretations, and decisions from various High Courts and the Supreme Court to support the assessee's position on the deductions and premium amount admissibility.