9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (2) TMI 112 - HC - Income TaxDeduction u/s 80IA(4) and 80IA(5) - whether deduction is with reference to the profits derived from eligible business of the assessee and not with reference to the profits derived from every unit engaged in the eligible business? - Held that - As decided in Hercules Hoists Ltd. (2017 (6) TMI 1125 - BOMBAY HIGH COURT) no error committed by the Tribunal in allowing the deduction of the profit u/s 80IB(5) of the Act without deducting the losses of the earlier years. See Velayudhaswamy Spinning Mills P. Ltd. & Sudan Spinning Mills (P). Ltd. 2010 (3) TMI 860 - Madras High Court wherein held that only losses of the years beginning from the initial assessment year alone are to be brought forward and no losses of earlier years which were already set off against the income of assessee, can be looked into. - Decided in favour of assessee Addition u/s 40(a)(ia) on account of non-deduction of TDS on the Wheeling Charges paid to MSEB - Held that - It is an agreed position by the parties that this issue is concluded against the Revenue and in favour of the Assessee by the decision of this Court in Commissioner of Income Tax Vs. Maharashtra State Electricity Distribution Co.Ltd 2015 (5) TMI 396 - BOMBAY HIGH COURT Appeal is admitted on the substantial questions of law as listed at Sr.No. 1 - Whether on the facts and circumstances of the case and in law, the Tribunal was justified in holding that the interest income is not required to be excluded from the net profit declared by the Respondent for computing book profit for the purpose of determining the allowable deduction of remuneration payable to the partners under Section 40(b) of the Act?
Issues:
- Interpretation of Section 40(b) of the Income Tax Act regarding the exclusion of interest income for computing book profit. - Interpretation of Section 80IA(4) and 80IA(5) regarding deduction with reference to profits derived from eligible business. - Decision of CIT(A) in deleting addition under Section 40(a)(ia) for non-deduction of TDS on Wheeling Charges. - Disallowance of deduction under Section 80IA(iv)(a) due to setting off unabsorbed depreciation against profits. - Reliance on the decision of Madras High Court in Velayudhaswamy Spinning Mills case. - Conclusion against Revenue in line with the decision in Commissioner of Income Tax Vs. Maharashtra State Electricity Distribution Co.Ltd. Interpretation of Section 40(b): The High Court considered whether interest income should be excluded from the net profit for determining the allowable deduction of remuneration payable to partners under Section 40(b) of the Income Tax Act. The Tribunal's decision was challenged by the Revenue, questioning the justification of excluding interest income. The Court analyzed the provisions of the Act and the specific circumstances of the case to determine the correctness of the Tribunal's decision. Interpretation of Section 80IA(4) and 80IA(5): Another issue raised was the interpretation of Section 80IA(4) and 80IA(5) concerning the deduction with reference to profits derived from eligible business. The Tribunal's decision was questioned for not appreciating the specific provisions of these sections. The Court examined the legal framework and the factual background to assess whether the Tribunal erred in its interpretation. Decision on CIT(A) Deletion under Section 40(a)(ia): The Court also addressed the issue of the CIT(A) deleting the addition made by the Assessing Officer under Section 40(a)(ia) for non-deduction of TDS on Wheeling Charges. The Tribunal's decision to uphold the CIT(A)'s deletion was scrutinized based on the facts and circumstances of the case, along with the legal principles involved. Disallowance under Section 80IA(iv)(a) and Reliance on Velayudhaswamy Spinning Mills Case: The Court discussed the disallowance of deduction under Section 80IA(iv)(a) due to setting off unabsorbed depreciation against profits and the subsequent reliance on the decision of the Madras High Court in the Velayudhaswamy Spinning Mills case. The Revenue's appeal was dismissed based on the precedent set by the Madras High Court, and the Court's decision in a related case further supported this dismissal. Conclusion in line with Maharashtra State Electricity Distribution Co.Ltd Case: Lastly, the Court noted that the issue was concluded against the Revenue and in favor of the Assessee based on the decision in the Maharashtra State Electricity Distribution Co.Ltd case. As a result, the Court did not entertain the proposed question, aligning its decision with the established legal precedent.
|
