Whether the profits earned by an assessee carrying on a priority industry which are assessable u/s.41(2) of the I.T.Act, 1961 can be treated as profits attributable to the priority industry and whether relief u/s.80-I (earlier section 80-E) of I.T.Act, 1961 can be allowed in respect of such profits. - Income Tax - 596/CBDT

INSTRUCTION NO. 596/CBDT Dated : August 24, 1973 Section(s) Referred: 41(2) ,80I Statute: Income - Tax Act, 1961 The Board had occasion to consider the question whether the profits earned by an assessee carrying on a priority industry which are assessable u/s.41(2) of the I.T.Act, 1961 can be treated as profits attributable to the priority industry and whether relief u/s.80-I (earlier section 80-E) of I.T.Act, 1961 can be allowed in respect of such profits. 2. U/s.80-I where the gross total income includes any profits and grains attributable to any priority industry, they shall be allowed certain deductions from such profits and gains in computing the total income of the company. The Board in consultation with the Ministry of Law has decided that only the income which is attributable to the carrying on of business of priority industry would be entitled to the deduction u/s.80-I and not any other income of the priority industry. To take an illustration, if an electricity company has sold scrap which has become redundant income from such sale cannot be attributed to the business of generation and transmission of electricity. Similar income as a result of sale or business take over, which is not attributable to the carrying on of the business of priority industry, will not qualify for deduction u/s.80-I 3. Necessary instructions may please be issued to the officers working in your charge on the lines indicated above.