Karimjee P. Ltd. vs Deputy Commissioner Of Income - Tax

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2002 Supreme(SC) 2161

SUPREME COURT OF INDIA
S.S.M. Quadri, S.N. Variava, JJ.
Karimjee P. Ltd. - Petitioner
Versus
Deputy Commissioner Of Income - Tax and Anr. - Respondents
CA No. 5692/2002
Decided On : 09-09-2002

Important Points

Compliance with the second proviso to Section 80 HHC is necessary to claim deduction, and once complied, the assessee is entitled to the deduction.

Subject

Taxation Law - Income Tax

Act Referred

INCOME TAX ACT : S.80(hh)(c)

Headnote

Section 80 HHC - Compliance with Second Proviso - Deduction Allowed

Fact of the Case:

The assessee was denied relief due to failure to comply with the second proviso to Section 80 HHC of the Income-tax Act 1961. The assessee later complied with the proviso by debiting the amount of deduction claimed and crediting it to a reserve account.

Finding of the Court:

The court set aside the order denying relief and held the assessee entitled to deduction under Section 80 HHC for the accounting year 1986-87.

Issues: Compliance with the second proviso to Section 80 HHC

Ratio Decidendi: Compliance with the second proviso to Section 80 HHC is necessary to claim deduction, and once complied, the assessee is entitled to the deduction.

Final Decision: The civil appeal was allowed, and the assessee was held entitled to deduction under Section 80 HHC for the accounting year 1986-87. No costs were awarded.

ORDER :

1. Heard learned counsel for the parties.

2. Leave is granted.

3. The only reason for declining the relief to the assessee was the failure of compliance of the second proviso to Section 80 HHC of the Income - tax Act 1961. In respect of other requirements, there is no dispute that the assessee has complied with the same.

4. While the matter was being argued, we permitted learned counsel for the assessee to comply with the requirements of the said proviso and it is now represented that an amount equal to the amount of deduction claimed under the sub - section has been debited from the profit and loss account of the previous year relevant to the assessment year 1987-88 in respect of which the deduction was to be allowed and that the same was credited to a reserve account to be utilised for the purpose of the business of the assessee.

5. In view of the compliance of the said proviso, the order under challenge is set aside and the assessee is held entitled to deduction under Section 80 HHC in the accounting year 1986 - 87.

6. The civil appeal is, accordingly, allowed.

7. No costs.