Bombay High Court
Commissioner of Income Tax, Bombay
Versus
Albright Morarji and Pandit Ltd., Bombay
Decided On:

Headnote:Section 80-HH-For deduction under Section 80-HH of the Income Tax Act condition precedent is that gross total income of assesse must include profits and gains derived from industrial undertaking computed in accordance with provisions contained in Sections 30 to 43-A of the Act.- The condition precedent for deduction under Section 80-HH of the Income Tax Act is that the gross total income of the assessee must include profits and gains derived from an industrial undertaking computed in accordance with the provisions contained in Sections 30 to 43-A of the Act and forming part of the gross total income and not with reference to the gross profits and gains derived by the assessee from such business. That being so, investment allowance under Section 32-A has to be deducted from the profits and gains and only such profits would be included in the gross total income of the assessee. The quantum of the profits and gains derived from an industrial undertaking, from which deduction of an amount equal to twenty per cent is allowable under Section SO-HH, would be the quantum of income arrived at after making all deductions under Sections 30 to 43-A. This position has been made clear by Section 80-AB of the Act. (1978) 113 ITR 84 : (1985) 155 ITR 120 and (1994) 205 ITR 433-Relied on.

       Sections 29, 32-A to 43-A and 80-HH-Deduction-New industrial undertaking-Computation of income from profits and gains-According to Sections 30 to 43-A including Section 32-A of Act-Thus as per Section 32-A investment allowance allowable as deduction.-Section 29 of the Act which deals with the manner of computation of income from profits and gains of business or profession says that such income shall be computed in accordance with the provisions contained in Sections 30 to 43-A of the Act, which obviously includes Section 32-A of the Act. It is, therefore, clear that for computing in-come from profits and gains derived by an assessee from an industrial undertaking, provisions of Section 32-Ahave to be taken into account, and the investment allowance allowable thereunder has to be deducted from the profits and gains derived from such business. This is so, because what is included in the gross total income in such a case, is the particular quantum of income from the profits and gains of a new industrial undertaking. Therefore, such profits and gains must have reference to the income by way of profits and gains derived from an industrial undertaking, computed in accordance with the provisions of the Act, meaning thereby, computed under Section 29 of the Act. It is, thus, clear that the deduction required to be allowed under the provisions of Section 80-HH(I) is to be calculated with reference to the amount of profits and gains derived from an industrial undertaking computed in accordance with the provisions of the Act and forming part of the gross total income, and not with reference to the gross profits and gains derived by the assesse from such business.

       The quantum of the profits and gains derived from an industrial undertaking, from which deduction of an amount equal to twenty per cent is allowable under Section 80-HH, would be the quantum of income arrived at after making all deductions under Sections 30 to 43- A.

       For Citation : (1999) 101 (1) Bom LR 417 at p. 420 : 1999 (1) Mh LJ 934