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2014 Supreme(Raj) 727
RAJASTHAN HIGH COURT AT JAIPUR BENCH
Ajay Rastogi, J.K.Ranka, JJ.
Vijay Solvex Ltd. - Appellant
Versus
Commissioner of Income - Respondent
D.B. Income Tax Appeal Nos. 185 of 2004, 20 of 2005 and 31 of 2006.
Decided On : 06-01-2014
For the Appellant:Sanjay Jhanwar, Advocate.
For the Respondent:Mrs. Parinitoo Jain, Advocate.
Deductions under sections 80HH and 80-I of the Income-tax Act are allowable only on net income after deducting depreciation, unabsorbed depreciation, and unabsorbed losses.
Headnote:
INCOME TAX - DEDUCTIONS - SECTION 80HH AND 80-I - PROFITS AND GAINS - INTERPRETATION - GROSS TOTAL INCOME - COMPUTATION - DEDUCTIONS FOR DEPRECIATION, UNABSORBED DEPRECIATION, AND UNABSORBED LOSSES - APPLICABILITY - HELD: DEDUCTIONS UNDER SECTIONS 80HH AND 80-I ARE ALLOWABLE ONLY ON NET INCOME AFTER DEDUCTING DEPRECIATION, UNABSORBED DEPRECIATION, AND UNABSORBED LOSSES.
Fact of the Case:
The assessee, an industrial undertaking, claimed deductions under sections 80HH and 80-I of the Income-tax Act, 1961, on the profits and gains of the undertaking before deducting depreciation. The Assessing Officer disallowed the deductions, holding that they were allowable only after deducting depreciation, unabsorbed depreciation, and unabsorbed losses. The Commissioner of Income-tax (Appeals) and the Income-tax Appellate Tribunal upheld the Assessing Officer's order.
Finding of the Court:
The court held that deductions under sections 80HH and 80-I are allowable only on net income after deducting depreciation, unabsorbed depreciation, and unabsorbed losses. The court observed that the provisions of Part D of Chapter IV of the Income-tax Act, which deal with deductions for depreciation, unabsorbed depreciation, and unabsorbed losses, must be taken into consideration when computing the income from an industrial undertaking for the purpose of claiming deductions under sections 80HH and 80-I. The court further observed that the gross total income of the assessee must be worked out after deducting the aforesaid deductions to arrive at the net income, and only if such income is positive would the assessee be entitled to deductions under sections 80HH and 80-I.
Issues: Whether the term "profits and gains" used in sections 80HH and 80-I of the Income-tax Act has the same meaning as the term "income" and whether the "profits and gains" of the current year of the eligible undertaking are relevant for computing deductions under sections 80HH and 80-I or the income computed after reducing depreciation allowance, unabsorbed depreciation, and unabsorbed loss is relevant for these deductions.
Ratio Decidendi: The court relied on the following principles in reaching its decision: * The provisions of Part D of Chapter IV of the Income-tax Act, which deal with deductions for depreciation, unabsorbed depreciation, and unabsorbed losses, must be taken into consideration when computing the income from an industrial undertaking for the purpose of claiming deductions under sections 80HH and 80-I. * The gross total income of the assessee must be worked out after deducting the aforesaid deductions to arrive at the net income, and only if such income is positive would the assessee be entitled to deductions under sections 80HH and 80-I.
Final Decision: The court dismissed the assessee's appeals, holding that the assessee was not entitled to any deduction under sections 80HH and 80-I of the Income-tax Act.
Substantial question of law in D.B.I.T.A. No. 185 of 2004
"(i) Whether the term `profits and gains` used in section 80HH and section 80-I of the Income-tax Act 1961, with reference to an eligible industrial undertaking have the same meaning as the term `income` whereas the statute uses both the terms independently in different provisions of the Act ?
(ii) Whether the `profits and gains` of current year of the eligible undertaking would be relevant for computing deduction under Section 80HH and section 80-I of the Act or the income computed after reducing depreciation allowance under section 32(1), unabsorbed depreciation under section 32(2) and unabsorbed loss under section 72 shall be relevant for these deductions ?"
Substantial question of law in D.B.I.T.A. No. 20 of 2005
"(i) Whether the learned Tribunal was justified in holding that the deduction under Chapter VI-A are to be given from the amount of gross total income for the purpose of computing the deduction under section 80HH and section 80-I of the Income-tax Act 1961 ?
(ii) Whether the term `profits and gains` used in section 80HH and section 80-I of the Income-tax Act, 1961, with reference to an eligible industrial undertaking have the same meaning as the term `income` whereas the statute uses both the terms independently in different provisions of the Act ?
(iii) Whether the `profits and gains` of current year of the eligible undertaking would be relevant for computing deduction under Section 80HH and section 80-I of the Act or the income computed after reducing depreciation allowance under section 32(1) shall be relevant for these deductions ?"
Substantial question of law in D.B.I.T.A. No. 31 of 2006
"(i) Whether the term `profits and gains` used in section 80HH of the Income-tax Act, 1961, with reference to an eligible industrial undertaking have the same meaning as the term `income` whereas the statute uses these terms independently in different provisions of the Act ?
(ii) Whether the `profits and gains` of current year of the eligible undertaking would be relevant for computing deduction under section 80HH of the Act or the income computed after reducing depreciation allowance under section 32(1) shall be relevant for this deduction ?"
