1993 (1) TMI 28 - HC - Income Tax

Summary

Issues Involved:
The judgment involves the interpretation of section 80-I of the Income-tax Act, 1961 regarding the eligibility of certain receipts for deduction under this section for the assessment years 1971-72 and 1972-73.

Interpretation of Section 80-I - Eligibility of Receipts for Deduction:
The respondent, a company engaged in electricity generation and distribution, had initially received deductions under section 80-I of the Act for various receipts. However, the Income-tax Officer later withdrew these deductions, stating that the receipts were not attributable to the business of electricity generation and distribution. The Appellate Assistant Commissioner found that the receipts were indeed part of the income earned in the course of the business and allowed the deductions under section 80-I, citing the decision in Cambay Electric Supply Industrial Co. Ltd. v. CIT [1978] 113 ITR 84.

Appeal to Income-tax Appellate Tribunal:
The Revenue appealed to the Income-tax Appellate Tribunal, arguing that the receipts were not incidental to the business and hence not eligible for deduction under section 80-I. However, the Tribunal disagreed, affirming that the receipts were indeed incidental to the business activities of the assessee, thereby upholding the Appellate Assistant Commissioner's decision.

Reference to High Court - Interpretation of "Attributable To":
The Revenue sought reference to the High Court under section 256(1) of the Act, contending that the receipts were not incidental to the business. The counsel for the assessee argued that the expression "attributable to" in section 80-I has a broader meaning than "derived from," as discussed in the Cambay Electric case. The High Court, after considering the Tribunal's findings and relevant case laws, upheld that the receipts qualified for deduction under section 80-I, in line with the decisions in Cambay Electric and United Carbon India Ltd.

Conclusion:
After reviewing the arguments and precedents, the High Court found no merit in the Revenue's submissions and affirmed the Tribunal's decision that the receipts in question were eligible for deduction under section 80-I of the Income-tax Act. The court answered the reference question in favor of the assessee, without any order as to costs.