Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Articles Highlights TMI Notes SMS News Newsletters Calendar Imp. Links Database Experts Contact us More....
Extracts
Home List
← Previous Next →

Commissioner of Income Tax, Central III Versus M/s. GR Thangamaligai Firm

2015 (6) TMI 146 - MADRAS HIGH COURT

Entitlement to claim deduction under Section 80-IA - Held that:- The business undertaking of the assessee is wind mill power generation/hosiery goods, etc., and it has claimed the benefit of deduction under Section 80IA of the Income Tax Act for the assessment year in question and for the subsequent years as well. Having exercised its option and its losses have been set off already against other income of the business enterprise, the assessee in this appeal falls within the parameters of Section .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

by R. Sudhakar,J.) The above Tax Case (Appeals) are filed by the Revenue as against the orders of the Income Tax Appellate Tribunal. The core issue raised in the above Tax Case (Appeals) is whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the respondent/assessee is entitled to claim deduction under section 80-IA of the Income Tax Act. 2. The issue involved in these appeals has already been decided by this Court in the decision reported in ( .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

2) 340 ITR 477 (Velayudhaswamy Spinning Mills V. Asst. CIT), this Court, while dealing with the benefit under Chapter VIA of the Income Tax Act, placed reliance on the decision reported in (2009) 317 ITR 218 (SC) ( Liberty India V. CIT), wherein the Supreme Court considered the scope of Section 80I, 80IA and 80IB of the Income Tax Act and held that Chapter VI-A provides for incentives in the form of tax deductions essentially belong to the category of "profit-linked incentives". This C .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

erstanding of the decision, we extract the relevant portion of the decision of this Court as such: "From a reading of the above, it is clear that the benefit is given to the profits and gains derived from the business of the hotel or the business of repairs to ocean-going vessels or other powered craft. The deduction is allowed to the extent of 20 per cent. from the profits and gains of the assessee. Sub-section (5) gives deduction for the period of seven assessment years immediately succee .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

purpose of allowing deduction under section 80-I brought forward losses and unabsorbed depreciation of the new industry need not be taken into consideration once they have been set off from other sources of income earlier. In the present case, we are concerned with the provision of section 80-IA. The said provision was introduced by the Finance Act, 1999, with effect from April 1, 2000. The provisions of sections 80-I and 80-IA are also more or less identically worded. Sections 80-I and 80-IA c .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

80AC and 80B. Section 80AB deals with "Deductions to be made with reference to the income included in the gross total income", which reads as follows : "Where any deduction is required to be made or allowed under any section included in this Chapter under the heading 'C-Deductions in respect of certain incomes' in respect of any income of the nature specified in that section which is included in the gross total income of the assessee, then, notwithstanding anything contai .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

which is included in the gross total income of the assessee for the purpose of computing the deduction under that section, the amount of income of that nature as computed in accordance with the provision of this Act shall alone be deemed to be the amount of income of that nature which is derived or received by the assessee and which is included in the gross total income. Section 80AB defines "gross total income" which means the total income has to be computed in accordance with the Ac .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t provisions that are to be considered are sections 80-I, 80-IA and 80-IB. In the case of Liberty India v. CIT [2009] 317 ITR 218 (SC) ; [2009] 225 CTR (SC) 233 ; [2009] 28 DTR (SC) 73, the apex court considered the scope of sections 80-I, 80-IA and also section 80-IB of the Act, wherein, it has been held that Chapter VI-A provides for incentives in the form of tax deductions essentially belong to the category of "profit-linked incentives". Therefore, when section 80-IA/80-IB refers to .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the only source of income of the assessee. Section 80-IA reads as follows : "80-IA. (1) Where the gross total income of an assessee includes any profits and gains derived by an undertaking or an enterprise from any business referred to in sub-section (4) (such business being hereinafter referred to as the eligible business) there shall, in accordance with and subject to the provisions of this section, be allowed in computing the total income of the assessee, a deduction of an amount equal t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

onomic zone referred to in clause (iii) of sub-section (4) or generates power or commences transmission or distribution or power or undertakes substantial renovation and modernisation of the existing transmission or distribution lines. (4) This section applies to- (i) any enterprise carrying on the business of (i) developing, or (ii) operating and maintaining, or (iii) developing, operating and maintaining any infrastructure facility which fulfils all the following conditions, namely : (a) it is .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s operating and maintaining the infrastructure facility on or after the 1st April, 1995. (5) Notwithstanding anything contained in any other provision of this Act, the profits and gains of an eligible business to which the provisions of sub-section (1) apply shall, for the purposes of determining the quantum of deduction under that sub-section for the assessment year immediately succeeding the initial assessment year or any subsequent assessment year, be computed as if such eligible business wer .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ligible business, there shall, in accordance with and subject to the provisions of the section, be allowed, in computing the total income of the assessee, a deduction of an amount equal to 100 per cent. of the profits and gains derived from such business for ten consecutive assessment years. Deduction is given to eligible business and the same is defined in sub-section (4). Sub-section (2) provides option to the assessee to choose 10 consecutive assessment years out of 15 years. Option has to be .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ment year" employed in sub-section (5) is different from the words "beginning from the year" referred to in sub-section (2). The important factors are to be noted in sub-section (5) and they are as under : "(1) It starts with a non obstante clause which means it overrides all the provisions of the Act and other provisions are to be ignored ; (2) It is for the purpose of determining the quantum of deduction ; (3) For the assessment year immediately succeeding the initial asses .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of the years beginning from initial assessment year alone are to be brought forward and no losses of earlier years which were already set off against the income of the assessee. Looking forward to a period of ten years from the initial assessment is contemplated. It does not allow the Revenue to look backward and find out if there is any loss of earlier years and bring forward notionally even though the same were set off against other income of the assessee and the set off against the current in .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

y set off and adjusted against the profits of the earlier years. During the relevant assessment year, the assessee exercised the option under section 80-IA(2). In Tax Case Nos. 909 of 2009 as well as 940 of 2009, the assessment year was 2005-06 and in Tax Case No. 918 of 2008 the assessment year was 2004-05. During the relevant period, there were no unabsorbed depreciation or loss of the eligible undertakings and the same were already absorbed in the earlier years. There is a positive profit dur .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d held as follows (page 314 of 271 ITR) : "Having considered the rival contentions which follow on the line noticed above, we are of the opinion that on finding the fact that there was no carry forward losses of 1983-84, which could be set off against the income of the current assessment year 1984-85, the recomputation of income from the new industrial undertaking by setting off the carry forward of unabsorbed depreciation or depreciation allowance from previous year did not simply arise an .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

required to be set off against the income of the current year. It is not at all required that losses or other deductions which have already been set off against the income of the previous year should be reopened again for computation of current income under section 80-I for the purpose of computing admissible deductions thereunder. In view thereof, we are of the opinion that the Tribunal has not erred in holding that there was no rectification possible under section 80-I in the present case, alb .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

der as to costs." From a reading of the above, the Rajasthan High Court held that it is not at all required that losses or other deductions which have already been set off against the income of the previous year should be reopened again for computation of current income under section 80-I for the purpose of computing admissible deductions thereunder. We also agree with the same. We see no reason to take a different view. The standing counsel appearing for the Revenue is unable to bring to o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

independent unit owned by a taxpayer who does not have any other source of income. In the result, the losses, depreciation and investment allowance of earlier years in respect of the new industrial undertaking, ship or approved hotel will be taken into account in determining the quantum of deduction admissible under the new section 80-I even though they may have been set off against the profits of the taxpayer from other sources." We are not agreeing with the counsel for the Revenue. We are .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

what is new what is new
  ↓     bird's eye view     ↓  


|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version