COMMISSIONER OF INCOME TAX vs. RAJOO ENGINEERS LTD.

TAXAP/213/2006HC GujaratGJHC24037203200630 November 2013Author: HONOURABLE MR. JUSTICE M.R. SHAH,HONOURABLE MR. JUSTICE R.P.DHOLARIA3 pages
AI SummaryDismissed

What were the facts?

The Revenue is aggrieved by the ITAT's order for Assessment Year 1995-96, which allowed the assessee's appeal. The ITAT held that for the purpose of applying Explanation (baa) below Section 80HHC(4B), only 90% of the net interest, after setting off interest paid, could be reduced from business profits, not 90% of gross interest receipts. The High Court is considering the Revenue's appeal against this ITAT decision.

What did the High Court hold?

The High Court held that the ITAT was correct in directing the Assessing Officer to recompute the deduction under Sections 80HH, 80I, and 80IA of the Income Tax Act, 1961, holding that interest is eligible thereon. The Court applied the law laid down by the Supreme Court in ACG Associated Capsules Pvt. Ltd. vs. Commissioner of Income Tax. In that case, the Supreme Court held that for the purpose of clause (1) of Explanation (baa) to Section 80HHC, 90% of the net interest, which has been included in the profits of the business of the assessee as computed under the head 'Profits and gains of business or profession', is to be deducted, and not 90% of the gross interest. Therefore, the question of law raised in the appeal was held against the Revenue.

What were the issues?

1. Whether, on the facts and circumstances of the case, the Income Tax Appellate Tribunal (ITAT) was right in law and on facts in directing the Assessing Officer to recompute the deduction under Section 80HH, 80I, and 80IA of the Income Tax Act, 1961, holding that interest is eligible thereon? Assessee's Contention: The ITAT correctly directed the recomputation of deductions under Sections 80HH, 80I, and 80IA, holding that interest is eligible for such deductions. The ITAT relied on the Special Bench decision in Lalsons Enterprises vs. DCIT, which was approved by the Supreme Court in ACG Associated Capsules Pvt. Ltd. vs. Commissioner of Income Tax. Revenue's Contention: The Revenue is aggrieved by the ITAT's decision that only 90% of net interest, after set-off of interest paid, is to be reduced from business profits for the purpose of Explanation (baa) below Section 80HHC(4B), and not 90% of gross interest receipts.

Which sections of the Income-tax Act were involved?

Section 80HHC,Section 80HH,Section 80I,Section 80IA

AI-generated summary — verify with the full judgment below

O/TAXAP/213/2006 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL  NO. 213 of 2006 FOR APPROVAL AND SIGNATURE:

HONOURABLE MR.JUSTICE M.R. SHAH ­ ­ and HONOURABLE MR.JUSTICE R.P.DHOLARIA ­ ­ =============================================

1.

Whether   Reporters   of   Local   Papers   may   be allowed to see the judgment ? NO 2. To be referred to the Reporter or not ? NO 3. Whether their Lordships wish to see the fair copy of the judgment ? NO 4. Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? NO 5. Whether it is to be circulated to the civil judge ? NO ============================================= COMMISSIONER OF INCOME TAX....Appellant(s) Versus RAJOO ENGINEERS LTD.....Opponent(s) ============================================= Appearance: MR. PRANAV DESAI , ADVOCATE for the Appellant(s) No. 1 MRS SWATI SOPARKAR, ADVOCATE for the Opponent(s) No. 1 ============================================= CORAM: HONOURABLE MR.JUSTICE M.R. SHAH and HONOURABLE MR.JUSTICE R.P.DHOLAR

The order continues below.

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