ELECTRONICS CORPORATION OF TAMILNADU LTD.,CHENNAI vs. ITO, CORPORATE WARD-2(10, CHENNAI

ITA 3591/CHNY/2025Status: DisposedITAT Chennai06 October 2026AY 2019-2013 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the deduction under Section 80IAB of the Income Tax Act, 1961, is to be allowed against the gross total income of the assessee and is not restricted to the income under the head 'profits and gains from business or profession'. The Tribunal relied on the ratio laid down by the Hon'ble Supreme Court in CIT vs. Reliance Energy Ltd., which held that Section 80AB and Section 80IA(5) govern the computation of the quantum of deduction, while the allowance of deduction is governed by Section 80IA(1) and Section 80A, subject to the ceiling that total deductions under Chapter VI-A cannot exceed the gross total income. The Tribunal also noted the Hon'ble Madras High Court's decision in Sundaram Fasteners Ltd. that the provision treating the eligible undertaking as the only source of income applies only for computing the quantum of deduction. The Tribunal distinguished the assessee's own case for earlier assessment years, noting that in those years, the assessee had a net loss from business, which is not the case for AY 2019-20. The Tribunal directed the AO to allow the deduction under Section 80IAB considering the gross total income of the assessee. The issue regarding jurisdiction under Section 143(1) was left open.

What were the facts?

The assessee, Electronics Corporation of Tamilnadu Ltd., a state public sector undertaking, filed its return for AY 2019-20 declaring a total income of Rs. 30,01,46,020/- after claiming a deduction of Rs. 39,35,46,782/- under Section 80IAB of the Income Tax Act, 1961. The Assessing Officer (AO) processed the return under Section 143(1) and restricted the deduction to Rs. 7,48,01,241/-, stating that the deduction under Section 80IAB cannot exceed the income under the head 'profits and gains from business or profession'. The Commissioner of Income Tax (Appeals) upheld the AO's decision, further restricting the deduction to Rs. 7,47,44,241/-. The assessee appealed to the Income Tax Appellate Tribunal (ITAT).

What were the issues?

1. Whether the deduction under Section 80IAB of the Income Tax Act, 1961, is to be allowed against the gross total income of the assessee or is restricted to the income under the head 'profits and gains from business or profession'? (Question of law) Assessee's Contention: The assessee argued that the deduction under Section 80IAB should be allowed on the gross total income, not just the business income. They relied on the decisions of the Hon'ble Madras High Court in Sundaram Fasteners Ltd. vs. CIT and the Hon'ble Supreme Court in CIT vs. Reliance Energy Ltd. The assessee also contended that the issue is debatable and thus cannot be decided under Section 143(1). Revenue's Contention: The revenue, through the CIT(A), argued that Section 80IAB(1) clearly states that the deduction is for 'profits and gains derived from such business'. They also relied on Section 80IA(5) (read with Section 80IAB) which mandates that for determining the quantum of deduction, the eligible business should be considered as the only source of income. The CIT(A) distinguished the Reliance Energy Ltd. case, stating its facts were not applicable.

Which sections of the Income-tax Act were involved?

Section 80IAB,Section 80IA(5),Section 143(1),Section 80A,Section 80AB

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘A’ BENCH: CHENNAI

Before: SHRI SS VISWANETHRA RAVI & MS. PADMAVATHY.S

For Respondent: Ms. R. Anitha, CIT

PER PADMAVATHY.S, A.M: This appeal by the assessee is against the order of the Commissioner of Income Tax (Appeals), Addl./JCIT(A), Faridabad (in short "FAA") passed u/s. 250 of the Income Tax Act, 1961 (in short "the Act") dated 26.09.2025 for Assessment Year (AY) 2019-20. 2. The assessee is a Tamil Nadu State public sector undertaking. The assessee is the state Government’s channel to execute major policies on informati

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