COMMISSIONER OF INCOME TAX vs. AUSTIN ENGINEERING CO. LTD.

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TAXAP/1217/2005HC GujaratGJHC24034612200526 November 2014Bench: HONOURABLE MR. JUSTICE KS JHAVERI,HONOURABLE MR. JUSTICE K.J.THAKER5 pages
AI SummaryAllowed

What did the High Court hold?

The High Court held that Sections 80HH and 80I of the Income Tax Act, 1961, are independent provisions. Therefore, a newly established industrial undertaking can claim deductions under both Section 80HH and Section 80I on the gross total income. The Court relied on the decision of the Apex Court in Joint Commissioner of Income-Tax v. Mandideep Eng. And Pkg. Ind. P. Ltd., [2007] 292 ITR 01 (SC). The High Court found that the learned counsel for the Revenue was not in a position to dispute this proposition of law. Consequently, the question of law was answered in favour of the assessee and against the Revenue. The appeals were disposed of accordingly, with the operative direction being to allow the deduction as claimed by the assessee.

What were the facts?

The assessee, Austin Engineering Co. Ltd., filed its return of income for Assessment Year (AY) 1994-95 on 29.11.1994, declaring a total income of Rs. 29,57,820/-. The Assessing Officer (AO) made an adjustment of Rs. 51,802/- for previous year expenses. The AO granted deduction under Section 80I of the Income Tax Act, 1961, after reducing the deduction under Section 80HH, vide order dated 11.09.1996. The assessee appealed to the CIT(A), who partly allowed the appeal. The Revenue then appealed to the Income Tax Appellate Tribunal (ITAT). The ITAT, in its judgment dated 16.03.2005, dismissed the Revenue's appeal for AY 1994-95 and partly allowed it for AY 1997-98. The Revenue has filed these appeals against the ITAT's order.

What were the issues?

1. Whether deduction under Section 80I of the Income Tax Act, 1961, has to be granted after deducting the benefit/deduction granted under Section 80HH of the Income Tax Act, 1961, from the business income? Assessee's Contention: The judgment does not record any specific contentions made by the assessee. However, by implication, the assessee would argue that the deduction under Section 80I should not be reduced by the deduction under Section 80HH. Revenue's Contention: The judgment does not record any specific contentions made by the Revenue. However, by implication, the Revenue would argue that the deduction under Section 80I should be granted after reducing the deduction under Section 80HH.

Which sections of the Income-tax Act were involved?

Section 80I,Section 80HH,Section 260A

AI-generated summary — verify with the full judgment below

O/TAXAP/1216/2005 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 1216 of 2005 With TAX APPEAL NO. 1217 of 2005

FOR APPROVAL AND SIGNATURE:

HONOURABLE MR.JUSTICE KS JHAVERI

and HONOURABLE MR.JUSTICE K.J.THAKER

================================================================ 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 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 ? 5 Whether it is to be circulated to the civil judge ? ================================================================ COMMISSIONER OF INCOME TAX....Appellant(s) Versus AUSTIN ENGINEERING CO. LTD.....Opponent(s) ================================================================ Appearance: MR PRANAV G DESAI, ADVOCATE for the Appellant(s) No. 1 MR BS SOPARKAR FOR MRS SWATI SOPARKAR, ADVOCATE for the Opponent(s) No. 1 ================================================================ Page 1 of 5

O/TAXAP/1216/2005 JUDGMENT CORAM: HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE MR.JUSTICE K.J.THAKER

Date : 26/11/2014 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1. Both these appeals arise out of the common judgment and order rendered by the Income Tax Appellate Tribunal and therefore, they are decided by this common judgment. 2. These two Tax Appeals u/s.260A of the Income- tax Act, 1961 have been filed against the common judgment and order dated 16.03.2005 passed by the Income

Tax Appellate

Tribunal in

ITA No.322/RJT/2001 & 325/RJT/2001 for the A.Y. 1994- 95 and 1997-98 respectively whereby, the appeal of the Revenue for the Assessment Year 1994-95 was dismissed and for the Assessment Year 1997-98 was allowed in part. For the sake of convenience, Tax Appeal No.1216/2005 is taken as the lead matter. 3. Briefly stated, the facts are that the assessee-firm filed its return of income on 29.11.1994

declaring

total

income

at Rs.29,57,820/-. The return was processed u/s.143(1) of the Act and adjustment of Rs.51,802/- was made on account of previous year Page 2 of 5

O/TAXAP/1216/2005 JUDGMENT expenses. The same addition was retained as the assessee was maintaining accounts on mercantile basis. The business of the assessee-firm was the same as that of the last year, ie. manufacturing bearings of different types. During the assessment proceedings, the Assessing Officer granted deduction u/s.80I of the Act to the assessee after reducing the amount of deduction u/s.80HH of the Act, vide order dated 11.09.1996. 4. Against the aforesaid order of the Assessing Officer, appeal was filed before the CIT(A). The CIT(A) partly allowed the appeal vide order dated 30.04.2001. Being aggrieved by the order passed by the CIT(A), the Revenue filed an appeal before the Appellate Tribunal. Vide impugned judgment and order dated 16.03.2005, the Appellate Tribunal dismissed the appeal of the Revenue for the A.Y. 1994-95 and partly allowed for the A.Y. 1997-98. Being dissatisfied with the aforesaid order of the Appellate Tribunal, the Revenue has preferred the present appeals. 5. Both these appeals were admitted on the following substantial question of law; “Whether deduction u/s.80-I of the Income Tax Act, 1961 has to be granted after deducting the benefit / deduction granted u/s.80HH of Page 3 of 5

O/TAXAP/1216/2005 JUDGMENT the Income Tax Act, 1961 from the business income?” 6. We have heard learned counsel for both the sides and have perused the record of the case. The issue involved in these appeals is already concluded by a decision of the Apex Court in the case of Joint Commissioner of Income-Tax v. Mandideep Eng. And Pkg. Ind. P. Ltd., [2007] 292 ITR 01 (SC) wherein, it has been held that Sections 80HH and 80-I of the Act are independent and therefore, deductions can be claimed by a newly established industrial undertaking both u/s.80HH and 80-I on the gross total income. 7. Learned counsel appearing for the Revenue was not in a position to dispute the above proposition of law. Since the issue is already concluded as aforesaid, we are not assigning elaborate reasons while disposing of the present appeals and accordingly, answer the question raised in these appeals in favour of the assessee and against the Revenue. 8. The appeals stand disposed of accordingly. (K.S.JHAVERI, J.) Page 4 of 5

O/TAXAP/1216/2005 JUDGMENT (K.J.THAKER, J) Pravin/* Page 5 of 5

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