WOLKEM INDIA LTD. vs. ASSTT. COMMISSIONER INCOME TAX, UDAIPUR

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ITA/5/2012HC Rajasthan2025:RJ-JD:54992-DB18 December 2025Author: PUSHPENDRA SINGH BHATI, SANJEET PUROHIT3 pages
AI SummaryAllowed

What did the High Court hold?

The Tribunal was not justified in holding that Section 80-IA(9) of the Income-tax Act, 1961 mandates the reduction of profits allowed as deduction under Section 80-IA(1) from the profits of the business while computing deductions under other provisions of Chapter VI-A. The High Court, following the decision in Associated Capsules P. Ltd. v. Deputy Commissioner of Income-tax & Anr., held that Section 80-IA(9) affects the allowability of deductions, not their computation. The purpose of Section 80-IA(9) is to prevent claiming repeated deductions or deductions exceeding eligible profits, ensuring the aggregate deduction under Section 80-IA and other provisions under Heading C of Chapter VI-A does not exceed 100% of the business profits. The appeals were allowed in the same terms as the cited judgment, with no order as to costs.

What were the facts?

The appeals were filed by Wolkem India Ltd. (the assessee) against the order of the Income Tax Appellate Tribunal (the Tribunal). The assessment years are not explicitly stated in the provided text. The core issue revolves around the interpretation of Section 80-IA(9) of the Income Tax Act, 1961, and its impact on deductions under other provisions of Chapter VI-A. The assessee sought to reframe the substantial question of law, which was allowed. The assessee relied on a judgment from the Bombay High Court in Associated Capsules P. Ltd. v. Deputy Commissioner of Income-tax & Anr. The revenue's counsel was unable to refute the assessee's submissions.

What were the issues?

1. Whether the Tribunal was justified in holding that Section 80-IA(9) of the Income-tax Act, 1961 mandates that the amount of profits allowed as deduction under Section 80-IA(1) of the Act has to be reduced from the profits of the business of the undertaking while computing deduction under any other provisions under heading C in Chapter VI-A of the Income-tax Act, 1961? Assessee's contention: The assessee argued that the controversy is squarely covered by the judgment of the Bombay High Court in Associated Capsules P. Ltd. v. Deputy Commissioner of Income-tax & Anr. This judgment held that Section 80-IA(9) affects the allowability of deductions, not their computation, to ensure the aggregate deduction does not exceed 100% of the business profits. The assessee also referred to CBDT Circular No. 772 dated December 23, 1998, supporting this interpretation. Revenue's contention: The revenue's counsel was unable to refute the assessee's submission.

Which sections of the Income-tax Act were involved?

Section 80-IA(9),Section 80-IA(1),Section 80HHC

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
[2025:RJ-JD:54992-DB] HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR D.B. Income Tax Appeal No. 5/2012 Wolkem India Ltd. ----Appellant Versus Asstt. Commissioner Income Tax, Udaipur ----Respondent Connected With D.B. Income Tax Appeal No. 19/2012 Wolkem India Ltd. ----Appellant Versus Asstt. Commissioner Income Tax, Udaipur ----Respondent For Appellant(s) : Mr. Anjay Kothari For Respondent(s) : Mr. K.K. Bissa HON'BLE DR. JUSTICE PUSHPENDRA SINGH BHATI HON'BLE MR. JUSTICE SANJEET PUROHIT

Order 18/12/2025 In Application No.01/2025):-

1.

The matter comes up on an application for disposal of the instant appeals and reframing the substantial question of law.

2.

Learned counsel for the appellant submits that the judgment of the Hon’ble Bombay High Court in Associated Capsules P. Ltd. v. Deputy Commissioner of Income-tax & Anr. (I.T.A. No. 3036/2010), decided on 10.01.2011, deals with a similar issue relating to the interpretation of Section 80-IA(9) of the Income Tax Act, 1961, wherein, at the time of hearing, the substantial (Uploaded on 19/12/2025 at 04:39:47 PM) (Downloaded on 27/10/2026 at 11:16:16 PM)

[2025:RJ-JD:54992-DB] (2 of 3) [ITA-5/2012] questions of law formulated earlier were reframed into one question of law.

3.

For the reasons mentioned in the application, the same is allowed. Accordingly, the earlier framed substantial questions of law are substituted by following substantial question of law :- “Whether the Tribunal was justified in holding that section 80- IA (9) of the Income-tax Act, 1961 mandates that the amount of profits allowed as deduction under section 80-IA(1) of the Act has to be reduced from the profits of the business of the undertaking while computing deduction under any other provisions under heading C in Chapter VI-A of the Income-tax Act, 1961 ?” In D.B. Income Tax Appeal No. 5/2012 and 19/2012 :-

4.

Learned counsel for the petitioner submits that the controversy involved in the present appeals is squarely covered by the judgment rendered by Hon’ble Bombay High Court in the case Income-tax & Anr. (I.TA No.3036/2010); decided on 10.01.2011; relevant portion of the said judgment reads as under :- “41. In the result, we hold that section 80-IA(9) does not affect the computability of deduction under various provisions under heading C of Chapter VI-A, but it affects the allowability of deductions computed under various provisions under heading C of Chapter VI-A, so that the aggregate deduction under section 80-IA and other provisions under heading C of Chapter VI-A do not exceed 100 per cent. of the profits of the business of the assessee. Our above view is also supported by the Central Board of Direct Taxes Circular No. 772 dated December 23, 1998 (Uploaded on 19/12/2025 at 04:39:47 PM) (Downloaded on 27/10/2026 at 11:16:16 PM)

[2025:RJ-JD:54992-DB] (3 of 3) [ITA-5/2012] ((1999) 235 TR (St.) 35), wherein it is stated that section 80-IA (9) has been introduced with a view to prevent the taxpayers from claiming repeated deductions in respect of the same amount of eligible income and that too in excess of the eligible profits. Thus, the object of section 80-IA(9) being not to curtail the deductions computable under various provisions under heading C of Chapter VI-A, it is reasonable to hold that section 80-IA(9) affects allowability of deduction and not computation of deduction. To illustrate, if Rs.100 is the profits of the business of the undertaking, Rs. 30 is the profits allowed as deduction under section 80-IA(1) and the deduction computed as per section 80HHC is Rs. 80, then, in view of section 80-IA(9), the deduction under section 80HHC would be restricted to Rs. 70, so that the aggregate deduction does not exceed the profits of the business.

42.

Accordingly, the appeal is allowed by answering the question raised herein in the negative, that is, in favour of the assessee and against the Revenue. There shall be no order as to costs.” 4. of Income-tax & Anr. (supra), the present appeals are also allowed in the same terms. All pending applications stand disposed of. (SANJEET PUROHIT),J (DR.PUSHPENDRA SINGH BHATI),J 329-330-Sudheer/- Powered by TCPDF (www.tcpdf.org) (Uploaded on 19/12/2025 at 04:39:47 PM) (Downloaded on 27/10/2026 at 11:16:16 PM)

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