THE COMMISSIONER OF INCOME-TAX vs. M/S ACER INDIA PVT LTD

PDF · subscribers
ITA/236/2011HC KarnatakaKAHC01056179201119 November 2018Bench: RAVI MALIMATH,K.NATARAJAN5 pages
AI SummaryPartly Allowed

What did the High Court hold?

The High Court held that the excess provision for warranty is allowable as a deduction, following its previous judgment in a similar case involving the same assessee. However, it held that interest income not derived from the eligible business cannot be included for computing deduction under Section 80IB.

What were the facts?

The Revenue appealed against the ITAT's order concerning the deductibility of excess warranty provision and the inclusion of interest income in eligible profits for Section 80IB deduction. The High Court had to decide on substantial questions of law related to these issues.

What were the issues?

The key issues were whether an excess provision for warranty is deductible and whether interest income not derived from the eligible business should be included for Section 80IB deduction.

Which sections of the Income-tax Act were involved?

Section 80IB

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(3)Show list

Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

ON THE 19TH DAY OF NOVEMBER, 2018

BEFORE THE HON'BLE MR. JUSTICE RAVI MALIMATH

AND

THE HON'BLE MR. JUSTICE K. NATARAJAN

INCOME TAX APPEAL No.236 of 2011

BETWEEN

1.

THE COMMISSIONER OF INCOME TAX, C.R. BUILDING, QUEENS ROAD, BANGALORE.

2.

THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-11(1), C.R. BUILDING, QUEENS ROAD, BANGALORE. ... APPELLANTS (BY SRI K.V. ARAVIND, ADVOCATE)

AND

M/S. ACER INDIA PVT. LTD., 1st FLOOR, GEORGE THANGAIAH COMPLEX (EAST), 80 FT. ROAD, INDIRANAGAR, BANGALORE – 560 075. ... RESPONDENT (BY SRI T. SURYANARAYANA, ADVOCATE)

THIS INCOME TAX APPEAL IS FILED UNDER SECTION 260-A OF THE INCOME TAX ACT, 1961, ARISING OUT OF ORDER DATED 25/02/2011 PASSED IN ITA No.784/BANG/2010, FOR THE ASSESSMENT YEAR 2005- 2006, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN AND ALLOW THE APPEAL AND SET ASIDE THE ORDERS PASSED BY THE INCOME-TAX APPELLATE TRIBUNAL, BANGALORE IN ITA No.784/BANG/2010, DATED 25/02/2011 AND CONFIRM THE ORDER OF THE APPELLATE COMMISSIONER CONFIRMING THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-11(1), BANGALORE.

THIS INCOME TAX APPEAL COMING ON FOR HEARING THIS DAY, RAVI MALIMATH, J., DELIVERED THE FOLLOWING:

J U D G M E N T

Heard.

2.

The appeal was admitted to consider the following three substantial questions of law:

“1. Whether the Tribunal was correct in holding that the excess provision for warranty of Rs.2,26,05,903/- is allowable as deduction when the assessee has not made provision on

the basis of the past experience and scientific method as enunciated by the Apex Court in Rotork Controls India Pvt. Ltd., VS CIT, 314 ITR 62?

2.

Whether the Tribunal was correct in holding that the assessee is entitle for deduction when excess provision towards warranty made in the previous years is not offered to tax by reversing the entries as laid down b the Apex Court in Rotork Controls India Pvt. Ltd., VS CIT, 314 ITR 62?

3.

Whether the Tribunal was correct in holding that the interest income of Rs.25,83,813/- has to be included in the eligible profits for computing deduction u/s.80IB of the Act when the interest income was not derived from the eligible business,

contrary to the decision of the Apex Court in 262 ITR 278 & 317 ITR 218?”

3.

It is submitted that the first and second substantial questions of law are covered by the judgment of this Court in the case of COMMISSIONER OF INCOME-TAX AND ANOTHER vs. M/s. ACER INDIA PVT. LTD., in ITA No.394 of 2009, disposed off on 25.06.2018. Following the said judgment, the first and second substantial questions of law are answered in favour of the assessee and against the Revenue.

4.

The third substantial question of law is covered by the judgments of the Hon’ble Supreme Court in the case of PANDIAN CHEMICALS LTD., vs. COMMISSIONER OF INCOME TAX reported in 262 ITR 278 and LIBERTY INDIA LTD., vs. COMMISSIONER OF INCOME TAX reported in 317 ITR 218. Following the said judgments, the third substantial question of law is answered in favour of the Revenue and against the assessee.

5.

The substantial questions of law are accordingly answered.

The appeal is disposed off.

SD/-

SD/- JUDGE

JUDGE

More judgments on Section 80IB

All 1,094 judgments and leading authorities on Section 80IB →

Recent GST High Court judgments

Search GST case law →