THE COMMISSIONER OF INCOME TAX, HYDERABAD vs. M/S. ANDHRA PRADESH PAPER MILLS,

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ITTA/306/2005HC TelanganaHBHC01005406200529 November 2017Bench: C.V.NAGARJUNA REDDY,T.AMARNATH GOUD3 pages
AI SummaryDismissed

What did the High Court hold?

The tribunal held that 90% of net interest, includible in the profits of business, should be deducted for determining the profits of business for Section 80-HHC. This was based on a Supreme Court judgment.

What were the facts?

The appeals by the Revenue concerned the treatment of interest income for the purpose of deduction under Section 80-HHC. The core issue was whether 90% of gross interest or 90% of net interest should be excluded from the 'profit of business'.

What were the issues?

The key issues were how to calculate the 'profit of business' for Section 80-HHC deduction, specifically regarding the exclusion of interest income, and whether the Tribunal's previous finding was legally sustainable.

Which sections of the Income-tax Act were involved?

Section 80-HHC

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HON’BLE SRI JUSTICE C.V. NAGARJUNA REDDY & HON’BLE SRI JUSTICE T. AMARNATH GOUD

I.T.T.A.No.299, 306 & 318 of 2005 Date : 29-11-2017

ITTA No.299 of 2005 Between :

The Commissioner of Income Tax-III, Hyderabad

.. Appellant

And

M/s. Andhra Pradesh Paper Mills, Secunderabad

.. Respondent

Counsel for appellant : Sri B. Narasimha Sarma, Senior Standing Counsel for Income Tax Department Counsel for respondent : Sri Challa Gunaranjan

The Court made the following :

2 COMMON ORDER:

(per Hon’ble Sri Justice C.V. Nagarjuna Reddy)

These appeals by Revenue raise common questions of law which are as under :

1.

Whether 90% of the interest received by the Assessee should be considered for exclusion from the “profit of business” or net interest alone should form part of “profit of business” for the purpose of Clause (baa) of Explanation to Section 80-HCC ? 2. Whether the finding of the Tribunal without considering the said relevant statutory provision and by allowing the appeal of the assessee as covered case is sustainable in law ?

At the hearing, Sri B. Narasimha Sarma, learned Senior Standing Counsel for the Income Tax Department, fairly submitted that the above mentioned substantial questions of law are no longer res integra in view of the Judgment of the Supreme Court in ACG Associated Capsules Pvt. Ltd. (Formerly Associated Capsules Pvt. Ltd) Vs. Commissioner of Income Tax, Central-IV, Mumbai1 wherein it was held that for the purpose of deduction under Section 80-HHC of the Income Tax Act 1961, 90% of net interest which was includible in profits of business of assessee is to be deducted for determining the profits of business.

1 (2012) 3 SCC 321

3 In the light of the above Judgment, the questions of law are answered against the Revenue. The appeals are accordingly dismissed.

_______________________ Justice C.V. Nagarjuna Reddy

_____________________ Justice T. Amarnath Goud Date : 29-11-2017 AM

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