COMMISSIONER OF INCOME-TAX VS RAJENDRA TEXTILES
1999 P T D 839
[225 I T R 516]
[Rajasthan High Court (India)]
Before B. R. Arora and B. J. Shethna, JJ
COMMISSIONER OF INCOME-TAX
Versus
RAJENDRA TEXTILES
D.B. I.T.R. No.22 of 1992, decided on 20/11/1995.
Income-tax---
----New Industrial undertaking in backward area---Special deduction-- Computation of special deduction---Special deduction to be calculated on net income after deduction of depreciation, investment allowance, etc.---Indian Income Tax Act, 1961, S.80HH.
While calculating the amount of deduction under section 80HH of the Income Tax Act, 1961, depreciation and investment allowance are required to be deducted and only the net income ascertained under the Act shall be deemed to be the amount entitled for relief under section 80HH of the Act.
C.I.T. v. Vishnu Oil and Dal Mills (1996) 218 ITR 71 (Raj.) fol.
S. Bhandawat for the Commissioner.
JUDGMENT
B. R. ARORA, J.---The Income-tax Appellate Tribunal, Jaipur Bench, Jaipur, for the assessment years 1985-86, 1986-87, at the instance of the Revenue, has referred the following question of law for the opinion of the High Court under section 256(1) of the Act:
'Whether, on the, facts and in the circumstances of the case, the Tribunal was legally justified in holding that while calculating the amount of deduction under section 80HH of the Income Tax Act, 1961, depreciation and investment allowance is required to be ignored?"
The identical question came up for consideration before the Division Bench of this Court in D.B. Income-tax Reference No. l of 1991 C.I.T. v. Vishnu Oil and Dal Mills (1996) 218 ITR 71, and the Division Bench of this Court answered the question as follows (at page 74):
"If we read section 80HH with section 80AB of the Act then it is very much clear that for the purpose of determination of the relief under section 8,OHH of the Act, the gross total income of the assessee has to be worked out after deducting unabsorbed losses and unabsorbed depreciation and the income eligible for deduction under section 80HH will be the net income as computed in accordance with the provisions of the Act and not the gross income. "
For the reasons given in our judgment in C.I.T. v. Vishnu Oil and Dal Mills (1996) 218 1TR 71, we are of the opinion that while calculating the amount of deduction under section 80HH of the Income-tax Act the depreciation and investment allowance are required to be deducted and it is only the net income ascertained under the Act that shall be deemed to be the amount entitled for relief under section 80HH of the Act. Consequently, the reference is answered in favour of the Revenue and against the assessee.
C.M.A./1739/FCReference answered.