THE COMMISSIONER OF INCOME TAX- I V. ANIL DYECHEM INDUSTRIES LTD.

TAXAP/233/2008

AI Insights

The case involves a series of tax appeals by the Commissioner of Income Tax against Anil Dychem Industries Ltd., concerning the assessment years 1994-95 and 1995-96. The primary legal issue was whether the Appellate Tribunal was correct in confirming the order passed by the CIT (A) that directed the reduction of net interest after applying Explanation (baa) to section 80HHC of the Income Tax Act. The ITAT had allowed deductions under Sections 80HH, 80I, and 80IA for the net interest income, a decision which was challenged by the revenue in the High Court. The High Court, referencing the Supreme Court's precedent, upheld the ITAT's decision.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 728649 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 30-11-2013
• Assessment Year: misc
• Other Referred Cases: Lalsons Enterprises Vs. DCIT, ACG Associated Capsules Pvt. Ltd vs. Commissioner of Income Tax
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: HARDIK VORA
• Assessee Lawyers: MAUNA BHATT
• Keywords: Deduction; Income Tax; Interest; Net Interest; Special Bench; Supreme Court Approval
• Section: 80HHC; 80IA; 80HH; 80I

Judgement Text

"O/TAXAP/231/2008 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 231 of 2008 With TAX APPEAL NO. 232 of 2008 With TAX APPEAL NO. 233 of 2008 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE M.R. SHAH ­ sd/­ and HONOURABLE MR.JUSTICE R.P.DHOLARIA ­sd/­ ============================================ 1. Whether Reporters of Local Papers may be allowed to see the judgment ? NO 2. To be referred to the Reporter or not ? NO 3. Whether their Lordships wish to see the fair copy of the judgment ? NO 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 ? NO 5. Whether it is to be circulated to the civil judge ? NO ============================================= THE COMMISSIONER OF INCOME TAX­ I....Appellant(s) Versus ANIL DYECHEM INDUSTRIES LTD.....Opponent(s) ============================================= Appearance: MRS MAUNA M BHATT, ADVOCATE for the Appellant(s) No. 1 MR Hardik Vora, ADVOCATE for the Opponent(s) No. 1 ============================================= CORAM: HONOURABLE MR.JUSTICE M.R. SHAH and HONOURABLE MR.JUSTICE R.P.DHOLARIA Date : 30/11/2013 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE M.R. SHAH) 1.0. As common question of law and facts arise in this group of appeals and as such between the same assessee but with respect to Page 1 of 3 O/TAXAP/231/2008 JUDGMENT different AY, all these appeals are decided and disposed of by this common judgment and order. 2.0. Feeling aggrieved and dissatisfied with the common impugned judgment and order passed by the learned Income Appellate Tribunal (hereinafter referred to as the ITAT) passed in ITA Nos. 2344 & 2545 /AHD/2000 and C.O No.71 & 75/AHD/2003 for AY 1994­95 and 1995­96, the revenue has preferred the present appeals. 3.0. At the outset, it is required to be noted that while admitting the Tax Appeal Nos. 231 of 2008 to 233 of 2008 the Division Bench of this Court has framed the following substantial question of law. “Whether the Appellate Tribunal is right in law and on facts in confirming the order passed by the CIT (A) directing to reduce the net interest i.e. after reducing of Explanation (baa) to section 80HHC of the Act?” 4.0. Heard Shri Manish R. Bhatt, learned Senior advocate for the appellant­ revenue and Shri Hardik Vora, learned Advocate for the respondent­ assessee. 5.0. Considering the impugned judgment and order passed by the learned ITAT and while directing Assessing Officer to recompute the deduction under Section 80HH, 80I and 80IA of the Income Tax Act, 1961 holding that the interest is eligible thereon, the learned ITAT has relied upon the decision of the ITAT Delhi Special Bench in the case of Lalsons Enterprises Vs. DCIT reported in (89 ITD 25). It is reported that the decision of the Special Bench in the case of Lalsons Enterprises (supra) has been approved by the Hon’ble Supreme Court in the case of ACG Associated Capsules Pvt. Ltd vs. Commissioner of Income Tax reported in (2012) 343 ITR 89(SC). In the case of ACG Associated Page 2 of 3 O/TAXAP/231/2008 JUDGMENT Capsules Pvt. Ltd (supra) it is held by the Hon’ble Supreme Court in the said decision that 90% of not the gross interest but only the net interest, which has been included in the profits of the business of the assessee as computed under the heads “Profits and gains of business or profession” is to be deducted under clause (1) of Explanation (baa) to Section 80HHC for determining the profits of business. 6.0. Applying the law laid down by the Hon’ble Supreme Court in the case of ACG Associated Capsules Pvt. Ltd (supra) the question of law raised in the present appeal is held against the Revenue. Consequently present appeals deserve to be dismissed and are accordingly dismissed. No costs. sd/­ (M.R.SHAH, J.) sd/­ (R.P.DHOLARIA,J.) Kaushik Page 3 of 3 "