The Commissioner Of Income Taxcoimbatore v. M/S. Rajshree Sugars & Chemicals Ltd.“The Uffizi“

IN THE HIGH COURT OF JUDICATURE AT MADRAS CORAM THE HONOURABLE MR. JUSTICE R.SUDHAKARANDTHE HONOURABLE MR. JUSTICE R.KARUPPIAH T.C. NO. 666 OF 2007 The Commissioner of Income TaxCoimbatore... Appellant - Vs - M/s. Rajshree Sugars & Chemicals Ltd.“The Uffizi“338, Avinashi Road, PeelameduCoimbatore 641 004. .. Respondent Appeal filed under Section 260-A of the Income Tax Act againstthe order dated 17.11.06, passed by the Income Tax AppellateTribunal, Madras 'D' Bench, made in ITA No.1459/Mds/05 against theorder of commissioner of Income Tax (Appeals)I Madurai, Camp atCoimbatore dt. 22.3.2005 in A.Nos.180-C/2000-01- and arrising out ofthe assessment order of Joint Commissioner of Income - Tax SpecialRange-1- Coimbatore dt. 2.5.2000 in PAN GIR NO.49-512-CY-0984. For Appellant : Mr. T.R. Senthil KumarFor Respondent: Mr. R.Vijayaraghavan for M/s. Subbaraya Aiyer JUDGMENT(DELIVERED BY R.SUDHAKAR, J.) Aggrieved by the order of the Appellate Tribunal in dismissingthe appeal filed by it, the Revenue is before this Court challengingthe said order by filing the present appeal and this Court, videorder dated 18.6.07, framed for following substantial questions oflaw for consideration :- “1) Whether on the facts and in the circumstances ofthe case, the Income Tax Tribunal is right in holdingthat deduction under 80I should be allowed on theeligible profits without reducing the deduction givenunder 80 HH for the assessment year 1995-96? https://hcservices.ecourts.gov.in/hcservices/ 2) Whether on the facts and in the circumstances ofthe case, the Income Tax Tribunal is right in holdingthat 80I deduction should be allowed without reducingdeduction under 80HH even though interest on TDRsfavouring TNPCB were not receipts arising in thecourse of business nor were the said income derivedfrom the industrial undertaking? 3) Whether on the facts and in the circumstances ofthe case, the Income Tax Tribunal is right in holdingthat for the purpose of claiming deduction under 80 HHand 80I, while dealing with eligible profits, intereston term deposits, bank and interest on TDRs, arereceipts derived from industrial undertaking?” 2. Though this Court finds that this appeal has been admitted onthe above three questions of law, unfortunately, this Court findsthat substantial questions of law (2) and (3) framed above aretotally irrelevant to the case on hand and has not been considered bythe Tribunal on the matter of facts as well as on law. Therefore,substantial questions of law Nos. (2) and (3) are irrelevant and,therefore, it is not necessary to be answered. 3. Assessment for the year 1995-96 was completed determining ataxable income of Rs.8,03,97,980/= which was subsequently revisedunder Section 154 of the Act. Certain incomes derived during thecurrent assessment year and earlier assessment year were not deductedand, thereby excessive deductions were allowed under Section 80 I and80 IA and, therefore, to withdraw the same, the assessment wasreopened under Section 147 by issuance of notice under Section 148.On appearance of the assessee, after deliberations, the assessmentwas finalised. However, the assessee not happy with the incomearrived at, filed appeal before the CIT (Appeals), who confirmedcertain portions of the order of the Assessing Officer, while oncertain heads granted relief to the assessee. 4. However, the Department, aggrieved by the said order, filedappeal before the Income Tax Appellate Tribunal, which was dismissedfollowing the judgment of the Madhya Pradesh High Court reported in144 TAXMAN 176. Aggrieved by the said order of the Tribunal indismissing the appeal filed, the Revenue is before this Court byfiling the present appeal. 5. Heard the learned standing counsel appearing for theappellant/Revenue and the learned counsel appearing for therespondent. 4. However, the Department, aggrieved by the said order, filedappeal before the Income Tax Appellate Tribunal, which was dismissedfollowing the judgment of the Madhya Pradesh High Court reported in144 TAXMAN 176. Aggrieved by the said order of the Tribunal indismissing the appeal filed, the Revenue is before this Court byfiling the present appeal. 5. Heard the learned standing counsel appearing for theappellant/Revenue and the learned counsel appearing for therespondent. 6. From a perusal of the order, it is evident that the Tribunalgranted the benefit under Section 80 HHC and held that deductionunder Section 80I to be made from the gross total income beforeallowing admissible deduction under 80 HHC. The issue raised in thepresent case is whether the benefit under Section 80I and 80HH couldbe taken together or whether the benefit of deduction under Sectionhttps://hcservices.ecourts.gov.in/hcservices/ 80I should be made and, thereafter, the deduction under Section 80HHshould be made. 7. The Supreme Court in Joint Commissioner of Income Tax – Vs –Mandideep Eng. & Pkg. India (P) Ltd. (2007 (210) CTR 614 (SC))approved several orders passed by various High Courts and held thatSection 80 HH and 80 I of the Income Tax Act are independent of eachother and, therefore, new industrial undertakings can claim deductionunder both the sections on the gross total income independently andapproved the decision of the Madhya Pradesh High Court in J.P.Tobacco Products (P) Ltd. - Vs – CIT (1997 140 CTR (MP) 329). 8. The abovesaid ratio laid down by the Supreme Court wasfollowed by this Court in DCIT – Vs – Chola Textiles (P) Ltd. (2008(218) CTR (Mad) 123). 9. In the light of the law enunciated in the decision of theSupreme Court, referred supra, this appeal fails and the same isdismissed, answering the issue raised in favour of the assessee andagainst the department. However, there shall be no order as to costs. Sd/-Assistant Registrar //True Copy// To1. The Commissioner of Income Tax Coimbatore.2. The Commissioner of Income Tax Appeals-I, Madurai, Camp at Coimbatore. 3. The Joint Commissioner of Income Tax, Special Range-I, Coimbatore. 4. The Assistant Registrar Income Tax Appellate Tribunal, Rajaji Bhavan, IIIrd floor, Besant Nagar, Chennai 600 090. TS(CO)