Win Laboratories Ltd v. The Assistant Commissioner Of Income-Tax

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.844 OF 2002 Win Laboratories Ltd. vs. The Assistant Commissioner of Income-Tax ...Appellant ...Respondent ---- Mr. Atul K. Jasani a/w. Mr. P. C. Tripathi for Appellant. Mr. Arvind Pinto for Respondent. ---- CORAM : K. R. SHRIRAM AND AMIT B. BORKAR, JJ. DATE : 18 NOVEMBER 2021 P. C. : On 15/9/2004 the following substantial question of law was framed: "Whether on the facts and in the circumstances of the case theTribunal was justified in law in holding that in view of theprovisions of Section 80AB of the Income Tax Act, 1961, the lossof Rs.3,24,080/- sustained by the Generic Division was to bededucted from the profits of Bulk Drugs Division for thepurposes of computing deduction under Section 80HH and 80Iof the Income Tax Act, 1961 ?" 2. Mr. Jasani at the outset submitted that this question is squarely covered by the judgment of the Apex Court in the Commissioner of Income Tax-I vs. Reliance Energy Ltd.1 Mr. Jasani submitted that though in Reliance Energy (supra) Section 80-IA of the Income Tax Act, 1961 (the Act) was 1(2021) 127 taxmann.com 69 (SC)Digitallysigned byRAJESHWARIRAJESHWARISUBODHSUBODHKARVEKARVEDate:2021.11.2210:46:18+0530Digitallysigned byRAJESHWARIRAJESHWARISUBODHSUBODHKARVEKARVEDate:2021.11.2210:46:18+0530 discussed, it would still squarely apply to the case at hand to Sectionsunder consideration, i.e., 80I and 80HH of the Act. 3.Mr. Pinto per contra, strongly opposed the appeal andsubmitted that the ITAT had correctly concluded that the losses should beset-off against the profits of industrial undertaking before grantingdeduction under Section 80 HH of the Act in view of the specific provisionfound in Section 80AB of the Act. Mr. Pinto submitted that to an extentSection 80AB of the Act restricts the deduction granted under Section80HH and 80I of the Act. Mr. Pinto relies on the judgment ofCommissioner of Income-Tax vs. Sundaravel Match Industries (P.) Ltd.2 4.If one considers Section 80I of the Act it provides for deductionin respect of profits and gains from Industrial undertaking after a certaindate etc. It applies to industrial undertaking or a ship or the business of ahotel or business of repairs to ocean going vessels or other powered craft.Section 80IA of the Act provides for deductions in respect of profits andgains from industrial undertaking or enterprises engaged in infrastructuredevelopment etc. Section 80HH of the Act provides for deduction in respectof profits and gains from a newly established industrial undertaking or ahotel business in backward area. If we consider the language applied in 2245 (ITR) 605 these three sections, they are identical except that the industry to which itbecomes applicable differs. Therefore, even if the judgment of the ApexCourt in Reliance Energy Limited (supra) was in regard to Section 80-IA ofthe Act, in our view it covers even Sections 80I and 80HH of the Act. 5.In Reliance Energy (supra) the Apex Court had categoricallystated that Section 80AB of the Act cannot be read to be curtailing thewidth of Section 80-IA of the Act. Mr. Pinto submitted that this observationof the Apex Court was in the nature of obiter. It is settled law that even ifthe observation of the Apex Court is in the nature of obiter, the same willbe binding on the High Courts. 6.In the circumstances, in view of what is said in RelianceEnergy Limited (supra) by the Apex Court we will have to answer thequestion noted above in negative. 7. Appeal disposed with no order as to costs. (AMIT B. BORKAR, J) (K. R. SHRIRAM, J.)