Commissioner of Income Tax vs Kerala State Industrial Development Corporation Ltd.

K.S. Paripoornan, J.—The Revenue is the petitioner in these petitions. Common questions arise for consideration in these cases. The Revenue prays for the issue of a certificate to appeal to the Supreme Court of India against the judgment of this court in I. T. R. No. 125 of 1984 dated June 19, 1989 ( Kerala State Industrial Development Corporation Ltd. Vs. Commissioner of Income Tax, ) and against the common judgment in I. T. R. Nos. 205 to 208 of 1984 dated June 26, 1989 ( Commissioner of Income Tax Vs. Kerala State Industrial Development Corporation Ltd. (No. 2), ). The respondent in these three petitions is a public limited company, Kerala State Industrial Development Corporation. The sole question that fell to be decided in these cases is the scope and content of Section 36(1)(viii) of the Income Tax Act, 1961. The question is whether the deduction referred to in the said section envisages 10% of the total income or 10% of the total assessed income before deduction of the amount so allowed. Following the decisions of the Patna and Madhya Pradesh High Courts, this court held that the Income Tax Appellate Tribunal was in error in holding that the deduction contemplated u/s 36(1)(viii) of the Act is a percentage of the total income arrived at after making the deduction under the said section. The question was answered against the Revenue and in favour of the assessee. This court held that the deduction should be allowed on the total income before deduction of the amount allowable u/s 36(1)(viii) of the Act.

One of the decisions relied on by this court in coming to the aforesaid conclusion is the decision in Commissioner of Income Tax Vs. Bihar State Financial Corporation, . We find that the Supreme Court has granted special leave to appeal from the said decision on November 17, 1982 in S. L. P. No. 1830/1980--See [1983] 140 ITR 2. It cannot be disputed that the difference in the amount of deduction will be substantial. The question is also a recurring one.

In the light of the above facts, we are of the view that the question regarding the interpretation of Section 36(1)(viii) of the Income Tax Act posed for consideration in these three cases (I. T. R. No. 125 of 1984-- Kerala State Industrial Development Corporation Ltd. Vs. Commissioner of Income Tax, and I. T. R. Nos. 205 to 208 of 1984 Commissioner of Income Tax Vs. Kerala State Industrial Development Corporation Ltd. (No. 2), ) is a substantial question of law of great public importance.

We certify that these cases are fit for appeal to the Supreme Court. Certificates granted accordingly.