The Commissioner of Income Tax vs Apcom Exports (P) Limited

K. Raviraja Pandian, J.—The Revenue is on appeal against the order of the Income Tax Appellate Tribunal, Madras ''C'' Bench, dated

19.03.2001 made in ITA No. 1342/Mds/1999 by formulating the following questions of law:

Whether on the facts and in the circumstances of the case, the Appellate Tribunal is right in holding that interest income earned by the assessee

to the tune of Rs. 32,25,695/- eligible for exemption u/s 80I was valid in law?

2.Whether on the facts and in the circumstances of the case, the Appellate Tribunal is right in holding the assessee will be entitled for exemption u/s

80HHC as claimed and exemption u/s 80I as claimed by the appellant is valid in law?

The assessee has filed return of income for the assessment year 1996-97 on 18.11.1996 admitting a total income of ""nil"". The assessee has

admitted the income under the head ""Profits and Gains of business"" as Rs. 1,67,10,717/-. They claimed deduction u/s 80HHC of Rs.

1,35,43,305/- and u/s 80I of Rs. 41,77,679/- but restricted the deduction upto availability of gross total income of Rs. 31,67,412/-. The assessing

officer, considered the sum of Rs. 32,25,695/- being the interest income as income from other sources as found in the revised computation

submitted by the assessee, and because of this deduction u/s 80HHC got reduced to Rs. 1,32,26,910/- and 80-I to Rs. 33,71,256/-. The

Assessing Officer while passing the order u/s 143(3) allowed deduction u/s 80HHC of Rs. 1,32,26,910/- but restricted the deduction u/s 80I to

the extent of business income available i.e. Rs. 2,59,362/-. The assessing officer has taxed the interest income of Rs. 32,25,700/-. Aggrieved by

that order, the assessee has filed an appeal before the Commissioner of Income Tax (Appeals). The Commissioner dismissed the appeal.

Aggrieved by that order, the assesee has filed an appeal before the Income Tax Appellate Tribunal. The Tribunal allowed the appeal. The

correctness of the same is now canvassed in this appeal.

We heard the learned Counsel appearing on either side and perused the materials on record.

The first question of law in this case is as to whether the interest income earned by the assessee eligible for exemption u/s 80I of the Act was

valid in law and the same is covered against the assessee in the case of Commissioner of Income Tax Vs. Pandian Chemicals Ltd., .

The second question of law is also covered by the decision of the Supreme Court in the case of (2007) 107 ITD 327 , wherein the Supreme

Court has held that Sections 80HH and 80I of the Income Tax Act, 1961, are independent and, therefore, deductions can be claimed by a newly

established industrial undertaking both u/s 80HH and Section 80I on the gross total income. The same reasons would equally apply in respect of

Section 80HHC and 80-I of the Act. While answering the first question of law in favour of the revenue and against the assessee, the second

question of law is answered against the revenue and in favour of the assessee. The Tribunal has followed the decision in the case of J.P. Tobacco

Products Pvt. Ltd. Vs. Commissioner of Income Tax, , which has been taken to the Supreme court in SLP, in which, the Supreme Court has

confirmed the view of Madras High Court.

The tax case appeal stands disposed of in the above terms. No costs.