Supreme Court: Section 80 of Income Tax Act provides for deduction

Assessee is in the business of generation of power
& also deals with purchase and distribution of power. In this case assessee asked for deduction under section 80-IA of the Act.

Assessing Officer restricted the eligible deduction under
Section 80-IA of the Income Tax Act, 1961 to the extent of ‘business income’ only.

Apeal by revenue is made where income tax return was filed in assessment year 2002-2003 where assessee declared total income Nil. The Assessee had revised its claim under Section
80-IA of the Act to Rs. 546,26,01,224/-, having admitted that
there was an error in calculation of income-tax depreciation.

On 23.03.2006, Commissioner of Income-Tax (Appeal)-I partly allowed Appeal filed by the
Assessee & reversed the order of the Assessing Officer on issue of the extent of deduction under Section 80-IA of
Act.

Income Tax Appellate Tribunal upheld the decision of appellant authority and issue of deduction under Section 80-IA.

Section 80-E of the Act, as it
then existed, permitted deductions in respect of profits &
gains attributable to business of generation or
distribution of electricity or any other form of power or of
construction, manufacture or production of any one or more
of the articles or things specified in the list in the Fifth
Schedule.

It was held that the profits and gains by an industry entitled to benefit under Section 80-E cannot be
reduced by the loss suffered by any other industry or
industries owned by the assessee.

Scope of sub-section (5) of Section 80-
IA of the Act is limited to determination of quantum of
deduction under sub-section (1) of Section 80-IA of the Act by
treating ‘eligible business’ as the ‘only source of income’.

The Appeal is
dismissed qua the issue of extent of deduction under
Section 80-IA of the Act.

Commissioner of Income Tax-I Vs. Reliance Energy Ltd. [CA 1327 of 2021]

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