Case Law Details

Case Name : Unipatch Rubber Ltd. Vs Commissioner Of Income Tax (Delhi High Court)
Appeal Number : ITA: 38/2000
Date of Judgement/Order : 05/01/2015
Related Assessment Year :
Courts : All High Courts (6440) Delhi High Court (1675)



Brief Facts:

The assessee is engaged in the business of manufacture and sale of rubber patches for tyre, tubes, uniseals, etc. For the period 01-01-1988 to 31-03-1989, relevant for the assessment year 1989-90, the return of income was filed by the respondent-assessee declaring Rs.53,93,390/- as income. By order dated 13-03-1992 the Assessing Officer inter alia held that deduction under Section 80-I could be allowed on the balance amount of income after it suffers a deduction under Section 80-HH. The Commissioner of Income Tax (Appeals) who was of the opinion that both Sections i.e. Sections 80-HH and 80-I were independent provisions and consequently, the assessee was entitled to deduction under Section 80-I on the total amount without it having suffered any deduction under Section 80-HH.

Question of Law:

Whether assessed is entitled to deduction/benefit under Section 80-I on the gross income without excluding/reducing deduction allowed under Section 80-HH?


The revenue was of the contention that the ITAT as well as the Commissioner (Appeals) completely overlooked Section 80-HH (9) which is in imperative terms and stipulates expressly that before the benefit of Section 80-I could be claimed, or some other benefit – under Section 80-J, could be claimed – the total profits had to be deducted in the manner provided in the Section i.e. in terms of Section 80-HH (I). The reference was also made to the language of Section 80-HH(9) to notice revenue’s contention in the grounds of appeal which states that where the assessee is entitled to deduction u/s 80-HH and 80-I, the assessee is first entitled to deduction u/s 80-HH and thereafter deduction will be allowed u/s 80-I.


The contention was that the deduction under Section 80-I and 80-HH had to be with reference to gross total income independent to one another, relying on the language with reference to Section 80-I. It was also contended that against the direction of the Ld.CIT (A) to allow deduction u/s 80I on the same income on which deduction u/s 80HH has been allowed i.e. on the gross income. The assessee claimed deductions u/s 80HH & 80I on the gross income. The issue was covered by the order dated 5.11.96 of Delhi Bench ‘B’ in ITA No.5730/Del/91 as amended in assessee’s own case. The ITAT had held in assessment year 1988-89 in this very case that the deduction u/s 80I must be allowed without taking into account other deductions permissible under Chapter 6 of the Act. Thus the relief under sec. 80HH and 80I were admissible on gross income.


After hearing the rival contentions, it was held that the Department having accepted the view taken in previous judgments of different High Courts following the view taken by the Madhya Pradesh High Court cannot be permitted to take a contrary view in the present case involving the same point.

It was stated that in J.P.Tobacco Products Pvt. Ltd vs Commissioner of Income Tax; (1998)229 ITR 123, the Madhya Pradesh High Court, after noticing that sub-Section 9 of Section 80-HH was amended by Act No.30 of 1981, Section 80-HH and Section 80-I were independent and consequently, there was no question of giving effect to Section 80-HH (9) and thereafter proceeding to bring the balance amount for the purposes of tax or benefit under Section 80-I.

The decision in J.P.Tobacco Products P. Ltd. [1998] 229 ITR 123 (MP) was followed by the Gujarat High Court, Allahabad High Court, Rajasthan High Court, the Punjab and Haryana High Court and even by a Division Bench of this Court [in CIT vs S.A. Engineering Pvt. Ltd. (2006) 285 ITR 423 (Del)].This view was affirmed by the Supreme Court in Joint Commissioner of Income Tax vs. Mandideep Engineering and Packaging IND. Pvt. Ltd. (2007) 292 ITR (1) SC and took the view that both the sections are independent and therefore, the deductions could be claimed both under sections 80HH and 80I on the gross total income.

The decision in J.P.Tobacco Products P. Ltd. [1998] 229 ITR 123 (MP) was followed by the same High Court in the case of CIT v. Alpine Solvex P. Ltd. in I.T.A. No. 92 of 1999 decided on May 2, 2000. Since this view has been followed repeatedly by different High Courts in a number of cases against which no special leave petitions were filed, thereby that the Department has accepted the view taken in these judgments.

The question of law framed in this appeal was answered in terms of the law declared by the Supreme Court in Mandideep Engineering and Packaging IND. Pvt. Ltd. and against the Revenue. The High Court of Delhi citing the above points upheld the contentions of the assessee and dismissed the appeals by the revenue with no costs.

Analysed by our Team Member Bhuvaneswari.S               

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