Case Law Details
Plastiblends India Limited Vs Addl. Commissioner of Income Tax (Supreme Court of India)
Section 80-IA of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act’) provides deductions in respect of profits and gains from industrial undertakings or enterprises engaged in infrastructure development, etc. Recently, in Plastiblends India Ltd. vs. ACIT[Civil Appeal No. 238 Of 2012 with Civil Appeal Nos. 12828 Of 2017, 12757 Of 2017,12758 Of 2017, 12762 Of 2017, 540 Of 2012, 529 Of 2012, 531 Of 2012, 532 Of 2012, 530 Of 2012, 535 Of 2012, 536 Of 2012, 533 Of 2012, 534 Of 2012, 537 Of 2012, 538 Of 2012, 543 Of 2012, 544 Of 2012, 541 Of 2012, 542 Of 2012, 546 Of 2012, 545 Of 2012, 547 Of 2012, 548 Of 2012, 539 Of 2012, 550 Of 2012, 549 Of 2012, 551 Of 2012, 12755 Of 2017 and 12980 Of 2017; decided on 9.10.17], the singular issue which was to be considered in the above appeals pertained to claim of depreciation under Section 80-IA of the Act. Interpreting the provisions of Section 32 of the Act (which prevailed in the relevant Assessment Years) Supreme Court in CIT vs. Mahendra Mills[(2000) 243 ITR 56] had held that it is a choice of an assessee whether to claim or not to claim depreciation. This decision was rendered in the context of assessing business income of an assessee under Chapter IV of the Act which is regulated by Sections 28 to 43D of the Act. Section 32 deals with depreciation and allows the deductions enumerated therein from the profits and gains of business or profession. Section 80-IA of the Act, on the other hand, contains a special provision for assessment of industrial undertakings or enterprises which are engaged in infrastructure development etc. This provision allows certain specific kind of deductions in respect of depreciation.
Briefly, the assessee was engaged in the business of manufacture of master batches and compounds. For this purpose, it had manufacturing undertakings at Daman Units I and II. Units I and II began to manufacture article or things in the previous years relevant to Assessment Years 1994-95 and 1995-96 respectively. Accordingly, for the year under consideration i.e. Assessment Year 1997-98 profits of the business of both the undertakings were eligible for 100% deduction under Section 80-IA of the Act. The assessee did not claim depreciation while computing its income under the head profits and gains of business. Consequently, deduction under Section 80-IA was also claimed on the basis of such profits i.e. without reducing the same by depreciation allowance. This position was accepted by the Assessing Officer (AO) in an intimation made under Section 143(1)(a) of the Act. Likewise, for the Assessment Year 1996-97, the assessee did not claim deduction on account of depreciation. Though, this position was not accepted by the AO, the claim of the assessee was upheld by the Tribunal.
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