CIT Vs Rane Brake Lining Ltd (Madras High Court)
Madras High Court has dismissed an appeal by the Commissioner of Income Tax (CIT), upholding an Income Tax Appellate Tribunal (ITAT) decision regarding deductions under Sections 80HHC and 80IB of the Income Tax Act, 1961.
The central question was whether deduction under Section 80HHC (for export profits) should be given without reducing the deduction claimed under Section 80IB (for industrial undertakings). The High Court relied on recent Supreme Court rulings to affirm the ITAT’s stance. It cited Shital Fibers Limited v. Commissioner of Income Tax (2025 SCC OnLine SC 1178), which approved the Bombay High Court’s view in Associated Capsules (P) Ltd. v. Deputy Commissioner of Income Tax and another (2011 SCC OnLine Bombay 27), further endorsed by the Supreme Court in Assistant Commissioner of Income Tax, Bangalore v. Micro Labs Limited (2015) 17 SCC 96. These precedents establish that Section 80HHC deduction must be granted without reducing the Section 80IB benefit.
Additionally, the Court addressed whether scrap sales could be included in total turnover for Section 80HHC computation. Citing Commissioner of Income-tax-VII, New Delhi v. Punjab Stainless Steel Industries [2014] 46 taxmann.com 68 (SC), the High Court confirmed that proceeds from scrap sales are excluded from total turnover for this purpose.
