Law:

Section:

Section 80HH of the Income-tax Act, 1961 - Deductions - Profits and gains from hotels or industrial undertakings, etc., in backward areas - Assessment year 1976-77 - Whether depreciation has to be deducted while computing total income for purpose of deduction under section 80HH - Held, yes FACTS The assessee-company claimed deduction under section 80HH without adjusting depreciation from its profit as per the profit and loss account. The Assessing Officer, however, did not agree with the assessee and calculated deduction under section 80HH after deducting the amount of depreciation and development rebate from profits. On appeal, the Commissioner (Appeals) as well as the Tribunal rejected the contention of the assessee and held that the Assessing Officer was justified in deducting depreciation and development rebate while computing the total income for the purposes of section 80HH. On reference : HELD For the purpose of computing total taxable income of an assessee who has claimed special deduction under Chapter VI-A, one has to keep in mind the provisions of sections 80B(5) and 80AB. Consequently, section 80HH, inter alia, lays down that if the gross total income includes profits from newly established undertaking, then 20 per cent of such profits would be deductible from gross total income in order to arrive at total taxable income. That, in such a case, profits derived from newly established undertaking shall be computed in accordance with the provisions of section 29 to section 43A. The argument of the assessee was that in view of the Judgment of the Supreme Court in CIT v. Mahendra Mills [2000] 243 ITR 56/ 109 Taxman 225, it is open to the assessee not to claim depreciation allowance under section 32. The scheme of sections 4 and 5 indicates that the income-tax is a tax in respect of income computed as per the provisions of the Act. There is a distinct dichotomy between cases of computation of normal income under the Act de hors Chapter VI-A and computation of taxable income where the assessee claims the benefit of deduction under Chapter VI-A because the Legislature has intended that these special deductions should be restricted to the profits derived from…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492