Law:

Section:

Section 80-I of the Income-tax Act, 1961 - Deduction - Profits and gains from industrial undertakings after certain date - Assessment years 1971-72 and 1972-73 - Whether cash subsidy referable to exports and refund of drawback duty was income of assessee company attributable to priority industry and it had to be taken into account for computing deduction allowable under section 80-I - Held, yes FACTS The assessee company claimed deduction under section 80-I on the amounts being cash subsidy referable to its exports and refund of drawback duty on the ground that they were profits and gains attributable to the priority industry. The ITO negatived the assessee's claim. However, the AAC as well as the Tribunal accepted the assessee's claim. On reference: HELD In view of the decision of this court in Shardlow India Ltd. v. CIT [1981] 128 ITR 571, it was to be held that the cash subsidy and refund of drawback duty should be considered as profits and gains arising from priority industry for purposes of computing the deduction under section 80-I for the assessment years in question. Note : The reference was decided in favour of the assessee. CASES REFERRED TO Shardlow India Ltd. v. CIT [1981] 128 ITR 571 (Mad.) and Cambay Electric Supply Industrial Co. Ltd. v. CIT [1978] 113 ITR 84(SC). J. Jayaraman and Nalini Chidambaram for the Applicant. Subbaraya Iyer, Padmanabhan and Ramamani for the Respondent. JUDGMENT Ramanujam, J.-The assessee is a public limited company. For the assessment year 1971-72, it claimed deduction under section 80-I of the Income-tax Act, 1961, of a sum of Rs. 5,079 being the cash subsidy referable to its exports and of a sum of Rs. 1,562 being the refund of drawback duty on the ground that they are profits and gains attributable to. the priority industry. The assessee claimed similar relief under section 80-I of the Income-tax Act, 1961, for the assessment year 1972-73 in relation to cash subsidy of Rs. 12,262 and drawback duty of Rs. 12,643. The Income-tax Officer negatived the assessee's claim holding that the amounts received by the assessee by way of cash subsidy and refund of drawback duty during the relevant previous assessment years could…

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