- (1.) Judgment of Delhi high Court in Motilal Pesticides (I) Pvt. Ltd. v. C. I. T. , Delhi reported in 1994 (207) ITR 636 is assailed before us. It concerns interpretation of Section 80-HH of the Income- tax Act, 1961 (for short the 'act') and pertains to Assessment Years 1979-1980 and 1980-81. The question of law which the high Court answered in affirmative and in favour of the Revenue and against the appellant is as under: "Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee was not entitled to deduction u/s. 80-HH of the Income-tax Act, 1961 on the gross profit of Rs. 34,30,035/- (Liquid Section) but on the net income there-from, for the Assessment Year 1979- 80 -
(2.) Appellant had claimed relief under section 80-HH in respect of its Liquid section which had been newly set up in a backward area. It was the contention of the appellant that relief should be allowed on the gross income and not on the net income. Section 80-HH in relevant part is as under: "80-Hh.(1) Where the gross total income of an assessee includes any profits and gains derived from an industrial undertaking, or the business of a hotel, to which this section applies, there shall, in accordance with the subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such profits and gains of an amount equal to twenty per cent thereof. "
(3.) In support of its submission in the High court appellant placed reliance on a decision of this Court in Cloth Traders (P) Ltd. v. Addl. C. I. T. ((1979) 118 ITR 243.- (AIR 1979 sc 1691). This judgment was delivered on interpretation of Section 80-M of the Act. Relevant part of Section 80-M is as under: "80-M.(1) Where the gross total income of a domestic company, in any previous year, includes any income by way of dividends from another domestic company, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of such domestic company, a deduction of an amount equal to. . ";