VIJAY INDUSTRIES Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) We are concerned in these cases with Assessment Year 1979-1980 and Assessment Year 1980-1981. The High Court of Rajasthan by the impugned judgment dated 17th May, 2004 construed Section 80-HH of the Income Tax Act, 1961 following a judgment of this Court in Motilal Pesticides (I) Pvt. Ltd. v. Commissioner of Income Tax, Delhi-II, 2000 9 SCC 63. The High Court noticed an argument made before it to the following effect:

(2.) The question of law set out by this Court is, whether, on the facts and circumstances of the case, the Tribunal was right in holding that the Assessee was not entitled to deduction Under Section 80-HH of the Income Tax Act, 1961 on the gross profit of Rs. 34,30,035 (Liquid Section) but on the net income therefrom for Assessment Year 1979-80

(3.) Thereafter, this Court set out Section 80-HH in para 2 and Section 80-M in para 3 of the Judgment. It will be noticed that whereas Section 80-HH uses the expression "any profits and gains derived from", Section 80-M uses the expression "any income". Section 80-M was held, in the Cloth Traders (P) Ltd. v. CIT, 1979 3 SCC 538, to mean that for the purpose of that Section, deduction is to be allowed on the gross total income and not on net income. This was over-ruled in Distributors (Baroda) Pvt. Ltd. v. Union of India, 1986 1 SCC 43.