VIJAY INDUSTRIES Vs. COMMISSIONER OF INCOME TAX
LAWS(SC)-2014-11-78
SUPREME COURT OF INDIA (FROM: RAJASTHAN)
Decided on
November 05,2014
VIJAY INDUSTRIES
Appellant
VERSUS
COMMISSIONER OF INCOME TAX
Respondents
Referred Judgements :-
CAMBAY ELECTRIC SUPPLY INDUSTRIAL COMPANY LIMITED VS. COMMISSIONER OF INCOME TAX GUJARAT II AHMEDABAD [REFERRED TO]CLOTH TRADERS PRIVATE LIMITED COMMISSIONER OF INCOME TAX H K INVESTMENT PRIVATE LIMITED C V MEHTA PRIVATE LIMITED DISTRIBUTORS BARODA PRIVATE LIMITED VS. ADDITIONAL C I T GUJARAT I: H K INVESTMENT P LTD [REFERRED TO]
DISTRIBUTORS BARODA PRIVATE LIMITED VS. UNION OF INDIA [REFERRED TO]
SIR RAMA VARMA H H VS. COMMISSIONER OF INCOME TAX KERALA [REFERRED TO]
MOTILAL PESTICIDES I PVT LIMITED VS. COMMISSIONER OF INCOME TAX DELHI [REFERRED TO]
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:
"It is most humbly submitted that the concept 'profits and gains' is a wider concept than the concept of 'income'. The profits and gains/loss are arrived at after making actual expenses incurred from the figure of sales by the Assessee. It does not include any depreciation and investment allowance, as admittedly these are not the expenses actually incurred by the Assessee.
However, the term 'income' does take into consideration the deductions on account of depreciation and investment allowance. Therefore, the term profits and gains are not synonymous with the term 'income'.
However, the High Court correctly felt that it was bound by the judgment of this Court.
Motilal Pesticides (I) Pvt. Limited is a Judgment of this Court which affirmed the Judgment of the Delhi High Court concerning the interpretation of the very same Section 80-HH of the Income Tax Act. The assessment years also happened to be the same assessment years as involved in these appeals.
(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.
"It is most humbly submitted that the concept 'profits and gains' is a wider concept than the concept of 'income'. The profits and gains/loss are arrived at after making actual expenses incurred from the figure of sales by the Assessee. It does not include any depreciation and investment allowance, as admittedly these are not the expenses actually incurred by the Assessee.
However, the term 'income' does take into consideration the deductions on account of depreciation and investment allowance. Therefore, the term profits and gains are not synonymous with the term 'income'.
However, the High Court correctly felt that it was bound by the judgment of this Court.
Motilal Pesticides (I) Pvt. Limited is a Judgment of this Court which affirmed the Judgment of the Delhi High Court concerning the interpretation of the very same Section 80-HH of the Income Tax Act. The assessment years also happened to be the same assessment years as involved in these appeals.
(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.
Copyright © Regent Computronics Pvt.Ltd.