2015 (1) TMI 833 - HC - Income Tax

Court upholds deletion of additions under Section 32AB, grants relief under Sections 80HH and 80I

COMMISSIONER OF INCOME TAX Versus HARSIDDH SPECIFIC FAMILY TRUST

COMMISSIONER OF INCOME TAX Versus HARSIDDH SPECIFIC FAMILY TRUST - TMI Issues Involved:1. Deletion of additions made under Section 32AB(6) of the Income Tax Act, 1961.2. Allowing separate relief under Sections 80HH and 80I of the Income Tax Act, 1961.Detailed Analysis:Issue 1: Deletion of Additions under Section 32AB(6)Facts and Circumstances:The assessee firm, engaged in manufacturing detergent, filed returns for the relevant assessment years and claimed deductions under Section 32AB by depositing amounts in the Investment Deposit Account with IDBI. The amounts withdrawn were used to repay loans against trucks, tankers, and plant and machinery. The Assessing Officer (AO) rejected these claims, leading to additions in the assessee's income. These additions were deleted by the CIT (Appeals) and upheld by the Tribunal.Revenue's Argument:The revenue contended that the Tribunal erred by overlooking the fact that deductions under Section 32AB(1) are only allowable if the amount is utilized for purchasing specified new assets. They argued that the amounts used to repay loans were not in accordance with Section 32AB, citing CBDT Circular No. 461.Assessee's Argument:The assessee argued that the amounts withdrawn were used for repaying term loans contracted after 1986, which is permissible under the Scheme. They relied on concurrent findings by lower authorities and Supreme Court decisions favoring interpretations beneficial to the assessee.Court's Analysis:The Court examined Section 32AB and the relevant Scheme, noting that the withdrawn amounts could be used for repaying principal amounts of term loans contracted after 1986. The Scheme did not specify that term loans should only be for plant and machinery. The Court emphasized the beneficial nature of the provision aimed at industrial growth and technological advancement.Conclusion:The Court concluded that the Tribunal did not err in deleting the additions made by the AO under Section 32AB. The question was answered in favor of the assessee, emphasizing that beneficial provisions should be interpreted to encourage industrial growth.Issue 2: Allowing Separate Relief under Sections 80HH and 80IFacts and Circumstances:In Tax Appeal No. 454 of 2000, the question was whether the Tribunal erred in allowing separate relief under Sections 80HH and 80I.Revenue's Argument:The revenue argued that for availing benefits under these sections, new machinery should have been purchased after the Scheme came into force.Assessee's Argument:The assessee relied on the Supreme Court decision in Joint Commissioner of Income-Tax vs. Mandideep Eng. And Pkg. Ind. P. Ltd., which allowed separate deductions under Sections 80HH and 80I.Court's Analysis:The Court referred to the Supreme Court decision in Mandideep Eng. And Pkg. Ind. P. Ltd., which upheld that deductions under Sections 80HH and 80I are independent and can be claimed separately. This view was consistently followed by various High Courts.Conclusion:The Court answered the question in favor of the assessee, allowing separate relief under Sections 80HH and 80I, in line with the Supreme Court's decision.Final Judgment:The appeals were dismissed, and the questions raised were answered in favor of the assessee and against the revenue. The Tribunal's decisions to delete the additions under Section 32AB and to allow separate relief under Sections 80HH and 80I were upheld.