Court affirms deduction for cash subsidy & duty refund under Income-tax Act

The High Court upheld the Income-tax Appellate Tribunal's decision to allow deduction under section 80-I of the Income-tax Act, 1961 for cash subsidy and drawback duty refund for assessment years 1971-72 and 1972-73. The court considered the amounts received by the assessee as profits and gains from the priority industry, in line with its previous rulings and a Supreme Court decision. The Revenue's challenge was dismissed, affirming the eligibility of the claimed deductions.

---

---

Issues involved: Claim of deduction u/s 80-I of the Income-tax Act, 1961 for cash subsidy and refund of drawback duty for assessment years 1971-72 and 1972-73.

For assessment year 1971-72: The assessee, a public limited company, claimed deduction u/s 80-I for cash subsidy and refund of drawback duty. The Income-tax Officer disallowed the claim, stating the amounts received were not income attributable to the priority industry. The Appellate Assistant Commissioner, however, allowed the deduction, considering the amounts as income related to the priority industry. The Income-tax Appellate Tribunal upheld the assessee's claim based on its earlier view in a different case. The Revenue challenged this decision, but the High Court, following its previous rulings and a Supreme Court decision, upheld the Tribunal's decision, stating that the amounts should be considered as profits and gains from the priority industry for the purpose of deduction u/s 80-I.

For assessment year 1972-73: Similar to the previous year, the assessee claimed deduction u/s 80-I for cash subsidy and drawback duty refund. The Income-tax Officer rejected the claim, but the Appellate Assistant Commissioner allowed it, considering the amounts as income attributable to the priority industry. The Income-tax Appellate Tribunal, relying on its earlier view, upheld the claim. The Revenue challenged this decision, but the High Court, following its previous rulings and a Supreme Court decision, upheld the Tribunal's decision, stating that the amounts should be considered as profits and gains from the priority industry for the purpose of deduction u/s 80-I.

---