Court allows deductions under Section 80HH & 80I without reduction, admissible premium amount on debenture redemption.

The Court ruled in favor of the assessee against the Revenue, allowing deductions under Section 80HH and 80I without reducing the deduction. The Court also held that 1/7th of the premium amount payable on debenture redemption after seven years is admissible. The decision was supported by legal precedents and interpretations from various High Courts and the Supreme Court. As a result, the appeal was dismissed in favor of the assessee.

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Issues:
1. Whether deduction under Section 80I is allowable without considering the deduction under Section 80HHRs.
2. Whether 1/7th of the premium amount payable on redemption of debentures after seven years is admissibleRs.

Analysis:
1. The respondent, a company operating a spinning mill in Rajasthan and leasing a factory in Jammu, sought a deduction of Rs. 2,85,715 as expenditure on debentures redemption premium for the assessment year 1991-92. The Assessing Officer disallowed the claim, stating that deductions under Section 80HH and 80I could only be allowed after reducing the deduction. The AO also carried forward the loss for Section 80I, rejecting the contention that losses could be set off as per Section 80HH(9).

2. The CIT(A) upheld the Revenue's stance, but the ITAT ruled in favor of the assessee. Referring to the Madhya Pradesh High Court's decision in J.P. Tobacco Products case, the ITAT supported the assessee's position. Additionally, the ITAT cited the Supreme Court's affirmation of the Madhya Pradesh High Court's decision in the Madideep Engineering case, along with this Court's judgment in SKG Engineering case and other High Courts' rulings on the matter.

3. Consequently, the question of allowing deductions under Section 80HH and 80I was resolved in favor of the assessee against the Revenue based on the precedents and legal interpretations highlighted by the ITAT.

4. Addressing the second issue, the Court noted a previous judgment regarding the admissibility of 1/7th of the premium amount payable on debenture redemption after seven years. The Division Bench's decision in a prior case and following the decision in Commissioner of Income Tax vs. Jagatjit Industries Ltd., the Court answered this question in favor of the assessee against the Revenue.

5. Ultimately, both questions of law were answered in favor of the assessee, leading to the dismissal of the appeal. The judgment relied heavily on legal precedents, interpretations, and decisions from various High Courts and the Supreme Court to support the assessee's position on the deductions and premium amount admissibility.

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