Section 80-I deduction extends to section 41(2) balancing charges and scrap-sale receipts under a wide attribution test.

Section 80-I relief was considered in relation to profits assessable under section 41(2) and scrap-sale receipts. The analysis states that the balancing charge under section 41(2), though created by legal fiction, forms part of business income and must be included before computing the special deduction. It also states that the words "attributable to" have a wide meaning and are not confined to receipts arising only from the actual conduct of the specified business. On that basis, the article concludes that the deduction extends to section 41(2) profits and scrap-sale receipts.

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Issues: Whether relief under section 80-I of the Income-tax Act, 1961 is allowable in computing business income in respect of profits assessable under section 41(2) and receipts by way of sale of scraps.

Analysis: The decision follows the principle that the balancing charge arising under section 41(2), though a legal fiction, forms part of the business income and must be taken into account before computing the special deduction under section 80-I. The expression "attributable to" is of wide import and extends beyond receipts arising from the actual conduct of the specified business. The Court applied the Supreme Court's ruling that the fiction under section 41(2) cannot be disregarded when working out the deduction.

Conclusion: The assessee is entitled to relief under section 80-I in respect of profits assessable under section 41(2) and scrap-sale receipts.

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