High Court's R&D expense reallocation for tax appeal, deductions under various sections, rejected calculations, and Supreme Court appeal granted.

The High Court considered various issues related to income tax deductions under different sections of the Income Tax Act. It admitted the tax appeal for consideration of reallocating R&D expenditure for determining profits under section 80IB. However, other issues such as reduction of brought forward depreciation and deduction under section 115JB were dismissed based on previous judgments. The Court rejected the calculation of deduction under section 80HHC without considering section 80IA(9) and granted a fitness certificate for appeal to the Supreme Court regarding the addition of deferred tax provision for calculating profits under section 115JB.

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Issues:
1. Reallocation of R&D expenditure for determining profits of a new industrial undertaking under section 80IB of the Income Tax Act.
2. Reduction of brought forward depreciation while computing profits for the purpose of deduction under section 80HHC of the Act.
3. Allowance of deduction under section 115JB for brought forward business loss or unabsorbed depreciation.
4. Calculation of deduction under section 80HHC without giving effect to provisions of section 80IA(9) of the Act.
5. Addition of provision for deferred tax to book profits for calculation under section 115JB of the Act.

Analysis:
1. The primary issue in this case was whether the Income Tax Appellate Tribunal was correct in directing the Assessing Officer to reallocate R&D expenditure for determining profits of a new industrial undertaking under section 80IB of the Income Tax Act. The High Court admitted the tax appeal for consideration of this question. The case was to be heard with connected appeals.
2. Another issue raised was regarding the reduction of brought forward depreciation of a company while computing profits for the purpose of deduction under section 80HHC of the Act. The counsel for the assessee pointed out that similar issues had been decided against the assessee in a previous judgment by the Court, and hence, this question was not entertained further.
3. The question of allowing deduction under section 115JB for brought forward business loss or unabsorbed depreciation was also raised. The Court referred to a previous judgment where it was held that the assessee had made a wrong claim, and the appeal was dismissed in favor of the department.
4. The issue of calculating deduction under section 80HHC without giving effect to the provisions of section 80IA(9) of the Act was the only surviving question. The Court noted a previous judgment where it was held that the provisions of section 80HHC were not immune from outside influence and had to be considered along with section 80IA(9). The Court rejected the question based on the binding judgment.
5. Lastly, the addition of the provision for deferred tax to book profits for calculation under section 115JB of the Act was discussed. The counsel for the assessee requested a fitness certificate for an appeal to the Supreme Court due to differing views among different High Courts and a pending decision by the Supreme Court on the matter. The Court granted the fitness certificate for appeal to the Supreme Court.

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