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Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether deduction under Section 80-I of the Income-tax Act, 1961 was to be computed on the profits of the industrial undertaking after reducing the deduction allowable under Section 32AB of the Income-tax Act, 1961.
Analysis: The relevant scheme of the Act distinguishes between computation of business income under the charging and computational provisions and deductions under Chapter VI-A. Section 80AB requires that, for the purpose of Chapter VI-A deductions, the amount of income of the relevant nature must be computed in accordance with the Act before making any deduction under that Chapter. The Supreme Court's exposition on the corresponding deduction provision clarified that deductions expressed as a percentage of "profits and gains" are to be worked out on the income computed under the Act and not on a figure arrived at after applying Chapter VI-A deductions. Applying that principle, the deduction under Section 80-I had to be computed on the eligible profits of the industrial undertaking after giving effect to the computation framework under the Act, including Section 32AB.
Conclusion: The question was answered in favour of the assessee and against the Revenue. Deduction under Section 80-I could be allowed without the Revenue's contrary objection succeeding, and the appeals were allowed.
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