Whether the profits earned by an assessee carrying on a priority industry which are assessable u/s.41(2) of the I.T.Act, 1961 can be treated as profits attributable to the priority industry and whether relief u/s.80-I (earlier section 80-E) of I.T.Act, 1961 can be allowed in respect of such profits.

Profits u/s 41(2) of Income Tax Act not eligible for Section 80-I relief unless directly from priority industry operations.

The circular addresses whether profits from a priority industry, assessable under section 41(2) of the Income Tax Act, 1961, can be considered as profits attributable to that industry for the purpose of relief under section 80-I. The Board, in consultation with the Ministry of Law, determined that only income directly attributable to the business operations of a priority industry qualifies for deductions under section 80-I. For example, income from selling redundant scrap by an electricity company does not qualify. Instructions are to be issued to officers to ensure compliance with this interpretation.