Section 80-IA of the act talks about the deduction of "only source of income" rather deduction of "business income" only
Shivani Bhati | Nov 10, 2021 |
Section 80-IA of the act talks about the deduction of “only source of income” rather deduction of “business income” only
Commissioner of income tax Vs. M/s. Reliance Energy Ltd.(Supreme Court of India); Civil Appeal No. 1327 of 2021; 28.04.2021
Appeal by the Commissioner of Income Tax before the Supreme Court for restricting the eligible deduction under Section 80-IA of the Income Tax Act, 1961 to the extent of ‘business income’ only.
Section 80-IA was again interpreted carefully before the court specifically sub section (1) and sub section (5) which are relevant to this case were taken into the account.
Section 80-IA: Deductions in respect of profits and gains from industrial undertakings or enterprises engaged in infrastructure development, etc.—
(1) Where the gross total income of an assessee includes any profits and gains derived by an undertaking or an enterprise from any business referred to in sub-section (4) (such business being hereinafter referred to as the eligible business), there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction of an amount equal to hundred per cent. of the profits and gains derived from such business for ten consecutive assessment years.
(5) Notwithstanding anything contained in any other provision of this Act, the profits and gains of an eligible business to which the provisions of subsection (1) apply shall, for the purposes of determining the quantum of deduction under that sub-section for the assessment year immediately succeeding the initial assessment year or any subsequent assessment year, be computed as if such eligible business were the only source of income of the assessee during the previous year relevant to the initial assessment year and to every subsequent assessment year up to and including the assessment year for which the determination is to be made.”
Supreme Court held that the scope of sub-section (5) of Section 80- IA of the Act is limited to determination of quantum of deduction under sub-section (1) of Section 80-IA of the Act by treating ‘eligible business’ as the ‘only source of income’. Sub-section (5) cannot be pressed into service for reading a limitation of the deduction under sub-section (1) only to ‘business income’. An attempt was made by the learned Senior Counsel for the Revenue to rely on the phrase ‘derived … from’ in Section 80-IA (1) of the Act in respect of his submission that the intention of the legislature was to give the narrowest possible construction to deduction admissible under this sub-section.
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