Under the Income Tax Act, 1961, what turns on the difference between ‘allowing’ a deduction and ‘computation’ of a deduction when Sub-section (9) of Section 80-IA is applied?

The two have separate and distinct meanings. Computation of deduction is a stage prior and helps in quantifying the amount which is eligible for deduction. Sub-section (9) of Section 80-IA does not bar the deduction allowed under Section 80-IA from being included in the gross total income when the deduction under Section 80-HHC(3) is computed, because the expression ‘shall not be allowed’ cannot be equated with ‘shall not qualify’ — an expression the legislature used in Sections 80-HHB(5) and 80-HHD(7) but not here.

Income Tax Act, 1961 — s.80-IA(9) — s.80-HHC — s.80-IB — Chapter VI-A, heading ‘C’ — Deductions — Computation of deduction and allowing a deduction distinguished — Reference answered — Income Tax Act, 1961 — s.80-IA(9) — Restriction on allowance, not on computation — Held: On a plain reading, Sub-section (9) of Section 80-IA restricts the deduction allowable under any other provision under heading ‘C’ to the extent already claimed and allowed under Section 80-IA. The restriction is not on computing the total gross income. (¶20, 21) Income Tax Act, 1961 — s.80-IA(9) — s.80-HHC — Computation of deduction unaffected — Held further: Allowing a deduction and computation of deduction have separate and distinct meanings. Gross total income for computing the deduction under Section 80-HHC is not reduced by the Section 80-IA deduction, though the aggregate cannot exceed the profits and gains of such eligible business. (¶21, 23) Income Tax Act, 1961 — s.80-IA(9) — Conflicting High Court views — Reference answered — Held further: The interpretation made by the Bombay High Court in Associated Capsules (P) Ltd. is logical and correct. The reference is answered accordingly and the appeals directed to be placed before the appropriate Bench. (¶24, 25)

One judgment a day. That's the whole habit.

Read the full text of Shital Fibers Limited v. Commissioner of Income Tax — and get the Supreme Court's output as a five-minute daily read, with plain-language headnotes and the questions each judgment settles.

Free forever plan · 30 seconds · data stays in India