Deduction u/s.80-O of Income-tax Act, 1961 : Amount allowable is restricted to the total income and not to the income computed under the head business.

Unreported :

21. Deduction u/s.80-O of Income-tax Act, 1961 : Amount allowable is restricted to the total income and not to the income computed under the head business.

[CIT v. M/s. J. B. Boda & Co. P. Ltd. (Bom.), ITA No. 3224 of 2009 dated 18-10-2010.]

The Assessing Officer determined the amount eligible for deduction u/s.80-O at Rs. 1,29,41,830 being 50% of the income so received or brought into India. However, he restricted the deduction u/s.80-O to Rs. 69,70,000, being the total income under the head ‘Business’, on the ground that allowing further deduction would amount to allowing the deduction from income under other heads. The Tribunal found that the gross total income exceeded Rs. 1,29,41,830 and therefore allowed the full claim of the assessee.

On appeal by the Revenue, the Bombay High Court upheld the decision of the Tribunal and held as under :

“(i) The only question sought to be canvassed is that out of these deductions the admissible deduction u/s.80-O ought to be limited to the extent of Rs. 69,70,127 which represents business income. In other words, income from interest and dividend shall not form part of the gross total income as defined u/s.80B(5) of the Act.

(ii) Considering the definition of the gross total income, it is difficult to hold that the interest income and the dividend income would not form part of the gross total income computed in accordance with the provisions of the Act.

(iii) The view taken by the Tribunal, in our considered view, is in consonance with what is stated herein.”