10. CIT vs. Apollo Tyres
Ltd. (No. 5); [2019] 416 ITR 571
(Ker.) Date of order: 14th
March, 2019 A.Y.: 1995-96
Industrial undertaking –
Special deduction u/s 80-IA of ITA, 1961 – Computation – Assessee having two
manufacturing units – Deduction to be at 30% of profits of eligible business
and not of total income
The assessee manufactured and sold automobile tyres and tubes. It had
two manufacturing units. The profit from the eligible business was Rs.
7,16,68,439 and the total income was Rs. 6,46,55,496. For the A.Y. 1995-96, the
AO restricted the deduction u/s 80-IA of the Income-tax Act, 1961 to 30% of
total income, instead of 30% of the profits of the Baroda unit as claimed by
the assessee.
The Commissioner (Appeals) and the Tribunal allowed the assessee’s
claim. The Tribunal held that according to section 80-IA, for the purpose of
allowing deduction the profits of the eligible unit alone should be considered
as if it was the only business of the assessee.
On appeal by the Revenue, the Kerala High Court upheld the decision of
the Tribunal and held as under:
‘(i) The understanding of the
Department with regard to the scope of section 80AB to enable them to reckon
the deduction at 30%, confining it to the lower extent of the total income from
all sources, instead of reckoning it as 30% of the business profits from the
eligible business, was wrong and misconceived.
(ii) The assessee was eligible to
have the deduction as allowed by the Commissioner (Appeals) and upheld by the
Tribunal.’
