The Mumbai Bench of the Income Tax Appellate Tribunal allowed deduction under Section 80 of the Income Tax Act, 1961 on interest income and miscellaneous income, thereby granting relief to M/s. Vodafone India Ltd.
The issue for adjudication in the appeal by assessee is whether interest income and miscellaneous income earned by the assessee would be eligible for deduction under Section 80IA of the Income Tax Act.
The Coordinate Bench in the case of BSNL vs. DCIT, after examining and comparing the provisions of section 80IA(1) and 80IA(2A) of the Income Tax Act held that on a reading of sub-section (1) of section 80-IA, we find that the legislature specifically uses the words meaning and import of which is plain and unambiguous in the context it is to be construed. Deduction under section 80- IA in terms of subsection (1) is available to “gross total income” of an assessee where “gross total income” is restricted to “profits and gains derivedfrom any business referred to in sub-section (4)”.
The Bench further noted that the legislature having ousted applicability of sub-section (1) and (2) in the opening sentence brought in for the purposes of time line sub-section (2) into play but made no efforts whatsoever to put the assessee under sub-section (2A) to meet the stringent requirements that the profits so contemplated were to be “derived from”. The requirements of the first degree nexus of the profits from the eligible business has not been brought into play.
Thus the Tribunal concluded that in terms of non- obstinate clause used in section 80IA(2A), deduction for telecommunication services is available in respect of “profits of eligible business” and is not restricted to “profits derived from eligible business” as mentioned in section 80IA(1) of the Act.
A Bench comprising M Balaganesh, Accountant Member and Vikas Awasthy, Judicial Member observed that “Respectfully following the decision of Hon’ble Delhi High Court in the case of BSNL, we direct the Assessing Officer to allow the benefit of deduction under Section 80IA of the Act in respect of interest Income as well as miscellaneous income.”
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