The division bench of the Calcutta High Court has held that the statute promoting growth and development should be considered liberally and upholds deduction u/s 80IC.
The assessee, M/s. ITC Limited, in its return, claimed deduction under Section 80IC of the I.T. Act, 1961, amounting to Rs.72,21,948/-. The Assessing Officer disallowed the deduction against which the appeal was filed and the appellate authority allowed the deduction in favor of the assessee. Aggrieved revenue filed an appeal before the High Court alleging that the captive undertaking is not entitled to deduction under the said provision for the notional profit since the products have only been supplied to the Food Business Division (FBD) of the assessee and not to an outsider.
High Court observed that CITA reversed the order passed by the assessing officer has found that the assessee was an eligible undertaking and entitled to the benefit of Section 80IC which is a special provision in respect of certain undertakings or industries in certain special category states. It is not in dispute that the said eligible undertaking was not manufacturing any of the goods as listed in the 13th schedule to the Act.
The division bench by relying on the decision of the High Court in the assessee’s case observed that statute granting incentives for promoting growth and development should be considered liberally to advance the objective of the provision and not frustrate it.
The Coram of Mr. Justice T.S. Sivagnanam and Mr. Justice Hiranmay Bhattacharyya while dismissing the appeal held that “there is no error in the approach of the CITA or the Tribunal for us to interfere”.
Advocate Mr. Om Narain Rai appeared for the appellant and Advocate J.P. Khaitan and Advocate Ms. Nilanjana Banerjee Pal appeared for the respondent.
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