Kerala H.C : Deduction under section 80HHD to be computed by taking assessee’s business as a whole and not unit-wise

High Court Of Kerala

Hotel And Allied Trades (P.) Ltd. Vs. DCIT

Assessment Year : 2000-01

Section : 80HHD, 80-IB

Dr. Manjula Chellur, Cj. And A.M. Shaffique, J.

IT Appeal No. 261 Of 2013

March  7, 2014

JUDGMENT

Dr. Manjula Chellur, CJ. – The following substantial questions of law arise for consideration in this appeal :

“1.Is not deduction under section 80HHD and section 80-IB allowable on the basis of the turnover, foreign exchange earnings and profits of each eligible units instead of on the basis of total turnover and foreign earnings of all units together disregarding the eligibility in the facts and circumstances of the case.

2.Whether, in the facts and in the circumstances of the case, the Tribunal is justified in interpreting section 80HHD and section 80-IB to the effect that for the purpose of computation of eligible deduction the profits and gains of the entire business of the hotel has to be taken into account.

3.Whether, in the facts and in the circumstances of the case, that the Tribunal is justified in sustaining the computation made by the authorities in the instant case for the purpose of determination of deductions allowable under section 80HHD and section 80-IA of the Act.”

2. The assessee is a company engaged in hotel business and the appeal pertains to the assessment year 2000-01. In this case, the appellant-assessee filed a return of income declaring the net loss of Rs. 4,52,23,735. The Assessing Officer disallowed the deductions claimed under section 80HHD and section 80-IB of the Income-tax Act. Aggrieved by the same, an appeal came to be filed before the Commissioner of Income-tax (Appeals) which was dismissed and the same was challenged before the Tribunal. The Tribunal also dismissed the appeal of the appellant-assessee.

3. So far as section 80HHD after referring to Hotel and Allied Trades (P.) Ltd. v. Dy. CIT (Assessment) [2007] 294 ITR 67/163 Taxman 11 (Ker.), the Tribunal opined that the orders of the Assessing Officer which came to be confirmed by the Commissioner of Income-tax (Appeals) was justified. So far as the principle adopted, the eligibility to deduct under section 80HHD and also the eligibility of deductions under section 80-IB being the same, the Tribunal was justified in negativing the contentions of the appellant-assessee. In the light of Hotel and Allied (P.) Ltd. v. Dy. CIT [2014] 361 ITR 184 (Ker.) pertaining to the very same assessee, this appeal is dismissed, in favour of the Revenue.

[Citation : 363 ITR 328]