Is deduction u/s 80-IA of the Income Tax Act, restricted to the amount of 'business income' only?

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
Civil Appeal No. 1327 of 2021

Commissioner of Income Tax-I .... Appellant(s)

Versus

M/s. Reliance Energy Ltd.
(Formerly BSES Ltd.) through its M.D. ….Respondent (s)

W I T H
Civil Appeal No. 1328 of 2021
Civil Appeal No. 1329 of 2021
Civil Appeal No. 2537 of 2016
Civil Appeal No. 1408 of 2021
Civil Appeal No. 1508 of 2021
Civil Appeal No. 1509 of 2021

J U D G M E N T

L. NAGESWARA RAO, J.

For the sake of convenience, we are referring to the facts of Civil Appeal No.1328 of 2021. Civil Appeal No. 1328 of 2021

1. By an order of assessment dated 31.01.2005, the Assessing Officer restricted the eligible deduction under Section 80-IA of the Income Tax Act, 1961 (hereinafter “the Act”) to the extent of ‘business income’ only. On 23.03.2006, the Commissioner of Income-Tax (Appeal)-I (hereinafter “the Appellate Authority”) partly allowed the Appeal filed by the Assessee and reversed the order of the Assessing Officer on the issue of the extent of deduction under Section 80-IA of the Act. The Income Tax Appellate Tribunal (hereinafter “the Tribunal”), upheld the decision of the Appellate Authority on the issue of deduction under Section 80-IA. The High Court refused to interfere with the Tribunal’s order as far as the issue on deduction under Section 80-IA is concerned. Therefore, this Appeal by the Revenue.

2. This Appeal pertains to the assessment year 2002-03 for which the income-tax return was filed by the Assessee on 31.10.2002 declaring the total income as ‘NIL’. The return was subsequently revised on 06.12.2002 and thereafter, on 30.03.2004. At the time of the assessment proceedings, the Assessee submitted a revised computation of income by revising its claim of deduction under Section 80-IA of the Act.

3. The Assessee is in the business of generation of power and also deals with purchase and distribution of power. The Assessee-Company generated power from its power unit located at Dahanu. In respect of deduction under Section 80-IA of the Act, the Assessee was asked to explain as to why the deduction should not be restricted to business income, as had been the stand of the Revenue for the assessment year 2000-01.

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