Supreme Court upholds High Court's question on interest netting for Section 80HHC (of Income Tax Act, 1961) deduction.

Case Name:

Liberty Footwear Co. vs Commissioner of Income Tax

Civil Appeal No. 5223/2008

Key Takeaways:

- The Supreme Court upheld the High Court's decision on the question framed regarding interest netting for Section 80HHC (of Income Tax Act, 1961) deduction.

- The court followed its earlier decision in ACG Associated Capsules (P) Ltd. vs Commissioner of Income Tax.

- If the Revenue had any grievance with the question framed, it was open to take remedies available in law, including moving the High Court for review.

Issue:

Whether the Income Tax Appellate Tribunal was correct in law in directing the Assessing Officer to allow netting of interest for computing deduction under Section 80HHC (of Income Tax Act, 1961).

Facts:

The High Court had framed a question in an appeal under Section 260A (of Income Tax Act, 1961), regarding the allowance of netting interest for computing deduction under Section 80HHC (of Income Tax Act, 1961). The Revenue had raised objections to the framing of the question and its relevance to the present case.

Arguments:

The arguments from both sides are not explicitly mentioned in the provided content.

Key Legal Precedents:

The court cited its earlier decision in ACG Associated Capsules (P) Ltd. vs Commissioner of Income Tax [(2012) 67 DTR (SC) 205] regarding the issue of interest netting for Section 80HHC (of Income Tax Act, 1961) deduction.

Judgement:

The Supreme Court answered the question framed by the High Court in favor of the assessee, following its decision in ACG Associated Capsules (P) Ltd. However, if the Revenue had any grievance with the question framed and its relevance to the present case, it was open for the Revenue to take out such remedies as may be available to it in law, including the remedy of moving the High Court by way of review.

FAQs:

Q1: What was the significance of the Supreme Court's decision?

A1: The Supreme Court upheld the High Court's decision on the question framed regarding interest netting for Section 80HHC (of Income Tax Act, 1961) deduction, following its earlier precedent in ACG Associated Capsules (P) Ltd.

Q2: What remedies were available to the Revenue if it had grievances with the question framed?

A2: If the Revenue had any grievances with the question framed and its relevance to the present case, it was open for the Revenue to take out such remedies as may be available to it in law, including the remedy of moving the High Court by way of review.

Q3: Did the Supreme Court set a precedent on the issue of interest netting for Section 80HHC (of Income Tax Act, 1961) deduction?

A3: No, the Supreme Court did not set a new precedent. It followed its earlier decision in ACG Associated Capsules (P) Ltd. vs Commissioner of Income Tax regarding the issue of interest netting for Section 80HHC (of Income Tax Act, 1961) deduction.

1. The question as framed by the High Court in the appeal under Section 260A (of Income Tax Act, 1961) before it is in the following terms:

“Whether, on the facts and the circumstances of the case, the Income-Tax Appellate Tribunal was correct in law in directing the Assessing Officer to allow netting in interest for computing deduction under Section 80HHC of the Income Tax Act, 1961?”

2. The aforesaid question has been answered by this Court in ACG Associated Capsules (P) Ltd. Vs. Commissioner of Income Tax [(2012) 67 DTR (SC) 205]. However, the learned counsel for the Revenue submits that the question as framed really does not arise and the High Court had committed an error in framing the question in the above terms and in answering the same. In this regard, the learned counsel for the Revenue has taken us through the order of the Income Tax Appellate Tribunal and also the decision of this Court in Pandian Chemicals Ltd. Versus Commissioner of Income Tax, Madurai [(2003) 5 SCC 590].

3. As in the present appeal by the Assessee we are only concerned with the correctness of the opinion of the High Court on the question framed by it, we answer the same in favour of the Assessee following the decision of this Court in ACG Associated Capsules (P) Ltd. (supra). However, if the Revenue has any grievance(s) with regard to the question framed and the relevance thereof to the present case, it will be open for the Revenue to take out such remedies as may be available to it in law including the remedy of moving the High Court by way of review.

4. The appeal stands disposed of in the above terms.

(RANJAN GOGOI)

(PRAFULLA C. PANT)

NEW DELHI

FEBRUARY 11, 2016