| Case ID |
261494e1-66bd-459b-bffb-831e1eab2587 |
| Body |
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| Case Number |
TAX CASE Nos. 451 AND 452 OF 1976 |
| Decision Date |
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| Hearing Date |
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| Decision |
The court held that rental income from leasing machinery used for the manufacture of automobile components qualifies for exemption under Section 80-I of the Income-tax Act. Additionally, export incentives received from the government are also eligible under the same section. However, interest on fixed deposits, which was not directly connected to the priority industry, does not qualify for exemption. The determination of what constitutes 'attributable to' versus 'derived from' is crucial in applying the provisions of Section 80-I, emphasizing the need for a direct nexus with the priority industry. |
| Summary |
In the landmark case of Commissioner of Income Tax v. Universal Radiators (P.) Ltd., the Madras High Court addressed critical issues concerning tax deductions under Section 80-I of the Income-tax Act, 1961. The case involved the examination of income sources, including rental income from leased machinery, export incentives, and interest on fixed deposits. The court established that income generated through leasing machinery used in the manufacture of automobile parts qualifies as profits attributable to a priority industry, thus warranting tax relief. Furthermore, it was determined that export incentives aimed at compensating exporters for lower prices in international markets also fall under the same exemption. However, the court clarified that interest earned on fixed deposits is not eligible for tax deductions under Section 80-I, as it lacks a direct connection to the priority industry. This case sets a precedent for the interpretation of 'attributable to' in tax law, affirming the need for a clear linkage between income sources and the operations of a priority industry, thereby providing valuable insights for tax planning and compliance for businesses engaged in priority industries. |
| Court |
Madras High Court
|
| Entities Involved |
Universal Radiators (P.) Ltd.
|
| Judges |
Sethuraman J.
|
| Lawyers |
J. Jayaraman,
Nalini Chidambaram,
T.V. Balakrishnan,
C.V. Mahalingam,
K.J. Rebello,
R. Santhanakrishnan,
G. Chokkappan
|
| Petitioners |
Commissioner of Income Tax
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| Respondents |
Universal Radiators (P.) Ltd.
|
| Citations |
1981 SLD 1606 = (1981) 128 ITR 531
|
| Other Citations |
Cambay Electric Supply Industrial Co. Ltd. v. CIT [1978] 113 ITR 84 (SC),
Addl. CIT v. Vellore Electric Corporation Ltd. [1979] 119 ITR 523 (Mad.)
|
| Laws Involved |
Income-tax Act, 1961
|
| Sections |
80-I
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