Dismissed¶47

The Commissioner of Income Tax v. M/S Mohan Breweries and

Madras HC10 Dec 2025TCA/201/2014

Case brief

AI extract

What is this about?

Madras High Court TCA 201/2014 (AY 2004-05) dismissed 10-12-2025; Revenue appeal u/s 260A vs ITAT 'B' Bench Chennai order (ITA 636/Mds/2010) upholding assessee Mohan Breweries and Distilleries Ltd; concurrent deductions Sections 80IA(9) and 80HHC permitted subject to 100% profit cap; substantial questions answered in favour of assessee, adverse to revenue; CIT Section 263 quashing sustained; follows Shital Fibres (174 Taxmann.com 807 (SC) : 476 ITR 309) and Micro Labs (380 ITR 1) affirming Associated Capsules (332 ITR 42); General Optics 315 ITR 400 referred; advocates: Karthik Ranganathan (Sr. Standing Counsel, appellant), R.Vijayaraghavan (respondent); bench: Anita Sumanth J. (author), Mummineni Sudheer Kumar J.; no costs.

What did the court decide?

None to the appellant/revenue; the Tax Case (Appeal) is dismissed with no costs.

The Commissioner of Income Tax Vs M/S Mohan Breweries and — Income Tax | Madras HC (2025)

What the court decided

AI extract

Outcome

None to the appellant/revenue; the Tax Case (Appeal) is dismissed with no costs.

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Issue for consideration

Whether the Tribunal was right in not considering the provisions of sub-section 9 of Section 80IA when deduction was allowed under Section 80HHC without reducing the deduction already given to the assessee under Section 80IA. +2 more

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Court's answer

Adopting the holding of the three-Judge Bench of the Supreme Court in Micro Labs, as affirmed in the Bombay High Court decision in Associated Capsules (para 39 extracted), both reliefs under Sections 80IA and 80HHC may be simultaneously granted, subject to the sum total of relief not exceeding 100% of the profits of the business of the assessee; section 80-IA(9) affects the allowability, not the computability, of deductions under heading C of Chapter VI-A.

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Ratio / Principle

In light of the Supreme Court authorities relied upon (Shital Fibres; the three-Judge Bench decision in Micro Labs affirming Associated Capsules), the substantial questions of law admitted in this appeal are answered in favour of the assessee and adverse to the revenue.

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Detailed headnote1 paragraphs

High Court of Judicature at Madras (Division Bench: Dr. Anita Sumanth J. and Mummineni Sudheer Kumar J.), TCA No. 201 of 2014, decision dated 10-12-2025 — Departmental appeal under Section 260A of the Income Tax Act, 1961 by the Commissioner of Income Tax, Chennai against the order of ITAT 'B' Bench, Chennai dated 17.09.2010 in ITA.No.636/Mds/2010 (AY 2004-05) — DISMISSED with no costs; the substantial questions of law (including whether the Tribunal was right in quashing the CIT's Section 263 order) answered in favour of the assessee and adverse to the revenue. Following Shital Fibres Ltd. v. CIT (SC) and the three-Judge Bench decision in ACIT, Bangalore v. Micro Labs Limited (380 ITR 1), which affirmed the Bombay High Court decision in Associated Capsules (P) Ltd. v. DCIT (332 ITR 42, para 39 extracted): section 80-IA(9) affects the allowability, not the computability, of deductions computed under heading C of Chapter VI-A, so deductions under Sections 80IA and 80HHC may be concurrently granted subject to the aggregate not exceeding 100% of the profits of the business. General Optics (Asia) Ltd. v. DCIT (315 ITR 400) appears only within the admitted question and is not separately engaged by this Court (referred).

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2025:MHC:2832

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TCA No. 201 of 2014

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IN THE HIGH COURT OF JUDICATURE AT MADRAS

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DATED: 10-12-2025

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CORAM

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THE HON'BLE DR.JUSTICE ANITA SUMANTH

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AND

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THE HON'BLE MR.JUSTICE MUMMINENI SUDHEER KUMAR

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TCA No. 201 of 2014

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The Commissioner Of Income Tax Chennai.

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..Appellant(s)

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M/s Mohan Breweries And Distilleries Ltd Rayala Towers, 2^nd Floor, 158, Anna Salai, Chennai -600 002.

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..Respondent(s)

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Prayer: Appeal filed under Section 260A of the Income Tax Act, 1961 against order of the Income Tax Appellate Tribunal, 'B' Bench, Chennai dated 17.09.2010 in ITA.No.636/Mds/2010 for the assessment year 2004-2005.

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For Appellant(s): Mr.Karthik Ranganathan Senior Standing Counsel For Respondent(s): Mr.R.Vijayaraghavan for M/s.Subbarayan Aiyar Padmanabhan

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Page 1 of 4

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https://www.mhc.tn.gov.in/judis

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TCA No. 201 of 2014

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JUDGMENT

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(Judgment of the Court was delivered by Dr.Anita Sumanth J.)

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Heard Mr.Karthik Ranganathan, learned Senior Standing Counsel appearing for the appellant/Department and Mr.R.Vijayaraghavan, learned counsel appearing for the respondent/assessee.

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This Tax Case (Appeal) relates to assessment year 2004-05. The substantial questions of law admitted on 15.07.2014 are as follows:

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“1. Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in not considering the provisions of sub-section 9 of Section 80IA when deduction was allowed under Section 80HHC without reducing deduction already given to the assessee under Section 80IA of the Act?"

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2. Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in not following the judgment of the Madras High Court in the case of General Optics (Asia) Ltd. Vs. DCIT reported in 315 ITR 400, where it was specifically held that sub-section 9A was inserted with effect from 01.04.1999 in Section 80IA of the Act had the effect of reducing such relief under Section 80IA prior to grant of deduction under Section 80HHC of the Act?

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3. Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in quashing the order passed by the CIT under Section 263 of the Income Tax Act?"

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Both learned counsel concur on the position that the issue stands

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covered by a judgment of the Supreme Court in Shital Fibres Ltd. V. CIT¹ , where the identical issue as arising in this matter, relating to concurrent grant of benefit under Sections 80 IA and 80 HHC of the Income Tax Act, 1961 was decided.

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1 174 Taxmann.com 807 (SC) : 476 ITR 309

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Page 2 of 4

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https://www.mhc.tn.gov.in/judis

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TCA No. 201 of 2014

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The issue had been referred to three Hon’ble Judges of the Supreme

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Court in Assistant Commissioner of Income Tax, Bangalore V. Micro Labs Limited² . The Bench ultimately holds that both reliefs may be simultaneously

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granted, subject to the sum total of the relief not exceeding 100% of the profits and business of the assessee. The decision of the Bombay High Court in Associated Capsules (P) Ltd. V. Deputy Commissioner of Income Tax³ to the following effect was affirmed. We extract below paragraph 39 of the decision of the Bombay High Court below:

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39. In the result, we hold that section 80-IA(9) does not affect the computability of deduction under various provisions under heading C of Chapter VI-A, but it affects the allowability of deductions computed under various provisions under heading C of Chapter VI-A, so that the aggregate deduction under section 80-IA and other provisions under heading C of Chapter VI-A do not exceed 100 per cent. of the profits of the business of the assessee. Our above view is also supported by the Central Board of Direct Taxes Circular No. 772 dated December 23, 1998 ((1999) 235 TR (St.) 35), wherein it is stated that section 80-IA(9) has been introduced with a view to prevent the taxpayers from claiming repeated deductions in respect of the same amount of eligible income and that too in excess of the eligible profits. Thus, the object of section 80-IA(9) being not to curtail the deductions computable under various provisions under heading C of Chapter VI-A, it is reasonable to hold that section 80-IA(9) affects allowability of deduction and not computation of deduction. To illustrate, if Rs. 100 is the profits of the business of the

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DR.ANITA SUMANTH J.

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AND

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MUMMINENI SUDHEER KUMAR J.

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2 380 ITR 1

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3 332 ITR 42

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Page 3 of 4

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https://www.mhc.tn.gov.in/judis

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TCA No. 201 of 2014

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undertaking, Rs. 30 is the profits allowed as deduction under section 80-IA(1) and the deduction computed as per section 80HHC is Rs. 80, then, in view of section 80-IA(9), the deduction under section 80HHC would be restricted to Rs. 70, so that the aggregate deduction does not exceed the profits of the business.”

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