Section 80E

Section 80E — the law in short

What the courts have decided on section 80E, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• CIT v Canara Workshops (P) Ltd Supreme CourtHelps taxpayer
  One of my units qualifies for the priority industry deduction and made a profit, while another unit made a loss. Must I set the loss off before claiming?
  No. The Supreme Court held that in applying section 80E the profits and gains earned by an industry mentioned in the section cannot be reduced by the loss suffered by any other industry owned by the assessee - and it makes no difference that the other industry is itself a priority industry. The deduction recognises that a priority industry has been set up and is working efficiently, and that merit is not to be diminished because another business has done badly. The Court affirmed the High Court's answer for the assessee and dismissed the Revenue's appeals with costs.
• Cambay Electric Supply Industrial Co Ltd v CIT Supreme CourtCuts both ways
  The officer has disallowed a receipt on the ground that it is not 'derived from' our undertaking. Does the exact wording of the deduction section decide the point?
  It decides most of it, and this is the judgment that says so. Section 80E as it then stood used the words 'attributable to', and the Supreme Court held that expression is of wider import than 'derived from' and was chosen deliberately, wide enough to take in a balancing charge under s.41(2) on the sale of old machinery and buildings. The corollary is what bites today: s.80-IA, s.80-IB and s.80-IC all say 'derived from', so only receipts with a direct, first-degree connection to the undertaking qualify. On the second question the assessee lost: unabsorbed depreciation and development rebate of earlier years had to be deducted before the percentage relief was computed.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.