In Brief
The Supreme Court examined whether tax deductions under Section 80-IA of the Income Tax Act for power generation undertakings must be limited to business income or can be allowed against the assessee's total income from all sources. A power generation and distribution company (BSES/Reliance Energy) claimed deductions exceeding its business-specific income. The Revenue restricted the deduction to business income; the assessee argued it should apply against total income. The Court held that Section 80-IA(5) is limited to determining deduction quantum by treating the eligible business as the sole income source. However, this does not restrict allowance of the computed deduction to business income alone. Deductions must be aggregated with other Chapter VI-A deductions and set off against gross total income, subject to the overall ceiling. The appeal was dismissed.
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