Commissioner of Income Tax Trivandrum Vs.
The Kerala State Industrial Development Corporation, Trivand  INSC 94 (12 February 1998)
Kirpal, A.P. Misra Kirpal, J.
12TH DAY OF FEBRUARY, 1998 Present:
Mr. Justic B.N. Kirapal Hon'ble Mr. Justice A.P.Misra Mr. J. Ramamurthi, Sr.
Advocate, Mr. Rajiv Nanda and Mr. B. Krishna Prasad, Advocates with him for the
Roy Abraham and Mr.M.M.Kashyap, Advocates for the respondent.
following Judgment of the court was delivered:
these appeals by certificate granted by the Karala High Court, the following
question of law has been referred in respect of the assessment year 1978-79:-
"Whether, the Tribunal was right in law in holding that the statutory
deduction under Section 36 (i) (viii) of the I.T. Act, 1961 should be
calculated on the total income before deduction of the amount allowable under
the section?" The Kerala High Court came to the conclusion that in
computing the total income for the purpose of Section 36 (1) (viii) of the
Income Tax Act, 1961, the total income has to be computed in accordance with
the provisions of Sections 30 to 43A except Section 36 (i) (viii). In arriving
at this decision, the High Court relied upon the observations of this Court in Cambay
Electric Supply Industrial Co. Ltd. vs. Commissioner of Income Tax, (1978) 113
view which was taken by the Kerala High Court was in consonance with the view
taken by the Patna High Court in three decisions, Madhya Pradesh High Court in
two decisions and Kerala High Court itself in an earlier decision. It is stated
that sudsequent to the decision under appeal, other High Courts have also taken
the same view. The only dissenting view which has been expressed is by the
Karnataka High Court in Karnataka State Financial Corporation vs. Commissiner
of Income Tax. (1988) 174 ITR 203.
gone through the decisions cited at the cited at the Bar. We find that the
decision the High Court following its earlier decision in Commissioner of
Income Tax vs. Kerala State Industrial Development Corproration Ltd. (No.2).
(1990) 182 ITR 67, is une ceptionble. The Karanataka High Court has tried to
work out the sub-section the basis of a mathematical formula and has dissented
from the decision of the Patna High Court in Commissioner of Income Tax, Bihar
vs. Bihar State Financial Corporation (1983) 142 ITR 518. It may hare be
mentioned that Civil Appeal No. 3695 of 1982 against the aforesaid judgment
reported in 142 ITR 518 was desmissed by this Court on 20th January, 1995
thereby affiraming the view of the Patna High Court. It may here be noticed
that not only the preponderance of the judicial opinion of the various High
Courts is in line with the view expressed by the Kerala High Court but the
relevant sub-clause (viii) of Section 36(1) has subsequently been amended so as
to bring it in line with the view of the Patna and Kerala High Courts. The
decision of the Karnataka High Court does not appear to be correct being
contrary to the aforesaid decisions of the Patna High Court which stands
affirmed by its affirmation by this Court on 20th January, 1995. The view of the other High Courts is in consonance with
relevant provisions of the Act. We, therefore, agree with the deciaion of the
High Court in answering the question of law in the affiramative and in favour
of the assessee.
appeals are dismissed. No order as to costs.