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In the case of CIT v. Canara Workshop Pvt. Ltd. (161ITR320) the Apex Court clearly stated that the principle laid down in Distributor’s Baroda case has no application in cases of deduction admissible u/s80E (corresponding to section 80I/J/HH of the 1961 Act). In keeping note of this basic fact the Andhra Pradesh High Court in the case of Commissioner of Income-tax Vs. Visakha Industries Ltd. (251ITR471) held that the deduction u/s 80I/80HH is to be allowed with reference to the particular industrial undertaking and not with reference to total income of the assessee and further held that the ratio laid down by the Apex Court in Canara Workshop has universal application even after the insertion of section 80AB and further that there is no conflict between the decisions of the Apex Court in Canara Workshop and Rama Varma (205ITR433).

On the subject of recovery of any outstanding demands arising on account of any revenue action on the adverse view taken in so granting such deductions the assesses are advised to take benefit of Board Instruction No. 1914 dated 02.012.93 where it is desired that stay could be granted if the demand in dispute has arisen because the assessing officer has adopted an interpretation of law in respect of which there exist conflicting decisions of one or more High Courts (not of the High Court under whose jurisdiction the assessing officer is working).

Further sub section (6) of section 80I overrides even section 80AB of the Act and therefore the previous adverse rulings of the Madras and Calcutta High Court on this subject reported elsewhere do not hold much water on the present date.

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