COMMISSIONER OF INCOME TAX Vs. HINDUSTAN LEVER LTD

JUDGEMENT

(1.) This appeal by the Revenue under Section 260A of the Income Tax Act, 1961, has raised the following two substantial questions of law :

(2.) Both Counsel appearing on behalf of the Revenue and Counsel appearing on behalf of the Assessee are agreed that the first question is broad enough to determine the fate of this appeal. We accordingly admit the appeal on question (a). With the consent of Counsel, the appeal is taken up for hearing and final disposal.

(3.) The appeal relates to Assessment Year 1998 99. The assessee filed a return of income of Rs.661.15 crores and claimed a deduction in the amount of Rs.11.41 crores under Section 80 I, Rs. 218.62 crores under Section 80 IA and Rs.20.20 crores under Section 80 HH. The Assessing Officer assessed the income under Section 143(3) at Rs.814.66 crores and restricted the deduction claimed under Sections 80 I, 80 IA and 80 HH to Rs.11.06 crores, Rs.201.08 crores and Rs.18.57 crores respectively. The Commissioner of Income Tax issued a notice under Section 263 on 21 March 2003 stating that on verification of the records, it was revealed that the following expenditure, though having a bearing on the profits of the units, had not been considered for allocation: