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PETITIONER: THE COMMISSIONER OF INCOME TAX TRIVANDRUM

       Vs.

RESPONDENT: THE KERALA STATE INDUSTRIAL DEVELOPMENT CORPORATION,TRIVANDR

DATE OF JUDGMENT:       12/02/1998

BENCH: B.N. KIRPAL, A.P. MISRA

ACT:

HEADNOTE:

JUDGMENT:                THE 12TH DAY OF FEBRUARY, 1998 Present:                 Hon’ble 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 appellant. Mr.  Roy  Abraham  and  Mr.M.M.Kashyap,  Advocates  for  the respondent.                       J U D G M E N T      The following Judgment of the court was delivered: KIRPAL, J.      In 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 ITR 84.      The 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.      Having gone through the decisions cited at the cited at the Bar.  We find that the decision the High Court following

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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.      The appeals are dismissed. No order as to costs.