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HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE

Plastiblends India Limited v. Addl. Commissioner of Income Tax, Mumbai & Anr.

Civil Appeal No. 238 of 2012 / Civil Appeal No. 540 of 2012 / Civil Appeal No. 528 of 2012 / Civil Appeal No. 529 of 2012 / Civil Appeal No. 531 of 2012 / Civil Appeal No. 532 of 2012 / Civil Appeal No. 530 of 2012 / Civil Appeal No. 535 of 2012 / Civil Appeal No. 536 of 2012 / Civil Appeal No. 533 of 2012 / Civil Appeal No. 534 of 2012 / Civil Appeal No. 537 of 2012 / Civil Appeal No. 538 of 2012 / Civil Appeal No. 543 of 2012 / Civil Appeal No. 544 of 2012 / Civil Appeal No. 541 of 2012 / Civil Appeal No. 542 of 2012 / Civil Appeal No. 546 of 2012 / Civil Appeal No. 545 of 2012 / Civil Appeal No. 547 of 2012 / Civil Appeal No. 548 of 2012 / Civil Appeal No. 539 of 2012 / Civil Appeal No. 550 of 2012 / Civil Appeal No. 549 of 2012 / Civil Appeal No. 551 of 2012 / Civil Appeal No. 12755 of 2017 / Civil Appeal No. 12828 of 2017 / Civil Appeal No. 12757 of 2017 / Civil Appeal No. 12758 of 2017 / Civil Appeal No. 12762 of 2017 / Civil Appeal No. 12980 of 2017
[2017] 10 SCR 104 ·
80-IA [historical version applicable to the years in issue] · 32 · 80A · 80AB · 80B(5)

Reasoned final decisionRevenue on section 80-IA computation
Download AKHB noteFive-part research note
Sources & disclosures includedDownload original judgment / order

Two-judge bench · A. K. Sikri, J. · Ashok Bhushan, J.

Assessment years: 1997-98, 1998-99, 1999-2000, 2000-01

01 · Facts of the case

Plastiblends manufactured master batches and compounds at Daman Units I and II, which began production in the previous years relevant to AYs 1994-95 and 1995-96. The lead appeal concerned AYs 1997-98 to 2000-01. For the illustrated AY 1997-98, both units were eligible for a 100% section 80-IA profit deduction. The assessee omitted tax depreciation in computing business income and claimed the deduction on that higher profit figure, producing nil total income (paragraphs 2-3).

On reassessment the Assessing Officer took depreciation into account. The Commissioner (Appeals) accepted the assessee’s optional-depreciation argument based on the Tribunal’s earlier AY 1996-97 decision, but the Tribunal reversed. Following a reference arising from differing Bombay High Court decisions, the Full Bench held that depreciation must be accounted for in calculating the section 80-IA deduction, and the Division Bench disposed of the appeal accordingly. The assessees appealed to the Supreme Court (paragraphs 3-4). Eligibility for the 100% deduction in the years under appeal was conceded; the dispute was computation, not initial qualification (paragraph 6).

Source: reported judgment / paragraphs 2-6 / PDF pages 5, 6, 7, 8 / judicial text

02 · Discussion by the Hon’ble Court

The assessees relied on Mahendra Mills, which had construed sections 32 and 34 in their historical Chapter IV setting as allowing a choice whether to claim depreciation. They contended that the same choice should preserve a higher profit base for section 80-IA. Revenue defended the Full Bench’s distinct profit-linked computation and separately argued that the later Explanation 5 to section 32 was declaratory and retrospective; the assessees argued for prospective effect from 1 April 2002 (paragraphs 1 and 6-10).

The Court agreed with the Full Bench’s analysis of Chapter VI-A and the cited Supreme Court decisions. Section 80-IA supplies a self-contained profit-linked deduction scheme, including its computation rules. Its quantum must be calculated after the deductions allowable under sections 30-43D, including depreciation. Mahendra Mills did not establish a right to inflate this separate incentive by disclaiming depreciation in the business-income computation (paragraphs 12-18).

The assessees sought a 100% profit deduction while preserving depreciation for use in later years. That method would inflate the eligible profit-linked incentive and was incompatible with the statutory scheme. Having decided the section 80-IA issue on that ground, the Court found it unnecessary to determine whether Explanation 5 was declaratory or operated prospectively (paragraphs 18-19).

Source: reported judgment / paragraphs 6-10, parties’ submissions / PDF pages 8, 9, 10, 11 / judicial text; reported judgment / paragraphs 11-19, Court discussion and quoted authorities / PDF pages 12, 13, 14, 15, 16, 17, 18 / judicial text

03 · Judicial decision

The Court approved the Full Bench’s conclusion that depreciation must be taken into account when computing the eligible profits and quantum of the historical section 80-IA deduction, whether or not the assessee had claimed it. All assessees’ appeals were dismissed. The temporal effect of Explanation 5 to section 32 was expressly not decided (paragraphs 17-20).

Source: reported judgment / paragraphs 17-20 / PDF pages 17, 18 / judicial text

04 · Outcome / in whose favour

In whose favour: Revenue on section 80-IA computation

All assessees’ appeals dismissed

Final historical section 80-IA computation ruling; separate Explanation 5 temporal question not decided

This is not a universal no-option rule for every depreciation claim, deduction scheme or assessment year. Eligibility was admitted. Explanation 5 retrospectivity/prospectivity was not adjudicated.

Source: reported judgment / paragraphs 19-20 / PDF pages 18 / judicial text

05 · AKHB REVIEW POINT

Identify the exact deduction scheme and statutory year before using this case. Plastiblends concerns a profit-linked section 80-IA computation in which eligibility was admitted; its conclusion prevents a depreciation disclaimer from increasing that deduction while preserving the allowance for later years. That conclusion must not be rewritten as a universal proposition that an assessee never had any depreciation option.

Maintain a separate calculation of eligible industrial profits and apply the computation rules of the relevant historical version. Do not cite this judgment as resolving Explanation 5’s retrospectivity: paragraph 19 expressly leaves it open. The lead manufacturer was not shown to be an infrastructure developer merely because the introductory discussion describes infrastructure among section 80-IA’s categories. Subsequent law and treatment remain unverified.

Source: reported judgment / paragraphs 2 / PDF pages 5 / judicial text; reported judgment / paragraphs 5-6 and historical-version footnote / PDF pages 8 / judicial text; reported judgment / paragraphs 17-19 / PDF pages 17, 18 / judicial text

Detailed disposition and connected groups

issue results
  • issue
    Depreciation in computing historical section 80-IA eligible profits
    result
    Depreciation and other allowable sections 30-43D deductions must be accounted for; disclaimer cannot enlarge the profit-linked deduction
    in whose favour
    Revenue
    pinpoints
  • issue
    Reliance on Mahendra Mills for enhanced section 80-IA relief
    result
    Inapplicable to the distinct section 80-IA computation; not treated as a general overruling of Mahendra Mills in its historical context
    in whose favour
    Revenue
    pinpoints
  • issue
    Explanation 5 to section 32: declaratory/retrospective or prospective
    result
    Expressly unnecessary to decide; rival authorities on this issue not adjudicated
    in whose favour
    Not decided
    pinpoints
  • issue
    Lead and connected appeals
    result
    All assessees’ appeals dismissed
    in whose favour
    Revenue
    pinpoints

Additional statutory context, not separate holdings

28-43D [business-income computation framework]; 143(1)(a), 143(3), 147 and 260A [procedural history]; 32, Explanation 5 [retrospective/declaratory versus prospective effect expressly left undecided]; 34 [Mahendra Mills historical framework]; 35(1)(iv) [quoted illustration only]; 80-IB and 80HHC [quoted authorities, not separate deduction claims decided here]

Judicial authorship and separate opinions

A. K. Sikri, J.

Act identified in the reviewed source

Income-tax Act, 1961

Source & verification

Download original judgment / order · Open cited source rendition

Identified source rendition: 18 PDF pages; SHA-256 4bf725c4c2524e284537363ff7ce55a842fc09338e3a06e8592e03f67e5c83fe. Original bytes preserved. Judgment paragraphs 1-20 and its footnotes on physical pages 4-18 (SCR 107-121), including quoted submissions and authorities; all text read. Pages 1-3 and opening of page 4 contain report/editorial identity or appearance material.

  • Paragraph 2 gives AYs 1997-98 to 2000-01 for the lead Plastiblends appeal. AY 1996-97 is prior procedural history; 1994-95 and 1995-96 are commencement years of Daman Units I and II. Separate assessment years for every companion assessee are not supplied.
  • The reported jurisdiction page lists the lead appeal, twenty-four further 2012 appeals and six 2017 appeals. All are covered by the undifferentiated dismissal in paragraph 20.
  • The holding concerns mandatory depreciation in calculating profits for the historical section 80-IA deduction. The Court expressly leaves Explanation 5 to section 32’s temporal operation undecided (paragraph 19). Quoted provisions from Liberty India/Williamson Financial Services are not separate merits issues in this batch.
  • The preserved eSCR-reported PDF is the reviewed rendition. No independently retrieved signed original is claimed.; The headnote’s generic infrastructure-development description must not substitute for paragraph 2’s actual facts: the lead assessee manufactured master batches and compounds at Daman.; The case addresses the historical section 80-IA version in issue. Statutory quotations within later authorities use their own subsection numbering; no automatic present-version mapping is made.; The numerical narrative in paragraph 3 does not reconcile on its face across the quoted gross-total-income, depreciation and brought-forward-loss figures. The note avoids reconstructing an assessment computation or silently correcting printed figures.; The Court distinguishes Mahendra Mills for this computation; it does not decide a freestanding universal depreciation-option issue.; Revenue’s retrospective-Explanation-5 contention in paragraph 9 is a submission; paragraph 19 expressly leaves the question undecided.; Separate dates, years, facts and assessments for all companion assessees are not supplied; the dismissal is common.

Statutory scope

Historical statutory setting only; no automatic mapping to the Income-tax Act, 2025.

Later treatment

Source checked 2026-10-04. No comprehensive later-treatment or present-law audit has been performed. Authorities discussed or quoted in this judgment are described only within its own reasons; no independently verified cross-judgment treatment link is claimed.

Page references identify the supplied PDF; paragraph references identify the judgment unless stated otherwise.

Identified source links

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