CAMBAY ELECTRIC SUPPLY INDUSTRIAL CO. LTD. vs THE COMMISSIONER OF INCOME TAX, GUJARAT-IIAHMEDABAD (AND VI

The Supreme Court ruled that under Section 80E(1) of the Income Tax Act, 1961, the assessee company is entitled to claim an 8% deduction on profits attributable to the business of electricity generation and distribution, including profits from the sale of old machinery under Section 41(2). The Court upheld the Tribunal's decision that unabsorbed depreciation and development rebate should not be deducted when computing profits for the purpose of Section 80E(1). Consequently, the Court affirmed the High Court's ruling in favor of the assessee, allowing the deduction as claimed.