TMI Blog2014 (9) TMI 884X X X X Extracts X X X X X X X X Extracts X X X X ..... be made from total income, there may not be any justification to insist that it shall be the first of all the deductions - If that were to be so, the Parliament would have employed the expression gross total income u/s 80-HHC also, instead of the expression total income. When the law requires that the deduction of the amounts are required to be made from the corresponding total income, the inescapable conclusion is that the deduction must take place, at the threshold, before the left over total income referable to that activity merges in the other head, of the income of the assessee – Relying upon Commissioner of Income-Tax Versus Shirke Construction Equipment Limited [2007 (5) TMI 194 - SUPREME Court] - once the deduction is to be made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 80-HHC of the Act can be done at the threshold i.e., before deduction of unabsorbed losses or carried forward depreciation are effected. The Assessing Authority did not agree for the same and by placing reliance upon Section 80-HH of the Act, directed the deduction under Section 80-HHC at a later stage. Aggrieved by that, the respondent filed an appeal before the Commissioner of Income Tax (Appeals) III, Hyderabad. The said appeal was dismissed through order dated 27.12.1996. Thereupon, the respondent filed appeal in I.T.A.No.349/Hyd/97 and the Income Tax Appellate Tribunal, Hyderabad B Bench allowed the said appeal by order dated 21.8.2001. 4. Sri J.V. Prasad, learned counsel for the appellant, submits that Chapter VIA of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... various classes of assessees. Even while permitting deductions, extreme care is to be taken, to ensure that the assessees do not walk away with the uncovered amounts, by claiming them to be permissible deductions. Obviously, for that reason, the length of some sections exceeds the whole text of certain enactments. 7. While identification of the amount deductible is an important step, equally important, is the identification of stage at which the deduction is to be made. Deductions, by their very nature, are to be made from the income. However, under the Act, the connotation of the word income is not uniform. It is ascribed different meanings, depending on the purpose. For example, the definition of the word income, under Section 2 (24) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rising outside India shall not be deemed to be received in India within the meaning of this section by reason only of the fact that it is taken into account in a balance sheet prepared in India. Explanation 2:-- For the removal of doubts, it is hereby declared that income which has been included in the total income of a person on the basis that it has accrued or arisen or is deemed to have accrued or arisen to him shall not again be so included on the basis that it is received or deemed to be received by him in India. 9. Coming to the expression gross total income, it is indicated in sub-section (5) of Section 80-B of the Act, as under: (5) gross total income means the total income computed in accordance with the provisions of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rresponding income, the Assessing Authority objected to it and insisted that it should be done only at the end. In a way, the question as to whether the deduction must be from the total income or gross total income becomes relevant. 12. From a perusal of the definitions of the expressions gross total income and total income, it becomes clear that the gross total income is nothing but the total income, before any deductions under Chapter-VIA are made. If the Act provides for deduction of any amount from the gross total income, it is axiomatic that the deduction of that nature must take place at the first instance and thereafter, the other deductions can be made. 13. From the point of view of the assessee, the stage, at which the deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to be made from total income, there may not be any justification to insist that it shall be the first of all the deductions. If that were to be so, the Parliament would have employed the expression gross total income under Section 80-HHC also, instead of the expression total income. 16. Even if one goes by the requirement under Section 80-AB of the Act, the emphasis is to ensure that the deduction, which is referable to a particular source of income, must not cut into the other incomes. The use of the expression total income in Section 80-HHC of the Act adds strength to that. When the law requires that the deduction of the amounts are required to be made from the corresponding total income, the inescapable conclusion is that the deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
