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2013 (6) TMI 46 - HC - Income TaxSet off of carried forward losses before claiming deduction under chapter VI - Deduction u/s 80HHC - computation of deduction under section 80HHC - held that:- We reject the contention that computation of business profits for the purpose of section 80HHC(3) of the Act can only be in terms of Chapter IV and as set off or carried forward losses occurring in section 72 is in Chapter VI of the Act, cannot be factored, for the reason that computation should be in the first instance as per the provisions of the Act and, secondly, though section 72 of the Act does occur in Chapter VI, it qualifies for computation in a situation where there is carried forward unabsorbed depreciation allowance not absorbed for earlier years in terms of section 72(2) of the Act and such is the present situation. This exercise is not because of any provisions of Chapter VI-A, but by the operation of the provisions of the Act itself. Section 72(2) of the Act also contemplates that allowance which are brought forward shall be first given effect to, i.e., whatever brought forward unabsorbed depreciation allowance was there, that should be first given effect to. There can be a situation where the amount which qualifies for deduction under section 80HHC of the Act may be more than the available profits of the assessee and in view of section 80A(2) of the Act that has to be limited to the available profits, but if the method suggested by Sri Shankar, learned counsel for the appellant, is to be employed, even in such situation if the depreciation is excluded and as was sought to be done, deduction under section 80HHC of the Act is first done, the amount left over may not be sufficient to give a set off against unabsorbed depreciation of earlier years, in which event, it only amounts that the assessee is being given a benefit much more than the ceiling contemplated under section 80A of the Act. If that is so, it is an indirect way of defeating the purpose and object of section 80A(2) of the Act and, therefore, also we cannot accept the argument as the argument if accepted, it runs contrary to section 80A(2) of the Act and can defeat the very purpose of section 80A(2) of the Act. - Decided against the assessee.
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