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2022 (5) TMI 510 - AT - Income TaxDeduction u/s.80IC on the profits of Roorkee undertaking - Whether deduction u/s.80IC is required to be restricted to the amount of `gross total income’ ? - HELD THAT:- The total amount of deductions under the Chapter VIA cannot breach the amount of gross total income, which, in turn, means the total income computed in accordance with the provisions of the Act immediately before making any deductions under this Chapter. Thus, the procedure is to compute head-wise income under Chapter IV; club incomes of other persons in the assessee’s total income as per Chapter V; then apply the provisions of set off and carry forward as per Chapter VI, so as to reach the amount of gross total income. To put it simply, the amount of gross total income is the total income of the assessee immediately before the claim of deductions under Chapter VIA of the Act. Going with the prescription of section 80A(2) of the Act, if the gross total income is more than the aggregate amount of deductions under Chapter VI-A, then such total amount of deductions is reduced from it to find out the total income. If however, the aggregate amount of deductions under this Chapter happens to be more than the gross total income, then such aggregate amount of deductions gets restricted to the amount of the gross total income with the effect that the total income is reduced to Nil and is not converted into loss so as to allow carry forward of the amount of deductions under this Chapter to the next year. The Hon’ble Supreme Court in M/s. Synco Industries Ltd. Vs. AO and another [2008 (3) TMI 13 - SUPREME COURT] has also laid down to this extent. Adverting to the facts of the instant case, it is seen that the assessee’s final gross total income was Rs.3,11,49,011/-. Thus, the total amount of deductions under Chapter VI could not have breached the amount of gross total income. The authorities have rightly restricted the amount of deduction u/s 80IC to the extent of gross total income computed at Rs.3.11 crore. The ld. AR was fair enough to accept this position against the assessee. The ground is thus dismissed. Deduction u/s.80IC be allowed in the computation of book profit u/s.115JB of the Act in the light of sub-section (5) thereto - HELD THAT:- It is clear that for the purpose of calculation of tax liability u/s.115JB of the Act, there is no scope for reducing book profit by the amount of deduction u/s.80IC. The Mumbai Tribunal in Neha Home Builders [2018 (10) TMI 922 - ITAT MUMBAI] has held that deduction u/s.80IC is permissible in computing book profit u/s.115JB of the Act. Unfortunately, the above referred judgments of the Hon’ble Guwahati [2009 (3) TMI 511 - GAUHATI HIGH COURT], Uttarakhand [2010 (11) TMI 671 - UTTARKHAND HIGH COURT] and Karnataka High Courts [2013 (6) TMI 310 - KARNATAKA HIGH COURT], which were prevailing on the date of hearing by the Mumbai Bench, were not brought to its notice. In view of the fact that four consecutive High Courts have disentitled the assesses to reduce the amount of deduction u/s.80IB/80IC in the computation of book-profit u/s.115JB of the Act, and not even a single divergent judgment of any Hon’ble High Court has been brought to our notice, there is no scope for taking a contrary view. Ex consequenti, the Tribunal, which is an inferior authority, is incapacitated to lay down differently. Reverting to the language of section 115JB(5) making all other provisions of the Act applicable but by saving section 115JB and sub-section (1) of section 115JB containing a non obstante clause qua any other provision of the Act in the manner of computation of income tax liability of a company at 18.5% of its book profit and because of deeming provision in this sub-section regarding the computation of book profit and further Explanation 1 defining book profit in an exhaustive manner, we hold that there is no merit in the contention of the ld. AR in seeking reduction of the book profit u/s 115JB with the amount of deduction u/s 80IC of the Act. The additional ground, therefore, fails.
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