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TMI Blog2010 (2) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... he Income-tax Act, 1961 (hereinafter referred to as "the said Act"). The Assessing Officer, while computing the deduction allowable to the assessee, set off the losses of one unit against the profits of the other unit and, thereafter, sought to compute the deduction. The Commissioner of Income-tax (Appeals) also took the same stand as the Assessing Officer. The plea of the assessee before the Income-tax Appellate Tribunal was that the two units are independent units and only the profit making unit should be considered eligible for the purposes of computing the deduction under section 80-I(6) read with the provisions of section 80-1(6). The Tribunal accepted the plea of the assessee and by the said order dated September 28, 2007, pertaining to the assessment years 1992-93, 1993-94 held as under: "6. We have carefully considered the relevant facts. The learned Commissioner of Income-tax (Appeals) has not addressed the issue in its proper perspective. Whether two businesses are one and the same business is not relevant to arrive at a finding as to whether the two units are independent units. While computing the income under the head 'Profits and against of business' under section 28 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Income-tax Act, 1961?" 5. Since the issue involved is purely legal, the counsel for the parties agreed that the matter may be disposed of at this stage itself without the requirement of filing any paper book. We have, therefore, heard the counsel for the parties at length on the aforesaid question. 6. The learned counsel for the appellant submitted that the question of adjustment/setting off of the loss of one unit as against the profit of the other unit stands covered by the decision of the Supreme Court in the case of Synco Industries Ltd. v. Assessing Officer [2008] 299 ITR 444. The learned counsel for the appellant, however, fairly submitted that there is a decision of a Division Bench of this court in the case of CIT v. Dewan Kraft System P. Ltd. [ 2008] 297 ITR 305 (Delhi) which has considered the pari materia provisions of section 80-IA(7) of the said Act and has held against the Revenue. The learned counsel submits that though the decision of the Delhi High Court is against him, the later decision of the Supreme Court in the case of Synco Industries Ltd. [2008] 299 ITR 444 is clearly in his favour and, therefore, the question ought to be answered in favour of the Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fines gross total income, is as follows: "(5) 'gross total income' means the total income computed in accordance with the provisions of this Act, before making any deduction under this Chapter." 11. A plain reading of the said provisions makes it clear that gross total income referred to in section 80-I has to be computed in accordance with the provisions of the said Act before making any deduction under Chapter VI-A. It is, therefore, clear that while computing the gross total income, the deductions referred to in Chapter VI-A, which includes section 80-I are not to be considered. The gross total income of the assessee has to be computed after making all other adjustments of losses and carry forward losses ignoring the deductions available under Chapter VI-A. There is no dispute with this proposition. 12. It is further clear from a plain reading of the aforesaid provisions that the deduction under section 80-I is to be made in case the gross total income includes any profits and gains derived from an industrial undertaking, etc., in case such profits and gains are included in the gross total income of the assessee. The deduction in the case of a company, in view of the proviso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d upon by the learned counsel for the appellant. On going through the entire decision, we find that the Supreme Court was primarily concerned with the question as to whether any deduction could be allowed under Chapter VI-A if the gross total income was "nil". It is in that context that the Supreme Court considered the concept of gross total income and came to the conclusion, following its earlier decision in CIT v. Kotagiri Industrial Co-operative Tea Factory Ltd. [1997] 224 ITR 604 (SC), that the gross total income has to be computed in accordance with the Act after adjusting the losses, etc., and that, if the gross total income so determined is positive, then the question of allowing deductions under Chapter VI-A would arise, but not otherwise. While doing so, the Supreme Court further made it clear that the gross total income must be determined by setting off business losses of earlier years before allowing deduction under Chapter VI-A and that if the resultant income is "nil", then the assessee cannot claim any deduction under Chapter VI-A. While corning to the aforesaid conclusion, the Supreme Court was also confronted with an argument which had been raised on the basis of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of deduction whereas section 80-I(1) deals with the treatment to be given to such deductions in order to arrive at the total income of the assessee and, therefore, while interpreting section 80-I(1), which also refers to gross total income one has to read the expression 'gross total income' as defined in section 80B(5). Therefore, this court is of the opinion that the High Court was justified in holding that the loss from the oil division was required to be adjusted before determining the gross total income and as the gross total income was 'nil' the assessee was not entitled to claim deduction under Chapter VI-A which includes section 80-I also. 14. The proposition of law, emerging from the above discussion is that the gross total income of the assessee has first got to be determined after adjusting losses, etc., and if the gross total income of the assessee is 'nil' the assessee would not be entitled to deductions under Chapter VI-A of the Act." (underlining added) 15. From the above extract, it is apparent that the Supreme Court did not at all hold that while computing the deduction under section 80-I(6), the loss of one eligible industrial undertaking is to be set off ag ..... X X X X Extracts X X X X X X X X Extracts X X X X
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