TMI Blog2012 (11) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... revenue's appeal is allowed. Deduction u/s. 80-IA - Held that:- AO has computed deduction u/s 80-IA on the amount of Gross total income as reduced by the deduction given u/s 80HHD whereas a combined reading of the provisions of sub sec. 7 of sec. 80-IA and sec. 80AB would suggest that the computation of deduction u/s 80-IA made by the AO would be correct only if the Gross total income consisted of, only income of that nature which is eligible for deduction u/s 80-IA. The aggregate amount of deductions under chapter VIA shall be restricted to the amount of Gross total income - as the break up details of the Gross total income is not borne out of record. Hence, the issue of computation of deduction u/s 80-IA requires fresh examination - in favour of assessee by way of remand. Interest u/s. 234C on the tax payable u/s. 115JA - Held that:- As decided in Jtc. I. T., Mumbai Versus M/s Rolta India Ltd. [2011 (1) TMI 5 - SUPREME COURT OF INDIA] the assessee is liable to pay interest for short payment of advance tax even on the income computed u/s 115JB - against assessee. Deduction of carry forward depreciation while computing book profit u/s 115JB - Held that:- First of all, cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... do not find any infirmity in the decision of the Ld. CIT(A) in upholding the re-opening of the assessment. 3. The next issue in this year relates to the deduction claimed u/s. 80HHD of the Act. The facts borne out of the record are that the assessee was operating two hotel units, viz., Hotel named at Bangaram Island and another hotel named Coconut lagoon. There is no dispute that both the units are eligible for deduction u/s 80HHD of the Act. It appears that the assessee claimed deduction u/s. 80 HHD of the Act in respect of each of the unit separately. However, the Assessing Officer aggregated the results of both the units and allowed deduction u/s. 80HHD of the Act on the combined profit. The Ld. CIT(A) also upheld the method followed by the Assessing Officer. Hence, the assessee is in appeal before us. 4. Both the parties has agreed that the impugned issue has been decided against the assessee by the Hon'ble Jurisdictional High Court of Kerala in the assessee's own case reported in (2007) 294 ITR 67. We have gone through the said decision and notice that the very same issue was considered by the Hon'ble Jurisdictional High Court in the assessee's own case relating to the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igible for deduction even if the Gross total income results in a lesser figure or loss, since sub section 5 of sec. 80-IA overrides any other provisions of the Act including sec. 80A(2) and sec. 80AB of the Act. Thus, according to the assessee, the amount of deduction computed u/s 80-IA is eligible for deduction even if there is no Gross Total income or the Gross Total income results in a minus figure. On the contrary, the Ld D.R strongly supported the order of Ld CIT(A) on this issue. 7. We have heard the rival contentions on this issue. The provisions of sec. 80A(2) and sec. 80AB and sub sec. 7 of sec. 80-IA are relevant here. Hence, we extract the relevant provisions for the sake of convenience. 80A(2) : The aggregate amount of the deductions under this chapter* shall not, in any case, exceed the gross total income of the assessee. (* Chapter VI-A, which includes deductions specified in sec. 80C to 80VV, including deduction u/s 80-IA). 80AB:- Where any deduction is required to be made or allowed under any section included in this chapter under the heading "C Deductions in respect of certain incomes"** in respect of any income of the nature specified in that section whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IA, which is included in the Gross Total Income, shall be deemed to be the amount of income of that nature derived or received by the assessee for the purpose of computing deduction u/s 80-IA of the Act, i.e., the amount of deduction u/s 80-IA shall be computed only with reference to the amount of income from eligible business, which is included in the "Gross Total Income". This provision shall have application if the profits and gains of eligible business computed under sec. 80-IA get reduced while including the same in the Gross total income. 9. Accordingly, in our view, a combined reading of the provisions of sub sec. 7 of sec. 80-IA and sec. 80AB would suggest that (a) the "Profits and gains of an eligible business", to which the provisions of sec. 80-IA(1) shall apply, shall be restricted to the amount of income of that nature that is included in the Gross total income and (b) the quantum of deduction shall be computed on such profit, as if such eligible business were the only source of income of the assessee. The question whether the quantum of deduction so computed is fully eligible for deduction or not has to be determined by considering the provisions of sub sec. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT v. Rolta India Ltd., 330 ITR 470, in which it has been held that the assessee is liable to pay interest for short payment of advance tax even on the income computed u/s 115JB of the Act. Accordingly we uphold the order of the Ld. CIT(A) on this issue. 12. We shall now take up the appeal filed by the assessee for the assessment year 2000-2001. The assessee is assailing the decision of the Ld CIT(A) in confirming the computation of deduction made u/s 80HHD and sec. 80IB of the Act. We notice that the assessee has claimed deduction u/s 80IB of the Act in this year, where as in the immediately preceding year, it had claimed deduction u/s 80-IA of the Act for the very same source of income from hotel business. No explanation is available on record in respect of this shift from sec. 80-IA to sec. 80IB. Be that as it may, it is an admitted fact that the Gross total income returned by the assessee resulted in negative figure and the AO has also computed the Gross total income, after making certain disallowances and adjustments, at (-) Rs.2.15 crores. In view of the said loss, the AO denied the deduction claimed by the assessee u/s 80HHD as well as u/s 80IB of the Act. The said order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the AO. It was also contended that there should not be simultaneous action by the AO under sec. 154 and 147 by placing reliance on the decision of Hon'ble Gujarat High Court in the case reported in 245 ITR 775. The Ld CIT(A) was convinced with the said contentions and accordingly held that the reopening of assessment is void ab initio. Hence, the Ld CIT(A) did not adjudicate the grounds raised on merits. Aggrieved, the revenue has filed appeal before us. On an abundant caution, the assessee has also filed appeal on merits of the case, which were not adjudicated by the Ld CIT(A). 16. We have heard the parties and also perused the record. First of all, we notice that there is no simultaneous action u/s 154 and also u/s 147 of the Act, as contended by the assessee. We have already noticed that the AO has specifically stated in the assessment order that the proceedings initiated u/s 154/155 has got merged with the reassessment proceedings. Secondly, the return of filed by the assessee was processed u/s 143(1) and subsequently the AO has issued notice u/s 148 of the Act within four years from the end of the assessment year. Hence, as per the decision of the Hon'ble Supreme Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omputed under the income tax provisions from the book profit computed u/s 115JB of the Act. The AO further noticed that the books of account did not show any brought forward loss. Since the brought forward loss as per books of account was NIL, the AO held that the assessee is not eligible for deduction of any amount as per clause (iii) of Explanation 1 to sec. 115JB of the Act. However, the Ld CIT(A) directed the AO to allow deduction of carry forward depreciation as claimed by the assessee with the observation that the AO has disallowed the claim without assigning any reason. We notice that the Ld CIT(A) did not give any reason or finding in support of his decision. 20. However, we find merit in the observations made by the AO. First of all, clause (iii) of Explanation 1 to sec. 115JB, which is extracted above mandates that the deduction of amount of loss brought forward or unabsorbed depreciation whichever is less should be as per books of account. Hence the assessee was wrong in law in claiming deduction of carry forward depreciation, which was determined under the income tax Act. Secondly, the AO has given a specific finding that there is no carry forward loss as per the book ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ility of deduction u/s 80HHD of the Act has since been settled by the Hon'ble High Court of Kerala in the assessee's own case reported in 294 ITR 67. We have also discussed about this issue in the preceding paragraphs. Accordingly, we modify the order of Ld CIT(A) on this issue and direct the AO to consider the eligibility of deduction in accordance with law and also by following the binding decision of jurisdictional High Court in the assessee's own case referred supra. 27. The next issue relates to the validity of allowing deduction of carry forward depreciation while computing book profit u/s 115JB of the Act. We notice that the AO has computed the income under normal provisions of the Act, since it exceeded the book profit. Hence the issue raised by the revenue is academic in nature. In any case, we have dealt with this issue while adjudicating the appeal of the revenue for the assessment year 2003-04 in the preceding paragraphs, which shall apply in this year also. 28. In the result, the appeal filed by the assessee for the assessment year 1999- 2000 is treated as partly allowed. The appeals of the assessee for the assessment years 2000-01 and 2001-02 are dismissed. The ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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