TMI Blog2013 (7) TMI 445X X X X Extracts X X X X X X X X Extracts X X X X ..... had incurred loss from business and had no income chargeable to tax under the head ‘income from business or profession’ sub-section (3) of section 80GGA will not apply such contention is not acceptable for the simple reason that “income” as defined u/s 2(24) is an inclusive definition and also includes loss. As decided in CIT V/s. Hara Prasad & Co. Pvt. Limited (1975 (2) TMI 2 - SUPREME Court) the words “income” or “profit and gains” should be understood as including losses also, so that, in one sense “profits and gains” represent “plus income” whereas losses represent “minus income”. Loss is negative profit. Both positive and negative profits are of revenue character. Both must enter into computation, wherever it becomes material in the same mode of the taxable income of the assessee. Also see Reliance Jute and Industries Limited V/s. CIT (1979 (10) TMI 2 - SUPREME Court) and CIT V/s. Goldcoin Health (P) Ltd. (2008 (8) TMI 5 - SUPREME COURT ). Therefore, in view of the specific bar created under sub-section (3) of section 80GGA, the assessee is not entitled to avail deduction u/s 80GGA - grounds raised by the assessee are dismissed. Deduction alternatively claimed u/s 35AC in c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3) was reopened u/s 147 of the Act by issuance of notice dated 22-2-2010 u/s 148 of the Act calling upon the assessee to submit his return of income. In response to the notice issued u/s 148 of the Act, the assessee submitted his reply stating therein that the return of income already submitted to be treated as having been filed in response to notice issued u/s 148 of the Act. During the reassessment proceedings, the Assessing Officer noted that the assessee has claimed 100% deduction u/s 80GGA of the Act on payment made to Hyderabad Eye Research Foundation, LB Prasad Marg, Banjara Hills, Hyderabad of an amount of ₹ 12 lakhs on 20-7- 2004 and ₹ 1 crore on 23-3-2005. It was further noted by the Assessing Officer that during the year under dispute the assessee has shown loss of ₹ 74,02,422/- under the head income from business or profession . The loss from business was set off against the income available under the head income from house property and income from other sources and balance loss of ₹ 13,68,323/- was claimed as carry forward of loss. The Assessing Officer on interpreting the provision contained u/s 80GGA (3) of the Act opined that in case of an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r profession, the provisions u/s 80GGA(3) are not applicable was not accepted by the CIT(A) who held that income includes loss. In this context, the CIT (A) relied upon the decision of the Hon ble Supreme Court in the case of CIT V/s. Gold Coin Health (P) Ltd. (304 ITR 308) wherein it was held that the expression income appearing in the statute in section 2(24) of the Act has been clarified to mean that it is an inclusive definition and includes losses i.e. negative profit. The CIT (A) was further of the view that from the charging provisions of the Act, it is discernible that the word income or profit or gains should be understood as including losses also so that in any sense profit or gains represent plus income whereas loss represents minus income. In other words, loss is negative profit and both positive and negative profits are of revenue nature and both enter into computation wherever it becomes material. The CIT (A) was of the view that while considering allowing of deduction u/s 80GGA one has to see whether the claimant has income from sources other than business or profession. The CIT (A) held that the intention of the Legislature in bringing out clear demarcation in r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed u/s 80GGA of the Act. The assessment order passed u/s 143(3) of the Act a copy of which is at page-7 of the paper book would reveal the fact that the Assessing Officer has simply mentioned as under:- Total income as per order u/s 154 dt. 20-10-2006 ₹ 1,98,62,950/- The assessment order passed u/s 143(3) does not reveal even semblance of enquiry by the Assessing Officer with regard to claim of deduction u/s 80GGA. No other material was submitted before us to demonstrate that the Assessing Officer had conducted any enquiry with regard to claim of deduction u/s 80GGA. When the assessee had made the claim of deduction u/s 80GGA for the first time in the revised return it was incumbent upon the Assessing Officer to properly examine the allowability of the claim made by the assessee. In view of restriction imposed under sub-section (3) of section 80GGA The Assessing Officer having not at all considered the issue or applied his mind to the claim of deduction u/s 80GGA, there was escapement of income and as such initiation of proceeding u/s 147 of the Act is valid. When the Assessing Officer has not at all examined the issue, it cannot be said that he has formed any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eduction u/s 80GGA of the Act. In support of such contention the learned AR relied upon the following decisions:- (i) CIT V/s., Kotagiri Industrial Co-operative Tea Factory Ltd. (224 ITR 604) (SC) (ii) Synco Industries Ltd. V/s. Assessing Officer (299 ITR 444 (SC) (iii) CIT V/s. Williamson Financial Services (297 ITR 17 (SC) 10. The learned Departmental Representative, on the other hand, supporting the reasoning of the first appellate authority submitted that since assessee had income which also includes loss under the head income from business of profession , no deduction u/s 80GGA can be granted in view of restriction imposed under sub-section (3) of section 80GGA. 11. We have considered the rival submissions and perused the material available on record. We have also carefully applied our mind to the decisions cited before us. Undisputedly, the assessee is carrying on business and for the year under dispute the assessee had a negative income i.e., loss from business. It is the contention of the assessee that since he had no positive income chargeable to tax, he is eligible to avail deduction u/s 80GGA of the Act. The submissions of the learned AR though appears at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 43D of the Act. Hence, the rationale behind imposing certain restriction under sub-section (3) of section 80GGA is that since the assessee having income under the head business or profession can avail deduction towards payment of any sum under various provisions contained u/s 30 to 43D of the Act while computing the income under the head business or profession , the very same deduction cannot be allowed to them u/s 80GGA which is specifically meant for assessees who do not have any income under the business or profession which in other words means an assessee who does not carry out any business or profession. Otherwise, an assessee carrying on business or profession can claim deduction both under the provisions as contained u/s 30 to 43D and again u/s 80GGA of the Act. This cannot be the intention of the legislature. It will be pertinent to mention here that the assessee, in fact, had claimed deduction u/s 35AC, in the original return while computing profit from business and profession. Subsequently however the assessee gave up its claim u/s 35AC and claimed deduction u/s 80GGA in the revised return probably to reduce the tax burden. 13. So far as the contention of the lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7, the assessee has made an alternative claim that in case deduction u/s 80GGA is not allowed to the assessee, the Assessing Officer could have allowed deduction u/s 35AC of the Act. 16. The learned AR through his written submissions submitted before us that the Assessing Officer disallowed the deduction claimed u/s 80GGA only on the ground that the assessee has income under the head profits and gains of business and profession and he has not disputed either genuineness of expenditure or its allowability otherwise, hence the Assessing Officer should have allowed such claim alternatively u/s 35AC of the Act and accordingly recomputed the loss from business. He further contended that when a deduction claimed by an assessee on a particular section is denied on the ground that he was not eligible for such relief under the said section, even in the absence of an alternate claim for the deduction under different sections, if, by the provisions of the Act is entitled for such deduction, the same should be allowed. When the Bench raised a query as to how the assessee s alternate claim can be allowed in an appeal proceeding arising out of reassessment proceedings u/s 147 of the Act, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollowing manner:- As a result of the aforesaid discussion, we find that, in proceedings under s. 147 of the Act, the ITO may bring to charge items of income which had escaped assessment other than or in additional to that item or times which have led to the issuance of the notice under s. 148 and where reassessment made under s. 147 in respect of income which has escaped tax, the ITO's jurisdiction is confined to only such income which has escaped tax or has been under assessed and does not extend to revising, reopening or reconsidering the whole assessment or permitting the assessee the reagitate questions which had been decided in the original assessment proceedings. It is only the underassessment which is set aside and not the entire assessment when reassessment proceedings are initiated. The ITO cannot make an order of reassessment inconsistent with the original order of assessment in respect of matters which are the subject matter of proceedings under s. 147. An assessee cannot resist validly initiated reassessment proceedings under this section merely by showing that other income which had been assessed originally was at too high a figure except in cases under s. 152 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. Thus, the assessee having given up its claim u/s 35AC of the Act in the revised return filed by him, the claim of deduction/s 35AC of the Act cannot be allowed on the basis of the original return. The Hon'ble Supreme Court in case of CIT V/s. Mahendra Mills (243 ITR 56) held in the following manner:- To us it appears that if the revised return is a valid return and the assessee has withdrawn the claim of depreciation, it cannot be granted relying on the original return when the assessment is based on the revised return. Therefore, on the aforesaid view of the matter, the assessee s alternate claim for deduction u/s 35AC of the Act cannot be allowed. The grounds raised are dismissed. 20. In ground Nos. 8 and 9, assessee has challenged the levy of interest u/s 234D of the Act. While making computation in the order passed u/s 143(3) read with section 147 of the Act the Assessing Officer levied interest of ₹ 14,78,824/- u/s 234D of the Act on account of excess refund granted to the assessee. 21. The learned AR submitted before us that the provisions of section 234D are applicable only in respect of regular assessments which as per the definition u/s 2 (40) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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