TMI Blog2014 (5) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... ned. The income which qualifies for deductions u/s 80C to 80U has to be first included in the total income of the assessee - deduction is to be allowed in accordance with and subject to the fulfillment of the conditions of the respective provisions - This is also subject to Section 80AB and 80A(1) and (2). Chapter VIA does not postulate or state that the incomes which qualify for the said deduction will be excluded and not form part of the total income - They form part of the total income but are allowed as a deduction and reduced – Decided against Revenue. - TAX APPEAL NO. 271 of 2014 - - - Dated:- 31-3-2014 - MR. AKIL KURESHI AND MS SONIA GOKANI, JJ. FOR THE APPELLANT : MR.VARUN K.PATEL, ADVOCATE ORAL ORDER (PER : HONOURABLE MS JUSTICE SONIA GOKANI) 1. Revenue has preferred this appeal aggrieved by the order of the Income Tax Appellate Tribunal ( the Tribunal for short) dated 30.8.2013 raising following substantial questions of law for our consideration:- (i) Whether in facts and circumstances of the case, the learned ITAT has erred in law in confirming the order of CIT(A) deleting the addition of Rs.87,39,536/- made by the assessing off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssatisfied Revenue. The Tribunal placed reliance on the decision of ITAT Chennai Bench Tamil Nadu Silk Producers Federation Ltd. reported in 105 ITD 623, wherein it has been held that provisions of section 14A cannot be applied to the provisions of Chapter VIA where the deductions are to be made in computing the total income and the same cannot be compared with the exempted income, which does not form part of the total income as provided in Chapter III. The Tribunal also took into account that the provisions of section 14A when introduced retrospectively for the purpose of computing the total income under chapter IV and no deduction could be allowed in respect of the expenditure incurred by the assessee in relation to such exempted income, provisions of section Chapter VI-A does not speak about deduction to be made as per provisions of section 6A even though as a result of such deduction taxable income is reduced wholly or partially. 5. Having noted such decision and discussion of CIT(Appeals), the Tribunal held thus:- 4. With this brief background, we have heard both the sides. Our attention has been drawn on the balance sheet of the assessee drawn as on 31st of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome under this Act in accordance with such method as may be prescribed, if the Assessing Officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act. (3) The provisions of sub-section(2) shall also apply in relation to a case where an assessee claims that no expenditure has been incurred by him in relation to income which does not form part of the total income under this Act: Provided that nothing contained in this section shall empower the Assessing Officer either to reassess under section 147 or pass an order enhancing the assessment or reducing a refund already made or otherwise increasing the liability of the assessee under section 154, for any assessment year beginning on or before the 1st day of April, 2001. 7. Question to be addressed is as to whether section 14A would apply to provision of Chapter VIA. Provision of section 14A when examined, it operates in respect of the income not forming part of the total income. It could be noted that provisions of Chapter VIA (sections 80A to 80U) refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide. Similarly income of resident but not ordinary resident or nonresident, are computed in accordance with Section 5 Chapter II, which forms the basis of Charge. Secondly, Chapter III with the heading Incomes not included in the total income , comprises of Sections 10 to 13 and these incomes are not included in total income but some exemptions are only partial and not total. Thirdly, even in case of income, profit and gains included for arriving at the total income, the entire income is not liable to tax. Deductions as stipulated in Chapter IV can apply, e.g.. Sections 34, 35A and 35B etc. Even in Chapter VI, deductions for set off or carry forward of loss is allowed. Fourthly and lastly, certain deductions were permissible under Chapter VII and Chapter VIII and which had been substantial or partly replaced and were placed under Chapter VI-A. These were deductions which were reduced from the income computed in accordance with the earlier provisions/Chapters of the Act. These deductions were made in the computation of total income and, therefore, definition of gross total income , which was/is arrived at without reference to the deduction allowable under Chapter VI-A, was introdu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urged (though it was not specifically argued by the Revenue) that in case of complete or entire deduction of the gross amount, Section 14A will be applicable, and Section 14A will not apply in case only the net amount (as stipulated in several Sections in Chapter VIA of the Act) is allowable as a deduction. There will be a fallacy in this argument. Even were partial or net amount is to be allowed as a deduction, the figure can be minus or in a loss. Logically, as a squiter, it will follow that in case the assessee has a negative/minus figure as per the computation made any of the provisions of Chapter VIA, the expenditure incurred cannot allowable under Section 37 of the Act, in view of Section 14A. The said position cannot be accepted. Income will include negative income or a loss. The corollary is that the entire income is included under the provisions of the Act by firstly including the entire receipts or incomes as stipulated in the charging section but after excluding the income stipulated in Chapter III. Thereafter, total income is computed under the Act by applying provisions of Chapter IV, V and VI. From this income, deductions are permitted and allowed in terms of Chapter ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
