TMI Blog2014 (10) TMI 708X X X X Extracts X X X X X X X X Extracts X X X X ..... ourse is to apply the earliest view as the succeeding ones would fall in the category of per incuriam – the order of the Tribunal is upheld – Decided against revenue. - I.T.T.A No. 124 of 2002 - - - Dated:- 10-10-2014 - L. Narasimha Reddy And T. Sunil Chowdary,JJ. For the Appellant : Sri S.R. Ashok, Senior Counsel For the Respondent: Ms. K. Mamata Chowdary JUDGMENT (Per the Hon'ble Sri Justice L. Narasimha Reddy) It is too well known that the Income Tax Act, 1961 (for short, the Act) provides for levy of tax on what is known as total income as defined under Section 10 read with Section 5 of the Act. It takes in its fold the various categories of incomes of an assessee. One of the important steps to be taken under the Act in computing the total income is the identification of deductions that are permitted and provided for under Chapters VI and VI-A. While Chapter VI provides for setting off or carry forward of amounts under different heads, Chapter VI-A provides for deduction of certain amounts from the general income of an assessee on the one hand, and deduction of certain amounts in respect of incomes of a specified category on the other hand. For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ratio in the judgments of the Supreme Court in CIT v. Canara Work Shops (Pvt.,) Ltd 161 ITR 320 and H.H Sir Ramavarma v. CIT 205 ITR 433. Feeling aggrieved by the order of the Commissioner, the Revenue filed ITA No. 706/Hyd/1997 before the Hyderabad Bench of the Income Tax Appellate Tribunal (for short, the Tribunal). The Tribunal dismissed the appeal through order dated 31-01-2002. Hence, this further appeal under Section 260A of the Act by the Revenue. The following questions are raised in the appeal: (A) Whether on the facts and in the circumstances of the case, the Appellate Tribunal is correct in law in confirming the order of CIT (A) in holding that the assessee is entitled to claim deduction U/s.80HH and 80I, independent of the set off and carry forward provisions? (B) Whether on the facts and in the circumstances of the case, the Appellate Tribunal is correct in confirming the order of the CIT(A) in holding that the deduction U/s. 80HH, and 80I can be claimed with respect to each unit, separately? Sri S.R. Ashok, learned Senior Counsel for the appellant submits that the Commissioner (Appeals) as well as the Tribunal did not take into account, the purport of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. State of Maharashtra . Reliance is also placed upon a Division Bench judgment of this Court in CIT v. Visakha Industries Ltd 251 ITR 417. It is not in dispute that the respondent became entitled to claim deductions under Section 80HH of the Act on the one hand and Section 80-I on the other hand. The entire controversy is as to whether the deductions under the respective provisions must be made from the respective incomes of the concerned sources or the aggregate of both. A subsidiary to this would be, as to whether the deductions must be effected after the carry forward loss is set off from the profits, if any, or whether such a setting off must be after the deductions are effected. On both counts, the assessing officer held against the respondent. It has already been mentioned that the respondent earned profits from an activity covered by Chapter VI-A and incurred losses in another activity covered by that very chapter. The Tribunal took into account the judgment of the Supreme Court in Canara Workshops case (1 supra). In that case, the facts were: the assessee company established a factory for manufacture of automobiles and spares. It has also established factory for man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... then apply the benefit of the deduction to the figure so obtained will be, in our opinion, to undermine the object of the section. An example will illustrate this. An industry entitled to the benefit of section 80E could have its profits wholly wiped out on adjustment against a heavy loss suffered by another industry, and thus be totally denied the relief which should have been its due by virtue of its profits. In our opinion, each industry must be considered on its own working only when adjudging its title to the deduction under section 80E. It cannot be allowed to suffer because it keeps company with some other industry in the hands of the assessee. To determine the benefit under section 80E on the basis of the net result of all the industries owned by the assessee would be, moreover, to shift the focus from the industry to the assessee. We hold that in the application of section 80E, the profits and gains earned by an industry mentioned in that section cannot be reduced by the loss suffered by any other industry or industries owned by the assessee. (emphasis supplied) Similar factual situation obtains in the case on hand. It is no doubt true that the present case is governed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etc. It was opined that the deduction under Chapter VI-A can be made only in respect of such gross total income. He has also referred to Section 80AB in support of his view. The deductions claimed by the respondent are under Section 80HH on the other hand and Section 80-I on the other hand. Both the provisions occur in heading C of Chapter VI-A. Section 80AB deals with deductions of that nature. Therefore, it needs to be seen as to whether Section 80AB is suggestive of any mechanism for clubbing of the incomes of various sources covered by heading C. A close perusal of Section 80AB extracted above, discloses that, for the purpose of deduction under a particular section, it is only the income of the nature provided for only under that section, which shall be deemed to be income derived or received by the assessee. The provision does not mandate the clubbing of the incomes from different sources. The definition of gross total income under Section 80B(5) just indicates as to what it constitutes. The total income computed in accordance with the provisions of the Act before any deductions under Chapter VI-A are made is the gross total income. The provision does not go further and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Parliament proceeded to add sub-section (6) to Section 80-I which reads: (6) Notwithstanding anything contained in any other provision of this Act, the profits and gains of an industrial undertaking or a ship or the business of a hotel [or the business of repairs to ocean-going vessels or other powered craft] to which the provisions of sub-section (1) apply shall, for the purposes of determining the quantum of deduction under sub-section (1) for the assessment year immediately succeeding the initial assessment year or any subsequent assessment year, be computed as if such industrial undertaking or ship or the business of the hotel [or the business of repairs to ocean-going vessels or other powered craft] were the only source of income of the assessee during the previous years relevant to the initial assessment year and to every subsequent assessment year up to and including the assessment year for which the determination is to be made. The underlined portion becomes relevant. If these two provisions are kept in mind, it emerges that the intention of Section 80AB is to maintain the distinction between the respective sources of income, referable to the sections contained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aken contrary to what was decided earlier by a Bench of the same strength on account of the disinclination or failure on the part of a counsel to bring to the notice of the Court the precedents that already existed. In Sundeep Kumar Bafnas case (5 supra), the Supreme Court dealt with this aspect in detail under the heading Rule of Precedent and Per Incuriam. Situations where the High Courts are faced with two judgments of the Supreme Court rendered by the Benches of the same strength on a particular principle, expressing different views was taken note of. Their Lordships held: It is often encountered in High Courts that two or more mutually irreconcilable decisions of the Supreme Court are cited at the Bar. We think that the inviolable recourse is to apply the earliest view as the succeeding ones would fall in the category of per incuriam. Though we do not intend to express the view that the judgments of the Supreme Court in Canara Workshops case (1 supra) on the one hand and Synco Industries case (3 supra) on the other hand are not reconcilable, we prefer to follow the earlier one since it spelt out the principle, in detail. This, we do even while expressing our unclinching ..... X X X X Extracts X X X X X X X X Extracts X X X X
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