TMI Blog2015 (3) TMI 312X X X X Extracts X X X X X X X X Extracts X X X X ..... a precedence to the provision of sections 72(2) & 73(3), which are inapplicable in the present case in-asmuch as there is no brought forward business loss. There is no occasion or need for the set off of unabsorbed deprecation against income assessable under other heads of income, i.e., under Chapters IV-C and IV-F, as the assessee claims or does. How, for instance, s. 70 come into play without first determining the income assessable u/s. 28, and which would only be after giving effect to the provision of s. 32. The charge of depreciation u/s.32, it must be appreciated, is one, single charge, i.e., irrespective of the different sources of income where-under it may arise and, accordingly, would, in terms of section 32(1) r/w s. 32(2), allowable under the income assessable u/s.28, which per section 29 is to be computed in accordance with the provisions contained in sections 30 to 43D. The provision of section 32(2) itself does not admit of such a course in-as-much as the brought forward depreciation claim merges with the current year’s depreciation, so that it is a single charge, to be allowed to the extent of the available profit. The profit of Units B-2 and B-3, therefore, canno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,634,094 (B) Rent from Rap Media 600,000 Less: 30% Repairs 180,000 2,054,094 420,000 Income from other sources (Personal a/c.) Interest received from Rap Media Ltd. 3,879,654 Interest paid to the Bank on loan taken (2,437,434) 1,442,220 Gross total income 11,287,196 Less set off against carry forward depreciation 7,507,162 Net taxable income 3,780,034 Less: Deduction under Chapter VI-A Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f income (Table 1) being the GTI (defined u/s. 80B(5)) and, further, of the net income as per the said computation being the net taxable or the total income under the Act. On being further enquired about any decision by any hon ble high court or supreme court that would cover the assessee s case, he answered that the afore-cited decisions are the only two decisions to his notice, and on which therefore he places reliance. The Revenue s case 4. In the view of the Revenue, the income of the eligible undertakings, being the TI unit and Royal Energy Unit No.1, as included in the GTI, cannot exceed ₹ 2,83,720/-, i.e., the amount assessable u/s.28 (Rs.77,90,882 - ₹ 75,07,162). Further, this would be irrespective of whether the brought forward unabsorbed depreciation of ₹ 75.07 lacs is in respect of the eligible or the non-eligible undertakings. The assessee, by claiming the deduction at ₹ 37.80 lacs, is in fact claiming deduction u/s.80-IA on the income from house property (Rs. 20.54 lacs) and income from other sources (Rs. 14.42 lacs), and which surely cannot be. This sums up the Revenue s case. Discussion and findings 5. We have heard the parties ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed from such business for ten consecutive assessment years. [emphasis, ours] Further, as explained in Synco Industries Ltd. vs. Assessing Officer [2002] 254 ITR 608 (Bom), followed in and applied by the tribunal in Hercules Hoists Ltd. (supra), section 80-IA(3) (4) (i.e., the corresponding provisions of s. 80I) only describes the qualifying conditions to be fulfilled for the applicability of the provision and, thus, deduction u/s. 80-IA(1), under which only the deduction is to be allowed. This leads us to GTI, defined in s. 80-B(5), reading as under: Chapter VIA DEDUCTIONS TO BE MADE IN COMPUTING TOTAL INCOME A- General Definitions. 80B. In this Chapter- (1) (5) gross total income means the total income computed in accordance with the provisions of this Act, before making any deduction under this Chapter; 5.2 To compute GTI, income is therefore to be worked out in accordance with the provisions of the Act. Firstly, income from any source is to be computed following and applying the computational provisions of the relevant head of income. It is then aggregated for the different sources falling under the relevant head of income, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (24,37,434) 14,42,220 Gross Total Income 37,80,034 Net taxable income 3,780,034 The assessee s manner of computing GTI (Table 1), though mathematically leading to the same result, i.e., in terms of net taxable income, is incorrect and not in conformity with either the terms of the provisions or the scheme of the Act. There is, in fact, no scope for any vacillation; the same being basic to the scheme of the Act, with the apex court in Synco Industries Ltd. (reported at [2008] 299 ITR 444 (SC)), in fact affirming the decision by the hon ble jurisdictional high court explaining the manner in which the GTI is to be computed, so that independent of the provision of s. 80-I(6) (or s. 80-IA(5)), all other applicable provisions, including ss. 32(2) s. 72, would apply in computing such income. Rather, we observe a complete unanimity of judicial view, and toward which we may refer to some of the decisions by the ape ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... included in GTI, is ₹ 2.84 lacs, the income of the assessee s eligible undertakings/business cannot exceed the said sum. The balance GTI consists of income from house property and income from other sources , at ₹ 20.54 lacs and ₹ 14.42 lacs respectively. We are unable to see as to how could there at all be any different view in the matter. Even though otherwise apparent from the various computing and aggregating provisions of the Act, section 80AB specifically provides for the same, causing to remove any ambiguity or doubt in the matter. It unequivocally provides that only the income of a particular nature as specified in a particular deduction provision, computed in accordance with the provisions of the Act, i.e., prior to allowing any deduction under Chapter VI-A, shall alone be deemed to be the income of that nature derived or received by the assessee which is included in the GTI. In fact, the apex court has time and again, as in IPCA Laboratory Ltd. v. CIT [2004] 266 ITR 521 (SC), emphasized the primacy of sections 80A, 80AB and 80B(5) in computing the deductions under Chapter VI-A of the Act. 5.3 Going by the assessee s claim, the GTI would consist of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Unit A Rs.39,03,043/- Unit B-1 Rs.36,333/- Unit B-2 (#) (Rs.28,81,548/-) Unit B-3 (#) (Rs.7,74,110/-) Rs.2,83,720/- Income from other sources (Head C) Source 1 Rs.14,42,220/- Rs.14,42,220/- GTI Rs.37,80,034/- (*) As per the break-up of the brought forward depreciation u/s.32(2) of ₹ 75,07,162/-, supplied by the assessee, subject to the A.O. s verification. (#) figures in bracket represents negative figures. In this manner, it would be possible to contend that the income of Unit-A, as included in the GTI, is ₹ 39.03 lacs, which being higher than the GTI (Rs.37.80 lacs), the deduction qua the profit of that unit be limited to the latter sum. The same has no basis in law. The provision of section 32(2) itself does not admit of such a course in-as-much as the b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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