Tax Management India. Com
Law and Practice  :  Digital eBook
Research is most exciting & rewarding


  TMI - Tax Management India. Com
Follow us:
  Facebook   Twitter   Linkedin   Telegram

TMI Blog

Home

2016 (1) TMI 233

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ssioner of Income Tax [2011 (3) TMI 475 - PUNJAB AND HARYANA HIGH COURT] in computing the quantum of deduction under section 80I of the Act, out of the profits and gains of unit No.1, the loss incurred in another independent unit No.2 should be set off against the profits of unit No.1. - Decided in favour of revenue - ITA No.291 of 2004 - - - Dated:- 24-9-2015 - MR. AJAY KUMAR MITTAL AND MR. RAMENDRA JAIN, JJ. For The Appellant : Mr. Tajender K.Joshi, Advocate For The Respondent : Mr. Anand Chhibbar, Sr. Advocate with Ms. Riya Bansal, Advocate Ajay Kumar Mittal,J. 1. This appeal has been preferred by the revenue under Section 260A of the Income Tax Act, 1961 (in short, the Act ) against the order dated 8.3.2002, Annexure A.III passed by the income Tax Appellate Tribunal, Delhi Bench 'B' in ITA No.7370/Del./95 for the assessment year 1992-93. This appeal was admitted on 9.8.2007 to consider following substantial questions of law:- i) Whether on the facts and in the circumstances of the case, the Hon'ble ITAT was right in law in upholding the decision of CIT(A) who directed the AO to allow depreciation at the prescribed rates on plant and machi .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... revenue and against the assessee. In Bajaj Motors P. Limited's case (supra), identical issue was considered by this Court. In the said case, the assessee manufactured automobile parts at Gurgaon. It was entitled to deduction under section 80-I of the Act. The Assessing Officer took into account loss of the assessee in another manufacturing unit. It was held that the benefit under section 80I of the Act was referable to total income which was required to be worked out after taking into account the loss, if any. This view was upheld by the CIT(A) as well as the Tribunal. This Court while dismissing the appeal of the assessee held that in computing the quantum of deduction under section 80I of the Act, out of the profits and gains of unit No.1, the loss incurred in another independent unit No.2 should be set off against the profits of unit No.1. It was recorded as under:- 5. Learned counsel for the assessee submits that for computing the benefit admissible under Section 80-I, loss in another unit could not be taken into account. Reliance has been placed on judgment of Hon'ble Supreme Court in CIT Vs. Canara Workshops Pvt. Ltd. (1986) 161 ITR 320 (SC) which has bee .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... xxx xxx 80-I (1) Where the gross total income of an assessee includes any profits and gains derived from 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 this section applies, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such profits and gains of an amount equal to twenty per cent thereof: Provided that in the case of an assessee, being a company, the provisions of this sub-section shall have effect in relation to profits and gains derived from an industrial undertaking or a ship or the business of a hotel as if for the words twenty per cent , the words twenty five per cent had been substituted. 8. It is clear from the above provisions that component on which deduction is permissible under Section 80-I is gross total income which is defined in Section 80B(5) and is also referred to in Sections 80A(2) and 80AB. In Distributors (Baroda) the said provisions were so interpreted, which was also followed in H.H.Sir Rama Varma. Judgment in Canara Workshops does .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... e provisions of Section 80A(2), 80B(5) and 80AB of the Act were not considered before the Apex Court in Canara Workshops' case (supra). It may further be observed that the said judgment has been followed by Andhra Pradesh High Court in Visakha Industries Ltd's case (supra). We are unable to subscribe to the view taken by Andhra Pradesh High Court in the aforesaid decision. The provisions of Section 80AB having not been noticed in the judgments relied upon on behalf of the assessee except in Distributors (Baroda) P.Ltd. , the same are distinguishable. The question raised is decided against the assessee and in favour of the revenue. 5. Learned counsel for the respondent assessee was unable to distinguish the above said judgment. Consequently, question No.(ii) is answered in favour of the revenue and against the assessee. 6. With regard to question No.(i), the Assessing Officer held that the assessee was entitled to 50% of the depreciation only admissible on the plant and machinery in the Picture Tube Division at Pitampur (MP). The Picture Tube Division was completed in the previous year 1990-91 relevant for the assessment year 1991-92. In that year, the appe .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... words or to say anything in vain. Every part of a statute should be given as far as possible its full meaning and effect and no word should be rejected as superfluous. It cannot be assumed that the legislature used the language without any purpose. It must be presumed that the legislature has used the words in their known and ordinary signification. A further submission was filed on 14.7.1995 to the following effect: We have already referred to the relevant facts as also our submission on law to the effect that the learned Assessing Officer was not justified in curtailing the depreciation to 50% of the prescribed rate of depreciation by invoking third proviso to section 32(1)(ii). In this connection, we would like to elaborate our submission by referring to certain settled maxims on the interpretation of fiscal statutes. It has been held by the Hon'ble Apex court that in interpreting a taxing statute equitable considerations are entirely out of place (Reference CIT vs. MP Jatia AIR 1977 SC 420, Sir Hukum Chand and Manaalal Co. vs. CIT 60 ITR page 99 (SC). In the later case their lordships observed that page 103 of the report that equity has no place in constructing the .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... hird proviso to section 32(1)(ii). Since the assets were acquired in the financial year 1990- 91 (in which year they were not put into use) it was submitted that the third proviso to section 32(1)(ii) does not apply even though in the financial year 1991-92 they were used for less than 180 days. Xx xx xx xx x xxx 4.5. The third proviso uses the expression 'acquired by the assessee during the previous year. The words previous year are not preceded by the word 'any'. Since the proviso is applicable with effect from assessment year 1992-93,it is evident that it applies to the assets acquired during the previous year 1991-92, relevant to the assessment year 1992-93. It cannot apply to any asset acquired earlier tan previous year i.e. 1991-92. As the language of the third proviso is explicit and unambiguous, the only interpretation is that if the asset was acquired in the previous year 1991-92 and was used for less than 180 days in that previous year, then only the depreciation admissible could be curtailed. As in this case, the assets were acquired in the previous year i.e. 1990-91, learned Assessing Officer was not justified in curtailing the depreciation to 50%. .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

 

 

 

 

Quick Updates:Latest Updates