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2016 (1) TMI 233 - PUNJAB AND HARYANA HIGH COURT

2016 (1) TMI 233 - PUNJAB AND HARYANA HIGH COURT - TMI - Entitlement to 50% of the depreciation only on the plant and machinery in the Picture Tube Division at Pitampur (MP) - CIT(A) allowed 100% claim - Held that:- In the present appeal, admittedly the machinery has been purchased in an earlier assessment year but during the previous year under consideration, it has been used for a period less than 180 days. As the language of the third proviso is explicit and unambiguous, the only interpretati .....

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the same assessee with the profit of eligible profit making units - Held that:- As decided in Bajaj Motors P.Limited vs. Commissioner 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 KUMA .....

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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 machinery and Cylinders in respect of Picture and Tube Division at Pitampura (MP) as against 50% of prescribed rates of depreciation, restricted by the AO by invoking the third proviso to Section 32(1) (ii) of t .....

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e noticed. The assessee company claimed deduction under section 80HH and 80I of the Act at ₹ 12097161/- and ₹ 1,40,34,259/- respectively. During the course of assessment proceedings, it was noticed by the Assessing Officer that the assessee company had six industrial units and deduction under sections 80HH and 80I of the Act was claimed on the profits of eligible profit earning units without adjustment of the losses incurred in the other units. The Assessing Officer rejected the clai .....

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te of 50% of the normal depreciation. Aggrieved by the order, the assessee filed appeal before the Commissioner of Income Tax (Appeals) [CIT(A)]. Vide order dated 20.7.1995, Annexure A.II the CIT(A) partly allowed the appeal. The revenue went in appeal before the Tribunal. Vide order dated 8.3.2002, Annexure A.III the Tribunal dismissed the appeal. Hence the instant appeal by the revenue. 3. We have heard learned counsel for the parties. 4. Learned counsel for the revenue relied upon judgment of .....

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n 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 o .....

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1 ITR 471 (Andhra Pradesh). Learned counsel for the assessee also relies upon CIT Vs. Devidayal Rolling Refineries Pvt. Ltd. (1984)40 CTR 191 (Bombay). 6. Learned counsel for the revenue, however, submits that component of benefit under Section 80-I has to be worked out with reference to total income after excluding the loss therefrom as provided under Section 80AB read with Sections 80A(2) and 80B(5).Reliance has been placed upon the following judgments:- (i) Distributors (Baroda) P. Ltd. Vs. U .....

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08 ( Bombay). 7. In order to appreciate the controversy, it would be appropriate to refer to the following provisions:- 80A(1) xx xx xx 80A(2) The aggregate amount of the deductions under this Chapter shall not, in any case, exceed the gross total income of the assessee. xxx xxx xxx 80AB Where any deduction is required to be made or allowed under any section included in this Chapter under the heading C-Deductions in respect of certain incomes in respect of any income of the nature specified in t .....

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xx xxx 80B(5) gross total income means the total income computed in accordance with the provisions of this Act, before making any deduction under this chapter. xxx 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 .....

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ve 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 not refer to Section 80AB. As observed by Madras High Court in Macmillan Co.of India Ltd. if component of deduction under Section 80-I is to refer total income w .....

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y the assessee in the manufacture of alloy Steels (a priority industry) could not be set off against the profits of the manufacture of another product. The assessment year considered in that case was the year 1966-67. The Court, in the course of its judgment did not refer to Section 80AB of the Act and did not consider the effect of that provision as to whether it was declaratory or not, while the question was specifically considered by the Supreme Court in the case of H.H.Sir Rama Varma V,CIT ( .....

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ion Bench of the Apex Court in the case of Distributors (Baroda) P. Ltd. Vs. Union of India (1985)155 ITR 120 in which the Court while upholding the constitutional validity of section 80AA also in Chapter VIA of the Income-tax Act, held that section 80AA is merely declaratory of the law as it always was since April 1, 1968. Section 80AB similarly must be held to be declaratory of the law as it always was since April 1, 1981. It has been so held by the Apex Court in the case of H.H.Sir Rama Varma .....

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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 .....

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s cost was brought forward in the books of account for the previous year 1991-92 relating to assessment year 1992-93. In the previous year 1991-92, this unit worked for less than 180 days. The appellant claimed full depreciation at the rate applicable to such plant and machinery. The Assessing officer did not accept the explanation of the assessee and curtailed the depreciation to 50% on the ground that the plant and machinery was used for a period less than 180 days during the previous year in .....

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numbered as proviso No.3) the salient features of which are: i) That the asset should be acquired in the previous year and put to use for the purposes of business or profession in that previous year. ii)That the period of suer should be for a period of less than one hundred and eighty days in the previous year. iii)That if (i) and (ii) apply then the depreciation in respect of such asset shall be restricted to fifty percent of the amount calculated at the percentage prescribed in the case of blo .....

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iod of less than 180 days. It is well accepted proposition that if the words of a statute are unambiguous and not capable of any other meaning then the provision should be so construed as to avoid redundancy or surplusage. Legislature is deemed not to waste its 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 an .....

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ur 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 income tax Act that they have come to the conc .....

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is not expressed, it cannot import provisions in the statute so as to supply any assumed deficiency. Reference was invited to the repeated observations of Rowaltte J. In Cape Brandy Syndicate vs. Inland Revenue Commissioners (1921) 1 KB 64 (KB) at page 71: .....in a taxing Act one has to look merely as what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in nothing is to be implied. One can only loo .....

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words used in the statutes. The maxim is that taxing Act must be construed strictly. The scope of a fiscal provision cannot be enlarged by creating a fiction. As held by the Hon'ble Supreme Court in CED vs.A Kupu Swamy 108 ITR 439 (SC) and Yashwant Rao vs. CWT 61 ITR 444 (SC) in construing a taxing Act the court is not justified in straining the language in order to hold a subject liable to tax. It is submitted that it is not necessary to burden the submission by multiplying the authorities .....

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t 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 as .....

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