TMI Blog2004 (11) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee and in favour of the Revenue - - - - - Dated:- 1-11-2004 - Judge(s) : A. M. SAPRE., ASHOK KUMAR TIWARI. JUDGMENT The judgment of the court was delivered by A.M. Sapre J.- This is an income-tax reference made at the instance of the assessee under section 256(1) of the Income-tax Act, 1961, by the Tribunal by an order passed in R.A. Nos. 18 and 19/Ind of 1996 which in turn arise out of an order passed by the Tribunal on January 12, 1996,, I.T.A. No. 507-508/Ind of 1991 to answer the following question of law by this court: "Whether, on the facts and in the circumstances of the case, the Tribunal is justified in holding that the Assessing Officer was correct in adjusting the brought forward business loss of the earlier y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee and in favour of the Revenue. At the outset, learned counsel, for the assessee fairly conceded that the question in so far as it relates to the assessment year 1986-87 is concerned the same stands answered against the assessee by the latest decision of the Supreme Court rendered in the case of IPCA Laboratory Ltd. v. Deputy CIT [2004] 266 ITR 521. It is in this case, their Lordships examined the question as to whether the assessee was entitled to deduction under section 80HHC in respect of the sum of Rs. 3.78 crores by ignoring the loss of Rs. 6.86 crores suffered in export business? The Supreme Court had a close look at section 80HHC as it existed after April 1, 1986. Their Lordships, inter alia, held that though section 80HH ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s law can be applied even for the assessment year 1985-86 when section 80HHC was differently worded. In order to answer the question referred to this court, the following sections are relevant: "1. Section 80A(1). - In computing the total income of an assessee, there shall be allowed from his gross total income, in accordance with and subject to the provisions of this Chapter, the deductions specified in sections 80C to 80U. 2. Section 80A(2).- The aggregate amount of the deductions under this Chapter shall not, in any case, exceed the gross total income of the assessee. 3. Section 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in accordance with the provisions of the Act whereas subsection (2) operates like a ceiling for claiming total deduction falling under Chapter VI-A. It says that in no case, the aggregate amount of the deductions under Chapter VI-A shall exceed the gross total income of the assessee. Then comes section 80B(5). It defines what is gross total income for the purpose of Chapter VI-A. In other words, while calculating the gross total income for the purpose of deductions falling in Chapter VI-A one is required to take into account the definition contained in section 80B(5). It means "total income computed in accordance with the provisions of this Act before making any deductions under this Chapter". Then comes, section 2(45) which defines the w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the computation in accordance with the provision of the Act. In other words, it is because of the use of the aforementioned expression, that section 72 gets attracted for determining the total income of the assessee. Even otherwise, the principles of accountancy do recognise carry forward and set off of business losses as one of the relevant facts while calculating the net profit of the current year and hence, the same cannot be ignored while examining the case of the assessee under section 80HHC. In this view of the matter we are of the considered opinion that even for the assessment year 1985-86 the case of the assessee was no different than that of the assessment year 1986-87. In other words, despite some amendment made in the wording ..... X X X X Extracts X X X X X X X X Extracts X X X X
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