TMI Blog2001 (7) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... s a unit for oil division in Sriphi District, Rajasthan. It has a chemical division at Jodhpur. The assessee claimed deductions under section 80HH and section 80-1 of the Act in respect of the aforestated two divisions. The Assessing Officer, rejected the claim of the assessee on the ground that the gross total income of the assessee, before deductions under Chapter VI-A, was "nil" and, therefore, the Assessing Officer came to the conclusion that the assessee was not entitled to the benefit of deductions under Chapter VI-A and in particular sections 80HH and 80-I. Being aggrieved, the assessee carried the matter in appeal. The order of the Assessing Officer was confirmed by the Commissioner of Income-tax (Appeals). Being aggrieved, the assessee went in appeal to the Tribunal which dismissed the appeal of the assessee and, therefore, the assessee has come by way of appeal to this court under section 260A of the Income-tax Act. It is urged on behalf of the assessee that it had earned profits from the chemical division during the assessment years in question. In respect of the oil division, the assessee had carried forward the losses and to that extent, the assessee did not claim t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rofits derived from an industrial undertaking to which the section applied, then there shall be a deduction from such profits of an amount equal to twenty per cent. In the said judgment, it was further laid down that where an undertaking/unit was entitled to relief under section 80HH and also under section 80-I, then priority shall be given first to the deduction under section 80HH. This is in view of section 80HH(9). It was also laid down that section 80HH did not contemplate carry forward of shortfall as in the case of section 80J(3). That, after April 1, 1981, section 80HH and section 80-1 both, dealt with deductions based on profits. In that matter, the court gave a hypothetical example by pointing out that if profits derived from an industrial undertaking was Rs.80 and simultaneously, if there was a loss from another unit of Rs.50, then the gross total income would be Rs.30. However, for the purposes of deductions under sections 80HH and 80-I the total deduction available would be Rs.32. To this extent, there is no conflict in the views of the Department and the assessee. However, we have taken the view that in view of section 80A(2), the deduction under Chapter VI-A is restri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was contended that sub-section (6) starts with a non obstante clause. It was, therefore, contended that the provisions of section 80A(2) and section 80B(5) cannot be read while interpreting sub-section (6) of section 80-I. In this connection, reliance was placed on the judgment of the Supreme Court in the case of Canara Workshops (P.) Ltd. [1986] 161 ITR 320. We do not find any merit in the above last contention of the assessee. Section 80-I(1) lays down that where the gross total income of an assessee includes any profits derived from a priority undertaking/unit/division, then, in computing the total income of the assessee, a deduction from such profits of an amount equal to twenty per cent. shall be made. Therefore, section 80-I(1) lays down the broad parameters indicating circumstances under which an assessee would be entitled to claim deduction. On the other hand, section 80-I(6) is the section which deals with determination of the quantum of deduction. Section 80-I(6) lays down the manner in which the quantum of deduction shall be effected. After such computation of the quantum of deduction, one has to go back to section 80-I(1) which categorically states that where the gros ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1), which refers to gross total income, one has to read the expression "gross total income" in section 80-I(1) as defined in section 80B(5). In the circumstances, the judgment of this court in Nima Specific Family Trust's case [2001] 248 ITR 29 applies to the present case also. Learned counsel for the assessee, however, vehemently relied upon the judgment of the Supreme Court in the case of Canara Workshops (P.) Ltd. [1986] 161 ITR 320. In our view the judgment of the Supreme Court, on the facts, does not apply to the present case. In that matter, the assessee was a public limited company engaged in the manufacture of automobile spares. During the assessment year 1966-67, the assessee commenced another activity, viz., manufacture of alloy steels. Both the activities fell within the Fifth Schedule to the Act. The assessee sustained a loss in the manufacture of alloy steel, whereas profits were earned from the manufacture of automobile spares. The assessee claimed relief under section 80E, as it then stood. The Assessing Officer declined to grant the relief on the ground that the assessee had ignored the losses incurred in alloy steel industry. He held that the assessee would be ent ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
