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TMI Blog2006 (11) TMI 158X X X X Extracts X X X X X X X X Extracts X X X X ..... e Supreme Court in CIT v. P. K. Jhaveri [1990] 181 ITR 79. Aggrieved by the order of the assessing authority an appeal was filed before the Appellate Commissioner. The Appellate Commissioner ruled that the assessing authority is not justified in reducing the eligible profits on which deduction under section 80-I is to be given by the loss incurred by the appellant in its leasing business. He allowed the appeal. Aggrieved by the same, an appeal was filed by the Revenue before the Tribunal. Both the assessee as well as the Revenue filed two appeals before the Tribunal. The Tribunal rejected the appeal of the Revenue. The Revenue aggrieved by the order of the Tribunal is before us in this appeal. 3. The following question of law is raised : "Whether the assessee is entitled to deduction under section 80-I out of the gross total income computed from the manufacturing business of the assessee or the entire and the loss incurred in the leasing business should be taken into consideration for the purpose of computation of deduction ?" 4. Sri Seshachala, learned counsel would invite our attention to the material produced namely sections 80-I and 80AB has to be given a higher status othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the computation of section 80-I deduction, net income of all the types of income whether manufacturing business or lease business should be taken. He has noticed the judgment of the Supreme Court in CIT v. P. K. Jhaveri [1990] 181 ITR 79. This order was challenged before the Appellate Commissioner. The assessee filed a written statement in the course of hearing before the Commissioner. The Appellate Commissioner would say that though for the purpose of considering deductions, the entire income has to be reckoned, for the purpose of claiming relief under section 80-I, it is only income of that undertaking that has to be considered for the purpose of section 80-I of the Act in the light of section 80AB of the Act. The Commissioner without taking note of the impact of section 80AB to our surprise has chosen to say that the Assessing Officer is not justified in reducing the eligible profit on which deduction under section 80-I of the Act is to be given by loss incurred by the appellant in its lease business. The Commissioner has noticed the judgment of the Supreme Court in CIT v. Canara Workshops P. Ltd. [1986] 161 ITR 320. When this order was challenged before the Tribunal, the Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot only profits but also losses have to be taken into consideration." 9. The Supreme Court in a judgment in Motilal Pesticides (I.) P. Ltd. v. CIT [2000] 243 ITR 26 has chosen to notice its earlier judgments in Cloth Traders P. Ltd. v. Addl. CIT [1979] 118 ITR 243 and Distributors (Baroda) P. Ltd. v. Union of India [1985] 155 ITR 120 and thereafter the Supreme Court has chosen to say reading as under (page 27) : "Both sections 80HH and 80M fall in Chapter VI-A relating to deductions to be made in computing total income. It will be seen that the language of sections 80HH and 80M is the same. It was held in Cloth Traders (P.) Ltd.'s case [1979] 118 ITR 243 (SC) that deduction is to be allowed on the gross total income and not on the net income. But then the decision in Cloth Traders (P.) Ltd.'s case [1979] 118 ITR 243 (SC) was overruled in Distributors (Baroda) Pvt. Ltd. v. Union of India [1985] 155 ITR 120 (SC). After the decision in Cloth Traders (P.) Ltd.'s case [1979] 118 ITR 243 (SC), two sections 80AA and 80AB were introduced by the Finance (No. 2) Act, 1980. While section 80AA was to have retrospective effect with effect from April 1, 1968, section 80AB was to h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal is not justified in placing reliance on the said judgment and the said judgment is totally inapplicable and it is distinguishable on the facts. The Bombay High Court in Synco Industries Ltd. v. Assessing Officer of Income-tax [2002] 254 ITR 608, has chosen to notice the judgment of the Supreme Court in CIT v. Canara Workshops P. Ltd. [1986] 161 ITR 320 and thereafter the Bombay High Court would say that the judgment of the Supreme Court on the facts would not apply to the present case. The Bombay High Court has noticed in detail the effect of sections 80A(2) and 80B(5) in the light of section 80-I(6) in the said judgment. This is what the Bombay High Court would say (page 614) : "That, while calculating the gross total income of the company, one has to adjust the losses from one priority unit against the profits of the other priority unit and if the resultant gross total income is ' nil' then the assessee cannot claim deduction under Chapter VI-A." 16. We are in full agreement with the views expressed by the Bombay High Court. 17. Learned counsel for the assessee would place reliance on a judgment of this court in CIT v. Siddaganga Oil Extractions P. Ltd. [1993] 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee as well as the Department have not chosen to invite the attention of the Tribunal with regard to the applicability of section 80AB despite argument before the Commissioner. We would be failing in our duty, if we do not remind the parties with regard to placing all case law supporting or opposing their stand for a decision before the judicial forum. 20. In the case on hand, unfortunately both the parties have not chosen to refer to the Tribunal the impact of section 80AB. If only the Department had invited the attention of the Tribunal to the impact of section 80AB the Tribunal would not have passed this order. We express our displeasure in the matter. To avoid such recurring instances, in future, the Income-tax Department is well-advised to engage competent legal counsel, before the Tribunal, whenever large sums of money are involved with complicated questions of law. Income-tax provides revenue to the Government. If the Department is not properly defended, it would result in unnecessary references to this court and loss of time of every body concerned including the time of this court. We deem it proper to direct learned counsel to place our order before the Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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