TMI Blog1994 (11) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... hould be allowed on the gross total income instead of the net income as computed in accordance with the provisions of the Income-tax Act before making any deduction under Chapter VI-A ?" The assessee, Vishnu Oil and Dal Mills, Jodhpur, was assessed by the Income-tax Officer, A-Ward, Jodhpur, for the assessment year 1979-80. The assessee claimed deduction under section 80HH at the rate of 20 per cent. of the gross profit of Rs. 5,70,596.46 but the Income-tax Officer allowed deduction on Rs. 3,30,168, i.e., the net income computed under the Act and rejected the claim of the assessee for the remaining amount. Aggrieved by the order passed by the Income-tax Officer in not allowing the deduction on the basis of the commercial profit of the ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as and states that "where the gross total income of an assessee includes any profits and gains derived from an industrial undertaking, or the business of a hotel, to which section 80HH applies, there shall, in accordance with and subject to the provisions of section 80HH, 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." This section 80HH was inserted by the Direct Taxes (Amendment) Act, 1974 (Act No. XXVI of 1974). Section 80AB of the Act deals with the deduction to be made with reference to the income included in the gross total income and states that where any deduction is required to be made or allowed under any section (except section 80M) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of India [1985] 155 ITR 120 (SC), held that : "Section 80AB was enacted to declare the law as it always stood in relation to the deductions to be made in respect of the income specified under the head 'C' of Chapter VI-A. The manner of deduction specified under section 80AB accords with the interpretation that we have placed upon section 80T read independently." If we read section 80HH with section 80AB of the Act then it is very much clear that for the purpose of determination of the relief under section 80HH of the Act, the gross total income of the assessee has to be worked out after deducting unabsorbed losses and unabsorbed depreciation and the income eligible for deduction under section 80HH will be the net income as computed in ac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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