TMI Blog1985 (3) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... e case, the Tribunal was correct in annulling the orders of the Income-tax Officer under section 154 of the Income-tax Act, 1961, in the view that there was no mistake apparent from the record in the earlier orders granting relief under sections 80L and 80M of the said Act ? " The facts which are admitted and/or found by the Tribunal and incorporated in the statement of the case are stated hereunder : The assessee is a shipping company. Besides income from shipping business, it derives income by way of dividends and also interest on securities, In the original orders of assessment for the three assessment years under reference, the ITO did not allow the relief claimed by the assessee under s. 80L and s. 80M of the I.T. Act, 1961. Later, the ITO passed orders suo motu granting relief under ss. 80L and 80M of the Act. Later, by another set of orders, he purported to rectify under s. 154 of the Act, the earlier orders allowing relief under s. 80L and s. 80M. By those subsequent orders, the ITO had withdrawn the relief granted earlier under the aforesaid sections in the view that the granting of relief thereunder was a mistake apparent from the record. Aggrieved by the action of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act. We, therefore, direct the Income-tax Officer to recompute the total income of the assessee by granting in the first instance, the deduction contemplated by section 80M in computing such total income and to set off the business loss under s. 71 against the total income as thus computed." The Tribunal, therefore, upheld the contentions of the assessee and held that the deductions under s. 80M were rightly granted by the ITO for the assessment years under consideration and the subsequent orders passed by the ITO under s. 154 withdrawing such deductions are erroneous and unsustainable. It has been contended by Dr. Pal that the question whether the relief under ss. 80L and 80M should be allowed even if the income is a negative figure after setting off of the loss is a debatable question on which two views are possible and, therefore, such a mistake is not rectifiable under s. 154 of the Act. He has relied on several decisions of this court in support of his contention. The first decision relied on is in the case of CIT v. Ellenbarrie Tea Company Ltd. [1984] 146 ITR 617 (Cal). There, in the original assessment, the ITO allowed the deduction as claimed by the assessee under s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance Act, 1965, the correct interpretation whereof was laid down by the Supreme Court in Cambay Electric Supply's case [1978] 113 ITR 84 and, therefore, the profits and gains attributable to the business of manufacture or production of the articles or things specified in Part 111 of the First Schedule to the Finance Act, 1965, here, soda ash, which qualified for the special rebate under Para. F of Pt. I of the First Schedule to the Finance Act, 1965, could not be gross or commercial profits or gains but were the net or taxable profits or gains computed after allowing all allowable deductions and rebates including the development rebate but without allowing the special rebate under Para. F of Pt. I of the First Schedule to the Finance Act, 1965. We are unable to accept the contention of Mr. Bajoria that the said profits or gains were the gross or commercial profits and not the net or taxable profits. In view of the decision of the Supreme Court in Cambay Electric Supply [1978] 113 ITR 84, it cannot now be disputed any more that in computing the said profits and gains of Saurashtra Chemicals for allowing the special rebate under Para. F of Pt. I of the First Schedule to the Finance A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of Cloth Traders (P.) Ltd. v. Addl. CIT [1979] 118 ITR 243, understood the meaning of this expression. We have now the declared pronouncement of the Supreme Court at p. 260 of the said report that whenever the sections in that Chapter, namely, Chap. VI-A, used the expression 'where the gross total income of an assessee ...... includes any income ......... .. these sections meant that the deduction admissible was in respect of the whole of the income received by the assessee and not in respect of the income computed after making the deductions provided under the Act. That is how the Legislature also in enacting the Finance (No. 2) Act, 1980, understood the effect of the decision of the Supreme Court. That is how they have tried to alter the law by the provisions of ss. 80AA and 80AB by the Finance (No. 2) Act, 1980, as we have set out hereinbefore. Therefore, in our opinion, on the ratio of the decision of the Supreme Court in the case of Cloth Traders (P.) Ltd. v. Addl. CIT [1979] 118 ITR 243, as to the relevant assessment year with which we are concerned, the assessee was entitled to a deduction of 8 per cent. as contemplated by s. 80E(1) without a deduction of the unabsorbed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Engineering Industries Limited v. CIT [1978] 113 ITR 252 (Cal), (3) the decision of the Supreme Court in the case of Cloth Traders (P) Ltd. v. Addl. CIT [1979] 118 ITR 243 (SC) and the decision of the Supreme Court in the case of Rajapalayam Mills Ltd. v. CIT [1978] 115 ITR 777 (SC) and held thus (p. 677): " Where, by misreading a section which is clear, a different view was taken and it was held that if a wrong view was taken and at least a wrong calculation was made, then it would certainly come within the purview of s. 154 as a mistake apparent on the face of the record. See, in this connection, the observation of this High Court in the case of ITO v. Raleigh Investment Co. Ltd. [1976] 102 ITR 616 at p. 621. In view of the clear provisions of s. 80A, sub-s. (1), read with sub-s. (2), in our opinion, there was a clear mistake apparent from the record and, therefore, the Tribunal was not right on this aspect of the matter and in the view it took. In the premises, question No. 2 is answered in the negative and in favour of the Revenue. " We have considered the rival submissions. In Ellenbarrie Tea Company Ltd. [1984] 146 ITR 617 (Cal), the question was whether the relief und ..... X X X X Extracts X X X X X X X X Extracts X X X X
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