TMI Blog1983 (8) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... preciation and development rebate ? (2) Whether, on the facts and in the circumstances of the case, the assessee was entitled to the relief under section 80L, 80M and 80Q for the assessment year 1970-71 ? " The assessee is a private limited company. For the assessment year 1970-71, the ITO determined the net income at Rs. 24,981. After setting off 1965-66 unabsorbed depreciation, the net taxable income was, however, determined at " nil ". The assessee filed an appeal before the AAC claiming that it was eligible for the relief under ss. 80L, 80M and 80Q of the I.T. Act, 1961, (hereinafter referred to as " the Act "), amounting to Rs. 500, Rs. 26,470 and Rs. 70 respectively. The AAC by a short and laconic order upheld the assessee's claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the gross total income of the assessee. Aggrieved by the order of the Tribunal, the Revenue has sought and obtained the reference on the questions set out above. As already stated, the assessee has claimed deduction under ss. 80L, 80M and 80Q of the Act for the sums of Rs. 500, Rs. 26,470 and Rs. 70 respectively. It is not in dispute that the net income of the assessee before the set off of the unabsorbed depreciation relating to 1965-66 included sum of Rs. 44,687 as dividend. The break-up of the said amount is as under: Rs. (1) The Madras State Industrial Co-operative Bank Limited 70 (2) M/s. Hackbridge Hewittic and Easun Limited 2,400 (3) The Enfield India Limited 42,217 According to the Revenue, the deductions under Chapt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come computed in accordance with the provisions of the Act, before making any deduction under Chapter VI-A. Having regard to the above provisions, before making any deduction under Chapter VI-A, the total income of the assessee is to be computed in accordance with the provisions of the Act and such total income will have to be taken as the gross total income from which the deduction under Chapter VI-A has to be allowed. In this case, the gross total income computed in accordance with the provisions of the Act, that is after setting off unabsorbed depreciation relating to 1965-66, was nil. Therefore, I there is no positive figure from which deduction under Chapter VI-A could be allowed. The benefit of deduction under Chapter VI-A will not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elopment rebate has anything to do with commercial profits attributable to the business, the said two items would not be deductible before arriving at the figure that would be exigible to the 8% deduction. The Supreme Court rejected that contention for more than one reason, and the reasons are given below (p. 95): " First, in sub-section (1) of section 80E, the expression 'total income ' is followed by the words 'as computed in accordance with the other provisions of this Act' in parenthesis and the mandate of these words clearly negatives the argument that the expression 'total income' has been used in the sense of commercial profits. Secondly, the expression total income has been defined in section 2(45) of the Act as meaning 'the total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision of the Supreme Court in Cambay Electric Supply Industrial Co. Ltd. v. CIT [1978] 113 ITR 84 and also the decision of the Karnataka High Court in Dr. T. Ramadas M. Pai v. CIT [1978] 115 ITR 883. This court held that having regard to the language used in ss. 45, 48 and 80T, it is clear that the amount chargeable under the head " Capital gains " would only be the amount computed in accordance with the provisions of ss. 45 and 48, that these two provisions do not envisage adjustment of any other loss either of the same year or of a different year and, therefore, on the plain language of the provisions, it would be clear that the whole of the amount of capital gains would have to be taken into account even without reference to any othe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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