TMI Blog2005 (10) TMI 211X X X X Extracts X X X X X X X X Extracts X X X X ..... bserved that the assessee had claimed deduction under s. 80-I in respect of income without adjusting brought forward losses aggregating to Rs. 2,27,34,802 for the asst. yrs. 1992-93 and 1993-94. The AO computed the deduction under s. 80-I after adjusting brought forward business losses of the earlier years against the income of the current year and thereby restricted the claim for deduction under s. 80-I. Thereafter, the assessee moved an application under s. 154 stating that the assessee was entitled to deduction under s. 80-I in respect of entire income of Rs. 6,81,22,461 without adjusting against the same brought forward losses of the earlier years amounting to Rs. 2,27,34,802. The AO was, therefore, requested to rectify the assessment order under s. 154 and allow the claim under s. 80-I accordingly. The AO referred to the provisions of sub-s. (5) of S. 80B which defined the "gross total income" as the total income computed in accordance with the provisions of the Act before making any deduction under Chapter VI-A of the Act. Thus, the AO observed that the gross total income was to be computed after allowing set off of brought forward business losses and the assessee was entitle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Hence, this appeal before us. 4. The learned Departmental Representative, Sh. P.S. Sachdev, submitted that the learned CIT(A) was not justified in allowing deduction under s. 80-I in respect of income computed without allowing set off of brought forward losses of the earlier assessment years. He relied on the two judgments of Supreme Court in the cases of CIT Vs. Kotagiri Industrial Co-operative Tea Factory Ltd. (1997) 139 CTR (SC) 359 : (1997) 224 ITR 604 (SC) and Moti La1 Pesticides (I) (P) Ltd. vs. CIT (2000) 160 CTR (SC) 389 : (2000) 243 ITR 26 (SC). He submitted that the reliance of the CIT(A) on the judgment of Andhra Pradesh High Court in the case of CIT VS. Visakha Industries Ltd. is misplaced because in that case assessee owned two units and the loss from one unit was set off of against the profit of the second unit, which was entitled to deduction under s. 80HHC. He submitted that these are not the facts of the present case. The assessee owned only one unit and the brought forward losses for the earlier years were also from the same unit and, therefore, these were required to be set off against the profit of the same unit for the assessment year under reference. 5. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aggregation of income or carry forward of loss. This Chapter precedes the deductions mentioned in Chapter VI-A. which means that while computing the income as per provisions of the Act, brought forward losses have to be given set off first before arriving at the gross total income, which alone would be eligible for deductions under Chapter VI-A. Thus, we are of the view that deduction under s. 80-I is admissible only in respect of income as it remains after allowing set off of brought forward business losses. Such view is in conformity with the definition of gross total income as defined in s. 80B(5) of the IT Act. The judgment of Supreme court in the case of CIT VS. Kotagiri Industrial Co-operative Tea Factory Ltd. is directly on this issue and supports this view. In this case, Hon'ble Supreme Court has held that in order to arrive at the "gross total income" defined under s. 80B(5), brought forward business losses of the earlier years are required to be set off under s. 72 of the Act, before allowing deduction under s. 80P. Provisions of s. 80P are similar to the provisions of s. 80-I. For arriving at such a view, the Hon'ble Supreme Court has also relied on its two earlier de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s loss and unabsorbed depreciation. (vi) Vijay Industries VS. CIT (2004) 190 CTR (Raj) 90 : (2004) 270 ITR 175 (Raj) This matter also came up for consideration before the Hon'ble Rajasthan High Court and the Rajasthan High Court also referred to the judgment of Supreme Court in the case Motilal Pesticides (I) (P) Ltd. vs. CIT and held that deduction under s. 80HH of the Act, would be available out of income as computed under the Act and not out of the profits and gains of the industrial undertaking. It was held that before allowing deduction under s. 80HH, the profits and gains of an industrial undertaking should be computed by taking into consideration unabsorbed depredation, current depreciation and investment allowance. (vii) CIT vs. Sun Stone Engineering Industries (P) Ltd. (1996) 132 CTR (Raj) 203 :(1996) 220 ITR 182 (Raj) As regards brought forward business loss, the Rajasthan High Court considered the matter and held that deduction under s. 80HH was to be allowed in respect of net income computed after deduction of unabsorbed loss and unabsorbed depreciation. Thus, the unanimous view of aforesaid judicial pronouncements is that income has to be computed as per prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orward loss of the second unit not entitled to deduction under ss. 80HH and 80-I against the profits of the unit entitled to such deduction. Such action was not approved by the Andhra Pradesh High Court for the reason that the income of the unit entitled to deductions under ss. 80HH and 80-I was required to be separately computed without allowing set off of losses of the second unit. These are not the facts of the present case and, therefore, this judgment is also not applicable to the present case. Therefore, the learned CIT(A) erroneously relied on the decision of the Andhra Pradesh High Court in the case of CIT VS. Visakha Industries Ltd. in allowing the claim of the assessee. 6.3 Apart from the judgments referred to above, the Tribunal, Amritsar Bench, Amritsar, also considered this issue in the case of Kakkar Complex Steels (P) Ltd. Vs. Dy. CIT in ITA No. 201/Asr/1988, for the asst. yr. 1987-88 and held that the assessee was entitled to deduction under ss. 80HH and 80-I only in respect income as computed under the provisions of the Act and after adjusting brought forward business losses of the earlier assessment years. 6.4 Further, the action of the AO is to be seen in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion under s. 80P(2) of the IT Act, 1961, in respect of interest received from the co-operative bank/co-operative society. Briefly stated, the facts of the case are that the learned CIT(A) allowed deduction under s. 80P(2)(d) of the IT Act in respect of interest from co-operative bank/co-operative society by relying on the decision of the Tribunal. Amritsar Bench, Amritsar in the case of assessee in ITA No. 317/Asr/1997 for the asst. yr. 1994-95. The Revenue is aggrieved with the order of the CIT(A). Hence this appeal before us. 8. At the outset, both the learned Departmental Representative and learned counsel for the assessee conceded that this issue is squarely covered in favour of the assessee and against the Revenue by two decisions of Tribunal, Amritsar Bench, Amritsar, in assessee's own case in ITA No. 317/Asr/1997 for the asst. yr. 1994-95 and in ITA No. 476/Asr/1998 for the asst. yr. 1995-96. Copies of these orders were placed on our file. 9. We have heard both the parties and carefully considered the rival contentions, examined the facts, evidence and material placed on record. We find that this issue is squarely covered in favour of the assessee and against the Revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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