TMI Blog1997 (5) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... nd gains of the export-oriented industrial unit. Unabsorbed depreciation available to the assessee in assessment year 1988-89 was carried forward to this year and was claimed by the assessee to be adjustable against the income from other sources, thereby reducing the total income of the assessee for assessment purpose at nil. The Assessing Officer, in the assessment order passed on 17-3-1995 accepted the above claim of the assessee and assessed the total income at nil. The CIT, however, exercised his powers under section 263 of the Act and passed an order on 25-3-1996 in which he considered the above action on the part of the Assessing Officer of adjusting the brought forward unabsorbed depreciation against the income from other sources of the assessee to be wrong and bad in law and causing loss to the revenue. Ultimately he directed that the unabsorbed depreciation and unabsorbed investment allowance should be adjusted against the income of the export-oriented business undertaking and the total income of the assessee sold accordingly be recomputed afresh. According to the CIT, since by virtue of the provisions of section 32(2), unabsorbed depreciation forms a part of the current y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e other hand, it is furthermore contended by Shri Parthasarathi that special provisions of the Income-tax Act like section 32(2) enable the assessees to get the benefit of carry forward of the unabsorbed depreciation to subsequent years and adjustment of the same against the profits of such subsequent years. It is also contended that the provisions relating to treatment of the unabsorbed depreciation of earlier year at par with the current year's depreciation as envisaged in section 32(2) is applicable to the process of computing income of the undertaking for income-tax purpose and not for arriving at its profits and gains in accordance with the ordinary commercial principles. It is also argued by Shri Parthasarathi that the Karnataka High Court has held in the case of CIT v. H.M.T. Ltd. [1993] 199 ITR 235 that a new undertaking (on the profits of which deduction is required to be allowed under section 80J) is not to be treated as a compartment by itself while computing its profits and gains for the purpose of section 80J and that on the other hand, section 80J is a beneficial provision intended to encourage establishment of new industrial undertaking as a means of accelerating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wrong on the part of the assessee to ask for deduction under section 32(1) in respect of current year while computing the income of the export oriented industrial unit and at the same time to contend that unabsorbed depreciation of earlier years would not have to be adjusted against the profits of the said industrial units in accordance with the provisions of section 32(2). It is further more contended that while dealing with the different heads of income in section 14 of the Income-tax Act, the Legislature used the expression " profits and gains of business or profession " denoting that the income to be computed for income-tax Act is income from business or profession and that in that way, income from such business or profession and profits and gains are the same and would become synonymous. It is also argued by the learned DR that each year's income in respect of the industrial unit under consideration is required to be computed separately and that in doing so, all the relevant provisions of the Income-tax Act will have to be taken into account and the income finally computed would only be exempt under section 10B. In support of this contention, reliance has been placed on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the teamed counsel for the assessee that whereas the different sections like 80J and 80-I contained in Chapter VI-A relate to deductions, out of the total income already computed, section 10B on the other hand, allows complete exemption in respect of the profits and gains derived by an assessee from 100% export-oriented undertaking. Hence, we are of the opinion that the reliance placed by both the sides on the different decisions of the different courts with regard to deductions allowable under Chapter VI-A will not be applicable to the present case. On the other hand, it will be necessary for us to study the wording used in sub-section (2) of section 32, which reads as below : " 32(2) Where, in the assessment of the assessee, full effect cannot be given to any allowance under clause (ii) of sub-section (1) in any previous year, owing to there being no profits or gains chargeable for that previous year, or owing to the profits or gains chargeable being less than the allowance, then subject to the provisions of sub-section (2) of section 72 and sub-section (3) of section 73, the allowance or part of the allowance to which effect has not been given, as the case may be, shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterpretation of the expression " profits and gains derived by an assessee from an 100 per cent export-oriented undertaking ". As contended by the learned DR, this is not a case where plain and simple language is used to mean that such profits and gains actually denote income required to be computed under the different provisions of the Income-tax Act. Hence, all the decisions as relied upon by the learned DR in support of his claim of a literal interpretation to be made would be irrelevant in the present circumstances. Furthermore, the Supreme Court has also held in the case of Jaipuria China Clay Mines (P.) Ltd. that unabsorbed depreciation brought forward from earlier years need not be treated exactly at par with current year's depreciation inasmuch as while current year's depreciation is required to be allowed first, business loss for the current year will take precedence over allowance of unabsorbed depreciation. Even if it be that two different interpretations equal in force are available with regard to the meaning of a particular section appearing in the statute, in accordance with the decision of the Supreme Court in the case of CIT v. Vegetable Products Ltd. [1973] 88 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X
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