TMI Blog1994 (8) TMI 66X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing Officer reduced the aforesaid amount of Rs. 27,39,928 from the income computed at Rs. 89,98,259 and on the resultant figure of Rs.62,58,331, allowed deduction under section 80HH @ 20% amounting to Rs. 12,51,666. 12. Before the ld. CIT (Appeals), it was contended on behalf of the assessee that the investment allowance of Rs. 8,72,672 should not have been reduced from the figure of Rs. 89,98,259 for working out the deduction under section 80HH of the Act. The ld. CIT (Appeals) directed the Assessing Officer to compute deduction under section 80HH before deducting investment allowance from the profits and gains of industrial undertaking. It is against this finding of the learned CIT (Appeals) that the revenue has preferred this ground. 13. The ld D.R. submitted that in view of the clear-cut provisions contained in section 80AB of the Income-tax Act, the computation made by the Assessing Officer in this regard was correct and that the learned CIT (Appeals) was in error in directing the Assessing Officer not to reduce the amount of investment allowance for purpose of computing deduction under section 80HH of the Act. 14. Shri Garg, on the other hand, contended that Ori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion imposed in section 80AB aims at ensuring that the deduction does not exceed the net income under a particular source and it does not appear to be the legislative intent that the deduction is to be brought down to net income in a particular head of income. 15. The ld. counsel for the assessee next relied on the Karnataka High Court decision in CIT v. H. M. T. Ltd. [1993] 199 ITR 235. That was a case in which the High Court held that special deduction allowable under section 80J was to be computed on the profits and gains of the unit concerned without deducting depreciation and investment allowance. The High Court observed that the beneficial provision of section 80J should not be interpreted in a restrictive manner, The next decision relied on by the ld. counsel was of Karnataka High Court in CIT v. Siddaganga Oil Extractions (P.) Ltd. [1993] 201 ITR 968. That was a case of a newly established industrial undertaking in a backward area. The assessee had made certain profits and gains in the industrial undertaking but had suffered a loss in the hydrogenation plant. The Assessing Officer set off the loss from the hydrogenation plant against the profits of the solvent plant in co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of the ld. CIT (Appeals) on the point could not be faulted. 21. We have carefully considered the rival submissions as also the facts on record. The decision of the Orissa High Court in Tarun Udyog's case, however, does not consider section 80AB of the Income-tax Act. Same is the position with regard to Karnataka High Court decisions in the cases of H.M. T. Ltd. and Siddaganga Oil Extractions (P.) Ltd. There is, however, discussion about section 80AB in the Orissa High Court decision in Agency Marketing Co-operative Society Ltd's case, but the facts of that case are distinguishable. In that case, the question was one of deductibility or otherwise of loss incurred in another activity from the profits attributable to cottage industry on marketing of agricultural produce of the members. In the present case, we are, however, confronted with different controversy. 22. We put it to the ld. counsel for the assessee to enlighten us as to how the ratio of decision of the Supreme Court in H.H. Sir Rama Varma v. CIT [1994] 205 ITR 433, though in the context of section 80T of the Income-tax Act, could not be applied to the present case. The learned counsel submitted that while s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of sections 30 to 43D. Section 32A falls between section 30 and section 43D. The profits and gains of business have, therefore, to be computed after allowing the deduction under section 32A as well. Section 80AB, as noted above, talks of the income computed in accordance with the provisions of the Income-tax Act before making any deduction under Chapter VIA. The nature of income mentioned under section 80AB, when viewed in the context of section 80HH, means profits and gains of business. Section 80HH clearly lays down that where the gross total income of an assessee includes any profits and gains derived from an industrial undertaking, then a deduction of 20% from such profits and gains has to be allowed in computing the total income of the assessee. 24. If a comparative study of sections 80HH and 80T is made, then we find that the difference pointed out by the ld. counsel for the assessee that section 80T talks of income and section 80HH talks of profits and gains of business-- is a difference without distinction. The difference, in our opinion, is based on a superficial comparison of the two sections, namely, sections 80T and 80HH. In section 80T, two expressions have be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specified in Chapter VIA of the Act. It was further observed that the manner of deduction specified under section 80AB accords with the interpretation placed by the Supreme Court upon section 80T read independently. In our considered opinion, apart from the fact that certain decisions of Delhi and Gujarat High Courts, cited supra, support the view in favour of the revenue, the matter has to be decided against the assessee on the basis of the Supreme Court decision in H.H. Sir Rama Varma's case. We, therefore, hold that the ld. CIT (Appeals) was not justified in directing the Assessing Officer not to reduce investment allowance from the profits and gains of the industrial undertaking for purposes of computing deduction under section 80HH of the Act. Since our decision is based on the ratio of the latest decision of the Hon'ble Supreme Court in the case of H.H. Sir Rama Varma, there is no conflict of judicial opinion now and hence the proposition ' where two reasonable constructions are possible, the one favouring the assessee should be adopted ' has no application. This ground is accordingly allowed. 26. to 35. These paras are not reproduced here as they involve minor issues - ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
