TMI Blog1996 (8) TMI 142X X X X Extracts X X X X X X X X Extracts X X X X ..... ation. The assessee, however, filed a letter stating therein that deduction under section 80HH be allowed on the profit after adjustment of current year's depreciation and investment allowance but before the adjustment of unabsorbed investment allowance and previous years' relief. This contention was not found to be acceptable by the Assessing Officer. The Assessing Officer held that deductions under section 80HH were to be determined on the profit arrived at after giving effect to unabsorbed deficiencies of earlier years. 3. The Assessing Officer further noted that the first appellate authority had allowed certain relief to the assessee for assessment year 1985-86 and some other orders under section 154 had been passed in earlier years after the completion of regular assessment for assessment year 1986-87. The Assessing Officer, therefore, passed an order under section 154 dated 30-3-1989 to give consequential effect to order passed by the CIT(A) for assessment year 1985-86 and to the orders passed by the Assessing Officer under section 154 in earlier years so as to give consequential effect to those orders. The Assessing Officer recomputed the assessee's total income by reducin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial Co. Ltd. v. CIT [1978] 113 ITR 84 at 95 wherein the Supreme Court had held that while computing the deduction under section 80E of the Act, there was no scope for excluding items like unabsorbed depreciation and unabsorbed development rebate. It was argued that according to the ratio of the Supreme Court judgment in the case of Cambay Electric Supply Industrial Co. Ltd. even for purposes of section 80HH investment allowance had to be reduced before working out the deduction under section 80HH. It was also submitted that under section 80AB which was inserted by the Finance (No. 2) Act, 1980 w.e f. 1-4-1981 income had first to be computed as per the provisions of the Income-tax Act, and then only deduction had to be allowed under section 80HH. It was, therefore, submitted that the investment allowance had to be reduced from the income to be computed in accordance with the Income-tax Act before allowing deduction under section 80HH of the Act and that this was clear from the bare reading of section 80AB. Reliance was also placed on the Supreme Court decision in the case of Mettur Chemical Industrial Corpn. Ltd. v. CIT [1996] 217 ITR 768/86 Taxman 157 for the proposition that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Gujarat High Court had also followed the Supreme Court decision in the case of Cambay Electric Supply Industrial Co. Ltd. 8. The learned D. R. vehemently argued that a subsequent decision of the Supreme Court gives rise to a mistake apparent from record and for this proposition reliance was placed on the following decisions :--- (i) B. V. K. Seshavataram v. CIT [1994] 210 ITR 633/75 Taxman 180 (AP); (ii) M. K. Kuppuraj v. ITO [1995] 211 ITR 853 (Mad.); (iii) CIT v. East India Cold Storage (P.) Ltd. [1996] 218 ITR 668 (Cal.); (iv) Parshuram Pottery Works Co. Ltd. v. D. R. Trivedi, WTO [1975] 100 ITR 651 (Guj.); (v) Walchand Nagar Industries Ltd. v. V. S. Gaitonde, ITO [1962] 44 ITR 260 (Bom.). 9. The learned D. R. relied on the Calcutta High Court decision in the case of CIT v. Bengal Assam Steamship Co. Ltd. [1985] 155 ITR 26/22 Taxman 356 for the proposition that a mistake in the allowance of relief under section 80L and under section 80M made because of misreading of section 80A would be a mistake apparent from record and such mistake was rectifiable under section 154 of the Act. It was submitted that likewise a mistake in the allowance of relief under section 80 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 87-88 and 1988-89 had relied on the Supreme Court decision in the case of H. H. Sir Rama Varma in which it was held that relief under section 80T was to be given only for the amount of long-term capital gains of the current assessment year after the long-term capital loss of the earlier years brought forward was set off. It was, however, pointed out that the Supreme Court in the case of CIT v. V. Venkatachalam [1993] 201 ITR 737/70 Taxman 231 had held that the words " such income " in the main part of section 80T meant and referred to the capital gains and not the total income of the assessee. It was submitted that there was contradiction in the decisions of the Supreme Court in the cases of H. H. Sir Rama Varma and V. Venkatachalam. Relying on the ratio of the Punjab and Haryana High Court decision in the case of CIT v. Rajesh Talkies [1996] 220 ITR 107/87 Taxman 204 it was submitted that on merits the issue may have been decided against the assessed in its own case for assessment years 1987-88 and 1988-89 but in the present proceedings the order had been passed under section 154 and hence the assessee could legitimately claim that this point being a disputed one was not rectifiab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " whereas section 80HH mentioned the expression " profits and gains of business ". 14. In short, the learned Counsel submitted that there was no justification for the Assessing Officer to have rectified the original assessment order and reduced the assessee's claim under section 80HH of the Act. 15. In reply, the learned D. R. submitted that at the time of passing order under section 154, the decision in the case of Cambay Electric Supply Industrial Co. Ltd. was available and that the Supreme Court in subsequent decision in Mettur Chemical Industrial Corpn. Ltd.'s case had merely followed the same. It was also submitted that there was no difference in the language used in section 84 of the Act and section 80HH, read with section 80AB of the Act because originally section 84(5) stipulated that the profits and gains from an industrial undertaking shall be computed in accordance with the provisions contained in Chapter IV-D (i.e. sections 28 to 43) whereas sections 80HH and section 80AB stipulated that first the income had to be computed in accordance with the provisions of the Income-tax Act before allowing deductions contemplated under Chapter VI-A which included section 80HH ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties to the contrary. The learned CIT(A) in the present case has followed his order in the assessee's own case on merits for assessment year 1987-88 which order was reversed by the Tribunal in ITA No. 1418/Chandi/1989 vide order dated 22-8-1985 but the fact remains that the Tribunal has allowed the assessee's reference applications for assessment years 1987-88 and 1988-89 and drawn up the statement of the case on 24-1-1996 and referred the matter to the High Court for its opinion. The question referred has been reproduced in the earlier portion of this order and may not be repeated here. But even the Tribunal thinks that the matter is still not finally settled and that is why the question of law has been referred to the High Court. The very fact that the matter had to be debated at length before us shows that the neat proposition of law arrived at by the Revenue in the present case was arrived at after a long drawn process of reasoning and thus the matter is not one which would fall within the purview of section 154. Taking into consideration the entire facts and circumstances of the case, we hold that at the time of rectification, the dispute was very much there and it cannot be s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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