2003 (10) TMI 12 - HC - Income Tax

No s.154 power to reopen deduction recomputation under s.80-I where no apparent mistake or carry-forward losses exist

HC held that the AO lacked jurisdiction under section 154 to reopen computation of deduction under section 80-I because there was no mistake apparent on ... Rectification of computation of deduction u/s 80-I - Whether, the mistake pointed out by the AO for invoking jurisdiction u/s 154 can be considered as a mistake apparent from the record, which could confer jurisdiction to the AO for initiating and making orders u/s 154, for the purpose of recomputing allowable deduction u/s 80-I? - HELD THAT:- There was no carry forward losses of 1983-84, which could be set off against the income of the current assessment year 1984-85, the recomputation of income from the new industrial undertaking by setting off the carry forward of unabsorbed depreciation or depreciation allowance from previous year did not simply arise and on the finding of fact noticed by the Commissioner of Income-tax (Appeals), which has not been disturbed by the Tribunal and challenged before us, there was no error much less any error apparent on the face of the record which could be rectified. That question would have been germane only if there would have been carry forward of unabsorbed depreciation and unabsorbed development rebate or any other unabsorbed losses of the previous year arising out of the priority industry and whether it was required to be set off against the income of the current year. It is not at all required that losses or other deductions which have already been set off against the income of the previous year should be reopened again for computation of current income under section 80-I for the purpose of computing admissible deductions thereunder. We are of the opinion that the Tribunal has not erred in holding that there was no rectification possible under section 80-I in the present case, albeit, for reasons somewhat different from those which prevailed with the Tribunal. There being no carry forward of allowable deductions under the head depreciation or development rebate which needed to be absorbed against the income of the current year and, therefore, recomputation of income for the purpose of computing permissible deduction under section 80-I for the new industrial undertaking was not required in the present case. Issues:Rectification of computation of deduction under section 80-I for the assessment year 1984-85.Analysis:The appeal was directed against the order of the Income-tax Appellate Tribunal, Jodhpur Bench, regarding Appeals related to the assessment year 1984-85. The substantial question of law framed was whether the Assessing Officer's mistake in invoking jurisdiction under section 154 of the Income-tax Act for recomputing allowable deduction under section 80-I was apparent from the record. The issue pertained to rectification in the original assessment order concerning deductions under Chapter VI-A of the Income-tax Act for the said assessment year. The Assessing Officer believed that the deductions allowed to the assessee breached section 80A(2) of the Act, as the aggregate deductions under Chapter VI-A exceeded the gross total income. Consequently, a notice under section 154 was issued to rectify the computation of deductions under section 80-I as well. The primary subject of the appeal was the rectification of the computation of deduction under section 80-I, not related to rectification concerning deductions under Chapter VI-A.The Assessing Officer sought to compute the income of the new undertaking by setting off the carried forward losses from the previous year against it to determine deductions under section 80-I. However, the assessee contended that there were no carry forward losses from the previous year that required set off. The Commissioner of Income-tax (Appeals) concurred, stating that all losses from the previous year had been absorbed, eliminating the need for further set off against the income of the new undertaking for the current year. The Tribunal opined that the issue of set off of carry forward losses against the current year's income was debatable and not subject to rectification under section 154. The High Court agreed, emphasizing that as there were no carry forward losses necessitating adjustment against the current year's income, there was no error apparent on the face of the record to warrant rectification under section 80-I. The Court upheld the Tribunal's decision, dismissing the appeal.In conclusion, the Court held that as there were no carry forward losses requiring absorption against the current year's income, the recomputation of income for computing deductions under section 80-I was unnecessary. The Tribunal's decision that no rectification was possible under section 80-I in the absence of carry forward deductions was upheld. Therefore, the appeal was dismissed with no order as to costs.