Chapter VI-A deduction barred where gross total income is nil after set-off of brought forward losses.

Deduction under Chapter VI-A is capped by section 80A(2), so the aggregate claim cannot exceed the assessee's gross total income as defined in section 80B(5). Where gross total income, after set-off of brought forward losses, is nil and that computation is not shown to be erroneous, section 80HHC relief is barred by the statutory ceiling. Sections 80A and 80AB therefore control the operation of section 80HHC, and the deduction is not admissible in such circumstances.

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Issues: Whether deduction under section 80HHC of the Income-tax Act, 1961 was admissible when the assessee's gross total income, after set-off of brought forward losses, stood at nil.

Analysis: Deduction under Chapter VI-A is controlled by section 80A(2), which prohibits the aggregate deduction from exceeding the gross total income of the assessee. Gross total income under section 80B(5) means the total income computed before making any deduction under the Chapter. Since the assessee's gross total income, after set-off of brought forward losses, was admittedly nil and that computation was not shown to be erroneous, the statutory ceiling barred allowance of the claim. Section 80HHC was therefore subject to the limiting provisions of sections 80A and 80AB.

Conclusion: The deduction under section 80HHC was not admissible and the disallowance was upheld.

Ratio Decidendi: A deduction under Chapter VI-A cannot be allowed where the assessee's gross total income is nil, because section 80A(2) caps the deduction at the level of gross total income.

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