2005 (10) TMI 220

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....se in brief are that the assessee declared an income of Rs. 66,81,88,580 on 24th Nov., 1997 which was processed under s. 143(1)(a) on 23rd March, 1998 and the returned income was accepted. Subsequently the income was increased to Rs. 75,08,14,580 by passing an order under s. 154 of IT Act on 9th Feb., 1999. Thereafter the case was selected for scrutiny. The assessee had claimed deduction of Rs. 2,67,02,241 under s. 80-IA of IT Act. Subsequently on 30th March, 1999, the assessee filed revised return and in the revised return, deduction under s. 80-IA had been enhanced to Rs. 5,47,66,520. The main reason for enhancing the claim of deduction under s. 80-IA was given that the brought forward losses for asst. yrs. 1994-95 and 1995-96 had been de....

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....purpose of computing deduction under s. 80-IA the amount of income of that nature shall be computed in accordance with the provisions of this IT Act and this income alone shall be deemed to be the amount of income of the nature which is derived by the assessee from industrial undertaking. Quantum of deduction is to be computed under s. 80-IA(7) of IT Act as if such eligible undertakings were only the source of assessee in initial year as well as for all the subsequent years to which deduction under s. 80-IA is available. 6. The question before us is as to whether the assessee was required to set off the brought forward losses under s. 72 of IT Act before claiming deduction under s. 80-IA. The assessee in the revised return claimed deduct....

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....s before Chapter VI, therefore, for computing the income before making any deduction under s. 80-IA the effect to the adjustment under the provisions of s. 72 is to be given. Provisions of s. 72(1) read as under: "Where for any assessment year the net result of the computation under the head 'Profits and gains of business or profession' is a loss to the assessee not being a loss sustained in a speculation business and such loss cannot be or is not wholly set off against income under any head of income in accordance with the provisions of s. 71, so much of the loss as has not been so set off or where he has no income under any other head, the whole loss shall subject to the other provisions of this Chapter, be carried forward to the follo....