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TaxTMI 
TaxTMI 
TaxTMI 
2014 (10) TMI 708
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....ry on the other hand. For example, Section 80CCA provides for deduction in respect of deposits under the National Savings Scheme or payment to a deferred annuity plan, Section 80CCB provides for deduction in respect of investments made under equity linked savings scheme. Section 80G is in respect of donations to certain funds, charitable institutions etc., from the general income of an assessee. Deductions in respect of specific incomes are covered by part C of Chapter VI-A. Such deductions are to be made only from the income of a particular source. For example, if an assessee establishes industrial undertaking or hotel business in backward areas, he is entitled to make deduction to the extent of 20% from the profits and gains, under Section 80HH. Similarly, where the assessee establishes small scale industries in certain areas, Section 80 HHA provides for identical deduction. Deduction in respect of profits and gains from projects outside India which earn foreign exchange is provided for under Section 80HHB. Certain complications do arise when an assessee is entitled to deductions under more than one provision, more so, when they fall within heading C of Chapter VI-A. The contro....
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....port of the expression gross total income as defined under Section 80B(5) of the Act and the adjudication undertaken by them runs contrary to the said provision. He contends that once an assessee has income from any sources covered by Chapter VI-A, the first step must be to aggregate all the incomes and thereby arrive at the gross total income and then to effect deductions if permissible. According to the learned Senior Counsel, an assessee cannot be permitted to effect deductions separately from any item or a head of income which forms part of heading C. He has placed reliance upon the judgment of the Supreme Court in Synco Industries Ltd. v. Assessing Officer (I.T) AIR 2014 SC 1745 and Ipca Laboratory Ltd. vs. Deputy Commissioner of Income Tax 299 ITR 444. Learned Senior Counsel further submits that the judgment of the Supreme Court in Canara Workshops case (1 supra) was delivered at a time when Section 80B(5) was not on the statute book and that the same has no application to the facts of the case. Ms. K. Mamata Chowdary, learned counsel for the respondent, on the other hand, submits that the basis on which the assessing officer refused deduction as claimed by the assessee is c....
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....manufacture of alloy steels. The matter arose in respect of the assessing year 1966-67, by which time Chapter VI-A was not enacted. Section 80E (as it stood then) provided for deduction to the extent of 8% of the profits and gains, if the assessee is involved in manufacture or production of articles or things specified in the fifth schedule, appended to the Act. The articles manufactured by the assessee in both the factories figured in the fifth schedule. While in one industry the assessee earned profits, in the other industry, it suffered losses. In the context of effecting deductions provided for under Section 80E of the Act (as it stood then), while the assessee pleaded that the deduction must be from the income of the concerned industry, the assessing officer insisted on clubbing of incomes from both the sources and then making of deductions. Dealing with this aspect, the Supreme Court held: The assessee in this case carries on two industries, both of which find place in the list in the Fifth Schedule and can, therefore, be described as priority industries. It is urged by the learned Additional Solicitor General, appearing for the Revenue, that on a true application of Section....
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....y Chapter VI-A of the Act. The fact however remains that Chapter VI-A, for the most part of it, is an exercise of consolidation than introduction of a total new phenomenon. Except that the items that qualified for deduction were extended and the extent of deduction was varied, the concept and mechanism remained the same. Barring the rearrangement of the section that provide for deductions, the same concept came to be introduced through the Finance Act, 1967 which added Chapter VI-A to the Act. The improvement is mostly the method of deduction under the chapter, in the form of Section 80AB and the concept of gross total income under Section 80B(5). The relevant provisions as they stand now read as under: Deductions to be made with reference to the income included in the gross total income. 80AB. Where any deduction is required to be made or allowed under any heading C. Deductions in respect of certain incomes in respect of any income of the nature specified in that section which is included in the gross total income of the assessee, then, notwithstanding anything contained in that section, for the purpose of computing the deduction under that section, the amount of income of that ....
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....the deduction under the respective provisions must be from the gross total income. The method of deduction is ultimately to be decided by the text of the respective provisions. Further, Section 80B(5) is not a charging provision. It is important to mention that the Parliament itself employed the expressions gross total income at some places and total income at other places, in different provisions, depending upon the context. For example, under Section 80HHD which also occurs under heading C in Chapter VI-A, there is no mention of gross total income, whereas in Sections 80HH, 80HHA and 80-I, the expression gross total income is employed. The purpose appears to be to ensure that the deductions provided for under the relevant sections are made in computing the total income of the assessee, in contra-distinction to gross total income. For example, sub-section (1) of Section 80HH reads as under: Deduction in respect of profits and gains from newly established industrial undertakings or hotel business in backward areas. 80HH. (1) Where the gross total income of an assessee includes any profits and gains derived from an industrial undertaking, or the business of a hotel, to which this ....
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.... The intention appears to be to discourage or to prevent an assessee from avoiding tax by posting the profits earned in one industry, against the losses incurred in the other. Another way of looking at the provision is that, the hard work put by an entrepreneur resulting in profits in an industry cannot be wiped away if he suffered losses in another industry of the same category. Except that the provisions are different, the principle laid down by the Honble Supreme Court in Canara Workshops case (1 supra) is the same. This decision was followed by our High Court in Visakha Industries case (6 supra). It is no doubt true that the Supreme Court in Synco Industries Case (3 supra) took a different view. Firstly, the said judgment was not in existence when the Commissioner and the Tribunal decided the present case. Secondly, no reference was made to the judgment in Canara Workshops case (1 supra) in Synco Industries case (3 supra), obviously, because it was not brought to their Lordships notice. It is quite possible to argue that the relevant provisions, which the Honble Supreme Court was dealing in those two cases are different. However, the principle involved in both, was broadly, th....