TaxTMI 
TaxTMI 
2001 (7) TMI 45
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....both the appeals raise a common question of law and fact, they are disposed of by this common judgment. However, for the sake of convenience, the facts in Appeal No. 591 of 2000 are mentioned hereinbelow. 3. The assessee is engaged in the business of oil and chemicals. It has a unit for oil division in Sriphi District, Rajasthan. It has a chemical division at Jodhpur. The assessee claimed deductions under section 80HH and section 80-1 of the Act in respect of the aforestated two divisions. The Assessing Officer, rejected the claim of the assessee on the ground that the gross total income of the assessee, before deductions under Chapter VI-A, was "nil" and, therefore, the Assessing Officer came to the conclusion that the assessee was not entitled to the benefit of deductions under Chapter VI-A and in particular sections 80HH and 80-I. Being aggrieved, the assessee carried the matter in appeal. The order of the Assessing Officer was confirmed by the Commissioner of Income-tax (Appeals). Being aggrieved, the assessee went in appeal to the Tribunal which dismissed the appeal of the assessee and, therefore, the assessee has come by way of appeal to this court under section 260A of th....
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....at, it has continued to remain on the statute book without any change in the statute book. That, section 80-I was a successor to section 80J. That, under section 80-I, as inserted with effect from April 1, 1981, it was provided that where the gross total income of an assessee included profits derived from an industrial undertaking to which the section applied, then there shall be a deduction from such profits of an amount equal to twenty per cent. In the said judgment, it was further laid down that where an undertaking/unit was entitled to relief under section 80HH and also under section 80-I, then priority shall be given first to the deduction under section 80HH. This is in view of section 80HH(9). It was also laid down that section 80HH did not contemplate carry forward of shortfall as in the case of section 80J(3). That, after April 1, 1981, section 80HH and section 80-I both, dealt with deductions based on profits. In that matter, the court gave a hypothetical example by pointing out that if profits derived from an industrial undertaking was Rs. 80 and simultaneously, if there was a loss from another unit of Rs.50, then the gross total income would be Rs. 30. However, for the p....
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....ed by the oil division. It was, accordingly, contended that while calculating the deduction, the profits from the chemical division alone should be taken into account and the Assessing Officer erred in appropriating the loss from the oil division against the profits from the chemical division. It was contended that sub-section (6) starts with a non obstante clause. It was, therefore, contended that the provisions of section 80A(2) and section 80B(5) cannot be read while interpreting sub-section (6) of section 80-I. In this connection, reliance was placed on the judgment of the Supreme Court in the case of Canara Workshops (P.) Ltd. [1986] 161 ITR 320. We do not find any merit in the above last contention of the assessee. Section 80-I(1) lays down that where the gross total income of an assessee includes any profits derived from a priority undertaking/unit/division, then, in computing the total income of the assessee, a deduction from such profits of an amount equal to twenty per cent. shall be made. Therefore, section 80-I(1) lays down the broad parameters indicating circumstances under which an assessee would be entitled to claim deduction. On the other hand, section 80-I(6) is th....
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....tions 80A(2) and 80B(5). They operate in different spheres. Section 80-I(6) deals with actual computation of deduction whereas section 80-I(1) deals with the treatment to be given to such deductions in order to arrive at the total income of an assessee and, therefore, while interpreting section 80-I(1), which refers to gross total income, one has to read the expression "gross total income" in section 80-I(1) as defined in section 80B(5). In the circumstances, the judgment of this court in Nima Specific Family Trust's case [2001] 248 ITR 29 applies to the present case also. Learned counsel for the assessee, however, vehemently relied upon the judgment of the Supreme Court in the case of Canara Workshops (P.) Ltd. [1986] 161 ITR 320. In our view the judgment of the Supreme Court, on the facts, does not apply to the present case. In that matter, the assessee was a public limited company engaged in the manufacture of automobile spares. During the assessment year 1966-67, the assessee commenced another activity, viz., manufacture of alloy steels. Both the activities fell within the Fifth Schedule to the Act. The assessee sustained a loss in the manufacture of alloy steel, whereas pr....