1992 (11) TMI 6

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....60,536. This figure was arrived at after deducting depreciation of Rs. 2,09,251. The assessee contended that for the purpose of working out the relief under section 80-I, which relief at the relevant time had to be granted at eight per cent. of the profits and gains derived from the priority industry, depreciation ought to have been added back to the net profit of this unit as shown in the books. This contention of the assessee has been upheld by the Tribunal in view of the decisions of the earlier Benches of the Tribunal in the assessee's own case, although the Tribunal expressed some doubt as to whether the depreciation ought to be added back as contended by the assessee. Hence, the following question has been referred to us under section....

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....ons of the Income-tax Act. Therefore, depreciation is required to be deducted before arriving at such profits and gains. In the case of Cambay Electric Supply Industrial Co. Ltd. v. CIT [1978] 113 ITR 84, the Supreme Court considered similar provisions of section 80E which were then in force. The Supreme Court was concerned with the question whether in calculating the profits and gains attributable to the business of generation or distribution of electricity, etc., carried forward unabsorbed depreciation and development rebate were required to be deducted. Section 80E(1) provided as follows : " Section 80E(1).--In the case of a company to which this section applies, where the total income (as computed in accordance with the other provisio....

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....e " which is used there clearly indicates that this total income has to be computed in accordance with the other provisions of the Income-tax Act, 1961, in view of the definition of " total income " under section 2(45) of the Income-tax Act. Therefore, while ascertaining the profits and gains attributable to a priority industry which forms a part of such total income necessary deductions required under the Income-tax Act have to be made including deduction for depreciation. In the present case, it is only the depreciation in the current year which is being deducted and we do not see any provisions in section 80-I under which such depreciation requires to be added back to the profits and gains attributable to the priority industry for the pu....