TaxTMI 
TaxTMI 
1994 (3) TMI 36
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.... the U.P. Zamindari Abolition Rehabilitation Grant Bonds represented income chargeable to tax for the assessment years 1972-73 and 1973-74? (2) Whether, on the facts and in the circumstances of the case, any part of the amount received by the assessee-company apart from the actual interest received in respect of 2 1/2 per cent. of the U.P. Zamindari Abolition Compensation Bonds was chargeable to tax for the assessment years 1972-73 and 1973-74 ? (3) Whether, on the facts and in the circumstances of the case; the Tribunal was correct in holding that relief under section 80J of the Income-tax Act, 1961, is to be restricted to Rs. 90,93,431 and Rs. 29,44,727 for the assessment years 1972-73 and 1973-74 and was not available to the extent....
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....) of the Incometax Act, 1961 ? Assessment year 1973-74 : (8) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that relevant deduction should first be allowed under section 80G of the Income-tax Act and then that due under section 80J of the Income-tax Act, thereby upholding the Appellate Assistant Commissioner's order ? (9) Whether, on the facts and in the circumstances of the case, the Tribunal ought to have restricted relief under section 80J of the Incometax Act to the extent of available income only having regard to the provisions of section 80G(4) of the Income-tax Act, 1961 ? " Questions Nos. 1 and 2 are covered by the decision of this court in CIT v. Scindia Workshop....
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....tion 80J should be calculated on the basis of the gross total income which was admittedly Rs. 1,20,24,739. Instead of deducting development rebate from the business income itself, deduction should be made from the income from all other sources. This would leave large business income for absorption of relief under section 80J. It was, there fore, contended by the assessee that the development rebate should have been set off first against the income from other sources, then against the profits of the ships not entitled to the benefit under section 80J and lastly against the profits of the ships entitled to the benefit under section 80J. Since this contention was not accepted by the Commissioner of Income tax (Appeals), the assessee appealed b....
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....able to the business of the specified industry ; and, thirdly, if there be profits and gains so attributable, deduct the percentage fixed thereof from such profits and gains to arrive at the net total income exigible to tax. The Supreme Court emphasised the importance of the words "as computed in accordance with the other provisions of this Act" and held that the computation must be without reference to section 80E. Since, the income was business income, it was required to be computed as per section 29 in accordance with sections 30 to 43A. The ratio of this judgment will apply directly to the present case. Under section 80J where the gross total income of an assessee includes any profits and gains derived from an industrial undertaking ....
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...., the assessee would be entitled to claim a deduction under section 80G first and then under section 80J since the relief under section 80J can be carried forward to subsequent assessment years under certain circumstances. It also held that section 80G(4) merely provides a method of calculating the ceiling of available deduction under section 80G and should not be held as laying down any priorities between the two deductions. We do not agree with this view taken by the Tribunal. Undoubtedly, where two views are possible, the assessee should get the benefit of an interpretation which is favourable to him. But, in our view, section 80G(4) cannot be looked upon merely as laying down the ceiling of deduction under section 80G. Under secti....
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....chever is less, is the ceiling prescribed. Therefore, to calculate the ceiling, one must first determine the gross total income as reduced, inter alia, by a deduction under section 80J. It is, therefore, necessary to first decide the quantum of deduction under section 80J. Obviously, therefore, the quantum of deduction under section 80J cannot be calculated after reducing the income by deduction under section 80G. Because the quantum of deduction under section 80G is in turn dependent upon the gross total income as reduced by deduction under section 80J. Therefore, while section 80G(4) prescribes the ceiling of deduction under section 80G, it necessarily entails prior calculation of a deduction under any other provisions of Chapter VIA whic....