TaxTMI 
TaxTMI 
2019 (11) TMI 595
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....ue are general in nature and calls for no specific adjudication. Ground No.2 raised by the revenue reads as follows:- "2. On the facts and circumstances of the case, the CIT(A) erred in law in allowing the deduction claimed u/s 80IA by the assessee when as per section 80IA(5) the profits of the eligible business has to be computed as if it were the only business of the assessee. Having computed the deduction, the provision of section 80A(1) comes into play in laying the guidelines or procedure to be followed for actually allowing the deduction u/s. 80A(1) which states that under this chapter specified in section 80C to 80U shall be allowed from the gross total income of the assessee. Hence, Chapter VIA deductions are allowed only after set off of losses including inter unit losses. Further as per the provisions of section 72 of the IT Act, the brought forward losses have to be adjusted against the gross total income of the assessee before arriving at the taxable income for the year, thereafter the deduction admissible u/s.80IA has to be allowed." 4. As far as ground No.2 is concerned, the facts are that the assessee is engaged in the business of manufacture of sugar. In....
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....come of the eligible business is to be computed under the provisions of the Act as if the eligible business were the only source of income of the assessee. The opening words of the sub section 5 of section 80IA reads as:- "Notwithstanding anything contained in any other provision of this Act, the profits and gains of an eligible business to which the provisions of sub-section (1) apply shall for the purpose of determining the quantum of deduction under that sub-section for the assessment year immediately succeeding the initial assessment year or any subsequent assessment year, be computed as if such eligible business were the only source of income of the assessee during the previous year relevant to the initial assessment year and to every subsequent assessment year up to and including the assessment year for which the determination is to be made.". Therefore the subsection 5 of the section 80IA overrides all other provisions of the Act. Having regard to the cardinal principle of interpretation emerged from the maxim "generalia specialibus non derogant" the special provision of section 80-IA(5), which is over riding in the nature, must prevail over general provisions to the extent ....
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....ision of section 80IA(5), which is overriding in nature, must prevail over general provision to the extent of its scope and limit. The appellant relying on the Hon'ble Supreme Court judgment in the case of CIT vs. Canara Workshop Pvt Ltd 161 ITR 320 and also CIT vs. O. Belliss & Morecom reported in 136 ITR 481, wherein it was held that for the purpose of allowing a deduction u/s.80IA, the words such profit occurring in the section mean "the profits and gains attributable to any priority industry" without deducting there from any loss arising in another business activity u/s.70, 71 & 72 of the Income Tax Act 1961. Therefore, in view of the above, I am of the opinion that the entire deduction claimed by the appellant u/s.80IA(5) has to be allowed." 8. Aggrieved by the order of CIT(Appeals), the revenue has raised ground No.2 before the Tribunal. 9. We have heard the submissions of the ld. counsel for the assessee, who relied on the order of CIT(Appeals). 10. The ld. DR submitted that the CIT(Appeals) in agreeing with the submissions of assessee, has placed reliance on the decision of the Hon'ble Supreme Court in the case of CIT v. Canara Workshop Pvt Ltd. (supra....
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....s. 80HH and 80-I were allowable. The AO noticed that the gross total income of the appellant before deductions under Chapter VIA was 'Nil'. Therefore, he concluded that the assessee was not entitled to the benefit of deductions under Chapter VI-A. On the above facts, the Hon'ble Supreme Court considered the correctness of the action of the revenue authorities, the Tribunal and the Hon'ble High court concurring with the view of the AO. The Hon'ble Supreme Court held, Clause (5) of s. 80B defines the expression 'gross total income' to mean the total income computed in accordance with the provisions of the Act before making any deductions under Chapter VI-A. It follows, therefore, that deductions under Chapter VI-A can be given only if the gross total income is positive and not negative. If the gross total income of the assessee is determined as 'Nil' then there is no question of any deduction being allowed under Chapter VI-A in computing the total income. The AO has to take into account the provisions of s. 71 providing for set off of loss from one head against income from another and s. 72 providing for carry forward and set off of business losses. Sec. 32(2) makes provisions for ca....
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....come in order to arrive at the deduction under Chapter VI-A. However, the non obstante clause appearing in s. 80-I(6), is applicable only to the quantum of deduction, whereas, the gross total income under s. 80B(5) which is also referred to in s. 80-I(1) is required to be computed in the manner provided under the Act which presupposes that the gross total income shall be arrived at after adjusting the losses of the other division against the profits derived from an industrial undertaking. If the interpretation as suggested by the appellant is accepted it would almost render the provisions of s. 80A(2) nugatory and therefore the interpretation canvassed on behalf of the appellant cannot be accepted. It is true that under s. 80-I(6) for the purpose of calculating the deduction, the loss sustained in one of the units, cannot be taken into account because sub-s. (6) contemplates that only the profits shall be taken into account as if it was the only source of income. However, s. 80A(2) and s. 80B(5) are declaratory in nature. They apply to all the sections falling in Chapter VI-A. They impose a ceiling on the total amount of deduction and therefore the non obstante clause in s. 8....
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....the Assessee as the only income of the Assessee, was Rs. 24,36,83,037/-. The gross total income of the Assessee was Rs. 29,75,89,300/- (as per the return of income of the Assessee). Income under the head "Income from Business or profession" was Rs. 20,01,80,662/-. The ceiling of deduction u/s.80IA read with Sec.80AB or 80B(5) or 80A(2) is that it cannot exceed the gross total income, not the income determined under the head "income from Business or profession". This aspect has not been noticed by the AO or the CIT(A). We therefore hold that the conclusions of the CIT(A) that the Assessee should be allowed deduction u/s.80IA at Rs. 24,39,83,037/- as allowing the said deduction would not violate the mandate of law as laid down in the decision of the Hon'ble Supreme Court in the case of Synco Industries Ltd. (supra). For the reasons given above, we sustain the order of CIT(A). We therefore find no merits in Gr.No.2 raised by the revenue in its appeal for AY 2011-12. 17. Ground No.3 raised by the revenue in its appeal reads as follows:- "3. On the facts and circumstances of the case, the CIT(A) erred in law by stating that harvesting charges paid to labourers by the assesse....
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.... 20. Before the CIT(Appeals), the assessee submitted that the harvesting charges are nothing but payment for purchase of sugarcane from the farmers and that payment by any stretch of imagination cannot be considered as a payment to a contractor for carrying out any work as contemplated u/s. 194C of the Act. In this regard, the assessee pointed out that the payment made to the farmers are ex-factory gate purchase price in instalments following the well established policy of Central Govt. in determining the Statutory Minimum Price (SMP) of sugarcane. The assessee pointed out that it is the obligation and responsibility of the farmers for cutting and harvesting sugarcane and to transport the same from the field to the sugarcane factory. The farmers are paid consolidated price for their sugarcane fixed by Govt. of India and the said price also includes the harvesting and transportation charges. The assessee furnished copies of sugarcane purchase bills depicting the adjustment of harvesting and transportation charges from the cost of purchases. The assessee also placed reliance on the decision of ITAT Ahmedabad Bench in the case of Shree Mahuva Prasad Sahakari Khand Udyog Mandal Ltd. v.....
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....on charges was paid by the appellant as sugarcane price in three heads as sugar cane purchase cost, harvesting charges, transportation cost. As the harvesting charges and transportation charges need to be paid in short time before the sugarcane payment such bifurcation was made to have the control over the payments. He further pleaded that since the payments were made to farmers as sugarcane purchase cost, the provisions of section 194C r.w.s 40(a)(ia) are not applicable. He further relied on the judgment of the Ahmedabad Tribunal in the case of M/s. Shree Mahuva Pradesh Sahakari Khand Udyog Mandal Ltd vs. ITO, wherein it was held that on the Fact and circumstances of the case the assessee is not liable to deduct the tax at source from the payment made to MUKADAMS (harvesting labourers and transporters by Zone samiti) and also in the case of DCIT vs. Dwarakadeesh Sahakar Kharkhana Ltd. it was held by the special bench that sugar factory was not liable to make TDS u/s.194C from the payments made to Mukadams and Transporters by the samiti. It was for the cane grower to bring the sugarcane to the appellant's factory and on behalf of the cane growers the harvesting charges were pai....
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....o the farmers were regarded as payments falling within the ambit of section 194C of the act. In the appellate order for AY 2012-13, the CIT(A) has not discussed this aspect at all and has gone only by the legal proposition as to whether section 40(a)(ia) would be applicable to sums which have already been paid or only to sums which remains payable as on the last date of the previous year. Therefore, the reasons given by the CIT(Appeals) in AY 2011-12 regarding payment on account of harvesting and transportation charges not being in the nature of payment falling within the ambit of section 194C of the Act is only the available material. 26. We have perused the paperbook filed by the assessee containing sample bills for purchase of sugarcane issued by the assessee. The sample bill shows the value of cane supplied by individual farmers and the transportation & harvesting charges are shown as deduction, which by implication means that the cane price is inclusive of transportation & harvesting charges. The plea of assessee that supply of cane by the farmers to the assessee is on ex gate of sugar factory basis appears to be correct. In our opinion, it would depend on the agreement bet....