2013 (1) TMI 671 - HC - Income Tax

Determination of Gross Total Income - whether ITAT was justified in allowing deduction u/S 80HH and 80I by considering the gross income from the two units of the appellants, namely, flour mill unit, Itarsi and solvent extraction plant, Khandwa in violation of section 80AB - Held that - As decided in Synco Industries Ltd. v. Assessing Officer (Income-tax) 2008 (3) TMI 13 - SUPREME COURT Gross total income of the assessee has first got to be determined after adjusting losses etc., and if the gross total income of the assessee is Nil the assessee would not be entitled to deductions under Chapter VI-A. Remand the case for deciding the factual and legal issue involved in this appeal afresh in the light of the law laid down by the Supreme Court referred to supra as undoubtedly, this decision was rendered after the impugned decision of the Tribunal was passed in this case and, therefore, the Tribunal did not. have an occasion and nor the benefit to examine the question involved in this appeal.

Summary

Issues:
Appeal under section 260A of the Income-tax Act, 1961 regarding deduction under sections 80HH and 80-I in violation of section 80AB.

Analysis:
The judgment was delivered by Justice Abhay Manohar Sapre. The appeal was filed by the Revenue against the order passed by the Tribunal in Case No. 41/Nag/2001 for the assessment year 1996-97. The substantial question of law for consideration was whether the Tribunal was justified in allowing deduction under sections 80HH and 80-I by considering the gross income from two units, namely, flour mill unit and solvent extraction plant, in violation of section 80AB of the Act.

The counsel for the parties referred to a recent decision of the Supreme Court in Synco Industries Ltd. v. Assessing Officer, wherein the Supreme Court interpreted various sections including 80HH and 80-I. The High Court noted that the Tribunal did not have the opportunity to consider the issue in light of the Supreme Court's decision. Therefore, the matter needed to be reexamined by the Tribunal on its factual aspects in accordance with the law laid down by the Supreme Court in the aforementioned case and other subsequent decisions.

The High Court decided to allow the appeal in part and remand the case to the Tribunal for fresh consideration of the factual and legal issues involved. The Court refrained from expressing any opinion on the merits of the controversy, emphasizing that it was for the Tribunal to provide its findings on the merits. It was also highlighted that depending on the Tribunal's decision, the concerned parties could appeal against it. No costs were awarded in this matter.

In conclusion, the High Court directed the remand of the case to the Tribunal for a fresh examination of the issues in light of the Supreme Court's interpretation of relevant sections. The decision emphasized the importance of factual assessment and legal considerations by the Tribunal in determining the eligibility for deductions under the Income-tax Act.