2014 (1) TMI 1082 - HC - Income Tax

Whether the deficiency u/s 80J be carried over for an indefinite period in view of the provisions of Section 80VVA(4) - As per proviso to sub-section 3 to section 80J - The deficiency or any part thereof cannot be carried forward beyond the seventh assessment year as reckoned from the end of the initial assessment year - While calculating the number of years initial assessment year should be excluded - Decided against Revenue.

Summary

Issues: Interpretation of Section 80-J of the Income Tax Act regarding the carry forward of deficiency beyond the seventh assessment year.

Analysis:
The primary issue in this case revolves around the interpretation of Section 80-J of the Income Tax Act concerning the carry forward of deficiency beyond the seventh assessment year. The Income-tax Appellate Tribunal forwarded a question of law regarding the permissibility of carrying forward the deficiency under Section 80-J for an indefinite period in light of Section 80-VVA(4). The crux of the matter lies in determining whether the benefit of deduction under Section 80-J can be extended beyond the stipulated seven years. The Counsel for the revenue argues that the benefit should be limited to seven years as explicitly provided in Section 80-J of the Act. On the other hand, the Counsel for the assessee contends that the proviso to Section 80-J(3) clearly states that the deficiency cannot be carried forward beyond the seventh assessment year, excluding the initial assessment year. The disagreement between the parties hinges on the interpretation of the legislative intent behind the provision.

Upon a thorough examination of Section 80-J and the first proviso to sub-section (3), the Court delves into the legislative intent behind the provision. The Court highlights that the proviso unambiguously specifies that the deficiency or any part thereof cannot be carried forward beyond the seventh assessment year as reckoned from the end of the initial assessment year. By emphasizing the clarity of the legislative language used in the proviso, the Court concludes that there is no ambiguity regarding the permissible duration for carrying forward the deficiency under Section 80-J. The Court finds no grounds to challenge the order passed by the Income Tax Appellate Tribunal, which upheld the decision of the CIT(A). Consequently, the Court rules that the order in question does not contravene the provisions of the Act or raise any substantial legal queries, thereby providing a definitive answer to the question posed by the Tribunal.

In conclusion, the judgment clarifies the interpretation of Section 80-J of the Income Tax Act concerning the carry forward of deficiency beyond the seventh assessment year. The Court's analysis underscores the importance of adhering to the explicit legislative language in determining the permissible duration for availing the deduction under Section 80-J. The ruling provides a definitive resolution to the legal query forwarded by the Income-tax Appellate Tribunal, settling the dispute between the parties regarding the applicability of the provision.