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TMI Blog1984 (9) TMI 104X X X X Extracts X X X X X X X X Extracts X X X X ..... es not state that the claim under section 80M will not be admissible at all on the facts and in the circumstances of the case of the appellant. 4. That the above grounds are without prejudice to one another. 5. That the appellant craves permission to add, alter, amend or delete one or more grounds of appeal on or before the date of hearing." 2. Before us, the assessee has moved an application under rule 11 of the income-tax (Appellate Tribunal) Rules, 1963, for the admission of additional grounds of appeal, which are as under : " A. That the learned Commissioner (Appeals) erred in coming to the conclusion that even though the assessee does not desire its income from dividend to be set off against the business loss, still the same will have to be set off against the business loss and, accordingly, the appellant will not be entitled to claim deduction under section 80M of the Income-tax Act since there will be no income left after such set off. B. That the learned Commissioner (Appeals) has failed to appreciate that the words ' be entitled ' in section 71(1) of the Income-tax Act give an option to the assessee, whether to get his loss from business set off against his incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gross total income. The Tribunal noted that there was no dispute that the gross total income, without considering the deductions allowable in Chapter VIA, was a figure of loss and, therefore, the deductions under that Chapter were also to be nil. While passing the above order, the Tribunal had relied on the order of the Special Bench of the Tribunal in the case of India Sugar Refineries Ltd. v. ITO [1983] 3 SOT 167 (Bom.). 6. The learned counsel for the assessee submitted that though this question stood decided against the assessee in the above order, he would like the matter to be reconsidered in the light of the additional grounds of appeal raised before the Tribunal. He submitted that under the provisions of section 71 of the Act, where the net result of the computation under any head of income is a loss, the assessee shall be entitled to have the amount of such loss set off against his income, if any, assessable for that assessment year under any other head. According to the counsel, the assessee was entitled to have the amount of such loss set off against income under any other head and that should mean that the assessee has a right to get such a set off, but only if he s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd., but in that case it had been contended that it was not open to the ITO to adjust the dividend income against the business income, when the assessee opted for the assessment of the dividend income independent of the business loss. It was, therefore, contended that in this case, the assessee's option had been clarified at the earliest possible time when the intention of the department was made clear and the assessee's claim under section 80M was not going to be allowed. 8. The learned counsel for the assessee clarified his submission and contended that according to the assessee's claim deduction under section 80M should be allowed from the dividend income of Rs. 1,79,889 and the same should be brought to tax in this year, whereas the business loss as determined should be carried forward to the later years for being set off in accordance with the provisions of section 72. He made it clear that he was not giving up this claim for carrying forward of losses and their being set off in the future years, while opting for the loss being not allowed to be set off in this year. It was the contention of the learned counsel for the assessee that the provisions of law should be interpre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anner by a person authorised to do so. In this connection, he drew our attention to the fact that only while making submission before the IAC, the secretary to the company had raised the question but the return of income where such option should be reflected had not been revised and the person authorised to file the return had not revised the return. It was his submission that an option, which had the effect of modifying the return, could not have been made by a person, who was not authorised to file the return. He also submitted that the assessee had not shown any material that he had opted for the payment of tax on the dividend income. He pointed out that the assessee did not pay any tax on the dividend income either by way of advance tax or self-assessment and in fact, he had exercised his option to set off the business loss against the other income when he filed the return by setting it off himself. It was also contended that the IAC was not the authority to consider the assessee's option as that had to be exercised before the ITO. He pointed out that when the assessee had not shown a positive income from dividend as taxable, and the ITO had also followed the same position thou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Delhi High Court in the case of Mahalaxmi Sugar Mills Co. Ltd. v. CIT [1974] 94 ITR 592. Similar loss suffered by a person in his personal business cannot be set off against the profit from an unregistered firm, which is not fully taxable in the hands of the partner. In the present case, we are, however, not concerned either with any capital gain or any income which is included only for Tate purposes or is exempt under law. We need not, therefore, take into consideration these factors in the present case. 14. We may now consider as to what is the nature of the option under the provisions of section 71 in the context of the other provisions of the Chapter dealing with set off and carry forward of losses. We have to consider the argument regarding option only from the angle of the benefit, which such option can give to the assessee. The whole argument advanced by the learned counsel for the assessee is directed towards achieving two objectives. Firstly, it is aimed to obtain the deduction under section 80M to the full extent in spite of the provisions of section 80A(2), by exercising this option and de-linking the business loss from the assessment of dividend income. The other ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of India Sugar Refineries Ltd. had also considered similar arguments and after considering the whole legal position, the Special Bench had observed that in such matters, the assessee has no real option and in any event assuming it has the option not to exercise its right of set off of business losses against other income, the exercise of such an option will not be in his favour, as the assessee will not be able to carry forward the full business loss as expected by him. The assessee's submission in that case was rejected by the Special Bench for such reasons. In view of the above, contention raised by the assessee has to be rejected. 16. It will not be out of place to mention that the argument advanced has to be tested by taking some examples of non-corporate tax-payers, as the provisions of sections 71 and 72 and the whole Chapter apply to all the assessees. If once the theory of such free option is accepted, tax-payers can manipulate their taxable income according to the availability of business profits or other profits in one year or the other. This would never have been the intention of the legislature and, therefore, such arguments cannot be accepted. 17. We will brie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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