9911796707
TMI Blog1995 (4) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,32,884. The net income so computed was set off against carry forward losses of earlier years. The total income was taken at 'nil' figure. The assessment for the asst. yr. 1987-88 was completed vide order dt.20th March, 1988. From the total income computed at Rs. 20,02,473, the AO allowed deductions under s. 80HH and 80-I aggregating to Rs. 8,00,988. From the balance income, the AO deducted aggregate figure of Rs. 9,92,635 representing unabsorbed depreciation for 1983-84 and unabsorbed investment allowance for 1982-83 and 1983-84. The balance amount was charged to tax. 3. The CIT called for record of above assessments and held the view that brought forward losses of earlier year were to be first set off before allowing deductions under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s passed for the asst. yr. 1986-87 and applied in asst. yr. 1987-88. The assessee has come up in appeal. 5. We have heard both the parties at great length. There is no dispute that decision of Hon'ble Supreme Court in the case of Shri Shubh Laxmi Mills Ltd. has no application to the facts of the present case. There is further no dispute that provisions of s. 80VVA were applicable in asst. yrs. 1986-87 and 1987-88 but were not invoked by the AO and to the above extent assessments were erroneous and prejudicial to the interests of the Revenue. Therefore, the action initiated by learned CIT under s. 263 of IT Act has to be held to be valid. 6. During the course of hearing of appeal, learned counsel for assessee drew our attention to decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction was to be computed under s. 80HH. In above situation, a reasonable view which is in favour of the assessee has to be adopted. If in the assessment order, the Assessing Officer has taken a possible view, then the order cannot be termed as erroneous and prejudicial to the interests of Revenue for purposes of s. 263 of the Act. 7. For resolving present controversy, we are to give proper meaning to two expressions firstly "total income" and secondly "such profits and gains derived from an industrial undertaking" included in the 'gross total income'. The two expressions do not connote same meaning and are understood differently. This distinction is well known and is accepted even in decisions quoted by the assessee. In the case of Tarun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tled to benefit of s. 80HH. If the loss sustained by another unit is set off against this profits and gains of an industrial undertaking, the resultant figure would not reflect the profits and gains of the said industrial undertaking in any sense, much less in a commercial sense; it will be an unnatural and artificial "profits and gains" of that industrial undertaking. Hence, loss sustained elsewhere cannot be fastened to the profits and gains of the said industrial undertaking for purposes of s. 80HH." The "gross total income" is defined under s. 80B(5) of the IT Act and is to be computed in accordance with provisions of IT Act. In other words, all provisions of the Act not specifically excluded are to be applied to arrive at above figur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stment allowance is to be deducted and carried forward as provided in cls. (i) and (ii) of the sub-section. It is clear from the section that if total income is 'nil' or 'loss', the investment allowance is to be carried forward. 9. Having regard to the above legal position, we find that after taking into account brought forward losses, the assessee had "nil" 'total income' in asst. yr. 1986-87. Therefore, assessee was not entitled to investment allowance under s. 32A or to deduction under s. 80HH and 80-I of the IT Act. The aforesaid deductions, as noted earlier, were to be computed and allowed only if the assessee had some positive total income. We, therefore, hold that above deductions were wrongly allowed to the assessee in asst. yr. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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