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TMI Blog2012 (9) TMI 661X X X X Extracts X X X X X X X X Extracts X X X X ..... l income for the purposes of claiming benefit to return the income as Nil, and carry forward the loss. The intention of Section 143 IA was to discourage the misuse by unscrupulous tax payer, who might return lesser income by making obvious examination, or by claiming obvious incorrect deduction and taking a chance that if the same is deducted by the department, they would have to pay correct taxes only. In such cases while correcting the return, additional tax was payable. In the present case the provisions of Section 143 (I) (a) are clearly attracted. The respondent assessee claimed deduction, which were not permissible, and thereby not only tried to reduce the income to Nil, but also to carry forward the loss. The respondent assessee took chance, in which it did not succeed, and thus the A.O. and CIT (A) rightly imposed additional tax on him - in favour of Revenue. - INCOME TAX APPEAL No. - 258 of 2000 - - - Dated:- 5-9-2012 - Sunil Ambwani, Aditya Nath Mittal, JJ. Petitioner Counsel : - A . N . Mahajan , R.K. Upadhyaya Respondent Counsel : - R.R. Agarwal 1. We have heard Shri R.K. Upadhyay, for the appellants. Shri R.R. Agrawal appears for the responden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceed the gross total income of the assessee." The "Gross Total Income' is defined under Section 80B (5) as follows:- "Gross Total Income' means, the total income computed in accordance with the provisions of this Act, before making any deduction under this chapter." 9. The CIT (A) found that as per the provisions of Section 80A (2) read with Section 80 B (5) computation of income should have been made as follows:- "(i) Net Profit of Unit-I (+) Rs.1,28,69,006/- (ii) Net loss of Unit-II (-) Rs.1,14,03,131/- (iii) Gross Total income of the assessee (+) Rs.14,65,875/- (iv) Loss: Deduction u/s 80IA computed @ 30% of Rs.1,28,69,006/- i.e. Rs.38,60,702/- but the claim restricted to the gross total income of the assessee at Rs.14,65,875/- only u/s 80A (2) and no carry forward of balance 80IA deduction of Rs.23,94,827/- is permissible." 10. The CIT (A) having considered the net effect of the calculation prima facie found that the assessee had wrongly carried forward the deduction under Section 80IA of Rs.23,94,827/-, whereas there was no provision under the Income Tax Act to carry forward unabsorbed deduction under Section 80IA. The CIT (A), thereafter dismissed the appeal on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s charging of additional income tax under section 143 (1A) of the Income Tax Act?". 13. It is submitted by Shri R.K. Upadhyay that the ITAT has completely misdirected itself and has incorrectly followed its judgment delivered in Sybly Spinning Mills Pvt. Ltd. (Supra) without considering the order of CIT (A) on merits. The ITAT was not justified in directing the A.O. to allow deduction under Section 80IA, which was not an issue before it. The issue was regarding charging of additional income tax under Section 143 (1) (a) of the Act. 14. Shri R.R. Agrawal, learned counsel for the respondent assessee would submit that in the grounds of appeal in the Tribunal there was no ground taken or urged regarding the charging of additional tax. He has relied upon S.P. Kochar v. ITO, 1983 UPTC 861 in which this Court while interpreting the word 'thereon' under Section 254 (I) held that appeal may be heard on the subject matter of appeal. The word 'thereon' would mean subject matter of appeal and not any other plea or ground. Shri R.R. Agrawal has also relied upon the judgment of this Court in Indo-Gulf Fertilizers Chemicals Corpn. Ltd. v. Union of India, (1992) 195 ITR 485 in which scope of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rn. Clause (i) of the said Explanation provides about cases where the total income is increased, whereas Clause (ii) provides for any other case, where total income is reduced by the amount of adjustment. In none of these provisions, there is anything to indicate that, where losses are reduced, such cases would also be covered under the said provision. Circular No. 549, dated October 31, 1989 (see MANU/TN/0084/1989 : [1990]182ITR1(Mad) ), relied upon by the opposite parties is not correct when it says that Clause (i) of the aforesaid Explanation applies in the cases of loss returns only. It may be true that it may apply in a case where a loss return has been filed but on adjustment, the losses have disappeared and there is positive income which can be taxed. But to apply it in cases where after adjustment, the return showing losses still shows' losses, would not be correct." 15. Shri R.R. Agrawal further submits that after the judgment of this Court in Indo-Gulf Fertilizers Chemicals Corpn. Ltd. (Supra) the CBDT by its Circular No.689 again explained scope of prima facie disallowance under Section 143 (1) (a) of the Act and clarified as follows:- "Section 143 (1) (a) authoris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 80IA on the gross total income by reducing the loss of Unit-II from Unit-I and thereby declaring the return at Nil and carried forward the loss of Rs.23,94,827/-, which was not permissible. 18. We are of the view that the judgment in Indo-Gulf Fertilizers Chemicals Corpn. Ltd. (Supra) was rendered in the facts on its own case in which losses were sought to be reduced by loss and thereby no income was returned. The judgment is not applicable to the facts of the present case. 19. The powers under Section 154 can be used to rectify the mistake. It is true that the mistake should not be such, which may allow debate or where two views are possible. The mistake would also not include the cases, which are contentious and raise legal issues. In the present case there was no contentions issue or any legal issue on which two views are possible. The assessee had adopted a wrong method of calculation for the purposes of reducing income to 'Nil', and had also carrying the loss forward to next year. The computation was clearly impermissible and was against the provisions of Section 80A (2) of the Act. The gross total income as defined under Section 80B (5) includes total income compute ..... X X X X Extracts X X X X X X X X Extracts X X X X
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