9911796707
TMI Blog2006 (11) TMI 158X X X X Extracts X X X X X X X X Extracts X X X X ..... t judgment of the Supreme Court which is binding on us. In the case on hand, unfortunately both the parties have not chosen to refer to the Tribunal the impact of section 80AB. If only the Department had invited the attention of the Tribunal to the impact of section 80AB the Tribunal would not have passed this order. We express our displeasure in the matter. To avoid such recurring instances, in future, the Income-tax Department is well-advised to engage competent legal counsel, before the Tribunal, whenever large sums of money are involved with complicated questions of law. Income-tax provides revenue to the Government. If the Department is not properly defended, it would result in unnecessary references to this court and loss of time of every body concerned including the time of this court. We deem it proper to direct learned counsel to place our order before the Commissioner for proper remedical action in future cases. In the result, this appeal is accepted. The order of the Tribunal in so far as this issue is concerned, is set aside. - R. Gururajan And N. Ananda JJ. For the Appellants : M. V. Seshachala For the Respondent : S. Parthasarathi JUDGMENT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stributors (Baroda) P. Ltd. v. Union of India [1985] 155 ITR 120 and also the judgment of the Supreme Court in IPCA Laboratory Ltd. v. Deputy CIT [2004] 266 ITR 521. He would also rely on Motilal Pesticides (I.) P. Ltd. v. CIT [2000] 243 ITR 26 (SC). He would invite our attention to the judgment of this court in I. T. A. No. 86/99 dated July 12, 2006 (Asst. CIT v. Abcon Engineering and Systems P. Ltd. [2006] 287 ITR 201). While concluding he would invite our attention to a judgment of the Bombay High Court in Synco Industries Ltd. v. Assessing Officer of Income-tax [2002] 254 ITR 608 in which the Bombay High Court has considered CIT v. Canara Workshops P. Ltd. [1986] 161 ITR 320 (SC) for the purpose of consideration of section 80AB of the Income-tax Act. He would say that the Commissioner has committed a legal error in granting the relief, which is confirmed by the Tribunal. He would request us to answer the question of law in favour of the Revenue. 5. Per contra, learned counsel Sri Parthasarathi appearing for the assessee would support the order of the Tribunal, in addition he would invite our attention to the judgment of the Supreme Court in CIT v. Canara Workshops P. Ltd. [1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e order of the Commissioner in its order. The Tribunal has chosen to notice Distributors (Baroda) P. Ltd. v. Union of India [1985] 155 ITR 120 (SC) and CIT v. Canara Workshops P. Ltd. [1986] 161 ITR 320 (SC). Let me see as to whether the Commissioner is justified in granting relief in terms of section 80-I of the Act without considering the loss suffered in lease business by the very assessee. 8. Before we touch upon the merits of the matter, we have considered the legal provisions which have some impact on the facts of this case. Section 80-I provides for deduction in respect of profits and gains from industrial undertaking. After certain date section 80AB has been introduced retrospectively. The courts have considered the impact of section 80AB in the matter of deduction in terms of Chapter VI-A of the Act. The Supreme Court in IPCA Laboratory Ltd. v. Deputy CIT [2004] 266 ITR 521 has referred to section 80HHC and thereafter the Supreme Court at page 530 has chosen to notice the profit and loss of an undertaking for the purpose of deduction in terms of Chapter VI-A of the Income-tax Act. The Supreme Court has ruled as under (page 530) : Section 80AB is also in Chapter VI- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1985] 155 ITR 120 (SC) however, this court specifically over turned its earlier decision in Cloth Traders (P) Ltd.' s case [1979] 118 ITR 243 (SC), and held that deduction is to be allowed only on the net income and not on the gross income. With reference to section 80AB, this court said it was merely of a clarificatory nature and the decision of this court in Distributors (Baroda) (P.) Ltd.' s case [1985] 155 ITR 120 is thus irrespective of section 80AB of the Act. The High Court, therefore, relying on the decision of this court in Distributors (Baroda) (P.) Ltd.' s case [1985] 155 ITR 120 answered the question in favour of the Revenue and against the assessee. 10. These two judgments make it very clear that section 80AB would override all other sections for the purpose of deduction in Chapter VI-A of the Income-tax Act. 11. In fact this very issue has been considered by various courts. 12. In CIT v. Chemical and Metallurgical Design Co. Ltd. [2001] 247 ITR 749 a Full Bench judgment of the Delhi High Court has chosen to say that in terms of the stipulation contained in section 80AB of the Act one thing which emerges clearly is that the mode of computation as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AB of the Act. In the light of the subsequent judgment of the Supreme Court these judgments are of no assistance to the assessee. In the given circumstances, we deem it proper not to place reliance on this judgment for the purpose of consideration of section 80AB and that too in the light of the subsequent judgment of the Supreme Court which is binding on us. 18. Lastly, the contention with regard to section 80AB of the Act, learned counsel would say that the wording in section 80AB would indicate that the deduction has to be with reference to the total income of the assessee and for the purpose of computing deduction in that section the amount of income of that nature as computed in accordance with the provisions of this Act has to be taken note of. According to learned counsel, the words of that nature have to be with reference to the activity of the tele cables and not with reference to lease business. We are not prepared to accept this submission. Section 80AB has been introduced with the laudable object of considering deduction with reference to the gross total income. Any acceptance of the argument of the assessee, would result in our diluting the words gross total inco ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
