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TMI Blog2011 (1) TMI 1536X X X X Extracts X X X X X X X X Extracts X X X X ..... m of ₹ 11,33,53,911/-. The deduction under Chapter-VIA of the Act was determined as follows:- Deduction under Chapter - VI A i) u/s.80 G 2,95,125 ii) u/s.80M 2,96,99,157 iii) u/s.80-O 1,84,76,240 4,84,70,522 3. Under Section- 80A(2) of the Act, the aggregate amount of deduction under Chapter - VIA of the Act should not in any case exceed the gross total income of the assessee. Sec.80-AB provides as follows: "Deductions to be made with reference to the income included in the gross total income. 80AB. Where any deduction is required to be made or allowed under any section included in this Chapter under the heading "C.-Deductions in respect of certain incomes" in respect of any income of the nature specified in that section which is included in the gross total income of the assessee, then, notwithstanding anything contained in that section, for the purpose of computing the deduction under that section, the amount of income of that nature as computed in accordance with the provisions of this Act (before making any deduction under this Chapter) shall alone be deemed to be the amount of income of that nature which is derived or received by the assessee and which is inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of the learned CIT(Appeals) dated 20/8/2000 had not given any directions with regard to the claim of deduction u/s.80-O of the Act nor any direction with regard to the deduction to be allowed under Chapter-VI-A of the Act vis-à-vis-gross total income or income under the head "Income from Business". It was the plea of the Assessee that the question of determining the quantum of deduction u/s.80-O of the Act, was never subject matter of appeal before ITAT and therefore can never be considered by the AO while giving effect to the order of the Tribunal. The Assessing Officer on considering the above application of the assessee found that the claim made by the assessee was correct and he, therefore, rectified his order by determining the deduction u/s.80-O of the Act at ₹ 2,47,19,924/- by his order u/s.154 of the Act, dated 20-02-2007. The Assessee had also filed an appeal against the order dated 4-12-2006 whereby the Assessing Officer gave effect to the directions of the ITAT order dated 20.06.2006. The appeal was filed on 02.01.2007. By the time the appeal was heard by the learned CIT(Appeals), the Assessing Officer had already passed order u/s.154 of the Act on 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... head "Income from business". Alternatively, it was submitted that there were two views possible on the issue and, therefore, the jurisdiction u/s.263 cannot be invoked. In this regard, it was pointed out that the provision u/s.80AB of the Act, on which the CIT had placed reliance was applicable only while determining the nature of income that is entitled to deduction under Chapter-VIA of the Act and no limits with regard to the quantum of deduction to be allowed under any provisions contained in Chapter VI-A of the Act, can be read into the provisions of Sec.80-AB of the Act. 9. The learned CIT, however, did not agree with the submission of the assessee for the following reasons:- "I have given my earnest consideration to the contentions raised by the assessee and I must state that these are not acceptable for the reasons stated below: The order dated 04.12.2006 is one that gives effect to the ITAT's order dated 20.06.2006. In this order the business income of the assessee has been recomputed at ₹ 81,63,115/- after taking into account the various relief's granted by the ITAT. In giving effect to an appellate order, it is the duty of the Assessing Officer not only to allo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ermit the allowance of any amount in excess of the business income included in the gross total income. There is also no merit in the argument of the assessee that since on the applicability of Section 80 AB in restricting the deduction u/s.80-0 and 80 HHB to the business income, two views are possible, the CIT is precluded from invoking his powers u/s.263 in view of the ratio of the Supreme Court decision in the case of Malabar Industries Co. Ltd. vs. CIT (243 ITR 83), as there cannot be two plausible views on this issue. In the light of the foregoing discussion it is held that the order dated 20.02.2007 is erroneous and prejudicial to the interest of revenue and there is nothing on fact or in law barring the CIT from exercising his jurisdiction u/s.263 if the I.T, Act. Hence the order dated 20-02-2007 is set aside. The A.O. is directed to pass a fresh order restricting the deductions u/s.80-0 and 80 HHB to the business income included in the gross total income." 10. Aggrieved by the order u/s.263, the Assessee has preferred the present appeal before the Tribunal. 11. We have heard the rival submissions. The learned counsel for the Assessee submitted that in the order of asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether deduction under any sections of Chapter-VI-A of the Act, had to be restricted to the income under the head "Income from business" because of the provisions of Sec.80-AB of the Act, or it is only the overall ceiling of deduction under Sec.80-A(2) that has to be seen. Since the issues dealt with in the order dated 06.10.2003 and 20.02.2007 were different, there would be no question of the order dated 06.10.2003 merging with the order dated 4-12-2006. Therefore the order u/s.154 of the Act dated 20/2/2007 modifying the order dated 4/12/2006 was not erroneous and therefore the CIT could not revise the said order in exercise of his powers u/s.263 of the Act. It was his further submission that the CIT exercised jurisdiction u/s.263 by order dated 30.03.2009. The period of limitation for exercising jurisdiction u/s.263 in terms of Sec.263(2) is two years from the end of the financial year in which the order sought to be revised was passed. The period of limitation for passing the order u/s.263, if it is reckoned from the order dated 06.10.2003 would expire on 31.03.2006. It was his submission that having omitted to take appropriate action u/s.263 of the Act against the order dated 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Buildcon Ltd. (Supra) was a case of reassessment, whereas the case of the Assessee the orders relate to giving effect to the order of CIT(A) and ITAT which cannot be equated with order of assessment and reassessment. It was also his submission that the issues dealt with in the order which was revised u/s.263 were consequential to the orders of the appellate authorities and the AO examined them for the first time in the order dated 20.02.2007. 13. We have carefully considered the rival submissions. Under Section 263 of the Act, the commissioner may call for and examine the record of any proceeding under this Act and if he considers that any order passed therein by the AO is erroneous and prejudicial to the interest of the revenue, he may exercise jurisdiction by modifying, enhancing the assessment or canceling the assessment and directing a fresh assessment. The expression "any proceedings under this Act and if considers that any order passed therein by the Assessing Officer" no doubt gives power to examine the record of any proceedings under the Act. However the Commissioner, if he wants to exercise jurisdiction u/s.263 and revise an order passed by the Assessing Officer, then he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... examined by the AO. The issues before the ITAT were totally different and had nothing to do with the question as to whether deduction under any sections of Chapter-VI-A of the Act, had to be restricted to the income under the head "Income from business" because of the provisions of Sec.80-AB of the Act, or it is only the overall ceiling of deduction under Sec.80-A(2) of the Act that has to be seen. Since the issues dealt with in the order dated 06.10.2003 and 20.02.2007 were different, there would be no question of the order dated 06.10.2003 merging with the order dated 4/12/2006. The AO in his order dated 4.12.2006 while giving effect to the order of the tribunal acted beyond his jurisdiction in restricting the deduction u/s.80-O of the Act to the extent of income under the head "Income from Business". He realized this mistake and rightly passed order u/s.154 of the Act dated 20.2.2007. 14. For the reasons given above, we are of the view that the order dated 20.2.2007 passed by the AO u/s.154 of the Act was not erroneous. The order u/s.263 of the Act dated 30.03.2009 revising the order dated 20.02.2007 is bad in law. On this ground the order u/s.263 is liable to be quashed and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) setting off brought forward unabsorbed losses and unabsorbed depreciation, etc., only if the gross total income so determined is positive the question of allowing the deduction under Chapter VI-A would arise, not otherwise. It can be seen from the above decision that restricting deduction under Chapter VI-A of the Act, to the income under the head "Income from Business" was never referred to by the Hon'ble Supreme Court. The view of the CIT in the impugned order under Sec.263 of the Act, is therefore contrary to the mode of computation as explained by the Hon'ble Supreme Court as above. 17. The purpose of Sec.80-AB of the Act, is aimed at ensuring that the deduction to be allowed under any section of Chapter-VI A of the Act, does not exceed the net income under a particular source computed in accordance with the provisions of the Act. Income of a particular nature, which can be claimed as deduction under Chapter-VI A of the Act, have to be determined in accordance with the provisions of the Act, and only that can be said to be included in the gross total income. Section 80-AA of the Act, which is analogous to Sec.80-AB of the Act, was enacted to get over the decision of the Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X
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