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TMI Blog1991 (3) TMI 86X X X X Extracts X X X X X X X X Extracts X X X X ..... he Income-tax Act ? (3) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that technical fees amounting to Rs. 86,643 paid as per collaboration agreement is revenue expenditure allowable in the assessment year 1972-73 ?" The relevant assessment years are 1971-72 and 1972-73. Counsel are agreed that the answer to question No. 2 is covered by the judgment of the Hon'ble Supreme Court in CIT v. Andhra Prabha P. Ltd. [1986] 158 ITR 416, and so the question is required to be answered in the affirmative and in favour of the assessee. We, accordingly, answer question No. 2 in the affirmative and in favour of the assessee. Counsel are also agreed that the answer to question No. 3 is covered by the judgment of our court in LIC v. CIT [1978] 115 ITR 45 (sic), and so the question is required to be answered in the affirmative and in favour of the assessee. We, accordingly, answer question No. 3 in the affirmative and in favour of the assessee. As regards question No. 1, the matter has been argued at some length by learned counsel on both sides as it involves an important question of law in respect of carry forward and set-off of defi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld not be, therefore computed by the Income-tax Officer during that assessment year. The Income-tax Officer came to the conclusion that section 80J deficiency for the assessment year 1968-69 could not be verified, computed or allowed during the assessment year 1971-72 and the Assessing Officer, for the assessment year 1971-72, had no jurisdiction to do so. The Income-tax Officer held that the assessee had lost the right to claim benefit of carry forward and set-off of the said deficiency by reason of its own default. In appeal, the Appellate Assistant Commissioner took the same view and held that the assessee was not entitled to the set-off of the unascertained and uncomputed deficiency under section 80J of the Income-tax Act, 1961, pertaining to the assessment year 1968-69 against the current profits of the assessee for the assessment year 1971-72. The Income-tax Appellate Tribunal in appeal, however, came to the conclusion that the assessee was entitled to the benefit of the carry forward of section 80J deficiency on the ground that there was no provision under the Income-tax Act, 1961, or under the Income-tax Rules, 1962, prescribing an obligation to the effect that the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1967 (not being an assessment year prior to the initial assessment year or subsequent to the fourth assessment year as reckoned from the end of the initial assessment year) falls short of the relevant amount of capital employed during the previous year, the amount of such shortfall, or, where there are no such profits and gains, an amount equal to the relevant amount of capital employed during the previous year (such amount, in either case, being hereafter, in this section, referred to as deficiency) shall be carried forward and set-off against the profits and gains referred to in sub-section (1) (as computed after allowing the deductions, if any, admissible under section 80HH or section 80HHA and the said sub-section (1)) in respect of the previous year relevant to the next following assessment year and, if there are no such profits and gains for that assessment year, or where the deficiency exceeds such profits and gains, the whole or balance of the deficiency, as the case may be, shall be set off against such profits and gains for the next following assessment year and if and so far as such deficiency cannot be wholly so set off, it shall be set off against such profits and gai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... losses form part of a separate Chapter under the Income-tax Act, 1961, being Chapter VI. Section 80J forms part of a separate chapter, i.e., Chapter VI-A of the Income-tax Act, 1961. Dr. Balasubramaniam, learned counsel for the Revenue, invites the attention of the court to section 80 of the Income-tax Act, 1961. Section 80 provides that the benefit of carry forward and set-off of loss cannot be claimed by the assessee, unless the loss has been first determined by the Income-tax Officer in pursuance of a return filed by the assessee under the Act. Computation of section 80J deficiency cannot be equated to computation of loss. The two provisions are different and distinct. Section 80, with respect, has no relevance for the purpose of interpreting section 80J(3). If an analogy is to be applied, which appears to us to be unnecessary, the provisions of law contained in the Indian Income-tax Act, 1922, prior to the incorporation of section 22(2A) therein, may perhaps have some relevance. Section 22(2A) was inserted in the Indian Income-tax Act, 1922, by section 14 of the Indian Income-tax (Amendment) Act, 1953, with effect from April 1, 1952. By the said section, it was for the first t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee need not necessarily go through the aforesaid exercise in the year of loss by making a claim for section 80J deficiency and getting the same computed in the year of loss. The assessee may do so. The substantive right conferred on the assessee to carry forward and set off section 80J deficiency under section 80J(3) cannot be defeated merely by reason of an omission, on the part of the assessee in that behalf where there is no legal obligation to follow a particular procedure and there is no provision in the Act and the Rules obliging the assessee to follow a particular procedure, as contended by the Department. The facts of this case and the issue involved are similar to the facts of the above referred judgment of the High Court of Allahabad. In Indian Aluminium Co. Ltd. v. CIT [1980] 122 ITR 660, the High Court of Calcutta took the same view on the subject. The Hon'ble Division Bench observed during the course of this judgment that the Income-tax Rules, 1962, did not prescribe any procedure for prior determination of such deficiency and the income-tax return form did not have even column for making such a claim. These were the additional reasons provided by the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 89] 180 ITR 251. In this case, the High Court of Punjab agreed with all the judgments of different High Courts on the subject other than the judgment of the High Court of Karnataka and observed as under (at p. 255) : "With respect, the view of the High Court of Allahabad in Sheetalaya's case [1979] 117 ITR 658 is indeed to be preferred as, in our view, there is no bar to the Income-tax Officer dealing with the assessment for the subsequent year to compute the loss in the previous year for the purpose of section 80J of the Act." We are in respectful agreement with the view taken in the above referred case cited by Shri Mehta, learned counsel for the assessee. Shri Mehta has also relied on the judgments of other High Courts in CIT v. Mattoo Worsted Spinning and Weaving Mills [1983] 139 ITR 1020 (J K) and CIT v. Caps and Caps [1989] 179 ITR 235 (MP). The Hon'ble High Courts of Jammu and Kashmir and Madhya Pradesh have taken the same view as the High Court of Punjab. With respect, we are unable to agree with the view taken by the High Court of Karnataka. We prefer to follow the view of the majority of the High Courts after going through each of the cases, as the interpretation of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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