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TMI Blog1986 (5) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer since he found the assessable income for the year under consideration after setting off of losses and unabsorbed depreciation of the earlier year came to a nil figure. The assessee appealed to the Appellate Assistant Commissioner who allowed those claims of the assessee following the orders of the Tribunal on this point in various cases. Against that order of the Appellate Assistant Commissioner, the Department preferred an appeal before the Tribunal and it was contended on behalf of the Department that in accordance with the provisions of sections 80B(5) and 80A(2) of the Act which came into force with effect from April 1, 1968, the assessee was not entitled to the deductions claimed under sections 80G and 80M of the Act because the assessee's income for the purpose of income-tax assessment came to a nil figure, and that the term " gross total income " meant the total income as computed after considering the provisions of sections 71 and 72 of the Act, but before making any deductions under Chapter VI-A and under section 280C of the Act. It was submitted that on the aforesaid basis, the income of the assessee came to a nil figure and, consequently, the deductions claimed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tled to a deduction of 8 per cent. as contemplated by section 80E(1) without deduction of the unabsorbed depreciation and development rebate in the priority industry. " On the other hand, Mr. Bhattacharjee, the learned advocate appearing for the Commissioner, has drawn our attention to the judgment of this court in the case of CIT v. Mckod & Co. Ltd. [1982] 134 ITR 674. One of the questions in the said case was (at p. 675): " (1) Whether, on the facts and in the circumstances of the case, and on a proper interpretation of section 2(45), section 80B(5) and section 80A(2) of the Income-tax Act, 1961, the Tribunal was correct in holding that the deduction under section 80M of the said Act should be calculated with reference to the total income and gross total income as they stood before setting off the losses under section 71 or section 72 of the Act ? " The court answered the question in the following manner (at page 675): " So far as the first question is concerned, in view of the ratio of the decision of this court in the case of National Engineering Industries Ltd. v. CIT [1978] 113 ITR 252 and the ratio of the decision of the Supreme Court in the case of Cloth Traders (P.) Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... development rebate were liable to be deducted in arriving at the figure of profits and gains exigible to deduction of 8% contemplated in sub-section (1) of section 80E. The argument of the assessee was precisely the same as the one advanced in the present case, namely, that the words 'such profits and gains' in the latter part of sub-section (1) of section 80E were intended to refer only to the category of profits and gains referred to in the earlier part of that provision, namely, 'profits and gains attributable to the business of generation or distribution of electricity or any other form of power or of construction, manufacture or production of any one or more of the articles or things specified in the list in the Fifth Schedule' and not to the quantum of the profits and gains included in the total income, so that the profits and gains exigible to the deduction of 8% were the profits and gains attributable to the specified business in their entirety and not the profits and gains as computed in accordance with the provisions of the Act. The assessee contended that, in the circumstances, unabsorbed depreciation and unabsorbed development rebate were not liable to be deducted from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es for carry forward of depreciation) and section 33(2) (which provides for carry forward of development rebate for eight years). In other words, in computing the total income of the concerned assessee, items of unabsorbed depreciation and unabsorbed development rebate will have to be deducted before arriving at the figure that will become exigible to the deduction of 8% contemplated by section 80E(1).' It will thus be seen that, according to this decision, the words ' such profits and gains ' in the latter part of sub-section (1) of section 80E were referable to the quantum of the profits and gains attributable to the specified business included in the total income as referred to in the earlier part of the provision. If this decision lays down the correct interpretation of subsection (1) of section 80E, the same interpretation must also govern the language of sub-section (1) of section 80M. Structurally, there is hardly any difference between section 80E, sub-section (1), and section 80M, sub-section (1), and the reasoning which appealed to the court in the interpretation of subsection (1) of section 80E must apply equally in the interpretation of subsection (1) of section 80M. W ..... X X X X Extracts X X X X X X X X Extracts X X X X
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