Bombay High Court
Asian Cables Corporation Ltd. vs Commissioner Of Income-Tax, Bombay ... on 26 March, 1981
Equivalent citations: [1981]132ITR34(BOM), [1981]6TAXMAN244(BOM)
Author: P.B. Sawant
Bench: P.B. Sawant
JUDGMENT Chandurkar, J.
1. The ITO having found that for the assessment year 1967-68, he had by his earlier order carried forward deficiencies under s. 80J beyond the assessment year 1973-74, took action under s. 154 of the I.T. Act for rectification and found that the deficiency could not be carried forward beyond the seventh assessment year as reckoned from the end of the initial assessment year under prov. (i) to s. 80J(3). In those proceedings, it was contended on behalf of the assessee that deficiencies under s. 80J should have been set off first before setting off unabsorbed depreciation. This contention was rejected by the ITO on two grounds, namely, (1) that such an issue was never raised with at the time of the assessment or at the appellate stage and (2) that on merits also, the depreciation has to be set off in priority to s. 80J deductions, having regard to the definition of gross total income under s. 80B(5). He also relied on the decision in Ashok Motors Ltd. v. CIT (1961) 41ITR 397 (Mad). This order was upheld by the AAC and the Tribunal, and that is how question No.4 in respect of which rule was issued has been raised by the assessee.
2. It is obvious that the statutory definition of gross total income in s.. 80B(5) contemplated that the total income has to be computed in accordance with processions of the I.T. Act, before making any deduction under Chap. VI-A in which s. 80J is included. This definition thus makes it clear that unabsorbed depreciation has to first taken into account before the gross total income for the purposes of Chap. VI-A is considered. This position appears to us to be unassailable, and we, therefore, do not see any reason to make the rule absolute in this case. Rule discharged with costs.