Commissioner Of Income Tax-Ichennai v. M/S.ashok Leyland Limitedchennai-1

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 21.03.2007 THE HONOURABLE MR.JUSTICE P.D.DINAKARANand THE HONOURABLE MRS.JUSTICE CHITRA VENKATARAMAN T.C. (Appeal) No.59 of 2004 Commissioner of Income Tax-IChennai... Appellant versus M/s.Ashok Leyland LimitedChennai-1. PRAYER: Tax Case Appeal filed under Section 260A of the Income Tax Act,1961, against the order dated 18.6.2003 in ITA No.1403/Mds/1994 on thefile of the Income Tax Appellate Tribunal, Madras 'C' Bench against theorder of the Commissioner of Income Tax (AppealI) Madras 34, dated 29.3.94in ITA No.109/93-94 against the order of The Assistant CommissionerCentral Circle II (1) Madras 600 034, dated 31.12.93 in PA No.47-066-CX-2954/90-91. (Judgment of the Court was delivered by CHITRA VENKATARAMAN,J.) This appeal is by the Revenue against the order of the Tribunal,raising the question as to whether the Tribunal was right in holding thatthe short-term capital loss should not be deducted from the profits forthe purpose of computation of deduction under Section 80 HHC. The appealrelates to the assessment year 1990-91. 2. It is seen that while computing the business income for thepurpose of Section 80 HHC, the Income Tax Officer deducted the short-termcapital loss from the income from business. On appeal, the Commissionerof Income Tax (Appeals) agreed with the assessee and held that the incomefrom business for the purpose of Section 80 HHC should be the one computed https://hcservices.ecourts.gov.in/hcservices/ as per Section 28 and hence, the deduction need to be re-computed bytaking the business income without making any deduction for capital loss. 3. The Revenue went on appeal before the Tribunal. The Tribunalfollowed the decision in the very same assessee's case in I.T.A.Nos.61 and70 (Mds)/1994 and dismissed the Revenue's appeal. Aggrieved of the same,the present appeal is filed before this Court. 4. Learned senior standing counsel appearing for the Revenuesubmitted that the Tribunal committed an error in its view that the incomefrom business for the purpose of Section 80 HHC should be computed as perSection 28 of the Income Tax Act and that the capital loss should beexcluded from the business income for computing the deduction underSection 80 HHC. She also pointed out that the earlier order referred to inthe Tribunal's order pertains to a different issue. It is a subjectmatter of Tax Case Nos.404 and 405 of 2004. 5. It may be noted that in the decision reported in 266 ITR 521 (IPCALABORATORY LTD. Vs. DEPUTY C.I.T. (S.C.), the Apex Court held that thededuction under Section 80 HHC has to be worked out, keeping in mind theprovisions of Section 80 AB. Section 80 AB deals with the deduction to bemade with reference to the income included in the gross total income.Secion 80 B(5) defines 'gross total income" to mean "the total incomecomputed in accordance with the provisions of this Act, before makingany deductions under Chapter VI-A. 6. In the light of the decision of the Apex Court, computing theincome in accordance with the provisions of the Act before going in forthe deduction under Chapter VIA, on the interpretation given to the schemeof Section 80 HHC with reference to Section 80 AB, read with Section 80 B(5) that it has overriding effect over all other Sections in Chapter VI Aand the computation of total income in accordance with the provisions ofthe Act, we reject the contentions of the revenue and thereby dismissthis appeal. 7. In the circumstances the questions raised are answered against theRevenue confirming the order of the Tribunal. No costs. /true copy/ ksv Sub Asst.Registrar To: 1. The Assistant Registrar, Income Tax Appellate Tribunal, Bench"C" Rajaji Bhavan, III Floor Besant Nagar, Chennai.90. 2. The Commissioner of Income Tax, (Appeals I) Chennai.34. (Appeals I) Chennai.34. 3. The Assistant Commissioner, Central Circle II (1), Madras .34. 7. In the circumstances the questions raised are answered against theRevenue confirming the order of the Tribunal. No costs. /true copy/ ksv Sub Asst.Registrar To: 1. The Assistant Registrar, Income Tax Appellate Tribunal, Bench"C" Rajaji Bhavan, III Floor Besant Nagar, Chennai.90. 2. The Commissioner of Income Tax, (Appeals I) Chennai.34. (Appeals I) Chennai.34. 3. The Assistant Commissioner, Central Circle II (1), Madras .34. 4. Commissioner of Income Tax-I Chennai. Chennai. + 1 cc to Mrs.Pushya Sitaraman Adocate SR.NO 18000 TEJ(CO)RD 5.9.07 T.C. (Appeal) No.59 of 2004