ORDER
The Income Tax Appellate Tribunal, Jaipur has referred the following question for the opinion of this court :
'Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the deduction under section 80P of the Income Tax Act should be allowed before set-off of unabsorbed losses of earlier years ?'
2. It is agreed by the learned counsel for the parties that the controversy involved in the instant reference stands concluded by the decision of the Apex Court in CIT v. Kotagiri Industrial Co-operative Tea Factory Ltd. : [1997]224ITR604(SC) as such, the question deserves to be answered in favour of the revenue and against the assessee.
3. The respondent-assessee Ganganagar Sahkari Spinning Mills Ltd., Hanumangarh is a Co-operative Society. The assessee initially filed its return on 29-10-1990 declaring loss. On 17-1-1992, the return was revised by reducing the loss to a sum of Rs. 4,78,72,532 against the sum of Rs. 5,38,73,220 in the original return. The assessee claimed deduction under section 80P(2)(d) of Rs. 2,54,081 being interest received by it from the Co-operative Bank. This claim was disallowed by the assessing officer for the reason that the assessee did not have positive gross total income to make any claim for deduction under section 80P(2)(d). The Commissioner (Appeals) allowed the appeal of the assessee and it was stated by the Commissioner (Appeals) in his order that each year is a separate accounting entity and, accordingly, it is the gross total income of each year, which is relevant for the purpose of deduction and allowance of that year. It was also observed that gross total income for the year was Rs. 39,68,633 and it resulted into a negative figure only after adjustment of brought forward losses. The Tribunal held that the finding recorded by the Commissioner (Appeals) that the assessment has been made on positive income, was correct.
4. At this stage, it would be convenient to extract section 80P(2)(d) which reads thus :
'Deduction in respect of income of co-operative societies.
(1) ** ** **
(2) The sums referred to in sub-section (1) shall be the following, namely :
(a) to (c) ** ** **
(d) in respect of any income by way of interest or dividends derived by the co-operative society from its investments with any other cooperative society, the whole of such income;'
5. For the purposes of Chapter VI-A, the expression 'gross total income' is defined in clause (5) of section 80B in the following terms :
'(5) 'gross total income' means the total income computed in accordance with the provisions of this Act, before making any deduction under this Chapter.'
6. The Apex Court after reading the relevant provisions stated above, held as follows :
'If section 80P(1) is read with the definition of the expression 'gross total income contained in section 80B(5), it has to be held that for the purpose of making deduction under section 80P, it is necessary to first determine the gross total income in accordance with the other provisions of the Act. This means that for the purposes of the present case, the gross total income must be determined by setting off against the income the business losses of the earlier years as required under section 712 of the Act.' (p. 607)
The Apex Court further observed
'The principle of statutory construction invoked by Mrs. Ramachandran has no application in construing the expression gross total income' in subsection (1) of section 80P. In view of the express provision defining the said expression in section 80B(5) for the purpose of Chapter VI-A, there is no scope for construing the said expression differently in section 80P.' (p. 609)
7. Thus, the question referred stands answered by the decision of the Apex Court referred to above.
8. Consequently, the Reference is answered in favour of the revenue and against the assessee.