Great Eastern Shipping Co. Ltd. Vs. Commissioner of Income-tax - Court Judgment

SooperKanoon Citationsooperkanoon.com/352204
SubjectDirect Taxation
CourtMumbai High Court
Decided OnSep-15-1993
Case NumberIncome-tax Reference No. 111 of 1981
JudgeB.P. Saraf and ; D.R. Dhanuka, JJ.
Reported in[1994]206ITR505(Bom)
ActsIncome Tax Act, 1961 - Sections 2(45), 5, 14, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43A, 80J and 80J(1)
AppellantGreat Eastern Shipping Co. Ltd.
RespondentCommissioner of Income-tax
Appellant AdvocateMrs. Aarti Vissanji, Adv.
Respondent AdvocateG.S. Jetly, Adv.
Excerpt:
- indian evidence act, 1872 section 24: [v.s. sirpurkar & deepak verma,jj] dying declaration - multiple murders by accused - dying declaration not implicating one accused - evidence of eye witnesses however completely fixing his criminal liability ocular evidence found credible held, absence of his name in dying declaration would be of no help to accused. - this classification has been done for the purposes of charge of income-tax and 'computation of total income'.5. it is well-settled each head of income is distinct, head.dr. b.p. saraf, j.1. by this reference under section 256(1) of the income-tax act, 1961, at the instance of the assessee, the income-tax appellate tribunal has referred the following two questions of law to this court for opinion : '1. whether, on the facts and in the circumstances of the case, the amount of relief allowable under section 80j(1) should be allowed as deduction by way of set off against the total income of the assessee consisting of capital gains 2. whether, on the facts and in the circumstances of the case, the amount of deduction by way of development rebate should be set off against the income from capital gains in the first instance ?' 2. the assessee is a company. it carries on the business of playing ships. the relevant assessment year is 1973-74, the corresponding previous year being the year ended on march 31, 1973. in the assessment for the above assessment year, the assessee was entitled to some relief under section 80j(1) and also deduction by way of development rebate under section 33 of the act. the income-tax officer allowed relief under section 80j(1) by deduction the amount on that account as a deduction in computing the profits and against of the industrial undertaking in question. consequently, the total income, of the assessee under the head of income from business got reduced. the grievance of the assessee before the authorities below was that deduction under section 80j(1) should have been allowed not in the computation of the profits and gains of the assessee from the business in question but from its income under the head 'capital gains'. this contention of the assessee was not accepted by any of the authorities below including the income-tax appellate tribunal. the assessee is, therefore, before us by way of reference. question no. 1 pertains to the above controversy. the second question relates to the claim of the assessee for deduction of development rebate. the income-tax officer accepted the claim of the assessee for development rebate under section 33 of the act by deducting the same in the computation of the business income of the assessee. the assessee is aggrieved by this action of the income-tax officer. according to him, development rebate should have been allowed as a deduction not from 'income from business' but from the total income of the assessee including capital gains. 3. we have heard mrs. aarti vissanji, learned counsel for the assessee, at length. we have carefully perused the provisions of sections 28, 29, 33 and 80j of the act. we have also considered the definition of total income as given in section 2(45) of the act which is in the following terms : '2(45) 'total income' means the total amount of income referred to in section 5, computed in the manner laid down in this act;' 4. the scope of total is defined in section 5 which says that it includes all income from whatever source derived. section 14 classified the income under different heads. this classification has been done for the purposes of charge of income-tax and 'computation of total income'. 5. it is well-settled each head of income is distinct, head. income under particular head has to be computed in the manner laid down in the act for that purpose, and it is the aggregate income under different heads computed in such manner which forms the 'total income'. in that view of the matter, we find it difficult to understand the logic of the argument of learned counsel for the assessee that the total income should be arrived first for the purpose of giving deduction under section 33 of the act. it seems learned counsel is trying to put the cart before the horse. the argument of counsel goes counter to the clear scheme of the act which provides for computation of income under each head first and sets out the manner of computation thereof including the various deductions and allowances permissible in the computation of such income. the question of aggregation of income from all sources to arrive at the total income can arise only thereafter. 6. section 28 of the act specifies the income that shall be chargeable to income-tax under the head 'profits and gains of business or profession'. section 29 lays down the manner of computation of income from profits and gains of business or profession. it provides that the income referred to in section 28 shall be computed in accordance with the provisions contained in sections 30 to 43a of the act. section 33 of the act provides for allowance of a deduction of the sum computed in the manner laid down therein by way of deduction, evidently, is to be made as provided in section 29 while computing the income from business referred to in section 28 of the act. 7. in that view of the matter, we do not find any merit in the contention of learned counsel for the assessee that the development rebate allowable under section 33 of the act should be allowed as deduction from capital gains as claimed by it and not from business income. 8. so far as the claim under section 80j is concerned, the language of the section itself is clear, which provides that : 'where the gross total income of an assessee includes any profits and gains derived from an industrial undertaking or a ship or the business of a hotel, to which this section applies, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such profits and gains (reduced by the dedication, if any, admissible to the assessee under section 80h).......' 9. the language of section 80j is quite clear and unambiguous. it specifically says that deduction is to be allowed 'from such profits and gains reduces by the deduction, if any, admissible under section 80h....', meaning thereby the profits and gains referred to in the earlier part of the section, namely, 'any profits and gains derived from an industrial undertaking'. in that view of the matter, the answer to question no. 1 is self-evident. 10. in the light of the foregoing discussion, we answer both the questions referred to us in the negative and in favour of the revenue. 11. under the facts and circumstances of the case, there shall be no order as to costs.
Judgment:

DR. B.P. Saraf, J.

1. By this reference under section 256(1) of the Income-tax Act, 1961, at the instance of the assessee, the Income-tax Appellate Tribunal has referred the following two questions of law to this court for opinion :

'1. Whether, on the facts and in the circumstances of the case, the amount of relief allowable under section 80J(1) should be allowed as deduction by way of set off against the total income of the assessee consisting of capital gains

2. Whether, on the facts and in the circumstances of the case, the amount of deduction by way of development rebate should be set off against the income from capital gains in the first instance ?'

2. The assessee is a company. It carries on the business of playing ships. The relevant assessment year is 1973-74, the corresponding previous year being the year ended on March 31, 1973. In the assessment for the above assessment year, the assessee was entitled to some relief under section 80J(1) and also deduction by way of development rebate under section 33 of the Act. The Income-tax Officer allowed relief under section 80J(1) by deduction the amount on that account as a deduction in computing the profits and against of the industrial undertaking in question. Consequently, the total income, of the assessee under the head of income from business got reduced. The grievance of the assessee before the authorities below was that deduction under section 80J(1) should have been allowed not in the computation of the profits and gains of the assessee from the business in question but from its income under the head 'Capital gains'. This contention of the assessee was not accepted by any of the authorities below including the Income-tax Appellate Tribunal. The assessee is, therefore, before us by way of reference. Question No. 1 pertains to the above controversy. The second question relates to the claim of the assessee for deduction of development rebate. The Income-tax Officer accepted the claim of the assessee for development rebate under section 33 of the Act by deducting the same in the computation of the business income of the assessee. The assessee is aggrieved by this action of the Income-tax Officer. According to him, development rebate should have been allowed as a deduction not from 'income from business' but from the total income of the assessee including capital gains.

3. We have heard Mrs. Aarti Vissanji, learned counsel for the assessee, at length. We have carefully perused the provisions of sections 28, 29, 33 and 80J of the Act. We have also considered the definition of total income as given in section 2(45) of the Act which is in the following terms :

'2(45) 'total income' means the total amount of income referred to in section 5, computed in the manner laid down in this Act;'

4. The scope of total is defined in section 5 which says that it includes all income from whatever source derived. Section 14 classified the income under different heads. This classification has been done for the purposes of charge of income-tax and 'computation of total income'.

5. It is well-settled each head of income is distinct, head. Income under particular head has to be computed in the manner laid down in the Act for that purpose, and it is the aggregate income under different heads computed in such manner which forms the 'total income'. In that view of the matter, we find it difficult to understand the logic of the argument of learned counsel for the assessee that the total income should be arrived first for the purpose of giving deduction under section 33 of the Act. It seems learned counsel is trying to put the cart before the horse. The argument of counsel goes counter to the clear scheme of the Act which provides for computation of income under each head first and sets out the manner of computation thereof including the various deductions and allowances permissible in the computation of such income. The question of aggregation of income from all sources to arrive at the total income can arise only thereafter.

6. Section 28 of the Act specifies the income that shall be chargeable to income-tax under the head 'Profits and gains of business or profession'. Section 29 lays down the manner of computation of income from profits and gains of business or profession. It provides that the income referred to in section 28 shall be computed in accordance with the provisions contained in sections 30 to 43A of the Act. Section 33 of the Act provides for allowance of a deduction of the sum computed in the manner laid down therein by way of deduction, evidently, is to be made as provided in section 29 while computing the income from business referred to in section 28 of the Act.

7. In that view of the matter, we do not find any merit in the contention of learned counsel for the assessee that the development rebate allowable under section 33 of the Act should be allowed as deduction from capital gains as claimed by it and not from business income.

8. So far as the claim under section 80J is concerned, the language of the section itself is clear, which provides that :

'Where the gross total income of an assessee includes any profits and gains derived from an industrial undertaking or a ship or the business of a hotel, to which this section applies, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such profits and gains (reduced by the dedication, if any, admissible to the assessee under section 80H).......'

9. The language of section 80J is quite clear and unambiguous. It specifically says that deduction is to be allowed 'from such profits and gains reduces by the deduction, if any, admissible under section 80H....', meaning thereby the profits and gains referred to in the earlier part of the section, namely, 'any profits and gains derived from an industrial undertaking'. In that view of the matter, the answer to question No. 1 is self-evident.

10. In the light of the foregoing discussion, we answer both the questions referred to us in the negative and in favour of the Revenue.

11. Under the facts and circumstances of the case, there shall be no order as to costs.