2008 Supreme(SC) 461

2008(2) Supreme 629
Supreme Court of india
Ashok Bhan & J.M. Panchal, JJ.
M/s Synco Industries Ltd. — Petitioner
versus
Assessing Officer, Income Tax, Mumbai & Anr. — Respondents
Appeal (civil) 4190-4191 of 2002
Decided on : 12-03-2008

Important Point
1.It is well settled that where predominant majority of High Courts have taken certain view on interpretation of certain provisions, Supreme Court would lean in favour of predominant view.
2.Gross total income of assessee has first got to be determined after adjusting losses etc., and if gross total income of assessee is ‘Nil’ assessee would not be entitled to deductions under Chapter VI-A of Act.

Headnote:Income Tax Act, 1948 – Section 80HH and 80-I – Chapter VI-A – Appellant-assessee a Company engaged in business of oil and chemicals claimed deductions under Section 80HH and 80-I of the Act, claiming that each unit should be treated separately and loss suffered by oil division in earlier years was not adjustable against profits of chemical division while considering question whether deductions under Sections 80HH and 80-I were allowable – Assessing Officer noticed that gross total income of appellant before deductions under Chapter VI-A was ‘Nil’ and therefore, he concluded that assessee was not entitled to benefit of deductions under Chapter VI-A – Appeal – Commissioner of Income Tax (Appeals) confirmed view of Assessing Officer by dismissing same – Appellant preferred two appeals before Income Tax Appellate Tribunal – Tribunal held that gross total income of appellant had got to be computed in accordance with Act before allowing deductions under any Section falling under Chapter VI-A and as gross total income of appellant after setting off business losses of earlier years, was ‘Nil’, appellant was not entitled to any deductions either under Section 80HH or 80-I of the Act – Appeals there against – Dismissed by High Court – Appeals – Predominant majority of High Courts have taken view that while working out gross total income of assessee losses suffered have to be adjusted and if gross total income of assessee is ‘Nil’ assessee will not be entitled to deduction under Chapter VI-A of Act – It is well settled that where predominant majority of High Courts have taken certain view on interpretation of certain provisions, Supreme Court would lean in favour of predominant view – Therefore, held that High Court was justified in holding that gross total income must be determined, by setting off against income, business losses of earlier years, before allowing deduction under Chapter VI-A and if the resultant income is ‘Nil’, then asessee cannot claim deduction under Chapter VI-A – Gross total income of assessee has first got to be determined after adjusting losses etc., and if gross total income of assessee is ‘Nil’ assessee would not be entitled to deductions under Chapter VI-A of Act – Appeals dismissed.(Paras 11 to 14)

       Facts of the case :

       1.Appellant-assessee a Company engaged in business of oil and chemicals claimed deductions under Section 80HH and 80-I of the Act, herein in the instant case claiming that each unit should be treated separately and loss suffered by oil division in earlier years was not adjustable against profits of chemical division while considering question whether deductions under Sections 80HH and 80-I were allowable. Assessing Officer noticed that gross total income of appellant before deductions under Chapter VI-A was ‘Nil’ and therefore, he concluded that assessee was not entitled to benefit of deductions under Chapter VI-A. On Appeal, Commissioner of Income Tax (Appeals) confirmed view of Assessing Officer by dismissing same. Appellant preferred two appeals before Income Tax Appellate Tribunal. Tribunal held that gross total income of appellant had got to be computed in accordance with Act before allowing deductions under any Section falling under Chapter VI-A and as gross total income of appellant after setting off business losses of earlier years, was ‘Nil’, appellant was not entitled to any deductions either under Section 80HH or 80-I of the Act. Appeals there against was dismissed by High Court.

       2.Present appeals have been filed against said order of High Court.

       Findings of the Court :

       The Court held that gross total income of assessee has first got to be determined after adjusting losses etc., and if gross total income of assessee is ‘Nil’ assessee would not be entitled to deductions under Chapter VI-A of Act.

       Result : Appeal dismissed.