Duncans Industries Limited Vs CIT (Calcutta High Court)- Under S. 80-HHC (1) the deduction is to be given in computing the total income of the assessee. In computing the total income of the assessee both profits as well as losses will have to be taken into consideration. Section 80-AB is relevant. It reads as follows
“80-AB. Where any deduction is required to be made or allowed under any section included in this chapter under the heading “C-Deductions in respect of certain incomes” in respect of any income of the nature specified in that section which is included in the gross total income of the assessee, then, notwithstanding anything contained in that section, for the purpose of computing the deduction under that section, the amount of income of that nature as computed in accordance with the provisions of this Act (before making any deduction under this Chapter) shall alone be deemed to be the amount of income of that nature which is derived or received by the assessee and which is included in his gross total income.”
Section 80-B(5) is also relevant. Section 80-B(5) provides that “gross total income” means total income computed in accordance with the provisions of the Income-tax Act.
14. Section 80-AB is also in Chapter VI-A. It starts with the words “where any deduction is required to be made or allowed under any section of this Chapter.” This would include S. 80-HHC. Section 80-AB further provides that “notwithstanding anything contained in that section.” Thus S. 80-AB has been given an overriding effect over all other sections in Chapter VIA. Section 80-HHC does not provide that its provisions are to prevail over S. 80-AB or over any other provision of the Act. Section 80-HHC would thus be governed by S. 80-AB. Decisions of the Bombay High Court and the Kerala High Court to the contrary cannot be said to be the correct law. Section 80-AB makes it clear that the computation of income has to be in accordance with the provisions of the Act. If the income has to be computed in accordance with the provisions of the Act, then not only profits but also losses have to be taken into consideration.
(Emphasis supplied by us).
The principles mentioned above have been all along followed by the Supreme Court in the subsequent cases of ITO, Bangalore vs. Induflex Products Pvt. Ltd ( (2006) 1 SCC 458) and Commissioner of Income-tax, Pune vs. Shirke Construction Equipment Ltd. (AIR 2007 SC 2089).
In our opinion, in view of the aforesaid principles laid down by the Apex Court there is no scope of advancing any argument that the different business of
the assessee are required to be considered separately for the purpose of calculating the deductions under Section 80 HHC of the Act.