COMMISSIONER OF INCOME TAX Vs. JOSEPH V T

JUDGEMENT

(1.) THE following question expects our answer : " Whether, on the facts and in the circumstances of the case -

(2.) THE question is now fully answered in all its perspective by the decision of the Constitution Bench of the apex court in Distributors (Baroda) P. Ltd. v. Union of India [1985] 155 ITR 120, finally settling the position which unfortunately however, does not appear to have been brought to the notice of the Income-tax Appellate Tribunal when it decided the matter on February 28, 1992. Otherwise the Tribunal would not have been required to despatch the proceedings to this court for a reference to answer the question as has been brought before us by the Revenue.

(3.) THERE was yet another occasion for revision for giving set off of carried forward business loss of Rs. 86,580. This amount was required to be carried forward, and related to the assessment year 1981-82. This was done by the Income-tax Officer on January 9, 1987. All this was for the assessment year 1983-84, in regard to which the present proceedings are required to be dealt with. On this occasion, it would be found that the net income of the assessee was computed at Rs. 2,39,894. This was before considering allowance of deduction under Section 80HHC. The Income-tax Officer granted deduction under Section 80HHC to the extent of the whole of the net income of Rs. 2,39,894 showing, as a result thereof, the total income as reduced to "nil". This was an occasion for the Commissioner of Income-tax to move under Section 263 of the Income-tax Act. The Commissioner of Income-tax, acting under Section 263 of the Income-tax Act, 1961, found the said order dated January 9, 1987, of the Income-tax Officer showing the total income as reduced to "nil" as erroneous and prejudicial to the interests of the Revenue. This order under Section 263 of the Income-tax Act, 1961, is dated February 22, 1989. The Commissioner of Income-tax came to the conclusion that the grant of relief under Section 80HHC of the Act of Rs. 2,39,894 was much in excess. The Commissioner took the view that the deduction under Section 80HHC should have been limited to the business income.