COMMISSIONER OF INCOME TAX vs AVON EMERY INDUSTRIES

By the court :

Heard learned counsel for the parties.

This is an application u/s 256(2) of the Income Tax Act, 1961, filed by the revenue for seeking direction to the Appellate Tribunal, Jaipur Bench, Jaipur, to state the case and refer the following questions of law said to be arising out of order passed by the Tribunal in ITA No. 347/Jp/94 for the assessment year 1991-92 to this court for its opinion.

The facts which are not in dispute and has been made foundation for raising aforesaid questions are that as per assessment order assessee''s net taxable income computed in accordance with provisions of Income Tax after allowing all deductions and adjustments under the Act, but before claiming deduction u/s 80HH or section 80-I both of which are part of Chapter IV-A of the Income Tax Act, 1961, amounted to Rs. 1,85,671. The assessee is entitled to claim 20 per cent deduction u/s 80HH being profit and gains from newly established undertaking in backward area and also 20 per cent of his gross total income u/s 80-I in respect of profit and gains from industrial undertaking of the nature described in section 80-I, both the deductions are available on that part of income which is referable to profit and gains from said industrial undertaking and forming part of gross total income of the assessee computed in accordance with the provisions of the Act.

The assessing officer after computing Rs. 1,85,671 as gross total income of the said industrial undertaking, which fulfils the conditions of both the sections 80-I and 80HH, deducted 20 per cent from said gross total income as deduction permissible u/s 80HH and on the remaining amount after deduction u/s 80HH deducted another 20 per cent u/s 80-I. As in chronology section 80HH finds place prior to section 80-I, deduction u/s 80HH has been granted in the first instance and after deducting the permissible deduction u/s 80HH computing on the remaining sum only.

The assessee claimed that deduction u/s 80HH as well as section 80-I both are simultaneous and not successive to each other, and therefore, in computing deductible amount u/s 80HH as well as section 80-I deduction exigible under one cannot be deducted for the purpose of computing deduction under the another.

We are of the opinion that aforesaid issue between the parties raises purely on the interpretation of provisions of Chapter IV-A in the matter of computing deduction permissible under various provisions made therein as in a question of law the aforesaid question of law do arise out of Tribunal''s order. The Tribunal was in error in rejecting the application u/s 256(1) of the Income Tax Act.

Accordingly, we allow this application u/s 256(2) and direct the Tribunal to draw a statement of case and refer the aforesaid questions of law arising out of its order, dated 4-8-1997, made in ITA No. 347/Jp/97 for the opinion of this court.

The Tribunal is directed to submit statement of claim within four weeks with the direction to standing counsel for the revenue to submit requisite paper books along with the statement of case.