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Judgment
The income tax Appellate Tribunal, New Delhi, has referred to following question of law u/s 256(2) of the income tax Act, 1961, (hereinafter referred to as ''the Act'') for opinion of this Court :
"Was the ITAT on facts and circumstances of the case justified in law in holding that rectification for correctly computing the relief u/s 80HHA read with section 80A(2) was not a mistake apparent from record rectifiable u/s 154?"
The present reference relates to the assessment years 1984-85 and 1985-86.
Briefly stated the facts giving rise to the present reference are as follows:
Respondent/assessee is a private limited company. Assessment u/s 143(3) of the Act. income tax Act was framed by the Assessing Officer brought for the two assessment years determining its losses at Rs. 17,10,808 and Rs. 15,84,711 respectively. Subsequently, the assessing authority initiated proceedings u/s 154 of the Act on the ground that deductions u/s 80HHA for the assessment year 1984-85 and under sections 80HHA and 80J for the assessment year 1985-86 have been wrongly allowed as the final assessment accounted (sic) in net loss. After affording opportunity of hearing to the respondents he withdrew the deductions allowed under the aforesaid sections. Feeling aggrieved, the respondent preferred separate appeal before the Commissioner of income tax, who did not approve the order of the Assessing Officer and had held that the deductions allowed u/s 80HHA and 80J of the Act could not be withdrawn u/s 154 of the Act which order has been upheld by the Tribunal.
We have heard Sri Shambhu Chopra, learned standing counsel for the revenue and Sri R.R. Agrawal, learned counsel appearing for the respondent. Learned standing counsel submitted that under Chapter VIA of the Act under sections 80HHA and 80J of the Act deduction is permissible from the gross total income of the assessee and as in the present case there was a loss determined in respect of the two assessment years deductions under sections 80HHA and 80J of the Act was not admissible. The submission is misconceived. From perusal of the assessment order for the assessment year 1984-85, we find that the profit after deducting the depreciation amounting to Rs. 20,27,679 which was the net income of that year. Similarly for the assessment year 1985-86 net profit after depreciation have been worked out at Rs. 2,88,533. As in each of the two assessment years, there was a net profit prior before deductions under the aforementioned provisions for the assessment years 1984-85 and 1985-86 has rightly been allowed. In this view of the matter, proceedings u/s 154 of the Act had wrongly been taken as there was no mistake apparent on the record. We accordingly, answer the question referred to us in the affirmative, i.e., in favour of assessee and against the revenue. However, there shall be no order as to cost.