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Attorney(S)
  • For the Appellant: M.V. Seshachala, Advocate.
  • For the Respondent: S. Parthasarathi, Advocate.
Judges
  • R. Gururajan
  • N. Ananda, JJ.
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Attorney(S)
  • For the Appellant: M.V. Seshachala, Advocate.
  • For the Respondent: S. Parthasarathi, Advocate.
Judges
  • R. Gururajan
  • N. Ananda, JJ.
Acts
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Smart Summary

Court Opinion Summary — R. Gururajan, J.

Factual and Procedural Background

The assessee was engaged in the manufacture and sale of telecommunication cables. For the assessment year 1994‑95 the assessee filed a return of income on November 28, 1994 showing a total income of Rs. 8,43,81,674.

The Assessing Officer (A.O.) computed relief under section 80‑I of the Income‑tax Act and took the view that the assessee had considered only the business income from tele cables and had not taken into account the loss from its leasing business. The A.O., referring to a Supreme Court judgment (Cit v. P.K. Jhaveri), concluded that net income for the purpose of section 80‑I had to take into account both the manufacturing and the lease business.

The assessee appealed to the Appellate Commissioner, who allowed the appeal and held that the A.O. was not justified in reducing the eligible profits for section 80‑I by the loss incurred in the leasing business. The Revenue appealed to the Income‑tax Appellate Tribunal (Tribunal). The Tribunal rejected the Revenue's appeal. The Revenue appealed to the High Court (this court). The question of law framed was whether the deduction under section 80‑I should be computed by reference to (a) the gross total income derived from the manufacturing business alone, or (b) the entire gross total income after taking into account the loss from the leasing business.

Legal Issues Presented

  1. Whether the assessee is entitled to deduction under section 80‑I out of the gross total income computed from the manufacturing business only, or whether the loss incurred in the leasing business must be taken into consideration for the purpose of computing that deduction?

Arguments of the Parties

Revenue's Arguments (learned counsel Sri Seshachala)

  • Section 80AB has an overriding effect over other provisions in Chapter VI‑A and therefore must govern computation for deduction under section 80‑I.
  • If section 80AB is properly applied, losses (including losses from the leasing business) must be taken into account in computing deduction under Chapter VI‑A.
  • Relied upon a number of Supreme Court and high court decisions (including Distributors (Baroda) P. Ltd., IPCA Laboratory Ltd., Motilal Pesticides, and this court's earlier Division Bench decision in Asst. CIT v. Abcon) to show that section 80AB requires considering profits and losses in computing deductions.
  • Invited the court to answer the question of law in favour of the Revenue.

Assessee's Arguments (learned counsel Sri Parthasarathi)

  • Supported the Tribunal's and Appellate Commissioner's order allowing relief to the assessee.
  • Relied on earlier decisions such as Cit (Central), Madras v. Canara Workshops (P) Ltd. and a series of Karnataka High Court decisions (including Siddaganga Oil Extractions, CIT v. H.M.T. Ltd., Sterling Foods) to argue that the deduction under the relevant provision should be confined to income "of that nature" — i.e., referable to the activity of the tele cables undertaking.
  • Argued that even if section 80AB applied, the phrase "of that nature" ought to be read with reference to the activity of the industry (tele cables) and not to the leasing business.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court in this Opinion
Cit v. P.K. Jhaveri, [1990] 181 ITR 79 Authority relied upon by the Assessing Officer to support including income/loss from both manufacturing and lease business in computing net income. The A.O. had relied on this judgment to conclude net income must reflect both manufacturing and lease business; the Court records that the A.O. referred to this decision when reaching his view.
Distributors (Baroda) P. Ltd. v. Union of India, [1985] 155 ITR 120 (SC) Held that deduction under Chapter VI‑A is to be allowed on net income (not gross) and that earlier authority to the contrary (Cloth Traders) was overruled. The Court relied on this Supreme Court decision as establishing that deduction is to be allowed only on net income and as part of the foundation for the overriding effect of section 80AB on Chapter VI‑A computations.
IPCA Laboratory Ltd. v. Deputy CIT, [2004] 266 ITR 521 (SC) Interpreted section 80AB as having an overriding effect within Chapter VI‑A and stated that both profits and losses must be taken into account when computing deductions under the Chapter. The Court cited and quoted this decision to show that section 80AB overrides other provisions in Chapter VI‑A and mandates that losses be considered in computing deductions (explicitly relied upon in paragraph 7–8 of the opinion).
Motilal Pesticides (I.) P. Ltd. v. CIT, [2000] 243 ITR 26 (SC) Reviewed earlier authorities (including Cloth Traders and Distributors) and discussed the effect of sections 80AA/80AB; confirms the shift to net‑income based deduction as per Distributors. The Court relied on Motilal to demonstrate the jurisprudential development leading to the primacy of section 80AB/Distributors reasoning; used to support the conclusion that 80AB overrides Chapter VI‑A deductions.
Asst. CIT v. Abcon Engineering and Systems P. Ltd., [2006] 287 ITR 201 (Karn) Decision of this court (Division Bench) holding that section 80AB has overriding effect on all deductions in Chapter VI‑A. The present bench (one of whom was on that Division Bench) relied on this court's prior decision to conclude that the Tribunal was not justified in granting relief to the assessee without applying section 80AB.
Synco Industries Ltd. v. Assessing Officer of Income‑tax, [2002] 254 ITR 608 (Bombay HC) Considered Canara Workshops and discussed the effect of provisions such as sections 80A(2) and 80B(5) in light of section 80‑I(6); held that losses of one priority unit are to be adjusted against profits of another and that if gross total income becomes nil, Chapter VI‑A deduction cannot be claimed. The Court expressed full agreement with the Bombay High Court's view and used it to support the proposition that losses from one undertaking can eliminate the gross total income relevant to Chapter VI‑A deductions.
Cit (Central), Madras v. Canara Workshops (P) Ltd., Kodialball, Mangalore, [1986] 161 ITR 320 (SC) Earlier Supreme Court decision cited by parties; the present opinion notes that that judgment contains no reference to section 80AB. The Court held the Tribunal was not justified in relying on this judgment because it did not consider section 80AB and therefore is distinguishable and inapplicable to the present controversy.
Commissioner Of Income‑Tax v. Siddaganga Oil Extractions Pvt. Ltd., [1993] 201 ITR 968 (Karn) Decision of this court cited by the assessee in support of limiting deduction to income "of that nature". The Court observed that Siddaganga did not take into account the impact of section 80AB; accordingly, in light of subsequent Supreme Court authority, it is not of assistance and the Court declined to place reliance on it.
CIT v. H.M.T. Ltd., [1993] 199 ITR 235 (Karn) One of the Karnataka decisions noted in Siddaganga and referenced by the assessee. The Court treated this decision as part of judgments that did not consider section 80AB and therefore of limited assistance in the present matter.
Sterling Foods v. Commissioner Of Income‑Tax, Karnataka, [1984] 150 ITR 292 (Karn) Another Karnataka decision referenced in the chain of authorities relied on by the assessee. The Court noted it as part of older precedents not considering section 80AB and thus not helpful in face of later Supreme Court authority.
Commissioner Of Income‑Tax v. Chemical & Metallurgical Design Co. Ltd., [2001] 247 ITR 749 (Delhi HC Full Bench) Full Bench view that the mode of computation in section 80AB applies to other sections (e.g., section 80‑O); supports the broad applicability of section 80AB's computational rules. The Court cited this decision as another instance where courts treated section 80AB's mode of computation as having full application to other specific deduction provisions, reinforcing the Court's conclusion on applicability of 80AB.
CIT v. M.N. Dastur and Co. P. Ltd., [2000] 243 ITR 10 (Calcutta HC) Calcutta High Court decision taking a view similar to the Delhi Full Bench on the effect of section 80AB. The Court noted this decision as part of the body of authority supporting the overriding effect of section 80AB on deduction computations.
Cloth Traders (P.) Ltd. v. Additional CIT, Gujarat‑I, [1979] 118 ITR 243 (SC) Earlier Supreme Court decision that had held deduction was to be allowed on gross total income (later overruled). The Court referenced Cloth Traders as the pre‑Distributors position which was subsequently overruled by Distributors (Baroda) and addressed by legislative amendments (80AA/80AB). The opinion uses it to explain historical context.

Court's Reasoning and Analysis

The Court proceeded methodically from fact to law:

  1. It first recorded the Assessing Officer's approach: the A.O. had confined the base figure for section 80‑I relief to the manufacturing business income and had not netted off the leasing business loss; the A.O. relied upon Cit v. P.K. Jhaveri in support of including other business income/loss.
  2. The Appellate Commissioner allowed the assessee's appeal, treating the income eligible for section 80‑I deduction as the income "of that undertaking" and not reducing eligible profits by losses of the leasing business; the Tribunal affirmed that order, adopting a view favourable to the taxpayer and relying on Canara Workshops (which, the Court observed, did not consider section 80AB).
  3. The Court analysed the statutory framework: section 80‑I grants deduction in respect of profits and gains from an industrial undertaking; section 80AB was later introduced (with retrospective or clarificatory effect as discussed in the authorities) and is located in Chapter VI‑A.
  4. The Court then examined authoritative decisions of the Supreme Court and other high courts. It relied principally on IPCA Laboratory Ltd. (which interprets section 80AB as having overriding effect within Chapter VI‑A and requiring that both profits and losses be taken into account) and on Distributors (Baroda), which overruled earlier authority (Cloth Traders) and held deductions in Chapter VI‑A are to be allowed on net income.
  5. On that basis the Court concluded that section 80AB must prevail in computing deductions under Chapter VI‑A and that, therefore, the losses incurred in the leasing business are relevant and must be taken into account for the computation of deduction under section 80‑I.
  6. The Court also explained why the Tribunal's reliance on Cit (Central), Madras v. Canara Workshops was misplaced: that Supreme Court judgment did not refer to section 80AB and is therefore distinguishable and inapposite in the present context where 80AB is decisive.
  7. The Court refused the assessee's textual argument that the phrase "of that nature" in section 80AB should be confined to the activity of tele cables and not imported to require consolidation with lease losses. The Court held that accepting the assessee's narrower reading would dilute the plain meaning of "gross total income" and undermine section 80AB's purpose.
  8. The Court noted procedural shortcomings: both parties and the Tribunal failed adequately to address or raise the impact of section 80AB before the Tribunal. The Court expressed displeasure and admonished the parties (particularly the Department) to deploy competent legal counsel in complex tax litigation and instructed counsel to place the order before the Commissioner for remedial action in future cases.

Holding and Implications

APPEAL ACCEPTED

Holding: The appeal by the Revenue was allowed. The order of the Tribunal in so far as the issue of computation of deduction under section 80‑I (whether lease business losses are to be taken into account) is concerned was set aside. The Court ordered no costs.

Implications and direct effects:

  • The Court held that section 80AB has an overriding effect on the computation of deductions under Chapter VI‑A and requires that profits and losses be computed in accordance with the provisions of the Income‑tax Act; consequently, losses from the leasing business must be taken into account for computing deduction under section 80‑I in the facts of this case.
  • The direct effect of the decision is that the Tribunal's favourable order for the assessee on this issue is set aside and the Revenue's view (that lease losses are relevant for computing the deduction) is accepted by this court. The opinion does not purport to lay down a novel principle beyond application of binding Supreme Court authority; rather, it applies established Supreme Court rulings (including Distributors (Baroda) and IPCA) and this court's own prior Division Bench decision to the facts before it.
  • The Court also directed that its order be placed before the Commissioner for proper remedial action in future cases and admonished parties (and the Department) to fully present authorities bearing upon issues before appellate fora to avoid unnecessary appeals and consumption of judicial time.

No costs were awarded. The Tribunal's order on this issue was set aside by the High Court.

Show full summary ...

    Commissioner Of Income-Tax And Another v. R.P.G Telecoms Ltd.

    R. Gururajan, J.:— The Revenue is before this court challenging the order dated February 26, 2001, passed in I.T.A No. 1039.Bang/1998 for the assessment year 1994-95.

    2. The assessee carried on the business of manufacturing and sale of telecommunication cables. In respect of the assessment year 1994-95 return of income was filed by the assessee showing a total income of Rs. 8,43,81,674 on November 28, 1994. The Assessing Officer in computing the relief under section 80-I of the Act found that the assessee had considered only business income from tele cables and the assessee did not take into account the loss on account of lease business. The Assessing Officer concluded that the net income has to be based on the income of the manufacturing business and also the lease business in the light of the judgment of the Supreme Court in Cit v. P.K Jhaveri, [1990] 181 ITR 79. Aggrieved by the order of the assessing authority an appeal was filed before the Appellate Commissioner. The Appellate Commissioner ruled that the assessing authority is not justified in reducing the eligible profits on which deduction under section 80-I is to be given by the loss incurred by the appellant in its leasing business. He allowed the appeal. Aggrieved by the same, an appeal was filed by the Revenue before the Tribunal. Both the assessee as well as the Revenue filed two appeals before the Tribunal. The Tribunal rejected the appeal of the Revenue. The Revenue aggrieved by the order of the Tribunal is before us in this appeal. The following question of law is raised:

    “Whether the assessee is entitled to deduction under section 80-I out of the gross total income computed from the manufacturing business of the assessee or the entire and the loss incurred in the leasing business should be taken into consideration for the purpose of computation of deduction ?”

    3. Sri Seshachala, learned counsel would invite our attention to the material produced namely sections 80-I and 80AB has to be given a higher status other than section 80-I of the Act. He says section 80AB would provide in terms of the material placed in the case on hand. According to him, if section 80AB is understood in a proper way the loss is also to be considered for the purpose of deduction in terms of the income-tax laws. He would rely on the Constitutional Bench judgment of the Supreme Court in Distributors (Baroda) P. Ltd. v. Union of India, [1985] 155 ITR 120 and also the judgment of the Supreme Court in IPCA Laboratory Ltd. v. Deputy CIT, [2004] 266 ITR 521. He would also rely on Motilal Pesticides (I.) P. Ltd. v. CIT, [2000] 243 ITR 26 (SC). He would invite our attention to the judgment of this court in I.T.A No. 86/99 dated July 12, 2006 (Asst. CIT v. Abcon Engineering and Systems P. Ltd., [2006] 287 ITR 201). While concluding he would invite our attention to a judgment of the Bombay High Court in Synco Industries Ltd. v. Assessing Officer of Income-tax, [2002] 254 ITR 608 in which the Bombay High Court has considered Cit (Central), Madras v. Canara Workshops (P) Ltd., Kodialball, Mangalore., [1986] 161 ITR 320 (SC) for the purpose of consideration of section 80AB of the Income-tax Act. He would say that the Commissioner has committed a legal error in granting the relief, which is confirmed by the Tribunal. He would request us to answer the question of law in favour of the Revenue.

    4. Per contra, learned counsel Sri Parthasarathi appearing for the assessee would support the order of the Tribunal, in addition he would invite our attention to the judgment of the Supreme Court in Cit (Central), Madras v. Canara Workshops (P) Ltd., Kodialball, Mangalore., [1986] 161 ITR 320 and also Commissioner Of Income-Tax v. Siddaganga Oil Extractions Pvt. Ltd., [1993] 201 ITR 968 (Karn) and CIT v. H.M.T Ltd., [1993] 199 ITR 235 (Karn) and also Sterling Foods v. Commissioner Of Income-Tax, Karnataka., [1984] 150 ITR 292 (Karn). He would also argue that even assuming that section 80AB is applicable it has to be understood in a reasonable manner and the words “of that nature” have to be understood with reference to the activity of the industry.

    5. After hearing, we have carefully perused the material on record.

    6. The Assessing Officer has chosen to say that in computing the base figure of business income, the assessee has considered only business income from tele cables. The loss on account of lease business is not taken into account in arriving at the above base figure. It has not netted the business income figure. This method is fairly wrong because for the computation of section 80-I deduction, net income of all the types of income whether manufacturing business or lease business should be taken. He has noticed the judgment of the Supreme Court in Cit v. P.K Jhaveri, [1990] 181 ITR 79. This order was challenged before the Appellate Commissioner. The assessee filed a written statement in the course of hearing before the Commissioner. The Appellate Commissioner would say that though for the purpose of considering deductions, the entire income has to be reckoned, for the purpose of claiming relief under section 80-I, it is only income of that undertaking that has to be considered for the purpose of section 80-I of the Act in the light of section 80AB of the Act. The Commissioner without taking note of the impact of section 80AB to our surprise has chosen to say that the Assessing Officer is not justified in reducing the eligible profit on which deduction under section 80-I of the Act is to be given by loss incurred by the appellant in its lease business. The Commissioner has noticed the judgment of the Supreme Court in Cit (Central), Madras v. Canara Workshops (P) Ltd., Kodialball, Mangalore., [1986] 161 ITR 320. When this order was challenged before the Tribunal, the Tribunal has chosen to hold in favour of the assessee by saying that the Supreme Court has itself taken a different view and that it is clear that two views are possible on this issue. The Tribunal was of the view that when two views are possible on an issue, the one which is beneficial to the taxpayer has to be taken. The Tribunal therefore has upheld the order of the Commissioner in its order. The Tribunal has chosen to notice Distributors (Baroda) P. Ltd. v. Union of India, [1985] 155 ITR 120 (SC) and Cit (Central), Madras v. Canara Workshops (P) Ltd., Kodialball, Mangalore., [1986] 161 ITR 320 (SC). Let me see as to whether the Commissioner is justified in granting relief in terms of section 80-I of the Act without considering the loss suffered in lease business by the very assessee.

    7. Before we touch upon the merits of the matter, we have considered the legal provisions which have some impact on the facts of this case. Section 80-I provides for deduction in respect of profits and gains from industrial undertaking. After certain date section 80AB has been introduced retrospectively. The courts have considered the impact of section 80AB in the matter of deduction in terms of Chapter VI-A of the Act. The Supreme Court in IPCA Laboratory Ltd. v. Deputy CIT, [2004] 266 ITR 521 has referred to section 80HHC and thereafter the Supreme Court at page 530 has chosen to notice the profit and loss of an undertaking for the purpose of deduction in terms of Chapter VI-A of the Income-tax Act. The Supreme Court has ruled as under (page 530):

    “Section 80AB 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 section 80HHC. Section 80AB further provides that ‘notwithstanding anything contained in that section’. Thus section 80AB has been given an overriding effect over all other sections in Chapter VI-A. Section 80HHC does not provide that its provisions are to prevail over section 80AB or over any other provision of the Act. Section 80HHC would thus be governed by section 80AB. The decisions of the Bombay High Court and the Kerala High Court to the contrary cannot be said to be the correct law. Section 80AB 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.”

    8. The Supreme Court in a judgment in Motilal Pesticides (I.) P. Ltd. v. CIT, [2000] 243 ITR 26 has chosen to notice its earlier judgments in Cloth Traders (P) Ltd. v. Additional Cit, Gujarat-I, [1979] 118 ITR 243 and Distributors (Baroda) P. Ltd. v. Union of India, [1985] 155 ITR 120 and thereafter the Supreme Court has chosen to say reading as under (page 27):

    “Both sections 80HH and 80M fall in Chapter VI-A relating to deductions to be made in computing total income. It will be seen that the language of sections 80HH and 80M is the same. It was held in Cloth Traders (P.) Ltd.'s case, [1979] 118 ITR 243 (SC) that deduction is to be allowed on the gross total income and not on the net income. But then the decision in Cloth Traders (P.) Ltd.'s case, [1979] 118 ITR 243 (SC) was overruled in Distributors (Baroda) Pvt. Ltd. v. Union of India, [1985] 155 ITR 120 (SC). After the decision in Cloth Traders (P.) Ltd.'s case, [1979] 118 ITR 243 (SC), two sections 80AA and 80AB were introduced by the Finance (No. 2) Act, 1980. While section 80AA was to have retrospective effect with effect from April 1, 1968, section 80AB was to have operation with effect from April 1, 1981. Section 80AA had the effect of effacing the decision of this court in Cloth Traders (P) Ltd.'s case, [1979] 118 ITR 243, which had interpreted section 80M. Section 80AB was made applicable to all the sections in Chapter VI-A except section 80M. In Distributors (Baroda) (P.) Ltd.'s case, [1985] 155 ITR 120 (SC) however, this court specifically overturned its earlier decision in Cloth Traders (P) Ltd.'s case, [1979] 118 ITR 243 (SC), and held that deduction is to be allowed only on the net income and not on the gross income. With reference to section 80AB, this court said it was merely of a clarificatory nature and the decision of this court in Distributors (Baroda) (P.) Ltd.'s case, [1985] 155 ITR 120 is thus irrespective of section 80AB of the Act. The High Court, therefore, relying on the decision of this court in Distributors (Baroda) (P.) Ltd.'s case, [1985] 155 ITR 120 answered the question in favour of the Revenue and against the assessee.”

    9. These two judgments make it very clear that section 80AB would override all other sections for the purpose of deduction in Chapter VI-A of the Income-tax Act.

    10. In fact this very issue has been considered by various courts.

    11. In Commissioner Of Income-Tax. v. Chemical & Metallurgical Design Co. Ltd, [2001] 247 ITR 749 a Full Bench judgment of the Delhi High Court has chosen to say that in terms of the stipulation contained in section 80AB of the Act one thing which emerges clearly is that the mode of computation as indicated in section 80AB has full application to the case relating to section 80-O.

    12. The Calcutta High Court in CIT v. M.N Dastur and Co. P. Ltd., [2000] 243 ITR 10 has chosen to take a similar view.

    13. A Division Bench of this court consisting one of us (R. Gururajan J.) in I.T.A No. 86/1999 (Asst. CIT v. Abcon Engineering and Systems P. Ltd., [2006] 287 ITR 201 (Karn)) after noticing all these judgments, has chosen to hold that section 80AB has overriding effect on all the deductions in terms of Chapter VI-A of the Income-tax Act. Having come to this conclusion, we are of the view that the Tribunal is not justified in giving relief to the assessee.

    14. The Tribunal has chosen to place reliance on Cit (Central), Madras v. Canara Workshops (P) Ltd., Kodialball, Mangalore., [1986] 161 ITR 320 (SC). In the said judgment, there is no reference to section 80AB of the Act. Therefore the Tribunal is not justified in placing reliance on the said judgment and the said judgment is totally inapplicable and it is distinguishable on the facts. The Bombay High Court in Synco Industries Ltd. v. Assessing Officer of Income-tax, [2002] 254 ITR 608, has chosen to notice the judgment of the Supreme Court in Cit (Central), Madras v. Canara Workshops (P) Ltd., Kodialball, Mangalore., [1986] 161 ITR 320 and thereafter the Bombay High Court would say that the judgment of the Supreme Court on the facts would not apply to the present case. The Bombay High Court has noticed in detail the effect of sections 80A(2) and 80B(5) in the light of section 80-I(6) in the said judgment. This is what the Bombay High Court would say (page 614):

    “That, while calculating the gross total income of the company, one has to adjust the losses from one priority unit against the profits of the other priority unit and if the resultant gross total income is ‘nil’ then the assessee cannot claim deduction under Chapter VI-A.”

    15. We are in full agreement with the views expressed by the Bombay High Court.

    16. Learned counsel for the assessee would place reliance on a judgment of this court in Commissioner Of Income-Tax v. Siddaganga Oil Extractions Pvt. Ltd., [1993] 201 ITR 968. In the said judgment, two other judgments of this court have been noticed CIT v. H.M.T Ltd., [1993] 199 ITR 235 and Sterling Foods v. Commissioner Of Income-Tax, Karnataka., [1984] 150 ITR 292. A careful reading of the said judgment would show that the said Division Bench of this court has not taken into consideration the impact of section 80AB of the Act. In the light of the subsequent judgment of the Supreme Court these judgments are of no assistance to the assessee. In the given circumstances, we deem it proper not to place reliance on this judgment for the purpose of consideration of section 80AB and that too in the light of the subsequent judgment of the Supreme Court which is binding on us.

    17. Lastly, the contention with regard to section 80AB of the Act, learned counsel would say that the wording in section 80AB would indicate that the deduction has to be with reference to the total income of the assessee and for the purpose of computing deduction in that section the amount of income of that nature as computed in accordance with the provisions of this Act has to be taken note of. According to learned counsel, the words “of that nature” have to be with reference to the activity of the tele cables and not with reference to lease business. We are not prepared to accept this submission. Section 80AB has been introduced with the laudable object of considering deduction with reference to the gross total income. Any acceptance of the argument of the assessee, would result in our diluting the words “gross total income”.

    18. Before concluding, we are slightly disturbed by the order of the Tribunal. Section 80AB has been considered by the apex court with reference to deduction in the light of the other provisions of Chapter VI-A of the Act. The apex court in unmistakable terms has stated that section 80AB overrides Chapter VI-A in two judgments. Even the assessee before the Commissioner has chosen to probably directly or indirectly accept that the income from lease business also to be included. A reference is also made to section 80AB in the written statement as we see from the order of the Appellate Commissioner at page 56 of the paper book. The Commissioner to our surprise has not even chosen to refer to section 80AB in granting relief in paragraph 5.2 of the order of the Commissioner. When this order was challenged before the Tribunal, it is rather un-understandable as to why the assessee as well as the Department have not chosen to invite the attention of the Tribunal with regard to the applicability of section 80AB despite argument before the Commissioner. We would be failing in our duty, if we do not remind the parties with regard to placing all case law supporting or opposing their stand for a decision before the judicial forum. In the case on hand, unfortunately both the parties have not chosen to refer to the Tribunal the impact of section 80AB. If only the Department had invited the attention of the Tribunal to the impact of section 80AB the Tribunal would not have passed this order. We express our displeasure in the matter. To avoid such recurring instances, in future, the Income-tax Department is well-advised to engage competent legal counsel, before the Tribunal, whenever large sums of money are involved with complicated questions of law. Income-tax provides revenue to the Government. If the Department is not properly defended, it would result in unnecessary references to this court and loss of time of every body concerned including the time of this court. We deem it proper to direct learned counsel to place our order before the Commissioner for proper remedical action in future cases.

    19. In the result, this appeal is accepted. The order of the Tribunal in so far as this issue is concerned, is set aside. No costs.

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    Commissioner Of Income-Tax And Another v. R.P.G Telecoms Ltd.
    (Nov 14, 2006)