Law:

Section:

Section 80A, read with section 32(2), section 72 and section 80B(5), of the Income-tax Act, 1961 - Deductions - Computation of - Whether deduction under sections 80G and 80M are to be allowed only after setting of brought forward losses and unabsorbed depreciation for earlier years - Held, yes Facts The assessee claimed deductions under section 80G and section 80M, but these claims were negatived by the ITO since he found the assessable income for the year under consideration after setting off brought forward losses and unabsorped depreciation came to nil figure. On appeal, the AAC allowed the assessee's claim. On further appeal before the Tribunal, the department contended that in accordance with sections 80B(5) and 80A(2) the assessee was not entitled to the deductions claimed under sections 80G and 80M because the assessee's income for the purpose of Income-tax assessment came to a nil figure, and that the term 'gross total income' meant the total income as computed after considering the provisions of sections 71 and 72, but before making any deductions under Chapter VIA and under section 280C. It was submitted that on the aforesaid basis the income of the assessee came to a nil figure and, consequently, the deductions claimed by the assessee should not have been allowed. The Tribunal held that set off under section 71 or under section 72 was not part of the process of computation of the total income and that such set off was to be made after the computation of the total income. The Tribunal further held that for the purpose of assessment to tax and for any relief thereunder, only the income, profits and gains of the year under consideration had to be considered. Consequently, the Tribunal concluded that the deductions contemplated in sections 80G and 80M were to be allowed in the first instance if there was positive income before setting off brought forward losses and unabsorbed depreciation for the earlier years. On reference : Held In computing the total income the ITO has to take into account the provisions of section 71 providing set off of loss from one head againstincome from another and section 72 providing for carry forward and set off o f business…

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