K. Anji Reddy, Hyderabad V. Asst. Commissioner of Income Tax, Circle -1(2)1), Hyderabad

ITA 1384/HYD/2012

• Counselvise Citation: 138422514 RSA 2012
• Duration Of Justice: 2 year(s) 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2015
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 12-02-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 07-09-2012
• Court: TRIBUNAL
• Keywords: Business income; Search and seizure
• Section: 143(3); 263; 28; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A, HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 1249/HYD/2012 ASSESSMENT YEAR: 2008-09 DY. COMMISSIONER OF INCOME TAX, CIRCLE-1(2), HYDERABAD VS SHRI K. SATISH REDDY, LR OF LATE K.ANJI REDDY, BANJARA HILLS, HYDERABAD [PAN: AERPK6947F] I.T.A. NO. 1384/HYD/2012 ASSESSMENT YEAR: 2008-09 DR. K.ANJI REDDY, REP. BY HIS SON AND LR SHRI K. SATISH REDDY, BANJARA HILLS, HYDERABAD [PAN: AERPK6947F] VS ASST. COMMISSIONER OF INCOME TAX, CIRCLE-1(2), HYDERABAD (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI RAMA KRISHNA, BANDI DR FOR ASSESSEE : SHRI A.V.RAGHU RAM , AR DATE OF HEARING : 1 2 - 0 2 - 201 5 DATE OF PRONOUNCEMENT : 20 - 0 2 - 2015 O R D E R PER B. RAMAKOTAIAH, A.M. : THESE ARE CROSS APPEALS BY ASSESSEE AND REVENUE AG AINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-II , HYDERABAD DATED 29-06-2012 ON THE ISSUE OF CLAIM OF DEDUCTION U/S.8 0GGA/35(1) OF THE INCOME TAX ACT (ACT). I.T.A. NOS. 1249/HYD/2012 & 1384/HYD/2012 SHRI K. SATISH REDDY LR OF LATE K.ANJI REDDY :- 2 -: 2. ASSESSEE DR.K. ANJI REDDY HAS SINCE DECEASED ON 15-03-2013, THE LEGAL HEIR SHRI K. SATISH REDDY FILED REVISED FORM WITH A REQUEST TO CONSIDER HIM AS LEGAL HEIR OF SHRI K. ANJI REDDY. DEPARTMENT HAS ACCEPTED SHRI K. SATISH REDDY AS LR OF LATE SHRI K. ANJI REDDY AND HAS TAKEN ON RECORD. ACCORDINGLY, SHRI K. SATISH REDDY IS CONSIDERED AS LR OF LATE SHRI K. ANJI REDDY IN THESE APPEALS. 3. BRIEFLY STATED, ASSESSEE, AN INDIVIDUAL, FILED R ETURN OF INCOME DECLARING TOTAL INCOME OF RS.13,22,68,574/-. ASSESS EE CLAIMED A DEDUCTION OF RS.1,50,00,000/- U/S.80GGA OF THE ACT. IN THE SCRUTINY PROCEEDINGS U/S.143(3), THE ASSESSING OFFICER EXAMI NED THE CLAIM AND FOUND THAT ASSESSEE HAS GIVEN DONATION OF RS.1 CROR E TO M/S.NAANDI FOUNDATION ON 25-06-2007 AND AN AMOUNT OF RS.50 LAK HS TO M/S.MADRAS DIABETES RESEARCH FOUNDATION ON 17-03-20 08. ASSESSEE HAD BUSINESS INCOME AND DECLARED THE SAME AT RS.77, 21,353/-. SINCE ASSESSEE HAS BUSINESS INCOME, ASSESSING OFFICER WAS OF THE OPINION THAT AS PER SUB-SECTION (3) OF SECTION 80GGA, ASSESSEE I S NOT ELIGIBLE TO CLAIM DEDUCTION AS HE HAS INCOME FROM BUSINESS. HE HAS D ISCUSSED THE PROVISIONS OF SECTION 80GGA AND CAME TO THE CONCLUS ION THAT THE DEDUCTION CLAIMED U/S.80GGA IS NOT ALLOWABLE. ACCO RDINGLY, HE DISALLOWED THE AMOUNT AND ADDED TO THE INCOME RETUR NED THEREBY DETERMINING TOTAL INCOME AT RS.15,44,82,540/-. THIS ORDER OF THE ASSESSING OFFICER HAS BEEN ACCEPTED BY ASSESSEE. N O APPEAL HAS BEEN PREFERRED. HOWEVER, ASSESSEE SUBSEQUENTLY PREFERRE D AN APPLICATION U/S.154 DT.09-11-2010 SEEKING RECTIFICATION OF THE ORDER TO ALLOW ABOVE AMOUNT U/S.35(1)(I)/(II) AS AN ALTERNATE CLAIM. TH E ASSESSING OFFICER VIDE HIS LETTER DT.09-03-2011 REJECTED THE APPLICATION O N THE REASON THAT THERE IS NO MISTAKE APPARENT FROM RECORD TO BE RECTIFIED U/S.154. I.T.A. NOS. 1249/HYD/2012 & 1384/HYD/2012 SHRI K. SATISH REDDY LR OF LATE K.ANJI REDDY :- 3 -: 4. ASSESSEE PREFERRED AN APPEAL BEFORE THE LD.CIT(A ) INTER ALIA CONTENDING THAT ASSESSEE IS ELIGIBLE FOR DEDUCTION OF THE AMOUNT OF RS.1.50 CRORES EITHER U/S.80GGA OR U/S.35(1) (I),(I I) AND (IIA) AS BOTH THESE PROVISIONS ARE SYNONYMOUS FOR SCIENTIFIC RESE ARCH. LD.CIT(A) VIDE IMPUGNED ORDER HELD THAT ASSESSEE CLAIMED DEDUCTION U/S.80GGA IN THE RETURN WHICH WAS REJECTED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER U/S.143(3) ON THE CLEAR REASONING AND THE APP ELLANT'S SUBSEQUENT PETITION FOR RECTIFICATION UNDER OTHER SECTION I.E. , 35(1)(I)(II) DOES NOT EMANATE FROM THE RECORD, AND THEREFORE ARE NOT APPA RENT FROM RECORD. THE LD.CIT(A) ALSO WAS OF THE OPINION THAT IN ORDER TO ALLOW DEDUCTION U/S.35(1)(I)(II)/(IIA) AO HAS TO BE FIRST SATISFIED WITH THE CONDITIONS CONTAINED UNDER SAID SECTIONS AND THE DEDUCTION IS NOT AUTOMATIC. ALL THESE POINT OUT THAT THE ALTERNATE CLAIM MADE BY TH E APPELLANT U/S.154 IS NOT A MISTAKE APPARENT FROM RECORD. THEREFORE, THE ACTION OF ASSESSING OFFICER IN REJECTING THE RECTIFICATION AP PLICATION U/S.154 IS JUSTIFIED. 5. HOWEVER, AFTER APPROVING THE ACTION OF THE ASSES SING OFFICER IN REJECTING THE APPLICATION U/S.154, LD.CIT(A) WENT O N TO DISCUSS THE ISSUE U/S.35(1) ON MERITS AND ULTIMATELY DIRECTED THE ASS ESSING OFFICER AS UNDER: '6.4 FROM THIS IT APPEARS THAT ANY ASSESSEE WHO IS HAVING INCOME FROM BUSINESS OR PROFESSION IS ENTITLED TO THE DEDUCTION U/S.35(1)(I)&(II) IN RESPECT OF DONATIONS MADE TO INSTITUTIONS INVOLVED IN SCIENTIFIC RESEARCH, PROVIDED CERTAIN CONDITION S ARE SATISFIED. SINCE THE APPELLANT IS HAVING BUSINESS INCOME HE I S ENTITLED TO DEDUCTION U/S.35, BUT THE DEDUCTION IS SUBJECT TO CERTAIN CONDITIONS AND TERMS. SINCE THE AO HAS NOT EXAMINED THE CLAI M WITH REGARD TO THE PROVISIONS OF SECTION 35, HE IS DIRECTED TO EX AMINE THE ISSUE WITH REGARD TO THE PROVISIONS OF SECTION 35 AND IF, ALL THE CONDITIONS SPECIFIED ARE SATISFIED, TO ALLOW DEDUCTION U/S.35 (1)(I)(II)&(IIA) OF THE IT ACT AS PER LAW'. I.T.A. NOS. 1249/HYD/2012 & 1384/HYD/2012 SHRI K. SATISH REDDY LR OF LATE K.ANJI REDDY :- 4 -: 6. REVENUE IS AGGRIEVED AND PREFERRED PRESENT APPEA L CONTENDING THAT CIT(A) ERRED IN CONSIDERING THE ASSESSEE'S CLAIM U/ S.35(1)(I)(II) AND (IIA). EVEN THOUGH REVENUE ALSO CONTENDED THAT CIT(A) OUGH T NOT HAVE ALLOWED ASSESSEE'S CLAIM UNDER ALTERNATE PROVISIONS IN VIEW OF THE DECISION OF THE APEX COURT IN THE CASE OF GOETZE (INDIA) LTD., VS. CIT, THIS CONTENTIONS DOES NOT SURVIVE AS IT DOES NOT EMANATE FROM THE IS SUE IN THE ORDER. 7. COMING TO THE REVENUE'S APPEAL, WE HAVE NOTICED THAT LD.DR HAS NOT COME FULLY PREPARED. IT WAS ALSO NOTICED THAT THE ORDER U/S.154 WHICH IS THE SUBJECT MATTER OF APPEAL WAS NOT EVEN FILED ALONG WITH APPEAL EVEN THOUGH ORDER U/S.143(3) WAS ENCLOSED. HOWEVER, ASSESSEE'S APPEAL DO CONTAIN THE ORDER. SO REVENUE'S APPEAL I S HEARD. 8. WE ARE OF THE OPINION THAT LD.CIT(A) EXCEEDED TH E JURISDICTION/POWERS GRANTED IN DIRECTING THE ASSESS ING OFFICER TO EXAMINE THE ISSUE U/S.35(1). VIDE PARA 5 OF THE ORDER, WHE N DISMISSING THE ASSESSEE'S CONTENTION U/S.154, THE LD.CIT(A) WAS OF THE OPINION THAT 'IN ORDER TO ALLOW DEDUCTION U/S.35(1), ASSESSING OFFIC ER HAS TO BE FIRST SATISFIED WITH CONDITIONS CONTAINED UNDER THE SAID SECTIONS AND DEDUCTION IS NOT AUTOMATIC'. LD. CIT(A) HELD THAT THE ALTERNATE CLAIM MADE BY THE APPELLANT U/S.154 IS NOT A MISTAKE APPA RENT FROM RECORD. HAVING GIVEN AN OPINION/ FINDING WHILE REJECTING TH E APPLICATION U/S.154, THE CIT(A) SHOULD NOT HAVE TRAVERSED BEYOND THAT IN DIRECTING THE AO TO EXAMINE THE CLAIM ON MERITS. AS ALREADY STATED, AS SESSEE HAS NOT PREFERRED ANY APPEAL ON THE ORDER U/S.143(3), THERE FORE, THE ISSUE OF CLAIM U/S.80GGA WAS CONCLUDED. THERE WAS NO CLAIM U/S.35(1) EITHER IN RETURN OR IN THE COURSE OF ASSESSMENT PROCEEDING S WHEN ASSESSING OFFICER HAS ISSUED A SHOW CAUSE NOTICE WHY THE DEDU CTION U/S.80GGA SHOULD NOT BE DISALLOWED. THEREFORE, WE ARE OF THE OPINION THAT IN THE PROCEEDINGS U/S.154, THE CIT(A) CANNOT DIRECT THE A SSESSING OFFICER TO I.T.A. NOS. 1249/HYD/2012 & 1384/HYD/2012 SHRI K. SATISH REDDY LR OF LATE K.ANJI REDDY :- 5 -: EXAMINE THE ISSUE, ON A NEW CONTENTION AFRESH WHICH IS NOT ARISING FROM THE ORDER. WE ARE SUPPORTED BY THE DECISION OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF R.B.L. BANARSI DA SS AND CO. P. LTD., VS. CIT [316 ITR 212] (P&H) WHEREIN ON A SIMILAR IS SUE ON THE FOLLOWING FACTS, IT WAS HELD AS UNDER: 'THE ASSESSEE'S ASSESSMENT FOR THE YEAR 1989-90 UND ER SECTION 143(3) OF THE INCOME-TAX ACT, 1961, WAS COMPLETED CALCULATING THE SHOT-TERM CAPITAL GAINS AFTER DEDUCTING THE SUM RE CEIVED ON AN INSURANCE CLAIM AND THE SUM RECEIVED FROM SALE OF SCRAP. THE COMMISSIONER SET ASIDE THE ASSESSMENT UNDER SECTIO N 263 AND THE ASSESSING OFFICER MADE ASSESSMENT AFRESH UNDER SEC TION 143(3) REJECTING THE CLAIM OF THE ASSESSEE THAT THE INSUR ANCE CLAIM WAS IN LIEU OF DAMAGE BY THE FIRE AND HOLDING THAT THE IN SURANCE MONEY WAS TO BE CONSIDERED AS SHORT-TERM CAPITAL GAIN IN TERMS OF THE PROVISIONS OF SECTION 50 OF THE ACT. NO APPEAL WA S FILED AGAINST THE ASSESSMENT ORDER UNDER SECTION 143(3) READ WITH SE CTION 263 OF THE ACT. THEREAFTER, THE ASSESSEE MOVED AN APPLICATIO N UNDER SECTION 154 OF THE ACT FOR RECTIFICATION OF A MISTAKE IN A SSESSING THE SHORT- TERM CAPITAL GAIN UNDER SECTION 50 OF THE ACT. TH E ASSESSING OFFICER REJECTED THE APPLICATION ON THE GROUND THAT THE CL AIM OF THE ASSESSEE HAVING BEING REJECTED UNDER SECTION 143(3) COULD N OT BE CONSIDERED AFRESH BY INVOKING SECTION 154 AND ONLY AN APPEAL WAS THE APPROPRIATE REMEDY FOR THE ASSESSEE AGAINST THE AS SESSMENT ORDER. ON APPEAL AGAINST REJECTION OF THE APPLICATION UND ER SECTION 154, THE COMMISSIONER (APPEALS) SET ASIDE THE ASSESSMENT OR DER UNDER SECTION 143(3) OF THE ACT AND DIRECTED THE ASSESSI NG OFFICER TO EXAMINE THE ISSUE IN THE LIGHT OF THE PROVISIONS O F SECTION 50 OF THE ACT. THE TRIBUNAL OBSERVED THAT THE CORRECTNESS O F THE VIEW TAKEN BY THE ASSESSING OFFICER RELATING TO HIS FINDING I N THE ORDER PASSED UNDER SECTION 154 OF THE ACT ALONE SHOULD HAVE BEE N DECIDED BY THE COMMISSIONER(APPEALS) AND THAT HE HAD TRAVELLED BE YOND HIS POWERS IN SUBSTITUTING HIS OWN OPINION ON THE ISSU E RELATING TO THE PROVISIONS OF SECTION 50 FOR THE OPINION OF THE AS SESSING OFFICER IN THE ABSENCE OF ANY APPEAL BEFORE HIM AGAINST THE A SSESSMENT ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143( 3). THEREFORE, THE TRIBUNAL SET ASIDE THE ORDER OF THE COMMISSION ER (APPEALS) AND RESTORED THE ORDER OF THE ASSESSING OFFICER UNDER SECTION 154. ON APPEAL: HELD, DISMISSING THE APPEAL, THAT THE ORDER OF ASS ESSMENT PASSED UNDER SECTION 143(3) OF THE ACT HAD ATTAINED FINAL ITY AND THERE WAS I.T.A. NOS. 1249/HYD/2012 & 1384/HYD/2012 SHRI K. SATISH REDDY LR OF LATE K.ANJI REDDY :- 6 -: NO APPEAL FILED AGAINST THAT ORDER. THE COMMISSIO NER (APPEALS) ILLEGALLY SET ASIDE THE ASSESSMENT ORDER UNDER SEC TION 143(3). IT WAS ONLY THE ORDER UNDER SECTION 154 SEEKING RECTI FICATION THAT WAS THE SUBJECT MATTER OF CHALLENGE BEFORE HIM. THE O RDER PASSED BY THE TRIBUNAL WAS IN CONFORMITY WITH LAW'. 9. EVEN THOUGH PROVISIONS OF SECTION 80GGA AND 35(1 )(I),(II) ARE SYNONYMOUS, THE CLAIM IS NOT ALLOWABLE AUTOMATICALL Y U/S.35(1). IT IS TO BE EXAMINED WHETHER THOSE INSTITUTIONS/RESEARCH BOD IES TO WHOM THE PAYMENTS WERE MADE ARE ELIGIBLE TO CLAIM SUCH DEDUC TION AND WHETHER NECESSARY APPROVALS ARE THERE TO GRANT BENEFIT. AS SEEN FROM THE FACTS OF THE PAYMENTS, ASSESSEE HAS MADE A DONATION TO M/S. NAANDI FOUNDATION WHICH DOES NOT INDICATE THAT IT IS ONE OF THE RESEA RCH INSTITUTIONS PRIMA- FACIE. NOT ONLY THAT MADRAS DIABETES RESEARCH FOUN DATION TO WHOM ANOTHER AMOUNT WAS PAID ALSO REQUIRED TO BE EXAMINE D WHETHER THE SAME WAS APPROVED UNDER THE ACT SO AS TO ALLOW THE BENEFIT. WITHOUT EXAMINATION, THE CLAIM CANNOT BE ALLOWED. AS SEEN FROM THE ORDER OF THE ASSESSING OFFICER, ASSESSING OFFICER HAS NOT GIVEN ANY FINDING THAT ASSESSEE'S CLAIM U/S.80GGA IS OTHERWISE ALLOWABLE B UT FOR THE PROVISIONS OF 80GGA(3) WHICH WAS INVOKED. ASSESSEE HAVING ACC EPTED THE ORDER U/S.143(3) CANNOT SEEK RELIEF U/S.35(1) IN THE PROC EEDING U/S 154. HAD HE PREFERRED APPEAL OF THE ORDER U/S.143(3), THE CI T(A) COULD HAVE EXAMINED/DIRECTED THE ASSESSING OFFICER TO EXAMINE WHETHER ALTERNATE CLAIM CAN BE ENTERTAINED. WE ARE OF THE OPINION TH AT THE SAME CANNOT BE DONE IN AN APPEAL U/S.154, WHICH HAS LIMITED SCOPE AND JURISDICTION. AS HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF T. S. BALARAM, ITO, COMPANY CIRCLE-IV BOMBAY VS. VOLKART BROTHERS AND O THERS [82 ITR 50] (SC), A MISTAKE APPARENT ON RECORD MUST BE AN ERRON EOUS AND EVIDENT MISTAKE AND NOT SAME THING WHICH CAN BE ESTABLISHED BY A LONG DRAWN PROCESS OF REASONING ON WHICH THERE MAY BE CONCEIVA BLY TWO OPINIONS. A DECISION ON A DEBATABLE POINT OF LAW IS NOT A MISTA KE APPARENT FROM RECORD. SIMILAR VIEW WAS REITERATED BY THE HON'BLE SUPREME COURT IN THE I.T.A. NOS. 1249/HYD/2012 & 1384/HYD/2012 SHRI K. SATISH REDDY LR OF LATE K.ANJI REDDY :- 7 -: CASE OF CIT VS. KESHRI METAL P. LTD.237 ITR 165(SC) , IT WAS FURTHER REITERATED THAT A LOOK AT THE RECORD MUST SHOW THAT THERE HAS BEEN AN ERROR AND THAT ERROR MAY BE RECTIFIED. REFERENCE T O DOCUMENTS OUTSIDE THE RECORDS AND THE LAW IS IMPERMISSIBLE WHEN APPLY ING THE PROVISIONS OF SECTION 154. IN VIEW OF THIS, WE ARE OF THE OPINIO N THAT THE SUBSEQUENT DIRECTION OF THE CIT IN EXAMINING THE ASSESSING OFF ICER TO CONSIDER THE PROVISIONS OF SECTION 35(1)(I),(II) IS BEYOND THE J URISDICTION. THEREFORE, TO THAT EXTENT, THE ORDER IS SET ASIDE. REVENUE'S GRO UND NO 2 IS THEREFORE, ALLOWED. WE UPHOLD THE ORDER TO THE EXTENT THAT TH E ISSUE CANNOT BE RECTIFIED UNDER THE PROVISIONS OF SECTION 154 AS IT IS NOT A MISTAKE APPARENT FROM RECORD. REVENUE'S APPEAL IS ACCORDIN GLY, PARTLY ALLOWED. 10. ITA NO.1384/HYD/2012 : COMING TO ASSESSEE'S APPEAL, ASSESSEE HAS RAISED TH E FOLLOWING GROUNDS IN HIS APPEAL: '2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED COMMISSIONER (APPEALS) ERRED BY UPHOLDING THE DENIAL OF DEDUCTION CLAIMED UNDER SECTION 80GGA. SHE FAILED TO APPRECIATE THAT THE GROSS TOTAL INCOME OF THE APPELLANT DOES NOT INCLUDE INCOME CHARGEABLE UNDER THE HEAD 'PROFITS AND GAINS OF BU SINESS OR PROFESSION', AFTER ALLOWING DEDUCTION U/S.35(1)(II ) AND (IIA). 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED COMMISSIONER (APPEALS) ERRED BY UPHOLDING THE DEDUCTION U/S.80GGA WAS NOT ALLOWABLE FROM INCOME FROM SOURC ES OTHER THAN BUSINESS. WHILE HOLDING SO, SHE COMPLETELY MISREAD AND THEREBY THOROUGHLY MISINTERPRETED THE PROVISIONS OF SECTIO N 80GGA. SHE OUGHT TO HAVE APPRECIATED THAT SUCH DENIAL GOES AG AINST THE SPIRIT AND INTENT OF THE SAID PROVISIONS. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED COMMISSIONER (APPEALS) FAILED TO APPRECIAT E THAT THE DEDUCTION UNDER SECTION 80GGA WAS A BENEFIT GRANTE D BY THE STATUE AND AS SUCH NO ASSESSEE CAN BE DISCRIMINATED AGAIN ST IN SO FAR AS AVAILING OF SUCH BENEFIT IS CONCERNED. SHE OUGHT TO HAVE APPRECIATED I.T.A. NOS. 1249/HYD/2012 & 1384/HYD/2012 SHRI K. SATISH REDDY LR OF LATE K.ANJI REDDY :- 8 -: THE REAL INTENT AND PURPOSE OF THE PROVISIONS OF S UB-SECTION 3 OF SECTION 80GGA. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED COMMISSIONER (APPEALS) FAILED TO APPRECIAT E THAT DENIAL OF DEDUCTION CLAIMED UNDER SECTION 80GGA BY MISREADIN G AND MISINTERPRETING AND EXPRESS AND UNAMBIGUOUS PROVIS ION CONSTITUTES A MISTAKE APPARENT FROM RECORD'. 11. THESE GROUNDS CANNOT BE ENTERTAINED IN THE PRES ENT APPEAL AS THE ISSUE DOES NOT ARISE OUT OF THE ORDER OF ASSESSING OFFICER U/S.154. THE ISSUE OF DENIAL OF DEDUCTION CLAIMED U/S.80GGA WAS DETERMINED AND REJECTED BY THE ASSESSING OFFICER IN AN ORDER U/S.1 43(3). ASSESSEE HAS NOT PREFERRED AN APPEAL ON THAT. ASSESSEE AS STATE D EARLIER PREFERRED AN APPLICATION U/S.154 CLAIMING AN ALTERNATE CLAIM U/S .35(1). THE ASSESSING OFFICER REJECTED THE SAME. IN VIEW OF TH IS, THE SCOPE OF APPEAL IS LIMITED TO CLAIM U/S.35(1) AND NOT UNDER 80GGA. THEREFORE, THE GROUNDS RAISED BY ASSESSEE PER SE ARE NOT MAINTAINABLE. 12. NOT ONLY THAT, SIMILAR ISSUE AROSE IN AY.2005-0 6 AND ITAT IN ITA NO.1741/HYD/2011 DT.10-05-2013 HAS CONSIDERED ISSUE IN AN ORDER U/S.147 THEREIN ON MERITS WITH REFERENCE TO CLAIM U /S.80GGA. IT WAS DECIDED VIDE PARA 11, 12 & 13 AS UNDER: 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND P ERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE ALSO CAREFUL LY APPLIED OUR MIND TO THE DECISIONS CITED BEFORE US. UNDISPUTEDL Y, THE ASSESSEE IS CARRYING ON BUSINESS AND FOR THE YEAR UNDER DISPUT E THE ASSESSEE HAD A NEGATIVE INCOME I.E., LOSS FROM BUSINESS. IT IS THE CONTENTION OF THE ASSESSEE THAT SINCE HE HAD NO POSITIVE INCOME CHARGEABLE TO TAX, HE IS ELIGIBLE TO AVAIL DEDUCTION U/S 80GGA OF THE ACT. THE SUBMISSIONS OF THE LEARNED AR THOUGH APPEARS ATTRA CTIVE AT THE FIRST BLUSH, HOWEVER, ON DEEPER ANALYSIS IT CANNOT BE AC CEPTED. SECTION 80GGA WHICH COMES UNDER CHAPTER VI-A OF THE ACT PR OVIDES FOR DEDUCTION FROM GROSS TOTAL INCOME COMPUTED, ANY SU M PAID BY THE ASSESSEE TO A RESEARCH ASSOCIATION UNDERTAKING SCI ENTIFIC RESEARCH OR RESEARCH IN SOCIAL SCIENCE OR STATISTICAL RESEA RCH. THE SECTION FURTHER PROVIDES THAT DEDUCTION CAN ALSO BE ALLOWE D IN RESPECT OF THE SUM PAID BY THE ASSESSEE TO AN ASSOCIATION OR INST ITUTION WHICH HAS I.T.A. NOS. 1249/HYD/2012 & 1384/HYD/2012 SHRI K. SATISH REDDY LR OF LATE K.ANJI REDDY :- 9 -: AS ITS OBJECT THE UNDERTAKING OF ANY PROGRAMME OF RURAL DEVELOPMENT, FOR CARRYING OUT ANY ELIGIBLE SCHEME OR PROJECT APPROVED BY THE NATIONAL COMMITTEE, TO ANY PROGRAM ME OF CONSERVATION OF NATURAL RESOURCES OR OF AFORESTATI ON, TO A RURAL DEVELOPMENT FUND SET UP AND NOTIFIED BY THE CENTRA L GOVERNMENT AND ANY SUM PAID TO THE NATIONAL URBAN POVERTY ERA DICATION FUND SET UP AND NOTIFIED BY THE CENTRAL GOVERNMENT. SUB -SECTION (3) OF SECTION 80GGA READS AS UNDER:- (3) NOTWITHSTANDING ANYTHING CONTAINED IN SUB-SE CTION (1), NO DEDUCTION UNDER THIS SECTION SHALL BE ALLOWED IN THE CASE OF AN ASSESSEE WHOSE GROSS TOTAL INCOME INCLUDES INC OME WHICH IS CHARGEABLE UNDER THE HEAD PROFITS AND GAINS O F BUSINESS OR PROFESSION. 12. A READING OF SUB-SECTION (3) WHICH BEGINS WITH A NON OBSTANTE CLAUSE MAKES IT CLEAR THAT AN ASSESSEE WHOSE GROSS TOTAL INCOME INCLUDES INCOME WHICH IS CHARGEABLE UNDER THE HEAD PROFITS OR GAINS OF BUSINESS OR PROFESSION SHALL NOT BE ELIGIBLE FO R DEDUCTION U/S 80GGA OF THE ACT. SECTION 28 OF THE ACT PROVIDES F OR INCOME WHICH SHALL BE CHARGEABLE TO INCOME-TAX UNDER THE HEAD P ROFITS AND GAINS OF BUSINESS OR PROFESSION. SECTION 29 OF THE ACT P ROVIDES THAT INCOME U/S 28 SHALL BE COMPUTED IN ACCORDANCE WITH THE PR OVISIONS CONTAINED IN SECTIONS 30 TO 43D OF THE ACT. SECTIO N 30 TO 43D PROVIDES FOR VARIOUS DEDUCTIONS WHICH CAN BE CLAIM ED BY AN ASSESSEE WHILE COMPUTING THE INCOME UNDER THE HEAD BUSINESS OR PROFESSION. SECTION 35AC PROVIDES FOR EXPENDITURE INCURRED BY WAY OF PAYMENT OF ANY SUM TO A PUBLIC SECTOR COMPANY O R A LOCAL AUTHORITY OR TO AN ASSOCIATION OR INSTITUTION APPR OVED BY A NATIONAL COMMITTEE FOR CARRYING OUT ANY ELIGIBLE PROJECT OR SCHEME. THEREFORE, AN ASSESSEE WHO IS CARRYING ON BUSINESS OR PROFESS ION CAN CLAIM EXEMPTION OF ANY SUM PAID TO ANY INSTITUTION TOWAR DS SCIENTIFIC RESEARCH, RURAL DEVELOPMENT ETC., UNDER VARIOUS PR OVISIONS AS CONTAINED U/S 30 TO 43D OF THE ACT. HENCE, THE RAT IONALE BEHIND IMPOSING CERTAIN RESTRICTION UNDER SUB-SECTION (3) OF SECTION 80GGA IS THAT SINCE THE ASSESSEE HAVING INCOME UNDER THE HEAD BUSINESS OR PROFESSION CAN AVAIL DEDUCTION TOWARDS PAYMENT OF ANY SUM UNDER VARIOUS PROVISIONS CONTAINED U/S 30 TO 43D O F THE ACT WHILE COMPUTING THE INCOME UNDER THE HEAD BUSINESS OR P ROFESSION, THE VERY SAME DEDUCTION CANNOT BE ALLOWED TO THEM U/S 80GGA WHICH IS SPECIFICALLY MEANT FOR ASSESSEES WHO DO NOT HAV E ANY INCOME UNDER THE BUSINESS OR PROFESSION WHICH IN OTHER WORDS MEANS AN ASSESSEE WHO DOES NOT CARRY OUT ANY BUSINESS OR PR OFESSION. OTHERWISE, AN ASSESSEE CARRYING ON BUSINESS OR PRO FESSION CAN CLAIM DEDUCTION BOTH UNDER THE PROVISIONS AS CONTA INED U/S 30 TO I.T.A. NOS. 1249/HYD/2012 & 1384/HYD/2012 SHRI K. SATISH REDDY LR OF LATE K.ANJI REDDY :- 10 -: 43D AND AGAIN U/S 80GGA OF THE ACT. THIS CANNOT BE THE INTENTION OF THE LEGISLATURE. IT WILL BE PERTINENT TO MENTIO N HERE THAT THE ASSESSEE, IN FACT, HAD CLAIMED DEDUCTION U/S 35AC, IN THE ORIGINAL RETURN WHILE COMPUTING PROFIT FROM BUSINESS AND PR OFESSION. SUBSEQUENTLY HOWEVER THE ASSESSEE GAVE UP ITS CLAI M U/S 35AC AND CLAIMED DEDUCTION U/S 80GGA IN THE REVISED RET URN PROBABLY TO REDUCE THE TAX BURDEN. 13. SO FAR AS THE CONTENTION OF THE LEARNED AR THA T SINCE THE ASSESSEE DURING THE YEAR HAD INCURRED LOSS FROM BU SINESS AND HAD NO INCOME CHARGEABLE TO TAX UNDER THE HEAD INCOME FROM BUSINESS OR PROFESSION SUB-SECTION (3) OF SECTION 80GGA WI LL NOT APPLY, WE ARE AFRAID, SUCH CONTENTION IS NOT ACCEPTABLE FOR THE SIMPLE REASON THAT INCOME AS DEFINED U/S 2(24) OF THE ACT IS A N INCLUSIVE DEFINITION AND ALSO INCLUDES LOSS. THE HONBLE SUP REME COURT IN CASE OF CIT V/S. HARA PRASAD & CO. PVT. LIMITED (9 9 ITR 118) HELD THAT THE WORDS INCOME OR PROFIT AND GAINS SHOU LD BE UNDERSTOOD AS INCLUDING LOSSES ALSO, SO THAT, IN ONE SENSE P ROFITS AND GAINS REPRESENT PLUS INCOME WHEREAS LOSSES REPRESENT MINUS INCOME. IN OTHER WORDS, LOSS IS NEGATIVE PROFIT. BOTH POSI TIVE AND NEGATIVE PROFITS ARE OF REVENUE CHARACTER. BOTH MUST ENTER INTO COMPUTATION, WHEREVER IT BECOMES MATERIAL IN THE SAME MODE OF T HE TAXABLE INCOME OF THE ASSESSEE. THE AFORESAID VIEW WAS AGA IN REITERATED BY THE HONBLE SUPREME COURT IN CASE OF RELIANCE JUTE AND INDUSTRIES LIMITED V/S. CIT (120 ITR 921) AND CIT V/S. GOLDCO IN HEALTH (P) LTD. (304 ITR 308). THEREFORE, IN VIEW OF THE SPECIFIC BAR CREATED UNDER SUB-SECTION (3) OF SECTION 80GGA, THE ASSESSEE IS NOT ENTITLED TO AVAIL DEDUCTION U/S 80GGA OF THE ACT. IN AFORESAID VIEW OF THE MATTER, WE UPHOLD THE ORDER OF THE CIT(A) ON THIS ISSUE. THUS, THE GROUNDS RAISED BY THE ASSESSEE ARE DISMISSED'. 13. IT WAS FAIRLY ADMITTED BY THE LD.COUNSEL THAT T HE MATTER WAS PENDING BEFORE THE HON'BLE HIGH COURT. SINCE THE I SSUE IS ALREADY CONSIDERED AGAINST ASSESSEE IN REGULAR PROCEEDINGS U/S.143(3) R.W.S.147, THERE IS NO NEED TO CONSIDER THE ISSUE AGAIN IN THI S YEAR AS ASSESSEE HAS ACCEPTED THE ORDER U/S.143(3) AND NO PROCEEDINGS AR E PENDING ON THAT. FURTHER, THE FACT THAT THE MATTER WAS CONTESTED BEF ORE THE HON'BLE HIGH COURT ITSELF SHOWS THAT IT IS A DEBATABLE ONE, THE REFORE, THE SAME CANNOT BE CONSIDERED IN PROCEEDINGS U/S.154. IN THAT VIEW ALSO ASSESSEE'S GROUNDS CANNOT BE ENTERTAINED. ACCORDINGLY, THE SA ME ARE REJECTED. I.T.A. NOS. 1249/HYD/2012 & 1384/HYD/2012 SHRI K. SATISH REDDY LR OF LATE K.ANJI REDDY :- 11 -: 14. IN THE RESULT, REVENUE'S APPEAL IS PARTLY ALLOW ED AND ASSESSEE'S APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 20 TH FEBRUARY, 2015. SD/- SD/- (D. MANMOHAN) (B. RAMAKOTAIAH) VICE PRESIDENT ACCOUNTA NT MEMBER HYDERABAD, DATED 20 TH FEBRUARY, 2015. TNMM COPY TO : 1. DY. COMMISSIONER OF INCOME TAX, CIRCLE - 1 (2 ), 4 TH FLOOR, AAYAKAR BHAVAN, HYDERABAD. ASST. COMMISSIONER OF INCOME TAX, CIRCLE-1(2), AAYA KAR BHAVAN, HYDERABAD. 2. SRI K. SATISH REDDY, LR OF LATE K. ANJI REDDY, 8 -2-576/1, ROAD NO.7, BANJARA HILLS, HYDERABAD. C/O. SHRI A.V. RAGHU RAM, ADVOCATES, 610, BABUKHAN ESTATE, BASHEERBAGH, HYDERABAD-1. 3. CIT(A)-II, HYDERABAD 4. CIT-I, HYDERABAD 5. D.R. ITAT, HYDERABAD.