Section 80A(2) — the law in short
What the courts have decided on section 80A(2), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.
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CIT v Reliance Energy Ltd
Supreme CourtHelps taxpayer
My section 80-IA deduction is larger than my business income. Can I set it against my other income too, or only against business income?
Against gross total income, subject to the Chapter VI-A ceiling. The Supreme Court held that section 80AB deals only with computing the deduction on net income and cannot be read as curtailing the width of section 80-IA. Section 80-IA(5) is confined to determining the quantum of the deduction by treating the eligible business as the only source of income; it cannot be pressed into service to read a limitation confining the deduction under sub-section (1) to business income. Section 80A(1) allows the Chapter VI-A deductions from gross total income and section 80A(2) caps the aggregate at gross total income. The Revenue's appeals were dismissed on this issue.
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Synco Industries Ltd v Assessing Officer
Supreme CourtHelps department
My eligible unit made a profit but brought-forward losses of my other division wipe out my income. Can I still claim the Chapter VI-A deduction on the profitable unit?
No. The Supreme Court held that gross total income must first be worked out under the Act, after intra-head and inter-head set off and after setting off brought-forward business losses and unabsorbed depreciation. Chapter VI-A deductions come out of that figure. If it is nil or a loss, section 80A(2) leaves nothing for the deduction to be given from, and none can be allowed. The non obstante clause in section 80-I(6), which treats the eligible undertaking as the only source of income, fixes the quantum of the deduction only; it does not decide eligibility.
Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.
