B.S. Dhillon, J.
1. The following questions of law have been referred to this court for its opinion on a reference under Section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as 'the Act'), by the Income-tax Appellate Tribunal, Chandigarh Bench :
' (1) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in allowing the deduction under Section 80J of the Income-tax Act, 1961 ?
(2) If the answer to question No. 1 is in the affirmative, whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the sum of Rs. 41,174, being the development rebate deducted in terms of Section 33 by the Income-tax Officer while determining the ' gross total income ' could not again be deducted from the sum of Rs. 47,027 which was claimed as a deduction from the ' gross total income ' under Section 80J(1) of the Income-tax Act, 1961 '
2. The brief facts giving rise to the case are that the assessee owns two flour mills and derives income mainly from grinding of wheat. During the previous year relevant to the assessment year 1967-68, the assessee-company had also set up a cold storage. The previous year relevant to the assessment year 1971-72 ended on March 31, 1971. The assessee returned its total income of Rs. 9,84,560. The gross total income of the assessee included the profit of Rs. 47,027 made from the industrial undertaking of the cold storage. It is common ground that the cold storage from which this income was derived satisfied the conditions laid down under Section 80J(4)of the Act. The loss, depreciation, development rebate, profit and deficiency under Section 80J of the cold storage, being newly established industrial undertaking in different years, are as under :
Assessme Loss Depreciation Development Profit Deficiency
year rebate u/s. 80 J
Rs. Rs. Rs. Rs. Rs.
1967-68 29,444 68,615 1,98,623 ___ 11,155
1968-69 ___ 57,460 187 ___ 1,14,153
1968-70 ___ 1,32,871 37,143 ___ 90,228
1968-71 ___ ___ 711 1,51,011 83,391
1968-72 ___ ___ 41,174 47,027 1,09,342
29,444 2,58,946 2,77,838 1,98,038 4,08,269
3. The loss, depreciation, development rebate, indicated above, were adjusted while computing the total income for the assessment years 1967-68, 1968-69 and 1969-70. For the previous year ending March 31, 1970, relevant to the assessment year 1970-71, the assessee claimed that the deficiency under Section 80J for the years prior to the assessment year 1970-71 should be adjusted against the profit of Rs. 1,51,011 of that year but the ITO did not agree with that contention. Being aggrieved, the assessee filed an appeal before the AAC, but failed. The assessee then filed an appeal before the Tribunal and the Tribunal held that the assessee was entitled to a deduction under Section 80J(1) first and the deduction of Rs. 83,391 was, therefore, held to be allowable from the profit of Rs. 1,51,011. In other words, it was held that this deduction had to be allowed even before any deficiency of the earlier years could be considered. The Tribunal also allowed the deficiency pertaining to the assessment year 1967-68 to be adjusted as provided under Section 80J(3) and thus the total deficiency to be carried forward was held to be as under :
Assessment year Deficiency u/s 80J(3)
4. The revenue being aggrieved against the said order of the Tribunal in I.T.A. Reference No. 1244 of 1971-72 dated July 31, 1973, got the questions of law arising out of the order of the Tribunal referred to this court. This court, vide its order dated October 28, 1976, in CIT v. Patiala Flour MillsCo. (P.) Ltd. held that there is nothing in the language of Section 80J to warrant the conclusion that notwithstanding that the losses, depreciation and development rebate of earlier years pertaining to the cold storage business had already been adjusted in computing the total income of the assessee for those years, till such losses, depreciation and development rebate of the earlier years could once again be adjusted against the profits of the cold storage business for the assessment year 1970-71, and thus the reference was decided in favour of the assessee and against the revenue. It is not disputed that the judgment in Patiala Flour Milts' case of this court was challenged in the Supreme Court by the revenue and the said appeal had been dismissed, the final court of appeal having affirmed the decision of this court. In view of this, the learned counsel for the parties are agreed that question No. 1 referred to us for our opinion has to be answered in the affirmative, in favour of the assessee and against the revenue and we order accordingly.
5. For the assessment year under consideration the assessee claimed that the profit of Rs. 47,027 from the newly established industrial undertaking of the cold storage, should be deducted either from the deficiency under Section 80J worked out for this year or from the brought forward deficiency of the earlier years as provided under Section 80J(3) of the Act. The ITO did not accept this contention and more so in view of his order for the assessment year 1970-71. The assessee filed an appeal to the AAC and, inter alia, pleaded that deduction under Section 80J of the Act should have been allowed to the extent of Rs. 5,853 (profit Rs. 47,027 less development rebate already allowed Rs. 41,174). Following the earlier order of the Tribunal, the AAC held that the profit of Rs. 5,853 should be adjusted against the deficiency of Rs. 1,09,342 for this year.
6. Being aggrieved by the order of the AAC, both the parties came up in appeal before the Tribunal. The grievance of the assessee was that the AAC was not correct in restricting the deduction under Section 80J to Rs. 5,853 instead of Rs. 47,027 as worked out in the assessment year itself. On the other hand, the grievance of the revenue was that the assessee was not entitled even to deduction of Rs. 5,853 under Section 80J of the Act. The Tribunal did not accept the contention of the revenue. The Tribunal held that the loss, depreciation and development rebate for the earlier years had already been adjusted while working out the respective total income in those years and no notional carried forward loss, depreciation and development rebate could be adjusted against the profit of the industrial undertaking of the cold storage for this year. It was held that the assessee was entitled to deduction under Section 80J of the Act. It was further held that Rs. 5,853 had first to be adjusted against the deficiency of Rs. 1,09,342 of this year.
7. The Tribunal next considered whether the deduction under Section 80J(1) of the Act should be restricted to only Rs. 5,853 or deduction should be allowed in respect of the profit of Rs. 47,027 without reducing therefrom the development rebate of Rs. 41,174. It was argued on behalf of the assessee that the gross total income, as defined under Section 80B(5) of the Act, had to be computed in accordance with the provisions of the Act, but from such computation the deductions under Chap. VI-A or under Section 280O of the Act were not to be allowed. It was contended that under the said definition the gross total income had to be arrived at after deducting, inter alia, the development rebate admissible under Section 33 of the Act. The gross total income had to be worked out for the entire business of the assessee and when the ITO himself computed the total income at Rs. 10,60,240 he had correctly worked out that gross total income because while arriving at the aforesaid income, the deduction of Rs. 41,174 on account of development rebate in respect of the cold storage unit had been allowed. The assessee's contention was accepted and the Tribunal held that when development rebate of Rs. 41,174 had once been deducted while arriving at the gross total, the same amount should not be reduced while working out the profit from the industrial undertaking. It was, therefore, held that the deduction under Section 80J(1) of the Act should be allowed to the extent of Rs. 47,027. In other words, it was held for purposes of working out the deduction under Section 80J(1) of the Act that development rebate of Rs. 41,174 should not be deducted. The deficiency under Section 80J of the Act for this year was taken at Rs. 62,315 and along with the carried forward deficiency of earlier years amounting to Rs. 1,47,916, the total deficiency to be carried forward would be Rs. 2,10,231. Thus, the assessee's appeal on this point was allowed and the appeal of the revenue was dismissed. It is under these circumstances that both the questions of law, referred to above, have been referred by the Tribunal for our opinion.
8. It has been contended by Mr. Awasthy, learned counsel for the revenue, that with a view to arrive at the conclusion whether there has been a loss or profit and to what extent from the cold storage newly established industrial undertaking, the unabsorbed depreciation and unabsorb-ed development rebate have first to be adjusted and whatever figure then works out will be either the loss or the income from the newly established industrial undertaking, and, therefore, it has been stressed that the unabsorbed development rebate amounting to Rs. 41,174 pertaining to the assessment year 1971-72 should be first adjusted as against the profit of Rs. 47,027 and the remaining profit may then be adjusted towards the claim made under Section 80J of the Act. We do not find any merit in this contention. Keeping in view the provisions of Section 14 of the Act, the total income of an assessee is the aggregation of the income computed under various heads of income as specified therein. Business income derived from an undertaking has to be computed under a single head and in this computation the industrial undertaking is not regarded as a separate business for the purposes of the computation of assessable income under that head, except for the purposes of the grant of a special allowance under Section 80J of the Act itself. In our considered opinion, since the development rebate reduces the total income which aggregates the assessable income under the various heads, it is the assessee's right to claim the particular head or the particular business against which the development rebate allowance be made in the process of aggregation. There is no warrant in law in construing the expression ' income, profits and gains derived from an industrial undertaking ' as ' profits and gains otherwise determined but reduced by the allowance for development rebate ', which is a charge on total income and not on the profits of a particular business. It is not disputed that the development rebate is not a deduction from the profits of any business in which the plant and machinery are installed. It is a special allowance in the nature of an incentive to encourage the growth of new industrial undertakings, which reduces the total income of an assessee for a particular year. Thus, the contention that while working out the profit or loss under the head ' Profits and gains of business or profession ', the profits or losses qua each particular business have to be worked out, is without any merit.
9. The matter can be viewed from another angle. It is not disputed that the deduction in respect of profits and gains from a newly established industrial undertaking are to be calculated on the figure arrived at called ' gross total income '. The term ' gross total income ' has been defined in Section 80B(5) of the Act as follows :
' ' gross total income ' means the total income computed in accordance with the provisions of this Act, before making any deduction under this Chapter or under Section 280O. '
10. From this definition itself, it is to be noticed that the figure of gross total income has to be arrived at after computation of total income in accordance with the provisions of this Act, before making any deduction under Chapter VI-A or under Section 280-0 of the Act. It would thus be seen that while calculating gross total income the benefits as are permissible under Section 33(1)(c) and 33(2) of the Act, are to be allowed and only then the figure regarding gross total income will be arrived at. It is on this figure that the deduction in respect of profits and gains from a newly established industrial undertaking are to be allowed. If the deductions, as are permissible as depreciation or development rebate, have already been adjusted against the profits or income from other business concerns, the said development rebate cannot again be readjusted against the income from the newly established industrial undertaking. In the facts of the present case, the ITO himself in the computation deducted the entire development rebate allowance in respect of the entire business carried on by the assessee from the total income. Having done so, it is the assessee's right to claim that the component of the profits derived from the industrial undertaking (cold storage) included in such reduced total income, is the whole profit of Rs. 47,027 which the ITO himself had so computed and indicated in the chart. It is also equally well established that if two choices are open to the assessee the right of the assessee to claim assessment under the head which leaves him with a lighter burden cannot be restricted. From whatever angle it may be looked into, we are clearly of the opinion that the Tribunal was right in concluding that the sum of Rs. 41,174, being the development rebate deducted ia terms of Section 33 of the Act, by the ITO, while determining the gross total income, could not again be deducted from the sum of Rs. 47,027 which was claimed as deduction from the gross total income under Section 80J(1) of the Act. Question No. 2 is also, therefore, answered in the affirmative, in favour of the assessee and against the revenue.
11. There will be no order as to costs.