Ajit Kumar Sengupta, J.
1. In this reference under Section 256(1) of the Income-tax Act, 1961, for the assessment year 1970-71, the following question of law has been referred by the Tribunal :
' Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that in view of Section 80A(2) of the Income-tax Act, 1961, the assessee was not entitled to any relief under Section 80-I '
2. The assessee claimed relief under Section 80-I on its profits as a priority industry. The Income-tax Officer, however, did not allow the relief. The Appellate Assistant Commissioner directed the Income-tax Officer to allow relief under Section 80-I on the gross total income before setting off the carried forward losses and development rebate. Against the said order, the Department went in appeal before the Tribunal. The Tribunal held that the assessee is entitled to the benefit of Section 80-I deduction on its profits as a priority industry before the set-off of the carried forward losses and development rebate. The Tribunal, however, held that Section 80A(2) provides for a limit to the extent to which reliefs under Chapter VI-A can be allowed to the assessee and that the relief shall not exceed the gross total income. The Tribunal held that in the year under consideration, the gross total income is nil and in view of Section 80A(2), the assessee is not entitled to any relief under Section 80-I.
3. Section 80A lays down certain general principles which are relevant for the purpose of deductions to be allowed in computing the total income under Sections 80C to 80VV. Such deductions are to be allowed from the gross total income of the assessee in computing the total income. The term 'grosstotal income ' as defined in Clause (5) of Section 80B means, in the case of a company, total income computed in accordance with the provisions of the Income-tax Act, before making any deduction under Chapter VI-A. Section 80A(2) limits the aggregate of the deductions allowable under Sections 80C to 80VV to the amount of the gross total income of the assessee. This court held in the case of National Engineering Industries Ltd. v. CIT : 113ITR252(Cal) , that the deductions allowable cannot result in any negative figure or loss. In that case, the gross total income was found to be a net loss in the year concerned because of the losses suffer-red during the year. The court, therefore, held that there was no question of any further deduction under Section 80M of the Act. In the instant case also, the Tribunal found that the gross total income of the assessee is nil and, as such, the assessee is not entitled to any relief under Section 80-I of the Act. As regards the development rebate, the Finance (No. 2) Act, 1967 amended Section 33(2) of the Income-tax Act, 1961, with effect from April 1, 1968. Section 33(2), as amended, is in the following terms :
' In the case of a ship acquired or machinery or plant installed after the 31st day of December, 1957, where the total income of the assessee assessable for the assessment year relevant to the previous year in which the ship was acquired or the machinery or plant installed or the immediately succeeding previous year, as the case may be, the total income for this Purpose being computed without making any allowance under Sub-section (1) or Sub-section (1A) of this section or Sub-section (I) of Section 33A or any deduction under Chapter VI-A or Section 280-O is nil or is less than the full amount of the development rebate calculated at the rate applicable thereto under Sub-section (1) or Sub-section (1A), as the case may be,--
(i) the sum to be allowed by way of development rebate for that assessment year under Sub-section (1) or Sub-section (1A) shall be only such amount as is sufficient to reduce the said total income to nil; and......'
4. The underlined portion was inserted by the Finance (No. 2) Act of 1967. The effect of this amendment is that from the assessment year 1968-69, the deduction on account of development rebate is limited to the assessee's total income of the year without making the deductions for development rebate and development allowances and also without making any deduction under Chapter VI-A or any deduction on account of annuity deposit under Section 280-0.
5. In view of the provisions contained in Section 80A(2) and the amended Section 33(2) of the Act, the question in this reference is answered in the affirmative and in favour of the Revenue.
6. There will be no order as to costs.
Dipak Kumar Sen, J
7. I agree.