Judgment :- K. A. THANIKKACHALAM, J. At the instance of the Department, the Tribunal referred the following two questions for the opinion of this court under section 256(1) of the Income-tax Act, 1961 (in short "the Act"). "(i) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the assessee was manufacturing textiles within the meaning of entry 32 of the Fifth Schedule and entry 21 of the Ninth Schedule and, therefore, the assessee was entitled to higher development rebate and initial depreciation in respect of the plant and machinery installed during the previous year relevant for the assessment year 1975-76 ? and (ii) Whether, on the facts and in the circumstances of the case and having regard to the provisions of section 80B(5) of the Income-tax Act, 1961, the Appellate Tribunal was right in holding that relief under section 80J should be allowed before set off of unabsorbed development rebate ?". The assessee, S. S. M. Processing Mills, Komarapalayam, is a registered firm, carrying on business in processing of textiles. In respect of the machinery purchased during the previous year relevant for the assessment year 1975-76, the assessee claimed development rebate at the higher rate of 25 per cent. on the ground that the assessee should be considered to have been manufacturing textiles falling within entry 32 of the Fifth Schedule. In the same view, it also claimed initial depreciation as the item was falling under entry 21 of the Ninth Schedule. The Income-tax Officer denied the claim for development rebate as well as initial depreciation on the ground that the items processed by the assessee cannot be considered to be textiles to entitle it for higher development rebate and initial depreciation. He also held that the relief under section 80J should not be given set off, as there was no income after set off of the unabsorbed development rebate in this yearThe Commissioner of Income-tax (Appeals), on appeal, following the Appellate Tribunal's earlier order held that the assessee is entitled to higher development rebate as well as initial depreciation. The Commissioner of Income-tax (Appeals) further held that the relief under section 80J should be allowed first before set off of the unabsorbed development rebate. Aggrieved, the Department filed a second appeal before the Tribunal. The Tribunal confirmed the order passed by the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals) further held that the relief under section 80J should be allowed first before set off of the unabsorbed development rebate. Aggrieved, the Department filed a second appeal before the Tribunal. The Tribunal confirmed the order passed by the Commissioner of Income-tax (Appeals). Before us, learned standing counsel for the Department submitted that the assessee is not engaged in manufacturing activity and that, therefore, the assessee is not entitled to higher development rebate, and the initial depreciation as claimed. According to learned standing counsel, the assessee is not doing any manufacturing activity in textiles falling within entry 32 of the Fifth Schedule. So also, there is no manufacturing activity so as to claim initial depreciation under entry 21 of the Ninth Schedule. The assessee purchased cloth manufactured by others and then bleached, dyed and tentered the same. The assessee claimed higher development rebate on the machinery used in its business under section 33(1)(b)(B)(i) read with item No. 32 of the Fifth Schedule to the Act. So also initial depreciation was claimed under section 32(1)(vi) of the Act. Unless the assessee is manufacturing the textiles, the assessee cannot claim higher development rebate and so also without manufacturing activities, initial depreciation also is not possible. On the other hand, learned counsel appearing for the assessee submitted that the assessee while purchasing the cloth manufactured by others, bleaching, dyeing and tentering the same, the assessee was doing manufacturing activities, Manufacturing involves a series of processes. Processes in manufacture or in relation to the manufacture implies not only production but also various stages through which the material is subjected to change by different operations. It is by the cumulative effect of the various processes to which the material is subjected that the manufactured product emerges. Therefore, each step towards such production would be a process in relation to the manufacture. Where any particular process is so integrally connected with the ultimate production of goods, that but for which process, manufacture or processing of goods would be impossible or commercially inexpedient, that process is one in relation to the manufacture. According to learned counsel, simply because the cloth which was used as a raw material remains as it is in the end, that would not mean that there is no manufacturing activity. According to learned counsel, simply because the cloth which was used as a raw material remains as it is in the end, that would not mean that there is no manufacturing activity. Therefore, it was submitted that the assessee is entitled to higher development rebate and initial depreciation, as claimedA similar question came up for consideration before this court in respect of the very same assessee in CIT v. S. S. M. Finishing Centre 1985 (155) ITR 791, 1984 (40) CTR 200, 1984 (2) TLR 719, 1984 (40) CTR(Mad) 200 for the assessment year 1970-71. The name of the assessee in the present case is "S. S. M. Processing Mills". In the said decision, while considering the provisions of section 33(1)(b)(B)(i) of the Act, this court held as under: "That the basic quality of the commodity as cloth remained the same both at the time of the purchase by the assessee and even after the carrying on by the assessee of the various operations on the said cloth. The important requirement contemplated by the provisions for grant of higher development rebate is that the operation carried on must be directed towards manufacture or production of textiles which would include dyed clothing material, printed clothing material or clothing material otherwise processed made wholly or mainly of cotton. But, in the instant case, the fed in material was cloth and the resultant product, after the operations on the cloth were done by the assessee was again cloth, probably neater and more presentable cloth. Consequently, the assessee could not be said to be engaged in the business of manufacture or production of textiles within the meaning of item No. 32 of the Fifth Schedule and hence would not be eligible for the higher development rebate." It was further held that in that case, that the feed-in-material is only cloth and the resultant product after the operations are done on the cloth by the assessee is again cloth or probably neater or more presentable cloth as found by the Appellate Assistant Commissioner ; but that is not the same thing as saying that the assessee has "manufactured or produced" the cloth or textiles. We had occasion to refer and consider in detail all these aspects in T. C. No. 669 of 1978 (CIT v. S. S. M. Sizing Centre 1985 (155) ITR 782, 1987 (61) CTR 250, 1985 (20) TAXMAN 248 (Mad) and T. C. No. 146 of 1979 CIT v. Veena Textiles Private Ltd. 1985 (155) ITR 794, 1984 (40) CTR 233, 1984 (19) TAXMAN 86 , 1984 (2) TLR 715, 1984 (40) CTR(Mad) 233 (Mad). We are, therefore, unable to share the interpretation put upon the word "textiles" by the TribunalSimilarly in the case of the same assessee, a similar question came up for consideration before this court for the assessment year 1974-75 in CIT v. S. S. M. Finishing Centre 1990 (186) ITR 597, 1990 (85) CTR 189, 1990 (53) TAXMAN 396 , 1991 (2) TLR 100, 1990 (85) CTR(Mad) 189. While considering the assessee's claim for higher development rebate, this court held that the nature of the operations carried on by the assessee during the accounting period relevant to the assessment year in question had remained what it was during the previous assessment year. There was no manufacture or production of any article mentioned in the Fifth Schedule to the Act. Hence, the assessee was not entitled to development rebate at a higher rate. In this decision, this court had considered a decision of the Supreme Court in Ujagar Prints v. Union of India 1988 (S3) SCR 770, 1989 AIR(SC) 516, 1989 (3) SCC 488 , 1988 (4) JT 330 , 1988 (2) Scale 1115 , 1989 (74) STC 401, 1988 (38) ELT 535 , 1988 (19) ECR 578, 1989 (76) AIR 516, 1989 (179) ITR 317, 1988 (18) ECC 435, 1989 (46) Taxman 88, 1989 SCC(Tax) 469, 1989 (75) CTR(SC) 1 and pointed out that the abovesaid decision of the Supreme Court is concerned with section 2(f) (prior to 1980 amendment) of the Central Excises and Salt Act, 1944. In the said decision, while considering what is manufacture it was held that the view taken in Empire Industries Ltd. v. Union of India 1986 AIR(SC) 662, 1985 (S1) SCR 292, 1985 (3) SCC 314 , 1985 (1) SCALE 1269 , 1985 (20) ELT 179 , 1986 (162) ITR 846, 1986 (81) TAXATION 265, 1985 ECR 1169, 1985 SCC(Tax) 416, 1987 (64) STC 42: 1985 AIR(SC) 985, 1986 (52) FLR 19, 1985 (67) FJR 102, 1985 LIC 1008, 1985 (2) LLJ 401 , 1985 (2) LLN 270, 1985 (1) Scale 927 , 1985 (3) SCC 371 , 1985 (S1) SCR 282, 1986 (1) UJ 386 , 1985 (1) SCALE 927 , 1985 SCC(L&S) 808, that "grey fabric" after it undergoes the various processes of bleaching, dyeing, sizing, printing, finishing, etc., emerges as a commercially different commodity with its own price structure, custom and other commercial incidents and that there was in that sense a manufacture within the meaning of section 2(f), even as unamended, is an eminently plausible view and does not suffer from any fallacy. Therefore, this decision of the Supreme Court was rendered while considering what is manufacture as contemplated under section 2(f) prior to amendment of the Central Excises and Salt Act, 1944. So also, the Patna High Court CIT v. Natraj Processing Industries 1993 (203) ITR 833 , 1994 (116) CTR 281 had an occasion to consider what is manufacture of article, while considering special deduction under section 80J of the Act. According to the facts arising in that case, the assessee purchased grey cloth and added to it various chemicals and thereafter put it in a damping machine. The cloth was thereafter folded according to the size and stamped according to its length and breadth and a specific brand name was printed on its top. The calendering process employed by the firm was such as to give a temporary finish by processing the fabric for making it marketable. No lasting change was brought about. On these facts, a question arose whether the Tribunal was correct in holding that the assessee is engaged in manufacturing and producing articles within the meaning of section 80J of the Act, thereby entitling it to claim a deduction under that section. No lasting change was brought about. On these facts, a question arose whether the Tribunal was correct in holding that the assessee is engaged in manufacturing and producing articles within the meaning of section 80J of the Act, thereby entitling it to claim a deduction under that section. While answering this question, the Patna High Court held that if this is the nature of the operation, the "grey" fabric, on the facts of the instant case, does not become a new and commercially different commodity and cease to be "grey" cloth. For this reason, the assessee-firm is not entitled to relief under section 80J of the ActLearned counsel appearing for the assessee in order to support the contention that the assessee was doing manufacturing activity relied upon a decision of the Allahabad High Court in Tarai Development Corporation v. CIT 1979 (120) ITR 342, 1980 (14) CTR 61, 1979 (2) TAXMAN 359. According to the facts arising in that case, the assessee is engaged in processing of seeds and claimed relief under section 80J. A question arose whether the Tribunal was correct in holding that the income derived by the assessee from processing of seeds was not entitled to relief under section 80J of the Act for the assessment year 1970-71. While answering the said question, the Allahabad High Court held that there is inherent indication in the Act which shows that, in its context, processed seeds must be treated as falling either in the category of manufacture or production. One of the articles or things which is treated to be manufactured or produced for purposes of section 33 of the Act, as set out in Schedule V, is "processed seeds" which finds a place in item No. 28 thereof. "Processed seeds" is thus treated as an article which is obtained by the process of manufacture or production for purposes of section 33 also. Furthermore, section 80B and Schedule VI, also treat "processed seeds" as an article obtained by the process of manufacture or production. Again, section 80-I which granted relief to specified industries, including those which sold "processed seeds", occurred in Chapter VI-A of the Act along with section 80J. Furthermore, section 80B and Schedule VI, also treat "processed seeds" as an article obtained by the process of manufacture or production. Again, section 80-I which granted relief to specified industries, including those which sold "processed seeds", occurred in Chapter VI-A of the Act along with section 80J. In view of the various provisions contained in the Act as pointed out earlier, "processed seeds" were treated as an article which is obtained by the process of "manufacture" or production for the purpose of getting benefit under those provisions. In order to have an uniform interpretation, the Allahabad High Court held that the "processed seeds" should be taken as an article which is obtained either by process of "manufacture or production for the purposes of section 80J of the Act. In other words, in order to come to the conclusion that the "processed seeds" should be taken as an article which is obtained either by process of manufacture or production for the purposes of section 80J of the Act, the Allahabad High Court was depending upon the meaning of the words, "processed seeds" contained in various other provisions, as pointed out earlier. Therefore, it was in that context, the Allahabad High Court held, in order to get an uniform interpretation, that the "processed seeds" was considered as an article, which is obtained either by the process of manufacture or production for the purposes of section 80J. Learned counsel for the assessee relied on a decision in CIT v. Lakhtar Cotton Press Co. (Pvt.) Ltd. 1983 (142) ITR 503, 1983 (37) CTR 28, 1983 (12) TAXMAN 94 (Guj), according to which the assessee-company received cotton in bulk having lighter density which was sprinkled with water and through a mechanical device, pressed into small units of convenient sizes and then packed into bales, because cotton packed in bales was commercially acceptable as merchants found it convenient to store cotton in that form because unpressed cotton would require considerable storing space which might ultimately prove uneconomical to the traders dealing in or using cotton. The assessee-company claimed that pressing of cotton fell within the expression "processing of goods" within the meaning of section 2(7)(c) of the Finance Act, 1973, and, therefore, it was an "industrial company" entitled to the concessional rate of tax. The assessee-company claimed that pressing of cotton fell within the expression "processing of goods" within the meaning of section 2(7)(c) of the Finance Act, 1973, and, therefore, it was an "industrial company" entitled to the concessional rate of tax. On these facts, the Gujarat High Court held: that loose cotton in bulk quantity with lighter density was, as a result of pressing, converted into cotton bales and to that extent it underwent a change and, therefore, the assessee-company fell within the definition of an "industrial company" because it processed cotton into cotton bales and was entitled to the concessional rate of tax within the meaning of sections 2(7)(c) and 2(8)(c) of the Finance Acts, 1973 and 1974, respectively. "Thus, while considering the provisions of section 2(7)(c) of the Finance Act, 1973, the Gujarat High Court on the facts available on the record, held". that the assessee was carrying on business in ginning and pressing of cotton. The cotton was pressed and packed in bales. Therefore, the assessee-company fell within the definition of an "industrial company". Reliance was also placed on the decision in Shree Mulchand Co. Ltd. v. CIT 1986 (162) ITR 764, 1986 (51) CTR 195, 1986 (24) TAXMAN 188, 1986 (2) TLR 872 (Bom). According to the facts arising in that case, the assessee, which was engaged in the export of goods to foreign countries, purchased mixed clipped glazed raw wool in heaps from shepherds and petty traders at upcountry centres, which wool was of various colours, fibres and different staple lengths. The assessee sorted out this wool in different qualities, colours and staple lengths and had the wool hand-washed to eliminate dirt, grease and other vegetable matter. Thereafter, the wool was dried in the sun on open ground and then it was opened by opener so that lots were blended uniformly to get average export type quality. The assessee claimed that it was an "industrial company" within the meaning of section 2(6)(c) of the Finance (No. 2) Act, 1971. Thereafter, the wool was dried in the sun on open ground and then it was opened by opener so that lots were blended uniformly to get average export type quality. The assessee claimed that it was an "industrial company" within the meaning of section 2(6)(c) of the Finance (No. 2) Act, 1971. "that, therefore, the assessee was an "industrial company" entitled to the concessional rate of tax and that in the context of the statute which had used the expression "processing" in contradistinction to or differently from the expression "manufacture" the assessee-company was engaged in the act of processing the goods in terms of the Finance Act in force at the relevant time." * Reliance was also placed upon a decision in CIT v. R. Narayanaswami Naicker and Sons 1984 (149) ITR 283, 1985 (20) TAXMAN 229 , 1986 (2) TLR 740 (Mad). According to the facts arising in that case, the assessee claimed investment allowance under section 32A of the Act since the assessee was ginning cotton. A Division Bench of this court in a decision in CIT v. R. Narayanaswami Naicker and Sons 1984 (149) ITR 283, 1985 (20) TAXMAN 229 , 1986 (2) TLR 740 referred to the decision of the Supreme Court in State of Punjab v. Chandu Lal Kishori Lal 1969 AIR(SC) 1073, 1970 (25) STC 52, 1969 (1) SCC 695 , 1969 (3) SCR 849 , 1969 UJ 262 . This court further held "that ginning of cotton results in manufacture and hence the assessee was entitled to the investment allowance." The fact of ginning of cotton was common both in the decisions of the Supreme Court cited supra, as well as in the tax case pending before this court. Therefore, following the decision of the Supreme Court, this court held "that ginning process would amount to manufacturing process". Our attention also was drawn to the decision in CIT v. N. C. Budharaja and Co. Therefore, following the decision of the Supreme Court, this court held "that ginning process would amount to manufacturing process". Our attention also was drawn to the decision in CIT v. N. C. Budharaja and Co. 1993 AIR(SC) 2529, 1994 (S1) SCC 280, 1993 (5) JT 346 , 1993 (3) SCALE 726 , 1993 (204) ITR 412, 1993 (91) STC 450, 1993 (3) Scale 726 , 1993 (114) CTR 420, 1993 (70) TAXMANN 312, 1993 (2) TLR 1117, 114 CTR(SC) 420, 1993 AIR(SCW) 3317, 1993 TaxLR 1117 wherein the Supreme Court held that the activity of construction of a dam could not be characterised as manufacture or production of an article or articles within the meaning of section 80HH(2)(i). In the above decision, the Supreme Court further held that "the word ' production ' has a wider connotation than the word ' manufacture '. While every manufacture can be characterised as production, every production need not amount to manufacture. The word ' production ' or ' produce ', when used in juxtaposition with the word ' manufacture ', takes in bringing into existence new goods by a process which may or may not amount to manufacture. It also takes in all the by-products, intermediate products and residual products which emerge in the course of manufacture of goods ". Again, the Supreme Court pointed out that" the principle of adopting a liberal interpretation which advances the purpose and object of beneficent provisions cannot be carried to the extent of doing violence to the plain and simple language used in the enactment. It would not be reasonable or permissible for the court to rewrite the section or substitute words of its own for the actual words employed by the Legislature in the name of giving effect to the supposed underlying object" * Lastly, reliance was placed upon a decision of the Punjab and Haryana High Court in CIT v. Sovrin Knit Works 1993 (199) ITR 679 , 1993 (109) CTR 310, 1993 (68) TAXMAN 198 [[FB], wherein the Punjab and Haryana High Court held that "dyeing, bleaching, printing and embroidering of grey cloth constitutes production and manufacture in terms of item No. 32 of the Fifth Schedule to the Act and hence also falls, under entry 23 of the First Schedule to the Industries (Development and Regulation) Act, 1951. Machinery installed for such manufacture is entitled to development rebate." * This decision was rendered by a Full Bench of the Punjab and Haryana High Court relying upon the decision of the Supreme Court in Assessing Authority-cum-Excise and Taxation Officer v. East India Cotton Mfg. Co. Ltd. 1981 AIR(SC) 1610, 1982 (1) SCR 55 , 1981 (3) SCC 531 , 1981 (3) SCALE 1067 , 1981 (48) STC 239, 1981 (3) Scale 1067 , 1981 UJ 688 , 1981 TaxLR 3044, 1981 UPTC 1319 wherein the Supreme Court held "that sizing, bleaching and dyeing of grey cloth did amount to processing as it had the effect of converting grey cloth into a commercially different marketable commodity and it, therefore, amounted also to manufacture of a commercially new product and the user of the goods in sizing, bleaching and dyeing grey cloth was consequently within the terms of section 8(3)(b) read with the certificate of registration under the Central Sales Tax Act." * The Full Bench of the Punjab and Haryana High Court also had an occasion to consider the judgment of the Supreme Court in Empire Industries Ltd.'s case 1986 AIR(SC) 662, 1985 (S1) SCR 292, 1985 (3) SCC 314 , 1985 (1) SCALE 1269 , 1985 (20) ELT 179 , 1986 (162) ITR 846, 1986 (81) TAXATION 265, 1985 ECR 1169, 1985 SCC(Tax) 416, 1987 (64) STC 42 where, it was held that for the purpose of the Central Excises and Salt Act, 1944. the expression "manufacture" was taken to include processes like bleaching, shrink-proofing, grease resisting and the like. This view was subsequently endorsed and taken by the Supreme Court in Ujagar Prints v. Union of India 1988 (S3) SCR 770, 1989 AIR(SC) 516, 1989 (3) SCC 488 , 1988 (4) JT 330 , 1988 (2) Scale 1115 , 1989 (74) STC 401, 1988 (38) ELT 535 , 1988 (19) ECR 578, 1989 (76) AIR 516, 1989 (179) ITR 317, 1988 (18) ECC 435, 1989 (46) Taxman 88, 1989 SCC(Tax) 469, 1989 (75) CTR(SC) 1. Thus, relying upon the above earlier decisions of the Supreme Court, the Punjab and Haryana High Court held "that dyeing, bleaching, printing and embroidering of grey cloth constitutes production and manufacture in terms of item No. 32 of the Fifth Schedule to the Act." * The decisions rendered in the case of the assessee for the earlier assessment years as in CIT v. S. S. M. Finishing Centre 1985 (155) ITR 791, 1984 (40) CTR 200, 1984 (2) TLR 719, 1984 (40) CTR(Mad) 200 (Mad), and CIT v. S. S. M. Finishing Centre 1990 (186) ITR 597, 1990 (85) CTR 189, 1990 (53) TAXMAN 396 , 1991 (2) TLR 100, 1990 (85) CTR(Mad) 189 (Mad), were brought to the notice of the Full Bench of the Punjab and Haryana High Court while rendering the decision in CIT v. Sovrin Knit Works 1993 (199) ITR 679 , 1993 (109) CTR 310, 1993 (68) TAXMAN 198 It was also submitted that as against the decision rendered in CIT v. Sovrin Knit Works 1993 (199) ITR 679 , 1993 (109) CTR 310, 1993 (68) TAXMAN 198 (P & H) [FB], an appeal is pending before the Supreme Court in [1994] 205 ITR(St) 45, and as against the decision rendered in CIT v. S. S. M. Finishing Centre 1990 (186) ITR 597, 1990 (85) CTR 189, 1990 (53) TAXMAN 396 , 1991 (2) TLR 100, 1990 (85) CTR(Mad) 189 an appeal is pending before the Supreme Court in [1992] 198 ITR(St) 42 (sic), and as against the judgment rendered in CIT v. S. S. M. Finishing Centre 1985 (155) ITR 791, 1984 (40) CTR 200, 1984 (2) TLR 719, 1984 (40) CTR(Mad) 200 (Mad), an appeal is pending before the Supreme Court in [1991] 187 ITR(St) 155. Thus, inasmuch as the Full Bench decision rendered by the Punjab and Haryana High Court in CIT v. Sovrin Knit Works 1993 (199) ITR 679 , 1993 (109) CTR 310, 1993 (68) TAXMAN 198 is under appeal before the Supreme Court and with regard to the decision rendered by this court in the case of the very same assessee in CIT v. S. S. M. Finishing Centre 1990 (186) ITR 597, 1990 (85) CTR 189, 1990 (53) TAXMAN 396 , 1991 (2) TLR 100, 1990 (85) CTR(Mad) 189 an appeal is pending before the Supreme Court. In order to adopt an uniform view, we would like to follow and endorse the earlier view taken by this court in the case of the very same assessee in the earlier assessment years cited supra. Accordingly, we hold that the Tribunal is not correct in coming to the conclusion that the assessee was manufacturing textiles within the meaning of entry 32 of the Fifth Schedule and entry 21 of the Ninth Schedule and, therefore, the assessee was entitled to higher development rebate and initial depreciation in respect of the plant and machinery installed during the previous year relevant for the assessment year 1975-76. Accordingly, we answer question No. 1 in the negative and in favour of the DepartmentIn so far as the second question is concerned, the assessee claimed relief under section 80J of the Act before set off of unabsorbed development rebate. The Income-tax Officer held that the relief under section 80J could not be given set off, as there was no income after set off of the unabsorbed development rebate in this year. On appeal the Appellate Assistant Commissioner held that the set off of amount brought forward under section 80J(3) of the Act, would have to be allowed against the profits and gains, as included in the gross total income, i.e., before set off of carried forward loss. On further appeal, the Tribunal upheld the view taken by the Appellate Assistant Commissioner, viz., the relief under section 80J of the Act should have priority over some other items including the unabsorbed development rebate Learned standing counsel appearing for the Department submitted that the relief under section 80J of the Act should be given priority, after the set off of unabsorbed development rebate was given. He relied upon a decision of the Supreme Court in Cambay Electric Supply Industrial Co. v. CIT 1988 (113) ITR 84, 1978 AIR(SC) 1099, 1978 (113) ITR 84, 1978 (2) SCC 644 , 1978 (3) SCR 660 , 1978 UJ 412 , 1978 TaxLR 753, 1978 CTR(SC) 50, 1978 CTR(SO) 50, 1978 SCC(Tax) 119 and submitted that the relief under section 80J of the Act should be given only after the unabsorbed development rebate was given a set off. Therefore, according to learned standing counsel for the Department, the Tribunal was not correct in holding that the relief under section 80J of the Act is possible even prior to the set off of the unabsorbed development rebate. In order to support his contention, learned standing counsel also relied upon the decisions reported in CIT v. Rockweld Electrodes India Ltd. 1995 (215) ITR 358, 1995 (128) CTR 152, 1995 (128) CTR(Mad) 152 (Mad), Mettur Chemical and Industrial Corporation Ltd. v. CIT 1996 (217) ITR 768, 1995 (6) Scale 468 , 1995 (S4) SCC 732, 1996 (132) CTR 389, 1996 (86) TAXMAN 157, 1996 (132) CTR(SC) 389 (SC) and Scindia Steam Navigation Co. Ltd. v. CIT 1995 (211) ITR 747, 1994 (119) CTR 489, 1994 (75) TAXMAN 495 (Bom)On the other hand, learned counsel appearing for the assessee submitted that the relief under section 80J of the Act should be given in the gross total income determined in accordance with the other provisions of the Act. Section 80J(1) of the Act speaks of profits and gains included in the gross total income. Therefore, the development rebate is a charge on the profits even before the total income is computed. According to learned counsel, the decision reported in Cambay Electric Supply Industrial Co. Ltd. v. CIT 1995 (211) ITR 747, 1994 (119) CTR 489, 1994 (75) TAXMAN 495 (Bom). On the other hand, learned counsel appearing for the assessee submitted that the relief under section 80J of the Act should be given in the gross total income determined in accordance with the other provisions of the Act. Section 80J(1) of the Act speaks of profits and gains included in the gross total income. Therefore, the development rebate is a charge on the profits even before the total income is computed. According to learned counsel, the decision reported in Cambay Electric Supply Industrial Co. Ltd. v. CIT 1988 (113) ITR 84, 1978 AIR(SC) 1099, 1978 (113) ITR 84, 1978 (2) SCC 644 , 1978 (3) SCR 660 , 1978 UJ 412 , 1978 TaxLR 753, 1978 CTR(SC) 50, 1978 CTR(SO) 50, 1978 SCC(Tax) 119 (SC), has got nothing to do with the question of priority between various amounts which are carried forward for set off against the profits of the year. It was further submitted that the said decision, viz., Cambay Electric Supply Industrial Co. It was further submitted that the said decision, viz., Cambay Electric Supply Industrial Co. Ltd. 1988 (113) ITR 84, 1978 AIR(SC) 1099, 1978 (113) ITR 84, 1978 (2) SCC 644 , 1978 (3) SCR 660 , 1978 UJ 412 , 1978 TaxLR 753, 1978 CTR(SC) 50, 1978 CTR(SO) 50, 1978 SCC(Tax) 119 (SC), is concerned with sections 80E and 84 of the Act, where the computation of gross total income does not arise for consideration. Accordingly, it was submitted that there is no error in the order passed by the Tribunal while directing to grant relief under section 80J of the Act before set off of unabsorbed development rebate For the assessment year under consideration, the assessee had claimed relief under section 80J of the Act. According to the assessee, set off of the amount brought forward under section 80J(3) of the Act would have to be allowed against the profits and gains as included in the gross total income, i.e., before set off of carried forward losses. A similar question came up for consideration before this court in the decision in CIT v. Rockweld Electrodes India Ltd. 1995 (215) ITR 358, 1995 (128) CTR 152, 1995 (128) CTR(Mad) 152 wherein while considering sections 72, 80B and 80J of the Act, a Division Bench of this court after taking into consideration the decision of the Supreme Court in Cambay Electric Supply Industrial Co. Ltd. v. CIT 1988 (113) ITR 84, 1978 AIR(SC) 1099, 1978 (113) ITR 84, 1978 (2) SCC 644 , 1978 (3) SCR 660 , 1978 UJ 412 , 1978 TaxLR 753, 1978 CTR(SC) 50, 1978 CTR(SO) 50, 1978 SCC(Tax) 119 a decision of this court in CIT v. Madras Motors (P.) Ltd. 1984 (150) ITR 150, 1984 (19) TAXMAN 67 , 1984 (2) TLR 463 and another decision of the Supreme Court in H. H. Sir Rama Varma v. CIT 1994 (205) ITR 433, 1994 (116) CTR 55, 1993 (71) TAXMAN 237, 1994 (2) TLR 498, 1994 AIR(SC) 1904, 1993 (6) JT 183 , 1993 (4) Scale 315 , 1994 (S1) SCC 473, 1994 (116) CTR(SC) 55 and two decisions of this court in CIT v. North Arcot District Co-operative Spinning Mills Ltd. 1985 (151) ITR 238, 1984 (42) CTR 51, 1984 (19) TAXMAN 240 , 1984 (42) CTR(Mad) 51 and CIT v. Rane Brake Linings Ltd. 1979 (120) ITR 82 and yet another decision of the Supreme Court in Distributors (Baroda) P. Ltd. v. Union of India 1985 AIR(SC) 1585, 1985 (S1) SCR 778, 1986 (1) SCC 43 , 1985 (1) SCALE 1216 , 1985 (2) CompLJ 389, 1985 (155) ITR 120, 1986 (1) UJ 86 , 1985 (47) CTR 349, 1985 (22) TAXMAN 49, 1986 SCC(Tax) 159, 120 SCC(p) 46, 1985 (47) CTR(SC) 349 held that the definition of "gross total income" contained in section 80B(5) of the Act, as the total income computed in accordance with the provisions of the Act before giving deductions under Chapter VI-A clearly shows the intention of Parliament that section 72 has to be applied before the total income of an assessee is determined, that is, before the deductions under Chapter VI-A are allowed. Hence, the set off of development rebate under section 80J should be made after setting off business losses of earlier years which have been carried forward. Similarly, in the decision in Mettur Chemical and Industrial Corporation, Ltd. v. CIT 1996 (217) ITR 768, 1995 (6) Scale 468 , 1995 (S4) SCC 732, 1996 (132) CTR 389, 1996 (86) TAXMAN 157, 1996 (132) CTR(SC) 389 the Supreme Court, while considering the provision of section 84 of the Act and section 15C of the Indian Income-tax Act, 1922, following the decision of the Supreme Court in Cambay Electric Supply Industrial Co. Ltd. v. CIT 1988 (113) ITR 84, 1978 AIR(SC) 1099, 1978 (113) ITR 84, 1978 (2) SCC 644 , 1978 (3) SCR 660 , 1978 UJ 412 , 1978 TaxLR 753, 1978 CTR(SC) 50, 1978 CTR(SO) 50, 1978 SCC(Tax) 119, held that the profits and gains of an industrial undertaking to which section 84 of the Act applies have to be computed in accordance with the provisions contained in Chapter IV-D of the Act and the development rebate has first to be deducted from the total income and it is only thereafter, if any profits and gains remain from this business, that the benefit under section 84(1) of the Act would be applicable In the decision in Cambay Electric Supply Industrial Co. Ltd. v. CIT 1988 (113) ITR 84, 1978 AIR(SC) 1099, 1978 (113) ITR 84, 1978 (2) SCC 644 , 1978 (3) SCR 660 , 1978 UJ 412 , 1978 TaxLR 753, 1978 CTR(SC) 50, 1978 CTR(SO) 50, 1978 SCC(Tax) 119 (SC), while interpreting the provision similar to section 84(5) of the Act, the Supreme Court held that the profits and gains from an industrial undertaking to which the section applies have to be computed in accordance with the provisions contained in Chapter IV-D of the Act and the development rebate has first to be deducted from the total income and it is only thereafter if any profits and gains remain from the business, that the benefit under section 84(1) of the Act could be applicable The Bombay High Court in Scindia Steam Novigation Co. Ltd. v. CIT 1995 (211) ITR 747, 1994 (119) CTR 489, 1994 (75) TAXMAN 495 (SC), while interpreting the provision similar to section 84(5) of the Act, the Supreme Court held that the profits and gains from an industrial undertaking to which the section applies have to be computed in accordance with the provisions contained in Chapter IV-D of the Act and the development rebate has first to be deducted from the total income and it is only thereafter if any profits and gains remain from the business, that the benefit under section 84(1) of the Act could be applicable The Bombay High Court in Scindia Steam Novigation Co. Ltd. v. CIT 1995 (211) ITR 747, 1994 (119) CTR 489, 1994 (75) TAXMAN 495 while considering the provisions of section 29 of the Act held that in order to calculate the maximum deduction which is allowable under section 80G(4) of the Act, it is necessary to ascertain first, the gross total income. This is defined in section 80B(5) as the total income computed in accordance with the provisions of this Act, before making any deduction under Chapter VI-A or under section 280-O of the Act. Secondly, from this gross total income it is necessary to deduct, inter alia, any amount which the assessee is entitled to deduct under any provision of Chapter VI-A, other than section 80G. This would include a deduction under section 80J also. The gross total income thus gets reduced. The Bombay High Court further held that for the purposes of section 80J, gross total income has to be computed without reference to Chapter VI-A. If this total income includes income from profits and gains from business it will have to be calculated under section 29 and in accordance with the provisions contained in sections 30 to 43A. The Tribunal was, therefore, correct in holding that relief under section 80J of the Act had to be restricted and that the relief under section 80J of the Act has got to be given, after deducting the unabsorbed development rebateLearned counsel appearing for the assessee pointed out the difference between the definitions of the provisions contained in sections 80E and 84 of the Act and section 80J of the Act. According to learned counsel for the assessee in computing the gross total income as occurring in section 80J has not found a place in section 80E or section 84 of the Act The Supreme Court in Mettur Chemical and Industrial Corporation Ltd. v. CIT 1996 (217) ITR 768, 1995 (6) Scale 468 , 1995 (S4) SCC 732, 1996 (132) CTR 389, 1996 (86) TAXMAN 157, 1996 (132) CTR(SC) 389 while considering the decision of Cambay Electric Supply Industrial Co. Ltd. 1988 (113) ITR 84, 1978 AIR(SC) 1099, 1978 (113) ITR 84, 1978 (2) SCC 644 , 1978 (3) SCR 660 , 1978 UJ 412 , 1978 TaxLR 753, 1978 CTR(SC) 50, 1978 CTR(SO) 50, 1978 SCC(Tax) 119 (SC), held that the profits and gains of an industrial undertaking to which section 84 of the Act applies have got to be computed in accordance with the provisions of Chapter IV-D of the Act. Unless there are profits or gains, while computing the total income of the assessee, relief under section 80J cannot be granted. Therefore, in the decision in Cambay Electric Supply Industrial Co. Ltd. 1988 (113) ITR 84, 1978 AIR(SC) 1099, 1978 (113) ITR 84, 1978 (2) SCC 644 , 1978 (3) SCR 660 , 1978 UJ 412 , 1978 TaxLR 753, 1978 CTR(SC) 50, 1978 CTR(SO) 50, 1978 SCC(Tax) 119 the Supreme Court was concerned with the profits and gains from an industrial undertaking. So also, while ascertaining the gross total income of the assessee under section 80J of the Act, we are concerned with the profits and gains from an industrial undertaking, enabling the assessee to get relief under section 80J of the Act. Therefore, it cannot be said that the decision in Cambay Electric Supply Industrial Co. Ltd. 1988 (113) ITR 84, 1978 AIR(SC) 1099, 1978 (113) ITR 84, 1978 (2) SCC 644 , 1978 (3) SCR 660 , 1978 UJ 412 , 1978 TaxLR 753, 1978 CTR(SC) 50, 1978 CTR(SO) 50, 1978 SCC(Tax) 119 (SC) would not be applicable, while considering the relief under section 80J of the Act Therefore, we hold that the Tribunal was not correct in coming to the conclusion that the relief under section 80J of the Act should be allowed before set off of unabsorbed development rebate. Accordingly, we answer question No. 2 in the negative and in favour of the Department. Learned counsel appearing for the assessee seeks the leave of this court for appeal to the Supreme Court on the ground that a similar question in respect of the very same assessee is pending before the Supreme Court and that an appeal as against the decision of the Punjab and Haryana High Court in CIT v. Sovrin Knit, Works 1993 (199) ITR 679 , 1993 (109) CTR 310, 1993 (68) TAXMAN 198 [FB] is also pending. Learned standing counsel appearing for the Department also concedes the above position. Learned standing counsel appearing for the Department also concedes the above position. Leave is granted. There will be no order as to costs.