A.K. DAS, J.M. ORDER By this appeal assessee, company, challenges order of CIT(A) dt. 1st Sept., 1984. It is opposed by Department. 2. Ground Nos. 1 to 7 relate to first objection of assessee that order of CIT(A) regarding carry forward of deficiency under s. 80J(3) of IT Act, 1961 (hereinafter referred to as Act is erroneous. In asst. yr. 1976-77 assessee's claim under s. 80J of Act was dealt with by ITO in following manner: "80J Claim assessee claimed relief under s. 80J for Unit No. 2 which has commenced production in this year. separate Balance Sheet has also been filed in respect of Unit No. 2 which reveals figure of sale at Rs. 18,429 and closing stock of initial product at Rs. 22,82,633. assessee has also given separate balance sheet and separate set of accounts for this Unit in support of claim. But as claim for Rs. 2,58,729 in return and as per revised Return dt. 1st Dec., 1975 at Rs. 3,22,893 is not in conformity with r. 19A, claim is restricted to Rs. 1,35,000 as per computation in terms of Rule 19A vide Schedule `A' Rs. 1,35,000" xxx xxx xxx "Unabsorbed deduction under s. 80J to be carried forward Rs. 1,35,000." On examination of scheme of Chapter VIA in general and that of s e c . 80J in particular, CIT(A) before whom appeal was preferred "considered that appellant's gross total income (as defined in s. 80B(5) being nil or negative figure, ITO erred in law in all four years before me". He thought it fit to rectify this error in law and to withdraw benefit wrongly allowed by ITO. He gave opportunity to authorised representative for assessee to make submissions on matter. After hearing submissions of authorised representative for assessee-company, CIT(A) considered t h e matter by lengthy and elaborate order and came to following conclusion: 36 "To sum up: In case before me, gross total income as defined under s. 80B(5) is nil or negative figure. Consequently, appellant would not have been eligible for any deduction under s. 80J(1), even if new unit had produced profits large enough to fully absorb. deduction under s. 80J(1), deduction could not have exceed gross total income, if gross total income was positive but less than profit of unit. new unit has produced loss. This factor alone cannot place appellant in any better position. It must, therefore, follow logically that question of either computing deficiency or carrying it forward does not arise. I, therefore, hold that ITO erred in allowing straight deduction in asst. yrs. 1976-77, 1978-79 and 1979-80, and erred in computing deficiency for asst. yr. 1977-78 and in allowing it to be carried forward to subsequent assessment years. I accordingly annul relevant portion of each of four impugned assessment orders." Being aggrieved assessee-company preferred appeals against said order. It may be mentioned that we are not concerned with appeals relating to asst. yrs. 1977-78 to 1979-80. 3 . As can be seen from above CIT(A) assumed that ITO had allowed straight deduction under s. 80J(1) of Act for assessment year under consideration i.e., 1976-77. But from order of ITO it is clear that ITO did not allow deduction under s. 80J(1) because new Unit No. 2 suffered loss and also because gross total income of assessee was negative figure. CIT(A), however, made specific finding that carrying forward deficiency also did not arise. assessee-company challenges before us this finding of CIT(A) that in circumstances of case, it was not permissible finding of CIT(A) that in circumstances of case, it was not permissible to carry forward deficiency under s. 80J(3). As such, we are confining our discussions to scope of sub-s. (3) of s. 80J of Act. Our observations do not relate to construction of sub-s. (1) of s. 80J of Act. As such it is not necessary on our part to record our opinion whether deduction under s. 80J(1) is available if assessee suffers loss from new industrial undertaking or not. At para 17 of order CIT(A) made following observations: "17. Sub-s. (3) introduces idea of deficiency. Since under Sub-s. (1), deduction is allowed from profits and gains of new unit, deficiency has been defined in terms of (a) deduction and (b) new units profit/loss. Simply stated, deficiency is: (a) difference between deduction referred to in s. 80J(1) and profit of new unit, in cases where latter is less than former, or (b) amount of deduction itself, in cases where new unit has incurred loss. And deficiency will be carried forward and set off against new unit's profits of subsequent years. (The sub-section also lays down certain riders in this regard, but it is unnecessary for purpose on hand to notice them)." 4 . It seems to us that CIT(A) was not correct in summing up provision of s. 80J(3) inasmuch as he stated deficiency to be amount of deduction in cases where new unit has incurred loss. As we were of opinion that sub-s. (3) does not contemplate carry forward of deficiency in case industrial undertaking suffer loss, we invited authorised representatives for parties to make submissions on this point whether carry forward of deficiency is permissible under sub-s. (3) of s. 80J of Act in case of losses also. It was argued by departmental representative that provision of s. 80A(2) debars application of s. 80J(3). We are unable to accept this contention because under provision thereof "the aggregate amount of deductions under this Chapter shall not, in any case, exceed gross total income of assessee". Thus it is clear that s. 80A(2) does not permit actual deduction exceeding gross total income earned by assessee. But it does not, in our opinion, present carry forward of any deduction even if it is expressly permissible under any other provision of Act. In our opinion, s. 80J(3) is such provision. harmonious construction of ss. 80A(2) and 80J(3) will lead to conclusion s. 80A(2) bars actual deduction of relief exceeding gross total income of assessee but does not present carry forward of deficiency under s. 80J(3), if requisite conditions for such carry forward are fulfilled. 5 . authorised representative for assessee contended that words used in s. 80J(3) do not show that carry forward of deficiency is not permissible in case of loss in industrial undertaking. He further argued that intention of legislature was to allow carry forward of deficiency also in case of loss as well as in case of net profit or profit less than relevant amount of capital employed during previous year. These contentions were opposed by departmental representative. 6. We have given our anxious and careful consideration to respective contention put forth by authorised representatives for parties. We agree with authorised representative for assessee that when provision is capable of two interpretations, interpretation favourable to assessee should be accepted. We also agree with him that when two interpretations of provision of law are possible, interpretation translating intention of legislature should be preferred to that which negatives intention of legislature. Keeping this as well as other principles of Interpretation of Statutes in view we propose to discuss effect of s. 80J(3) of Act. 7. Sec. 80J(3) of Act runs as follows: "(3) Where amount of profits and gains derived from industrial undertaking or ship or business of hotel, as case may be, included in total income (as computed without applying provisions of s. 64 and before making any deduction under Chapter VI-A or s. 80-O) in respect of previous year relevant to assessment year commencing on or after 1st day of April, 1967 (not being assessment year prior to initial assessment year or subsequent to fourth assessment year as reckoned from end of initial assessment year) falls short of relevant amount of capital employed during previous year, amount of such shortfall, or, where there are no such profits and gains, amount equal to relevant amount of capital employed during previous year (such amount, in either case, being hereafter, in this section, referred to as deficiency) shall be carried forward and set off against profits and gains referred to in sub-s. (1) as computed after allowing deductions, if any, admissible under s. 80HH and said sub-s. (1) in respect of previous year relevant to next following assessment year and, if there are no such profits and gains for that assessment year, or where deficiency exceeds such profits and gains, whole or balance of deficiency, as case may be, shall be set off against such profits and gains for next following assessment year and if and so far as such deficiency cannot be wholly so set off, it shall be set off against such profits and gains assessable for next following assessment year and so on." 8. Thus it is clear that s. 80J(3) permits carry forward of deficiency in following cases: (a) where profits and gains derived from industrial undertaking (we are not concerned with income from ship or business of hotel) is positive figure but falls short of "the relevant amount of capital employed during previous year", and (b) where there are no such profits and gains. 9. It does not mention anywhere about contingency when loss occurs in industrial undertaking. But admittedly three contingencies are possible, namely, (a) where profits and gains fall short of "relevant amount of capital employed during previous year," (b) where there are no such profits and gains, and (c) where loss occurs in industrial undertaking. section makes provision for two contingencies only and not for third contingency. As such natural conclusion that has to be made is that third contingency has been excluded by legislature. Moreover, if all these three contingencies including loss occurring in industrial undertaking were meant to be covered by this sub-section, drafting would have been different and much simpler. No material could be produced before us to show that intention of legislature was to allow carry forward of loss even in case of loss occurring in industrial undertaking. We have examined provisions in Finance (No. 2) Bill, 1967 by which s. 80J was sought to be introduced by deleting s. 84. Sec. 80J was enacted differently from provision in Bill. Finance (No. 2) Bill, 1967 as well as Note of Clauses also do not show that it was intention of legislature to allow carry forward of deficiency when industrial undertaking suffered loss. So on careful consideration of provisions of Act and submissions of te authorised representatives for parties we hold that carry forward of deficiency is permissible under s. 80J(3) of Act only (a) where profits and gains are derived from industrial undertaking and (b) where there no such profits and gains. But carry forward of deficiency is not permissible when there is loss in industrial undertaking. 10. Admittedly, in case under appeal, assessee-company suffered loss in industrial undertaking as well as in its total business'. As such, in our opinion, it was not entitled to carry forward of deficiency under s. 80J(3). We, therefore, decline to interfere with order of CIT(A) though for different reasons. 11. Ground No. 8 was not pressed before us. As such we overrule this ground. 12. Ground No. 9 relates to disallowance of initial depreciation. For assessment year under consideration, assessee-company did not make any claim for initial depreciation in return of income filed by it. In response to draft assessment order, claim was however made. But it was rejected by IAC. This claim was negatived by CIT(A) because "the claim was not made in first instance, duly supported by necessary details and this is conceded by appellant". 13. It was contended before us by authorised representative for assessee that CIT(A) was not justified in dismissing this ground. He contended that proceedings under s. 144B of Act was part of assessment proceedings and as such claim should have been considered by authorities below. This contention was opposed by departmental representative who pointed out that additional ground raising claim for initial depreciation was admitted by CIT(A). But it was disallowed because of assessee's failure to produce necessary details. On consideration of material on record, we find substance in contention of departmental representative. It has been stated in para 43 of order that issue regarding claim for initial depreciation "was raised through additional grounds of appeal filed with my permission". In para 48 of order CIT(A) categorically stated that "since claim was not made in first instance, duly supported by necessary details and this is conceded by appellant this additional ground cannot be entertained." So CIT(A) disallowed claim of assessee- company because claim was not supported by necessary details and as such relief could not be granted. It was not that he declined to adjudicate claim on merits. Actually he adjudicated on merits but against assessee- company due to absence of supporting details. Therefore, we do not find any merit in this ground of appeal which is, therefore, fails. 14. As result, appeal is dismissed. *** HIND WIRE INDUSTRIES LTD. v. INCOME TAX OFFICER