TMI Blog2009 (2) TMI 506X X X X Extracts X X X X X X X X Extracts X X X X ..... peal are against the denial of deduction under section 80-IB amounting to Rs. 1,00,13,301. Briefly stated the facts of the case are that the assessee furnished its return declaring total income at Rs. 51,95,406. In computing the total income it had claimed deduction under section 80-IB at Rs. 1.00 crore. The Assessing Officer noted that the assessee has three units eligible for deduction under section 80-IB in Daman and the profit and loss of each unit was as under : ( i )Unit-I (-) Rs. 8,70,754 ( ii )Unit-II(-) (-) Rs. 3,81,391 ( iii )Unit-III Rs. 1,00,13,301 Relying on the judgment of the Hon ble Bombay High Court in the case of Synco Industries Ltd. v. Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer reduced the deduction under section 80-IB by the amount of losses suffered in eligible Unit Nos. 1 and 2 at Daman. Now the question before us is as to whether or not the assessee is entitled to claim deduction under section 80-IB in respect of profit from Unit No. 3 without adjusting the loss suffered in the other two eligible units. 4. Sub-section (1) of section 80-IB provides that where the gross total income of an assessee includes any profits and gains derived from any business referred to in sub-sections (3) to (11B), there shall be allowed, in computing the total income of the assessee a deduction from such profits and gains of an amount equal to such percentage and for such number of assessment years as specified in this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eparately. If there is a profit derived from such industrial undertaking, the deduction under section 80-IB will follow. The loss from such eligible industrial undertaking will go out of reckoning. There is no warrant for reducing the loss of one eligible undertaking from the profit of the other eligible undertaking. Such an interpretation will lead to violence to the unambiguous language of section, which otherwise talks of granting deduction in respect of the profits and gains derived from such industrial undertaking . If we were to read the section in a way that has been read by the authorities below, then instead of the phrase extracted in the preceding line, it should have been aggregate of profits and gains derived from such industr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that in computing the profits for the purpose of deduction under section 80E, the loss incurred by the assessee in the manufacture of alloy steels (a priority industry) could not be set off against the profits of the manufacture of automobile ancillaries (another priority industry) and hence the assessee was entitled to deduction at the specified rate on the entire profits of the automobile parts industry included in the total income without deducting there from the loss in the alloy steel manufacture. Facts involved in the instant appeal are mutatis mutandis similar. 6. The Hon ble Andhra Pradesh High Court in the case of CIT v. Visakha Industries Ltd. [2001] 251 ITR 471 has also taken the similar view by holding that the deduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee before the Tribunal and the Hon ble High Court. It was argued before the Hon ble Supreme Court that section 80-I(6) entitles it to deduction by considering such industrial undertakings as the only source of income of the assessee during the previous year relevant to the assessment year under consideration and hence the loss suffered by the assessee in the earlier years ought not to have been considered for the purposes of granting deduction under these sections in the current year. Jettisoning the assessee s point of view the Hon ble Supreme Court held that the deductions under Chapter VI-A are allowed from the gross total income in accordance with section 80-A and since the gross total income of the assessee was nil, hence there w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the losses of the current year under any head. The brought forward loss or unabsorbed depreciation etc., are also reduced. The resultant figure is determined as gross total income. To put it simply gross total income is the income available at the disposal of the assessee immediately before allowing deductions under Chapter VI-A. If the gross total income is say Rs. 100 and the assessee is entitled to deduction under section 80-IB at Rs. 150, then the amount of deduction under section 80-IB will be restricted to Rs. 100 as per the mandate of section 80A which provides that the deductions shall be allowed from the gross total income and the aggregate amount of all the deductions shall not in any case exceed the gross total income of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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