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2013 (2) TMI 202 - HC - Income TaxSet off of loss/unabsorbed depreciation – Whether loss/unabsorbed depreciation of the eligible business under section 80-IA(4) can be set off against the income of other non-eligible business – assessee is in the business of manufacturing of super enameled copper winding wires – Assessee also put up a windmill for power generation – In statement of income he set off the loss/unabsorbed depreciation from windmill i.e. eligible business with the income from the business of manufacturing of super enameled copper winding wires i.e. in eligible business – Held that:- It is a generally accepted principle that deeming provision of a particular section cannot be breathed into another section. Therefore, the deeming provision contained in section 80-IA(5) cannot override section 70(1) of the Act. The assessee incurs loss after claiming eligible depreciation. Hence, section 80-IA becomes insignificant since there is no profit from which this deduction can be claimed. Section 70(1) comes to the rescue of the assessee, whereby he is entitled to set off the losses from one source against income from another source under the same head of income. However, once set off is allowed under section 70(1) from the income from another source under the same head, another deduction on the same count is not permissible, i.e., during the subsequent years if the assessee makes surplus profits after claiming eligible allowances and he is entitled to claim deduction under section 80-IA, the earlier benefit given under other sections of the Act should be taken into account before granting deduction under section 80-IA. Therefore set off was allowed – Against the revenue.
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