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2023 (11) TMI 236 - HC - Income TaxDisallowance u/s 80IA/80IB - profits of two (2) eligible units were not adjusted against unabsorbed losses of the other (3) eligible units and brought forward losses of earlier years - view taken by the CIT(A) that, while calculating deductions u/s 80IA/80IB, only profits of the eligible businesses had to be considered is the correct view - HELD THAT:- Section 80IA(5) provides that to quantify the deduction under Section 80IA(1) of an assessee for an AY [post the initial AY in which such deduction is claimed], the profits and gains of the "eligible" business should be computed as if it is the only source of income of the assessee. It does not mandate that losses that have been adjusted against the profits of "other" non-eligible businesses have to be, once again, adjusted against the profits of the "eligible" business, or that absorbed losses against the "eligible" businesses of the time before the second AY in which deduction is claimed must be notionally carried forward and adjusted. See M/S STERLING AGRO INDUSTRIES LTD [2023 (8) TMI 768 - DELHI HIGH COURT] There is no requirement u/s 80IA(5) of the Act to adjust profits derived from the eligible units against the losses that stand absorbed against profits of the 'other’ non-eligible businesses or losses that have already been adjusted against the profits of the eligible businesses in the years before the previous year in relation the first assessment year in which the deduction was claimed. Therefore, in this case, the respondent/assessee was not required to set off losses of other units against its profitable units. Disallowance u/s 80M - dividend received by assessee had not been distributed to its shareholders - HELD THAT:- As assessee can only claim a deduction to the extent of the dividend it distributed to its shareholders. Although revenue sought to place reliance on the assessment order to submit that the dividend was not distributed by the respondent/assessee, it appears to be based on an erroneous factual foundation. CIT(A) has returned the finding of fact, which was sustained by the Tribunal, that the respondent/assessee had placed the relevant material before the AO which showed that dividend to the extent of Rs. 3,97,34,475/- had been distributed by it to its shareholders -This is a finding of fact that remains undisturbed and, therefore, in our view, the deletion of disallowance ordered by the CIT(A) and the Tribunal under Section 80M was correct. Revenue appeal dismissed.
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