TMI Blog2012 (11) TMI 507X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Meera Cotton & Synthetic Mills (P.) Ltd. Versus Assistant Commissioner of Income-tax, Ward 9(2), Mumbai [2009 (2) TMI 506 - ITAT MUMBAI] after considering the decision of the Hon'ble Supreme Court in the case of M/s Synco Industries Ltd Versus Assessing Officer [2008 (3) TMI 13 - SUPREME COURT ] clearly held that the stage at which set off has to be done is only after aggregation of income under all heads. The CIT(A) did not agree with this reasoning of the ITAT which is held to be bad as the CIT(A) being an authority lower in the tier of authorities under the Act to that of the ITAT, is bound to follow the decision of the ITAT and cannot refuse it without any valid reasons - in favour of assessee. - IT APPEAL NO. 1021 (BANG.) OF 2011 - - - Dated:- 31-8-2012 - N. Barathvaja Sankar And N. V. Vasudevan, JJ. Sheetal Borkar for the Appellant Farhat Hussain Qureshi for the Respondent ORDER N. V. Vasudevan, Judicial Member This is an appeal by the assessee against the order dated 12-08-2011of CIT(A)-I, Bangalore, relating to AY: 2004-05. 2. M/s Jindal Aluminum Ltd., the Assessee in this appeal, is engaged in the business of manufacture and sale of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting losses during the other units. This ITAT order was submitted to Assessing Officer on 07-10-2009 and on 15-12-2009, assessee also drew the attention of the Assessing Officer to following judgments; (a) Karnataka Power Corpn. Ltd. v. CIT, Bangalore) ITAT Bangalore (ITA No. 294/Bang/2009, dated 10-7-2009) (b) Asstt. CIT v. Goldmine Shares Finance (P.) Ltd. [2008] 113 ITD 209 (Ahd.) (SB). (c) Jt. CIT v. Associated Capsules (P.) Ltd. [2008] 114 ITD 189 (Mum.). (d) Meera Cotton Synthetic Mills (P.) Ltd. v. Asstt. CIT [2009] 29 SOT 177 (Mum.). wherein it has been laid down that deduction u/s 80IA is to be allowed unit wise without deducting losses during the other units. 5. The Assessing Officer passed order dated 23-12-2009 wherein she adjusted the losses (depreciation of WM-II WM III with the profit of WM I and disallowed the deduction u/s 80IA though gross total income of assessee was positive and more than deduction claimed u/s 80IA. After setting off loss (unabsorbed depreciation) the assessee had gross total income of ₹ 9,87,72,464/-. Deduction u/s 80IA amounting to ₹ 4,16,36,240/- was claimed in respect of WM I unit. The Assessing Officer pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he gross total income of the assessee before granting deductions under this section was nil. He, therefore, held that the assessee was not entitled to the benefit of deduction. The first appellate authority confirmed the view of the AO. Similar was the fate of the assessee before the Tribunal and the High Court. It was argued before the S.C that sec.801(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 Supreme Court held that the deduction under Chapter VIA are allowed from the gross total income in accordance with sec.80A and since the gross total income of the assessee was NIL, hence there was no scope for allowing any deduction . Since such decision is binding under Article 141 of the Constitution of India, the Hon'ble High Court of Mumbai distinguished the facts to hold that the appellant Meera Cotton de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r VI-A. The Appellate Tribunal and the High Court affirmed the view of the Assessing Officer. On appeal to the Supreme Court Held, affirming the decision of the High Court, that the High Court was justified in holding that the loss from the oil division was required to be adjusted before determining the gross total income and as the gross total income was nil the assessee was not entitled to claim deductions under Chapter VI-A which included sections 80HH and 80-I. The Hon'ble Court held that the effect of clause (5) of section 80B of the Income-tax Act, 1961, is that gross total income will be arrived at after making the computation as follows: (i) making deductions under the appropriate computation provisions ; (ii) including the incomes, if any, under sections 60 to 64 in the total income of the individual ; (iii) adjusting intra-head and/or inter-head losses ; and (iv) setting off brought forward unabsorbed losses and unabsorbed depreciation, etc. Only if the gross total income so determined is positive the question of allowing the deductions under Chapter VI-A would arise, not otherwise. The words includes any profits in section 80-I(1) are important and indicate tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He, therefore, reduced the amount of deduction from ₹ 1 crore to ₹ 87.61 lakhs. The Commissioner (Appeals) affirmed the view taken by the Assessing Officer. On appeal the Tribunal held that 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 section. Sub-section (2) states that this section applies to any industrial undertaking which fulfils all the conditions stipulated in this sub-section. The act of the Assessing Officer allowing deduction under this section, albeit at a lower profit, showed that all other requisite conditions making the assessee eligible for deduction, had been satisfied. If there was a profit derived from a particular industrial undertaking, that would qualify for deduction without reduction of loss suffered by any other eligible industrial undertaking(s). The gross total income of the assessee was ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evious 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 80A and since the gross total income of the assessee was nil, hence there was no scope for allowing any deduction. We find that there is absolutely no similarity in the facts of that case with those under consideration for the reason that the gross total income of the assessee is ₹ 152.08 lakhs whereas the amount of deduction under section 80-IB is only at ₹ 100.13 lakhs, thereby leaving the total income at a positive figure of ₹ 51.95 lakhs. That was a case in which the gross total income was nil and the Hon'ble Supreme Court held that in the absence of positive gross total income, there cannot be granted any deduction under those sections. Moreover in that case there was a brought forward loss from the eligible industrial undertaki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rward losses or unabsorbed depreciation. The claim of deduction under section 80-IB in respect of eligible unit No. 3 at ₹ 100.13 lakhs is obviously less than the gross total income. In our considered opinion the learned Commissioner of Income-tax (Appeals) has erred in interpreting the relevant provision when he held that the losses suffered by the assessee in two eligible units be reduced from the income of the other eligible unit for granting the deduction under section 80-IB. Since the facts of the case in the case of Synco Industries Limited [2008] 299 ITR 444 (SC) lie in an altogether different compartment, we hold that the ratio of that case cannot be considered for application to the assessee's case. Accordingly the impugned order is overturned and the assessee is allowed deduction under section 80-IB on the profit derived by it from eligible unit No. 3 at ₹ 100.13 lakhs. 11. The facts of the present appeal are identical to the facts as it prevailed in the case of Meera Cotton Synthetic Mills (P.) Ltd. (supra). The computation of total income of the Assessee is as follows: The Statement of total income for Income-tax, for the assessment year 2004-05. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hapter VIA 89326598 1551440 Deed. u/s 80HHC 48779583 47228143 Taxable Income 40547015 12. As can be seen from the computation of total income at the stage of aggregation of income under same head of income as well as under different heads of income, the losses intra head as well as inter head have to be adjusted. It therefore follows that the primary step for considering the grant of deductions under Chapter VI-A is to determine the gross total income, which, in turn, is computed by aggregating the income from all the sources in the year after adjusting 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. At the stage of aggregation of income there is no question of adjusting loss of any other business against the business income the undertaking eligi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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