TMI Blog2013 (11) TMI 1365X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, as held by the CIT (A) are more than the capital gains and dividend being brought to tax separately by AO. In these circumstances both on facts as well as on law, assessee's contentions are allowable – Decided against the Revenue. Claim of deduction u/s 80HHC, while computing the book profits under section 115JB – Held that:- Following the decision in the case of Ajanta Pharma Ltd vs. CIT [2010 (9) TMI 8 - SUPREME COURT], deduction u/s 80HHC is allowed for computation of book profit – Decided against the Revenue. Taking of turnover of the taxable division only on "standalone" basis for computation of deduction u/s 80HHC - assessee company had several division viz. Textile Division, Lease and Hire Purchase Division; Power Generation Division, Foreign Exchange Division & Financial and Other Services Division. These activities were distinct and separate from each other - Assessee had maintained separate books of account in respect of each division and separate P & L A/s. and separate balance sheet were prepared in respect of each division – Held that:- Assessing Officer had simply adopted the figures appearing in the consolidated account and ignored the separate accounts of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e other division without considering the provision of the section 80AB of the Act which talk about the gross profit of assessee and not of the Division". 2. We have heard the learned DR and the learned Counsel. It was submitted that most of the issues are covered in favour of assessee by the orders of the ITAT in later year of 204-05 and placed a chart referring to the grounds and the issues. 3. Ground No.1. This is with reference to the lease rent. Assessee paid lease rent of Rs.23,31,963 to M/s Weizmann Homes Ltd on account of 250 KW Wind Mill taken on lease. AO discussed the issue on page 2, para-3 of the order. The said addition was initially made in assessment year 1998-99. It was observed by AO in assessment year 1998-99 that the said wind mill was initially purchased by assessee and was sold to manufacturers, who in turn sold to another party and was leased to the assessee company. Consequently, AO treated the same as sale and lease back transaction and disallowed the lease rent on the wind mill taken on lease. Consequent to the orders in 1998-99 and 1999-2000 and also ITAT decision in earlier years, the learned CIT (A) deleted the addition. The ITAT in ITA No.4603/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken as a whole. The learned counsel for the assessee has rightly argued that the assessment of the assessee cannot be affected by what happened in the case of there assessee even if they were part of the same group as the assessee himself. Action, if any was legally permissible, could be taken in the assessment of there assessees. For the purpose of Income-tax proceedings each assessee is a separate entity. Above all there is considerable force in the contention of the assessee that while on the one hand the assessee's claim of deduction of lease rentals has been disallowed, the income earned by the assessee on sale of power to Andhra Pradesh Government has been assessed without demur. We therefore hold that the disallowance of the assessee's claim of deduction on account of lease rent paid in respect of windmill 250 KW is without adequate justification and direct the Assessing Officer to allow deduction of lease rental on this windmill." 4. Respectfully following the views of the Coordinate Bench, we confirm the order of the learned CIT (A) and decline to interfere in the matter. 5. Ground No.2 is with reference to the action of AO in not allowing set off of unabsorbed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TR 23) also held that brought forward depreciation could be set off against all the heads of income. The Supreme Court in an another decision in the case of Rajapalayam Mills Ltd v. CIT (1978) 115 ITR 777, held that no unabsorbed depreciation was not only to be set off against other heads of income in the relevant previous year but where it is carried forward, it stands exactly on the same footing as the current depreciation". The Supreme Court in an another case of Virmani Industries Pvt. Ltd (1995) 216 ITR 607 held that though on the first impression the expression "profits or gains chargeable" appears to refer only to profits or gains of business or profession chargeable under section 28 in view of the said decisions, the said expression is not so confined and it refers to income from all the heads of income specified in section 14 f the Act, which includes income from other sources". In another decision in the case of CIT vs. Principal Officer, Laxmi Surgical Pvt. Ltd, reported in 202 ITR 601, the Bombay High Court has held that the carried forward unabsorbed depreciation is deemed to be depreciation of the subsequent year to which it is carried forward, it would be permissible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation allowance worked out in A.Y. 1997-98 only for eight subsequent assessment years even after the amendment of section 32(2) by Finance Act, 2001 it would have incorporated a provision to that effect. However, it does not contain any such provision. Hence keeping in view the purpose of amendment of section 32(2) of the Act, a purposive and harmonious interpretation has to be taken. While construing taxing statutes, rule of strict interpretation has to be applied, giving fair and reasonable construction to the language of the section without leaning to the side of assessee or the revenue. But if the legislature fails to express clearly and the assessee becomes entitled for a benefit within the ambit of the section by the clear words used in the section, the benefit accruing to assessee cannot be denied. However, Circular No.14 of 2001 had clarified that under Section 32(2), in computing the profits and gains of business or profession for any previous year, deduction of depreciation under Section 32 shall be mandatory. Therefore, the provisions of section 32(2) as amended by Finance Act, 2001 would allow the unabsorbed depreciation allowance available in the A.Y. 1997-98, 1999-200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law, assessee's contentions are allowable. Therefore, we do not see any reason to interfere with the order of the CIT (A). Accordingly the ground is rejected. 8. Ground No.3 pertains to the claim of section 80HHC of Rs.1,23,80,610 while computing the book profits under section 115JB. AO disallowed the claim as deduction under section 80HHC was not allowed in the regular computation, whereas assessee's contention was that the deduction was allowable on the profits worked out under section 115JB. 9. The learned CIT (A) following the decision of the Kerala High Court in the case of Commissioner Of Income-Tax vs. G.T.N. Textiles Ltd. 248 ITR 372 and the ITAT decision in the case of Starchik Specialities Ltd. Vs. Deputy Commissioner of Income-tax, 90 ITD 34 allowed the claim of assessee. The ITAT in assessment year 2004-05 confirmed the same by holding as under: "9. The learned representatives fairly agree that the issue under consideration is squarely covered by the decision of a Coordinate bench in the case of DCIT vs. M/s Glenmark Laboratories Ltd in ITA No.4155/M/2007 for the assessment year 2004-05, wherein the Tribunal following the decision of the ITAT (SB) in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. At our direction the assessee has filed separate balance sheet and P L A/s. of Textile Division as also audit report in form no.10CCAC. In support of its contentions the learned counsel has relied upon the judgments reported in 245 ITR 49 (Bom); 245 ITR 769 (Bom); 246 ITR 429 (Bom); 246 ITR 439 (Bom); 254 ITR 656 (Mad); 257 ITR 60 (Mad) and 132 Taxmann 297 (Ker). The learned counsel has also placed reliance on the decisions reported in 63 TTJ 409 (Ahd); 66 ITD 353 and the decision of ITAT Mumbai Bench 'A' in ITA NO. 4205/Mum/96 in the case of Miku Agencies and Mumbai Bench 'C' decision in ITA No.4259 4260/M/95 in the case of M/s. Trab Enterprises. The learned Departmental Representative argued that under the provisions of section 80HHC(3) no distinction has been drawn as to whether the assessee was engaged in a single business or more than one business. For the purpose of that sub-section all the business of the assessee were required to be aggregated even if the same were separate and distinct from each other. In support of these contentions he placed reliance on the decision reported in 212 ITR (AT) 1 (Del) and 257 ITR 41 (Ker). On consideration of the matter we find that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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