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Nirma Limited Versus Dy. Commissioner of Income Tax, Circle-5, Ahmedabad

2015 (10) TMI 243 - ITAT AHMEDABAD

Deduction u/ss.80HH & 80I allowed before setting off of loss of another division - Held that:- There is no issue between the parties so far as facts of the case are concerned. The assessee claims section 80HHC and 80I deduction qua its profits derived from Mandali Undertaking whereas it has incurred losses from toilet soap division quoting case law of CIT vs. Modi Xerox [2010 (4) TMI 858 - Allahabad High Court ], CIT vs. Emmbros Metal (P) Ltd. [2012 (10) TMI 61 - HIMACHAL PRADESH, HIGH COURT] an .....

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ed therefrom. The first one is that for the purpose of computing gross income, losses of other units are to be taken into consideration. The second one is that the very course is not to be adopted whilst computing section 80HHC/80I deductions and the profits are to be considered as if the same are the only source of income of that unit. The Revenue fails to quote any distinction on facts or law. Therefore, we accept the assessee's legal submission on first aspect of the matter. We come to object .....

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e Petitioner : Shri S N Soparkar, AR For the Respondent : Shri Dinesh Singh, Sr ORDER Per S S Godara, Judicial Member This assessee's appeal for A.Y. 1991-92 arises from order of the CIT(Appeals)-XI, Ahmedabad, dated 12/07/2011 passed in Appeal No. CIT(A)-XI/1113/09-10, in proceedings u/s.143(3) r.w.s. 254 of the Income Tax Act, 1961, hereafter the Act'. 2. The sole substantive ground raised in the appeal reads as under: "2) In law and in the facts and circumstances of the Appellant .....

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. The Assessing Officer quoted case law of hon'ble apex court in Synco Industries vs. Assessing Officer [2008] 299 ITR 444 (SC) and amendment in section 80A by the Finance Act, 2009 for observing that its gross income is to be computed after adjusting losses of other divisions against profit derived from the eligible undertaking. 4. The CIT(A) upholds Assessing Officer's action as under: "3. In the second ground, it is submitted by the appellant that in law and in facts and circumst .....

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profit in respect of other division. 2. Hon'ble Tribunal set aside the issue after observing at para 12 which is reproduced hereunder :- "Accordingly, in the given facts and circumstances, we set aside the issue to the file of the A.O. to recomputed the deduction u/s. 80HH and 80I of the Act in terms of parameters indicated in the case of Synco Industries Ltd. (supra) and Another (supra) by the Hon'ble Apex Court." 3. The Id. A.O. passed order u/s. 143(3) r.w.s. 254 of the I. T .....

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etting off of the loss of Toilet Soap division. Deduction u/ss. 80HH and 80I refers to the profit derived from Industrial Undertaking. Relevant portion of section 80HH and 80I is as under :- 80HH. "(1) where the gross total income of an assessee includes any profits and gains derived from the industrial undertaking, or the business of a hotel, to which this section applies, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total inco .....

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assessee, a deduction from such profits and pains of an amount equal to twenty per cent thereof: B) Both sections referred to the deduction in respect of profits derived the Industrial Undertaking. Nowhere it refers to the income after setting off of loss. Hon'ble Supreme Court in the case of Canara Workshops P. Ltd. 161 ITR 320 has categorically observed that deduction u/ss.80HH and 80I should be allowed without setting off of loss of another undertaking. The gist of the said decision repr .....

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cting therefrom the losses in the alloy steel manufacture." C) Decision of Hon'ble Supreme Court in the case of Synco Industries Ltd (supra) does not overrule the decision of Hon'ble Supreme Court in the case of Canara Workshop P. Ltd. In fact, Hon'ble Ahmedabad Tribunal in the case of Goldmine Shares and Finance (P) Ltd. reported in 113 ITD 209 has interpreted the decision of Hon'ble Supreme Court in the case of Canara Workshop. Ltd. and after detailed discussion Hon'bl .....

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submitted that there is double deduction is not allowed. Deduction u/ss. 80HH and 80I is allowed higher on the basis of profit of the eligible undertaking which is earning positive income. The loss of different division should not be set off. Hence, amendment to section 80A has no implication to the present controversy. ii) Secondly, it is submitted that the Id. A.O. passed order u/s. 143(3) r.w.s. 254 of I. T. Act giving effect to the Tribunal's order. The Id. A.O. has no jurisdiction to r .....

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ion." 3.2. I have considered the facts of the case of Synco Industries Ltd. (supra). In this case the opinion of Bombay High Court that gross total income must be determined, by setting off against the income, the business losses of earlier years, before allowing deduction under Chapter VI-A and if the resultant income is NIL, then the assessee can not claim deduction u/s. VI-A of the Income-tax Act. For the sake of brevity the concluding para is reproduced as under :- "The proposition .....

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concluding para of the order of Hon'ble Supreme Court as reproduced above makes it clear. Thus the Hon'ble Supreme Court made certain observations with reference to section 80IA and 80I(6) but the same is interpreting these sections in a very limited manner and in a different context In view of this, I find no infirmity in the order of the assessing officer vis-à-vis the ratio of Synco Industries Ltd. (supra) and no interference is called for in the assessment order. Thus, this gr .....

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