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2015 (12) TMI 703 - ITAT DELHI

2015 (12) TMI 703 - ITAT DELHI - TMI - Deduction u/s 80IC - as per revenue deduction u/s 80IC can only be allowed after arriving at the gross total income by combining the income of both the units i.e. Noida unit and Roorkee unit and excess deduction claimed by the assessee was rightly denied to him - CIT(A) allowed appeal of the assessee directing AO to consider the profits & gains of Roorkee Unit only for allowing deduction u/s 80IC of the Act and also to determine the losses of NOIDA Unit to .....

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first appellate authority. Finally, we reach to a logical conclusion that the CIT(A) granted relief to the assessee on valid reasons - Decided against revenue - ITA No. 6621/DEL/2013 - Dated:- 8-12-2015 - Shri J. S. Reddy, Accountant Member And Shri Chandramohan Garg, Judicial Member For the Appellant : Shri Ashis Mohanty, Sr. DR For the Respondent : Shri P.K. Jain, CA ORDER Per C. M. Garg, J.M. This appeal of the revenue for assessment year 2009-10 has been preferred against the order of CIT(A) .....

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cumstances of the case, the Ld. CIT(A) has erred in deciding the issue following the judgment of Hon ble High Court, Delhi without appreciating the fact that the said judgment has been overruled by the decision of the Apex Court vide Civil Appeal No. 4192-4193 of 2002 dated 13.03.2008 M/s Synco Industries Vs AO. 3. We have heard arguments of both the sides and carefully perused the relevant material placed on record before us. Ld. DR supporting the stand and action of the Assessing Officer submi .....

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td. order dated 10.2.2010 in I.T.A. No. 1279/2008 and other connected appeals rightly allowed claim of the assessee. 5. On careful consideration of above, at the very outset, from the order of the Hon'ble High Court in the case of CIT vs Sona Koyo (supra) it is amply clear that after considering and referring to the propositions laid down by Hon ble Apex Court in the case of Synco Industries Ltd. vs Assessing Officer 299 ITR 444 (S.C.) and its own order in the case of CIT vs Dewan Kraft Syst .....

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1961 ?" 4. Since the issue involved is purely legal, the counsel for the parties agreed that the matter may be disposed of at this stage itself without the requirement of filing any paper book. We have, therefore, heard the counsel for the parties at length on the aforesaid question. 5. The learned counsel for the appellant submitted that the question of adjustment / setting off of the loss of one unit as against the profit of the other unit stands covered by the decision of the Supreme Co .....

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Delhi High Court is against him, the latter decision of the Supreme Court in the case of Synco Industries Ltd. (supra) is clearly in his favour and, therefore, the question ought to be answered in favour of the revenue and against the assessee. 6. On the other hand, the learned counsel appearing on behalf of the assessee, submitted that the decision of this court in C.I.T. v. Dewan Kraft Systems (supra) is clearly in favour of the assessee and there is nothing in the Supreme Court decision in S .....

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business of repairs to ocean-going vessels or other powered craft to which this section applies, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such profits and gains of an amount equal to twenty per cent thereof: Provided that in the case of an assessee, being a company, the provisions of this sub-section shall have effect in relation to profits and gains derived from an industrial undert .....

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the purposes of determining the quantum of deduction under sub-section (1) for the assessment year immediately succeeding the initial assessment year or any subsequent assessment year, be computed as if such industrial undertaking or ship or the business of the hotel or the business of repairs to ocean-going vessels or other powered craft were the only source of income of the assessee during the previous years relevant to the initial assessment year and to every subsequent assessment year up to .....

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before making any deduction under Chapter VI- A. It is, therefore, clear that while computing gross total income, the deductions referred to in Chapter VI-A, which includes Section 80-I, are not to be considered. The gross total income of the assessee has to be computed after making all other adjustments of losses and carry forward losses ignoring the deductions available under Chapter VI-A. There is no dispute with this proposition. 8. It is further clear from a plain reading of the aforesaid p .....

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ns with a non-obstante clause, the quantum of deduction is to be computed as if the industrial undertaking were the only source of income of the assessee during the relevant years. In other words, each industrial undertaking or unit is to be treated separately and independently. It is only those industrial undertakings, which have a profit or gain, which would be considered for computing the deduction. The loss making industrial undertaking would not come into the picture at all. The plain readi .....

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n arose with respect to computation of the deduction in relation to three units - the Kalamb Unit, the Delhi Unit and the Noida Unit. This court held that while computing the deduction under Section 80-IA of the said Act, the profits and gains of the Kalamb unit for the purposes of determining the quantum of deduction under Section 80-IA(5) was to be computed as if such eligible business of the said unit was the only source of income of the assessee. This court observed that the Assessing Office .....

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essee for the purposes of computing deduction under Section 80-IA. 10. We now came to the decision of the Supreme Court in the case of Synco Industries Ltd (supra) which was strongly relied upon by the learned counsel for the appellant. On going through the entire decision, we find that the Supreme Court was primarily concerned with the question as to whether any deduction could be allowed under Chapter VI-A if the gross total income was Nil . It is in that context that the Supreme Court conside .....

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s total income must be determined by setting off business losses of earlier years before allowing deduction under Chapter VI-A and that if the resultant income is Nil , then the assessee cannot claim any deduction under Chapter VI-A. While coming to the aforesaid conclusion, the Supreme Court was also confronted with an argument which had been raised on the basis of the provisions of Section 80-I(6) that the profits of one industrial undertaking cannot be set off against the losses suffered by t .....

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h the manner in which the gross total income is to be considered. The Supreme court observed as under:- "13. ...While computing the quantum of deduction under Section 80-I(6), the Assessing Officer, no doubt, has to treat the profits derived from an industrial undertaking as the only source of income in order to arrive at the deduction under Chapter VI-A. However, this court finds that the non obstante clause appearing in Section 80-I(6) of the Act, is applicable only to the quantum of dedu .....

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the interpretation canvassed on behalf of the appellant cannot be accepted. It is true that under Section 80-I(6) for the purpose of calculating the deduction, the loss sustained in one of the units, cannot be taken into account because Sub-section (6) contemplates that only the profits shall be taken into account as if it was the only source of income. However, Section 80A(2) and Section 80B(5) are declaratory in nature. They apply to all the sections falling in Chapter VI-A. They impose a ceil .....

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ne has to read the expression "gross total income" as defined in Section 80B(5). Therefore, this court is of the opinion 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 deduction under Chapter VI- A which includes Section 80-I also. 14. The proposition of law, emerging from the above discussion is .....

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ofit of another eligible industrial undertaking. All that the Supreme Court said was that in computing the gross total income of the assessee, the same has to be determined after adjusting the losses and that, if the gross total income of the assessee so determined turns out to be Nil‟, then the assessee would not be entitled to deduction under Chapter VI-A of the said Act. 12. We agree with the submissions made by the learned counsel for the assessee that there is nothing in the decision .....

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