TMI Blog2016 (7) TMI 331X X X X Extracts X X X X X X X X Extracts X X X X ..... lly agree with the view expressed by Allahabad High Court. This view is not in conflict with the decision of the Supreme Court in the case of Synco Industries Ltd. (2008 (3) TMI 13 - Supreme court ) wherein the Supreme Court observed that while computing quantum of deduction under section 80I(6), the Assessing Officer, no doubt, has to treat the profits derived from an industrial unit as the only source of income in order to arrive at a deductions under chapter VI. It was further observed that section 80I(6)deals with actual computation of deduction whereas section 80I deals with treatment to be given to such deductions in order to arrive at total income of the assessee and therefore, while interpreting section 80I(1) as also the gross tot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the ratio laid down by the Hon'ble Supreme Court in the case of Synco Industries vs. AO (2008) 299 ITR 444(SC)? (c) Whether the Hon'ble ITAT has erred in law and on facts by not appreciating that in the order passed under section 143(3) read with section 254 of the Act the AO has followed the direction given by the ITAT in its order dated 191.12.2008 while setting aside the issue to the file of the AO? 2. Briefly stated the facts are as under: For the assessment year 1991-92, the return of income filed by the respondent assessee upon remand by the Tribunal came up for consideration by the Assessing Officer. The Assessing Officer recomputed the deduction claimed by the assessee under section 80HH and 80I of the Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ex Industries Ltd. vs. Assistant Commissioner of Income Tax rendered in Tax Appeal No.261 of 2012 to contend that the course adopted by the Tribunal is erroneous and the views of the Assessing Officer and CIT(Appeals) were correct. 4. Before adverting to the decisions relied upon by Shri Mehta, we may recall, the Supreme Court in the case of Liberty India vs. Commissioner of Income-Tax 317 ITR 218 in the context of return derived from eligible business in the specified deductions available under section 80I and other similar provisions had observed that chapter VI which provides for incentives in the form of tax deductions essentially belongs to the category of profit-linked incentives . Therefore, when section 80-IA/80IB refers to p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loss making unit. Qua the profit making unit, the assessee had claimed deduction under section 80HH and 80I of the Act. With this background, it was held and observed as under: 37. We have considered the facts and circumstances of the present case and the law laid down by the apex court and the decision of the Delhi High Court referred hereinabove. It is not the case of the assessing authority that the gross income of the company was nil. From a perusal of the income disclosed to all the three units it appears that the gross income was not nil and therefore, the assessee was eligible to claim the deduction under sections 80HH and 80-I of the Act. After becoming eligible to claim the deduction, the question for consideration is that whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ken into account because sub-section (6) of the Act contemplates that only the profits shall be taken into account as if it was the only source of income. Therefore, from the decision of the apex court, two principles of law emerge one for the purposes of computation of gross total income the losses of other units are to be taken into account but for the purposes of calculating the deduction of industrial undertaking, the loss sustained in another unit cannot be taken into account and only the profit shall be taken into account as if it was the only source of income of that unit. In this view of the matter, we are of the view that there is no error in the order of the Tribunal. 7. We respectfully agree with the view expressed by Allahab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder sections 80I(6) which includes section 80I also. 8. This judgment nowhere provides that while computing the deduction under section 80HH or 80I or any other similar provision, loss of another unit is first to be set off. It only provides and in fact, reinforces that such deduction has to be computed as if the unit was an isolated industry. However, thereafter while computing gross total income, even the loss has to be accounted for and only if the income is positive, can the assessee claim deduction for its profit making eligible industry. This is how even this Court in the judgment in the case of Synco Industries (supra) had used or viewed or situation as can be seen from the following portion of the judgment referring the judgment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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