TMI Blog2012 (2) TMI 578X X X X Extracts X X X X X X X X Extracts X X X X ..... in not giving set off of the loss of the industrial undertaking on the pretext that the profit of the industrial undertaking was eligible for deduction u/s 80-IA of the Act and by virtue of section 80-IA(5) of the Act the loss was required to be carried forward and was not eligible to be set off against the other income of the appellant. 3. The learned CIT(A) erred in holding that the unabsorbed depreciation from the windmill business has to be allowed to be set off against other business income u/s 70(1) of the Act. 4. The section 80IA(5) starts with non-obstante clause begins with Notwithstanding anything contained in any other provisions of the Act non-obstante clause is used usually in a provision to indicate that the provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the financial year relevant to assessment year under appeal. The return was processed u/s 143(1) and the case was picked up for scrutiny. The facts as emanating from the order of the AO in brief are that during the financial year relevant to AY 2007-08 the assessee had installed a windmill for power generation of electricity and claimed loss under windmill business of ₹ 110,51,78,548/- which included depreciation of ₹ 109,26,78,728/- (being 80% of total cost of windmill) which was disallowed by the AO. The observation of the AO in disallowing the claim of loss from windmill business is reproduced below: Section 80IA(5) starts with non-obstante clause reading as notwithstanding anything contained in any provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted out by the learned AR of the assessee that the order of the Tribunal relied on by the first appellate authority viz., Swarnagiri Wire Insulations P. Ltd. (supra) was affirmed by the Hon ble jurisdictional High Court in ITA No.5050/2010 dated 27-5-2011. Learned Departmental Representative was not able to controvert the assertion of the learned AR of the assessee. 6. We have heard rival submissions and perused the material on record. The Tribunal, in the case of Swarnagiri Wire Insulations P. Ltd. (supra) had considered an identical issue relating to the applicability of section 80IA(5) of the Act. The relevant finding of the Tribunal in the case of Swarnagiri Wire Insulations P. Ltd. (supra) is as follows: 6.5. Thus, for the pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, the assessee incurs loss after claiming eligible depreciation. Hence section 80IA becomes insignificant, since there is no profit from which this deduction can be claimed. At this stage, section 70(1) comes to the rescue of the assessee, whereby he is entitled to set off the losses from one source against income from another source under the same head of income. However, once a set off is allowed u/s. 70(1) from the income on another source under the same head, another deduction on the same count is not permissible i.e., during the subsequent years if the assessee makes surplus profits after claiming eligible allowances and is entitled to claim deduction u/s. 80IA, the earlier benefit given under other sections of the Act should be t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m such profits of an amount equal to 20% has to be made. Section 80-I (1) lays down the broad parameters indicating circumstances under which an assessee would be entitled to claim deduction. On the other hand Section 80-I (6) deals with determination of the quantum of deduction. Section 80-I (6) lays down the manner in which the quantum of deduction has to be worked out. After such computation of the quantum of deduction, one has to go back to Section 80-I (1) which categorically states that where the gross total income includes any profits and gains derived from an industrial undertaking to which Section 80-I applies then there shall be a deduction from such profits and gains of an amount equal to 20 percent. The words includes any profi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o all the Sections falling in Chapter VI-A. They impose a ceiling on the total amount of deduction and therefore the non-obstante clause in Section 80-I(6) cannot restrict the operation of Sections 80A(2) and 80B(5) which operate in different spheres. As observed earlier Section 80-I(6) deals with actual computation of deduction whereas Section 80- I(1) deals with the treatment to be given to such deductions in order to arrive at the total income of the assessee and therefore while interpreting Section 80-I(1), which also refers to gross total income one 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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