TMI Blog2019 (8) TMI 927X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction u/s 80IA for a period of 10 years and the first of these ten years can be selected by the assessee. We hold that the loss of the eligible units cannot be set off against the profits of other eligible units. It is only the business income of the eligible unit and not the gross total income eligible for deduction u/s 80IA of the Act, we find that the case law relied upon by the assessee and in support of ground No.2 are also applicable to this issue. Respectfully following the same, we delete the findings of the CIT (A). - ITA No.2146/Hyd/2017 - - - Dated:- 14-8-2019 - Smt. P. Madhavi Devi, Judicial Member AND Shri S.Rifaur Rahman, Accountant Member For the Assessee : Sri Aman Barasia For the Revenue : Sri Y.V.S.T. Sai, CIT-DR ORDER PER SMT. P. MADHAVI DEVI, J.M. This is assessee s appeal for the A.Y 2010-11 against the order of the CIT (A)-4, Hyderabad, dated 21.09.2017 confirming the order passed by the AO dated 14.03.2016 u/s 154 of the I.T. Act. 2. Brief facts of the case are that the assessee company which is engaged in the business of rese ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Ld. Commissioner of Income-tax (Appeals) - IV ['Ld. CIT(A)'] erred in confirming the action of the Ld. Dy. Commissioner of Incometax, Circle - 16(1) ('Ld. AO') in rectifying under section 154 of the Income Tax Act, 1961 ('the Act'), the order giving effect to the Commissioner of Incometax (Appeals) - V order dated 19 September, 2014 without appreciating that the issue rectified under the garb of section 154 of the Act was not a 'mistake apparent from the record' and the issue was debatable in nature. The Appellant prays that the rectification order passed u/s. 154 of the Act by the Ld. AO, be held as bad in law and liable to be quashed. 2. Without prejudice to Ground No. 1, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in confirming the action of Ld. AO in setting-off losses of certain eligible units of ₹ 6,77,38,404/- against profits of other eligible units for computing the deduction under section 80IA of the Act. The Appellant prays that the Ld. AO be directed to allow the claim of deduction under section 80IA of the Act to the profits of eligi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years and the assessee claimed deduction u/s 80IA of the Act in respect of profit generating units from the four. He submitted that the AO, without considering the above facts adjusted the losses of two units against profit generated by four units thereby reducing the claim of deduction u/s 80IA of the Act vide rectification order u/s 154 of the Act dated 14.03.2016. He submitted that the AO s power u/s 154 are restricted to rectification of apparent mistakes from his order and where the issue is debatable, such order cannot not be rectified u/s 154. In support of this contention, he placed reliance upon the following decisions: i) CIT vs. Hero Cycles (P) LTd (1997) 228 ITR 463 (S.C) ii) ITO vs. Volkat Brothers and Others (SC) (1971) 82 ITR 50 (SC) iii) CIT vs. Richa Co (2001) 252 ITR 40 (Del.) iv) Satish Kumar Agarwal vs. DCIT (2012) 20 Taxmann.com 172 (Del.) v) CIT vs. Reliance Industries Ltd (2014) 228 Taxmann.com 184 (Bom HC) vi) DCIT vs. State Bank of Hyderabad (ITA No.1386/Hyd/2015) vii) DCIT vs. Arunachala Logistics (P) Ltd (I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n.com 137 (SC) wherein the Hon'ble Supreme Court held that while computing the deduction u/s 80IA of the Act, the depreciation has to be reduced for computing the profit eligible for deduction u/s 80IA of the Act. Applying the same rationale, he submitted that the loss of eligible unit has to be set off from the profits of another eligible units. 8. Having regard to the rival contentions and the material on record, we find that the assessee has claimed deduction u/s 80IA of the Act in the return of income filed along with Form 10CCB. The AO has accepted and allowed the claim u/s 80IA. It is only subsequent thereto, that he has issued notice u/s 154 on the ground that there is an excess claim of deduction u/s 80IA. The argument of the assessee that it is a debatable issue and therefore, it could not be rectified u/s 154 of the Act has to be examined first. It is not mere quantification but the method of quantification that has been considered u/s 154 of the Act. If there is mistake in the calculation of quantum to be allowed, it is a mistake which can be rectified u/s 154 of the Act. However, if the issue sought to be rectified, is the method of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e apparent from the record of the assessments of the assessee-firm. The revenue's appeal was accordingly dismissed . 10. After considering the above decisions, the Hon ble Delhi High Court in the case of CIT vs. Richa Co (Supra) has held as under: The adjustment, which was sought to be made by the Assessing Officer, was not one of those prima facie adjustments, permissible while exercising power under section 143(1)( a ). Law is fairly well settled that section 154 has no application where debatable issues are involved. Where the error sought to be rectified is far from self-evident, it ceases to be an apparent error. An error which is apparent on the face of the record should be one which is not an error which depends for its discovery on elaborate arguments on questions of fact or law. The power exercisable under section 154 to correct any mistake apparent from the record is undoubtedly not more than that of the High Court to entertain a writ petition on the basis of an error apparent on the face of the record . That being the position, the Tribunal s conclusion that the matter could be taken up in a regular proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act is to be computed if such eligible business of the said unit is the only source of income of the assessee. The Assessing Officer mixed the profits of the Kalamb unit with the profits of units at Delhi and NOIDA and, thus, he erroneously restricted the deduction to the extent of business income and this was done by him in total disregard of the previsions of sub-section (7) of section 80-IA of the Act as mentioned above. 15. Thus, the Kalamb unit being the only unit of the assessee eligible for deduction under section 80-IA of the Act is to be treated as an independent unit and the same is to be treated as the only source of income for assessee for the purpose of computing deduction under section 80-IA of the Act. The deduction claimed by the assessee under section 80-IA of the Act, thus, is in accordance with the said provisions and as such we find that there is no infirmity in the impugned order passed by the Income-tax Appellate Tribunal . 13. In the case of Punit Construction Co (Supra), the Coordinate Bench of the Tribunal at Mumbai has considered various judicial precedents including the decision of the hon Apex Court i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be reduced from the income of the other eligible unit before granting the deduction under section 80-IA. Since the facts of the case in the case of Synco Industries Ltd. (supra) lie in an altogether different compartment, we hold that the ratio of that case cannot be considered for application to the assessee' s case. Accordingly, the impugned order is overturned and the assessee is allowed deduction under section 80-IA on the profit derived by it from eligible unit 4.14 MW wind energy unit at ₹ 4,72,28,143. 14. We find that the CIT(A) in the present case has disregarded the binding decision of the ITAT. The basis on which the CIT(A) refused to follow the order of the ITAT in assessee's own case for the assessment year 2006-07 cannot be sustained. In the case of Meera Cotton Synthetic Mills (P) Ltd. (supra) the Bombay Bench of the ITAT after considering the decision of the Hon'ble Supreme Court in the case of Synco Industries Ltd. (supra) had clearly held that the stage at which set off has to be done is only after aggregation of income under all heads. The CIT(A) did not agree with this reasoning of the ITAT. The facts of the pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of deduction under various sections of Chapter VI-A individually and then such aggregate amount has to be restricted to the amount of gross total income as computed under section 80B(5), which means the income available after adjusting all the brought forward losses and unabsorbed depreciation etc. 16. In the case of Sriram Properties (P) Ltd (Supra), the Coordinate Bench at Chennai has held as under: 1 9. We are reminded of the celebrated judgment rendered by the Hon'ble Supreme Court in the case of CIT v. Canara Workshop (P.) Ltd. [1986] 27 Taxman 262/161 ITR 320 in which the assessee was engaged in the manufacture of automobile spares. The products manufactured by it were covered by the list in the Fifth Schedule to the Income-tax Act. During the relevant period, the assessee commenced another activity, that is the manufacture of alloy steels, which was also an industry covered in the Fifth Schedule. The assessee sustained loss in the alloy steel industry but profit in the other industry. It claimed deduction in respect of the profit without reducing the loss from the alloy steel industry. The ITO held that the assessee will be ent ..... X X X X Extracts X X X X X X X X Extracts X X X X
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