TMI Blog2020 (10) TMI 80X X X X Extracts X X X X X X X X Extracts X X X X ..... law, the Learned Commissioner of Income Tax (Appeals) - IV ( Ld. CIT(A) erred in upholding the rectification order passed u/s. 154 of the Income Tax Act, 1961 ( the Act ) by Deputy Commissioner of Income Tax, Circle 16(1), Hyderabad (Ld. AO) ) on the alleged ground that no debatable issue was rectified u/s. 154. The Appellant therefore prays that the rectification order passed u/s. 154 of the Act by the AO, be held as bad in law and liable to be quashed. 2. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in confirming the action of Ld. AO in restricting the claim of deduction u/s. 80IA of the Act only to the extent of income from business and profession on the alleged ground that deduction u/s. 80IA shall be allowed to the extent of business income only and not from the gross total income. The Appellant therefore prays that the Ld. AO be directed to allow the claim of deduction u/s. 80IA of the Act against the gross total income. 3 On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in not adjudicating the ground of disallowance u/s. 14A r.w.r. 8D of the Act on the alleged ground that disallowance u/s 14A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction u/s 80IA on the carbon credits as well. He was of the opinion that carbon credit is not business income, but it is other income. Therefore, the AO recomputed the deduction u/s 80IA at ₹ 16,55,99,026/- after reducing the carbon credits. 5. Subsequent thereto, the AO issued a notice u/s 154 of the Act on the ground that the deduction u/s 80IA was allowed to the assessee on the gross total income instead of restricting the same to the available business profit and therefore, there is a mistake apparent from record which needs rectification. In response to the said notice, the assessee submitted that the deduction u/s 80IA is available from the gross total income which has been correctly allowed during the assessment proceedings. But the AO was not convinced and he recomputed the income by restricting the deduction u/s 80IA to the business income/loss only. Aggrieved, the assessee preferred an appeal before the CIT (A) who confirmed the order of the AO u/s 154. As regards the assessee s challenge to the applicability of section 154 to deduction u/s 80IA, the CIT (A) held that there is no debatable issue and hence can be rectified u/s 154 of the Act. Thus, he upheld the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he order and it becomes apparent from the record. Rectification is not possible if the question is debatable. Moreover, the point which is not examined on fact or in law cannot be dealt with as mistake apparent on the record. The dispute in the instant case raised a mixed question of fact and law. Hence, the Tribunal was in error in upholding the Assessing Officer's order allowing the assessee's claim for weighted deduction by way of rectification order under section 154 . 9. In the case of T.S Balaram, ITO vs. Volkart Brothers (Supra), the Hon'ble Supreme Court has held as under: Section 17(1) of 1922 Act can apply to a 'person'. The expression 'person' is defined in section 2(9) of 1922 Act to include a HUF and a local authority. Unless a firm can be considered as a 'person', section 17(1) of the 1922 Act cannot govern the assessment of the assessee-firm. In the 1961 Act the expression 'person' is defined differently. It is a matter for consideration whether the definition contained in section 2(31) of the 1961 Act is an amendment of the law or is merely declaratory of the law that was in force earlier. To pronounce upon th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a datable issue and therefore, it cannot be rectified u/s 154 of the Act. Therefore, we allow the ground of appeal of the assessee. Even otherwise, on merits of the issue which is raised in Ground No.2, we find that the issue is covered in favour of the assessee by various decisions which are relied upon by the ld Counsel for the assessee. Sub-section 5 of Section 80IA provides that the deduction should be calculated in respect of an eligible unit on a standalone basis i.e. as if it is the only source of income to the assessee. This is for the reason that an assessee is eligible for deduction u/s 80IA for a period of 10 years and the first of these ten years can be selected by the assessee. 12. In the case of CIT vs. Dewan Kraft Systems () Ltd (2008) 297 ITR 305, the hon'ble Delhi High Court has clearly brought out that loss of eligible unit cannot be set off against the profits of another eligible unit. Relevant paragraphs of the Hon'ble Delhi High Court decision are as under: 13. Perusal of the above provision shows that it is a distinct and separate deeming provision which lays down the special method of computing the profits and gains entitled to deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l 5 wind mills are situated at different locations and commenced production at different point of time. All 5 wind mills are eligible units for deduction u/s 80IA of the Act. The assessee has derived profit from 2 wind mills and incurred losses from 3 wind mills. The assessee has claimed deduction u/s 80IA in respect of profit of 2 wind mills without set off of losses of 3 wind mills, considering each wind mill as a separate unit eligible for deduction u/s 80IA of the Act. Considering the facts and circumstances of this case, we are of the considered view that the assessee's claim of deduction u/s 80IA is in accordance with the provisions of section 80IA(5) of the Act and also in consonance with the decisions of ITAT, Ahmedabad special Bench and ITAT, Bangalore decision. Hence, we direct the AO to allow deduction claimed u/s 80IA of the Income Tax Act, 1961. 14. In the case of Jindal Aluminium Ltd (Supra), in similar circumstances it was held as under: 13. Coming back to the facts of our case we observe that the gross total income of the assessee is at ₹ 8,03,26,598 lakhs after adjusting the losses suffered by it in the eligible as well as profits of the non- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that in computing total income of the assessee, there shall be allowed from the gross total income the deductions specified in sections 80-C to 80-U. Sub-section (2) further provides that the aggregate amount of deductions under this Chapter shall not in any case exceed the gross total income of the assessee. The gross total income has been defined under section 80B (5) to mean 'the total income computed in accordance with the provisions of this Act, before making any deduction under this Chapter.' It therefore follows that the primary step for considering the grant of deductions under Chapter VI-A is to determine the gross total income, which, in turn, is computed by aggregating the income from all the sources in this year after adjusting the losses of the current year under any head. The brought forward loss or unabsorbed depreciation etc., are also reduced. The resultant figure is determined as gross total income. To put it simply gross total income is the income available at the disposal of the assessee immediately before allowing deductions under Chapter VI-A. If the gross total income is say ₹ 100 and the assessee is entitled to deduction under section 80-IB at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aries (another priority industry) and hence the assessee was entitled to deduction at the specified rate on the entire profits of the automobile parts industry included in the total income without deducting there from the loss in the alloy steel manufacture. Facts involved in the instant appeal are mutatis mutandis similar. 20. The Hon'ble Andhra Pradesh High Court in the case of CIT v. Visakha Industries Ltd. [2001] 251 ITR 471/118 Taxman 777 has also taken the similar view by holding that the deductions contemplated under section 80HH and 80-I are to be allowed with reference to the profits of the particular industrial undertaking and not with reference to the total income of the assessee and therefore loss in an other unit cannot be set off against the profits of eligible unit. 21. In the instant case, we observe that gross total income of the assessee is ₹ 2,56,37,975/- after adjusting losses suffered by the assessee in the ITA No 2146 of 2017 NSL Renewable Power P Ltd Hyderabad other two 'projects viz. 'Shreyas' and 'Coimbatore'. There are no brought forward losses or unabsorbed depreciation. The claim of deduction u/s 80IB in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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