TMI Blog2021 (9) TMI 357X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Satbeer Singh Godara, Judicial Member And Shri Laxmi Prasad Sahu, Accountant Member For the Revenue : Shri P. Chandra Sekhar For the Assessee : Shri Aliasgar Rampurwala ORDER PER L.P. SAHU, A.M.: These three appeals filed by the Revenue are directed against CIT(A) - 4, Hyderabad s separate orders, all dated 25/11/2019 for AYs 2-13-14, 2014-15 and 2015-16 involving proceedings u/s 143(3) of the Income- Tax Act, 1961; in short the Act . As the facts and grounds are identical in all these appeals, the same were clubbed and heard together and, therefore, a common order is passed for the sake of convenience. Therefore, the decision taken in AY 2013-14 shall mutatis-mutandis apply to the other appeals as well. 2. The grounds raised by the revenue, which are common in all the appeals, except quantum of additions, are as under: 1. The ld. CIT(A) erred in restricting the disallowance u/s 14A to the dividend income. 2. The ld. CIT(A) erred in not considering that section 14A provides for expenditure incurred for earning exempt income. 3. The ld. CIT(A) erred in allowing deduction u/s 80IA on Gross total income instead of o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come (A+B+C+D) 19,74,13,866 4. Aggrieved by the order of AO, the assessee preferred an appeal before the CIT(A) and the CIT(A) restricted the disallowance u/s 14A to ₹ 43,61,557/- on the ground that the assessee had earned dividend income of ₹ 43,61,557/- from its subsidiary companies during the year under appeal, hence, restricted to that extent. 4.1 As regards addition of ₹ 68,75,000/- towards ROC fee, the CIT(A) confirmed the same. 4.2 As regards deduction u/s 80IA of the Act, the AO denied the deduction u/s 80IA from the gross total income, while the CIT(A) allowed the same following the decision of the coordinate bench of this Tribunal in assessee s own case in ITA No. 2146/Hyd/2017 for AY 2010-11, dated 14/08/2019, on which reliance placed by the ld. AR of the assessee. 5. Aggrieved by the order of the CIT(A), the revenue is in appeal before us against the action of the CIT(A) in restricting the disallowance u/s 14A and allowing deduction u/s 80IA of the Act. 6. Before us, the ld. DR filed written synopsis, which is as under: ISSUE UNDER DISPUTE: The main issue involved in this case is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relied upon by the learned counsel for the appellant in Baby Marine Exports (supra), which even otherwise dealt with Section 80HHC of the Act and not Section 80-O, is of no help to the appellant. 2.2 Accordingly, the assessee is not eligible to claim deduction u/s 80IA from the income from house property as claimed. Thus, we dismiss the ground no. 1 raised by the assessee on this issue. 3. Accordingly, by placing reliance on the above-mentioned decision and in accordance with The Rule of Consistency and The Doctrine of Judicial Discipline , it is humbly requested to set-aside the order of the Ld. CIT (A) and restore the addition made by the AO. 4. Without prejudice to the above, in the light of the arguments made by the counsel for the respondent, I would like to submit as under: BRIEF FACTS OF THE CASE/AY 2013-14, ITA No.164/H/2020: 5. As seen from the facts of the case, during the year under reference, the assessee was operating 9 power generating units, eligible for deduction u/s. 80IA of the Act. The assessee filed the Return of Income for the impugned AY 2013-14, disclosing loss under the head Profits and gains of business or profes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3,43,74,695/- 3 Unit-III, Jaglur 5,43,90,705/- 4 Unit-IV, Jaglur 5,81,13,190/- TOTAL PROFIT/INCOME 17,26,49,292 ELIIBLE POWER GENERATING UNITS WHICH DISCLOSED LOSS: S.No Name of the unit Amount of Loss in Rs. (-) 1 Bheemsamudra, Unit-I 7,29,96,413 2 Bheemsamudra, Unit-II 12,37,65,522 3 Bheemsamudra, Unit-III 18,64,30,286 4 TOTAL LOSS 38,31,92,221 7. On the other hand, before computing the gross total income, the assessee applied the provisions of Chapter VI of the Act and arrived at the income/loss under the head Profits and gains of business or profession . To be precise, by following the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and, as seen from the language of provisions of section 80IA of the Act, the intention of the legislature is totally different i.e., to provide tax- holiday period of 10 AYs directly linked to profit/income derived from the eligible business, implying that the assessee is exempt from payment of tax in respect of profits/income derived from eligible business, if any, rather than set-off of such profits/income against income from other heads. However, if such income/profit derived from eligible business is included in the gross total income, then, the assessee can claim exemption from tax by way of claiming deduction from gross total income. 11. In this regard, reliance is placed on the Landmark judgment of Hon ble Supreme Court in ESCORTS LTD. AND ANOTHER vs UNION OF INDIA AND OTHER [1993] 199 ITR 43 (SC), wherein it has been held that double deduction in regard to same business outgoing is not intended unless clearly expressed in the provisions of the Act. The relevant portion of the judgment is extracted below, for kind reference of the Hon ble Bench: there is a fundamental, though unwritten, axiom that no Legislature could have at all intended a double deduction in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eligible to claim such amount as deduction against the gross total income of the assessee. 15. On the other hand, in the instant case, as explained earlier, it is an admitted fact that, as per the profit and loss account as well as statement of computation of total income, the assessee has disclosed loss from business to the extent of (-) ₹ 22,70,87,917/-. Whereas, in the case of Reliance Energy Ltd (supra), on the basis of which the assessee claimed deduction u/s.80IA of the Act, before the Hon ble Bench, it is clearly stated by the Hon ble Supreme Court that the business income of the assessee was computed at ₹ 355,74,73,451/- and the gross total income at ₹ 397,37,70,178/-, inclusive of income from other sources of ₹ 41,62,96,727/-. As such, in the case-law, the assessee did not claim any loss under the head Profits and gains from business or profession . It is humbly submitted that this particular difference in factual-matrix of the cases may be taken into cognizance. 16. Under the circumstances, there is a clear-cut distinction between the facts involved in the case decided by the Hon ble Supreme Court (supra) and the instant case. As su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ING OF. Undoubtedly section 80HHC has been incorporated in the Income-tax Act, 1961, with a view to providing incentive for earning foreign exchange. Even though a liberal interpretation has to be given to such a provision the interpretation has to be as per the wording of the section. If the wording of the section is clear, then benefits which are not available cannot be conferred by ignoring or misinterpreting words in the section. A plain reading of section 80HHC makes it clear that in arriving at profits earned from export of both self-manufactured goods and trading goods, the profits and losses in both trades have to be taken into consideration. If after such adjustments there is a positive profit the assessee would be entitled to deduction under section 80HHC(1) . If there is a loss the assessee would not be entitled to deduction. The word profit in sub-sections (1) and (3)(a) and (b) of section 80HHC means a positive profit. In other words, if there is a loss then no deduction would be available under sub-section (1) or sub-section (3)(a) or sub-section (3)(b). In arriving at the figure of positive profit, both the profits and the losses will have to be consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accordance with the provisions of the Act, then not only profits but also losses have to be taken into consideration. 20. Also, reliance is placed on the following judicial precedents wherein similar proposition of law was re-iterated by the Hon ble SC (case-laws annexed): 1) Liberty India Ltd. vs CIT (2009) 317 ITR 218 (SC) 2) Synco Industries Ltd. vs AO (2008) 299 ITR 444 (SC) 3) A.M. Moosa vs CIT (2007) 163 Taxman 741 (SC) 4) CIT vs Shirke Construction Equipments Ltd. (2007) 161 Taxman 212 21. It is trite law that until unless there are similarities in the facts of the case, it is not permissible to get the benefit of the proposition of law laid down by Hon ble Supreme Court. Accordingly, the assessee cannot claim the benefit of the decision of Hon ble Supreme Court in bits and pieces. 22. Further, as held by the Hon ble Supreme Court, it is mandatory to compute income from eligible business by applying the provisions of sub-section 80IA (5) of the Act. While doing so, any loss computed under the eligible units in the earlier AYs falling under the window period of 10 years shall be reduced from the current profits of the eligibl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ead of drafting the provision as exemption from tax i.e., under Chapter III of the Act, included under deduction provisions i.e., under Chapter VIA of the Act., so that out of 100% of such income/profits included in the Profits and gains of business and profession which in-turn is included in the gross total income, only 20% or so will be exempted from tax by way of deduction of such 20% of income/profit from the gross total income. However, latter, it was made 100% exemption from tax. 27. In a case, where there is no income derived from the eligible business which is otherwise subjected to tax by way of including in the gross total income, it is quite obvious that the assessee need not to pay tax. Similarly, though there is income from eligible business, but due to set-off of the same against other business income, the assessee need not to pay tax on the income derived from eligible business. Thus, as a natural corollary, when there is no income derived from eligible business which is subjected to tax, the question of allowing deduction in respect of such non-taxable income out of gross total income does not arise at all. 28. To put it in a nut shell, for instance, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l. To be precise, for the AY 2014-15, the assessee claimed loss under the head Profits and gains of business or profession of (-) ₹ 1,10,08,215/-. However, while computing the total income, the assessee claimed set off of the loss under the head business of (-) ₹ 1,10,08,215/- against the income from other heads of (+) ₹ 18,66,98,748/-, consisting of Income from house property of ₹ 13,63,103/- and Income from other sources of ₹ 18,53,35,645/-, and arrived at the gross total income of ₹ 17,56,90,533 /- before applying provisions of Chapter VIA of the Act. 31. Further, the assessee has claimed deduction under Chapter VIA of the Act i.e., under section 80IA of the Act, towards profits from 4 power generating units, to the extent of ₹ 16,29,42,462 /- and arrived at the taxable income of ₹ 1,27,48,0715/-. As such, the assessee has computed income from eligible business in respect of 4 power generating units by applying the provisions of section 80IA(5) of the Act to the extent of Rs. ₹ 16,29,42,462 /- without adjusting loss from other 4 power generating units aggregating to (-) ₹ 32,93,75,473 /-. 32. Accordi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 23 June 2021 our authorized representative (AR) argued that: a) 14A issue: The issue is covered in favour of the assessee vide Hon ble ITAT order in Assessee s own case bearing ITA No. 1024/Hyd/2017 dated 17.06.2021; b) 80-IA issue: The AR submitted that even though there is an against order in assessee s own case for the earlier year, now the issue is covered in favour of assessee by recent Hon ble SC decision in the case of CIT vs. Reliance Energy Ltd. [Civil Appeal No. 1327 of 2021 (SC)] Post the arguments, Your Honours requested the AR to file a detailed working of computation of deduction u/s 80IA of the Act. In compliance thereof, on 23 June, 2021, a short summary sheet was filed vide email dated 23 June, 2021 providing year-wise detail of GTI and deduction u/s. 80-IA of the Act along with referencing to relevant pages of the Paperbook ( PB ). The copy of the email and summary sheet is attached herewith again for Your Honours ease of reference at Page 1 to 2 (filed along with captioned written submissions). Further, Your Honours on 29 June, 2021 asked Learned AR to file a detailed working for each of the captioned year demonstrating unit-wise worki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stricted ONLY to Income from Business or Profession. In support of the said contention, reliance was placed on the following decisions at the time of hearing: a. CIT vs. Reliance Energy Ltd. [Civil Appeal No. 1327 of 2021 (SC)] [Page 1 to 18 of compilation of judgements ( COJ )] b. NSL Renewable Power Private Limited vs. DCIT (AY 2010-11) (ITA No. 2146/Hyd/2017) (Page 19 to 32 of COJ) (Assessee s own case) c. NSL Renewable Power Private Limited vs. DCIT (AY 2012-13) (ITA No. 988/Hyd/2017) (Page 33 to 42 of COJ) (Assessee s own case) d. Meera Cotton Synthetic Mills (P) Ltd vs. ACIT (2009) 29 SOT 177 (Mum.Trib.) B. Rebuttal to Department s submissions: As regard the Ld. DR s submission, we would like to place on record our rebuttals. 1. At the outset, Ld. DR relied on Assessee s own case for AY 2011-12 (ITA No. 1024/Hyd/2017) wherein Your Honours have held that the assessee is not eligible to claim deduction u/s. 80-IA of the Act, from the income from house property and submitted that in accordance with The Rule of Consistency and The Doctrine of Judicial Discipline , the order of Learned Commissioner of Income Tax (Appeals) b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht to set-off the losses of 3 power generating units against the profit of 4 units and that after such set-off of inter-unit losses, no income relatable to any of the eligible units forms part of gross total income and therefore no deduction u/s. 80-IA is eligible. Our submission: a. In this regard, it is humbly submitted that the issue raised by Ld. DR before Your Honours with respect to set-off the losses of 3 power generating units against the profit of 4 units and that after such set-off of inter-unit losses, no income relatable to any of the eligible units forms part of gross total income and therefore no deduction u/s. 80-IA is eligible, is not in dispute and that no such observations are made by the Ld. AO in the assessment order. Reliance is placed on the Hon ble Special Bench decision of Mumbai ITAT in the case of Mahindra Mahindra Ltd. vs. DCIT [(2009) 122 TTJ 577 (Mum) (SB)] (A copy of the Order is attached at Page 77 to 139) wherein it has been held that the Departmental Representative has no jurisdiction to go beyond the order passed by the AO. It has further been observed in the said case that the scope of argument of the Departmental Representativ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and gains of Kalamb unit for the purpose of determining the quantum of deduction under section 80-IA(5) of 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee in two eligible units 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 17. Respectfully following the above decisions, we hold that the loss of the eligible units cannot be set off against the profits of other eligible units. 18. As regards the third ground of the appeal against the observations of the CIT (A) that 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). Thus, the contention raised by Ld. DR of setting off losses of one unit with the profit of other units should be rejected as without merits. 3. Further, Ld. DR submitted that in terms of section 80-IA(5) of the Act, the Assessee is not paying tax on the profits of eligible unit as well as claiming set-off of such income/pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wable under Chapter VIA of the Act. With respect to the facts of the Assessee s case, there is no question of double deduction u/s. 80-IA of the Act as the allowability of deduction under chapter VIA is governed by section 80A(1) and similar deduction is not allowed under any other provisions of the Act. Thus, the reliance on the judgement of Escorts Ltd. (supra) is totally misplaced by the Ld. DR and is not applicable to the facts of the Assessee s case. d. Moreso, even if the assessee computes deduction u/s. 80IA, there is no guarantee that the benefit of deduction will be granted to the assessee. Since, the deduction will be granted only if there is a positive GTI (which comprises of all the heads of income). As per the computation mechanism u/s. 80-IA there can be a claimable amount, but if the GTI is a negative figure, the assessee will not be granted deduction as per section 80A of the Act (since the deduction has to be restricted to GTI). Hence there is no question of double deduction. Your Honours attention is invited to the facts of AY 2016-17 itself, refer to table below: Particulars Amount (Rs.) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce in such factual matrix has no relevance to the issue in dispute as the issue is limited only to the extent of, whether deduction u/ 80-IA is to be restricted to business income or to the GTI. Further, the Department is not relying upon what has been decided in Reliance Energy s case, but on what logically follows from the said precedent. The inferences drawn on the basis of Reliance Energy decision (supra) are thus, in our considered view, misplaced. Para 16 to 18 / Page 8-9 Ld. DR submitted that the Hon ble SC is laying down condition of having a positive income under the head PGBP (forming part of GTI) to claim 80-IA deduction from the GTI which also consists of income from other heads of income. It is respectfully submitted, that the Ld. DR has grossly erred in interpreting the Hon ble SC decision and on an imaginary and assumptive basis brought out a condition of having positive PGBP income forming part of GTI to claim deduction u/s. 80-IA of the Act. The said condition is neither coming out of from the provision of section 80-IA nor coming out from Hon ble SC judgement or any other judgements on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lculated the deduction u/s. 80-IA for each eligible unit in similar way as stated by Hon ble SC in the Liberty India s decision. (refer to charts filed) 2) Synco Industries Ltd. vs AO (2008) 299 ITR 444 (SC) Hon ble SC in Synco s case held that if the gross total income of the Assessee is NIL then it would not be entitled to deductions under chapter VIA. This is precisely the Assessee s submission in present case that the deduction has to be restricted to GTI and in case of loss, no deduction is allowed (refer to Para 3(d) at Page 8 above). Further, it was held that while computing quantum of deduction under section 80-I(6), profits derived from an industrial undertaking should be taken as the only source of income in order to arrive at deduction under Chapter VI-A. But however, non obstante clause appearing in section 80-I(6) is applicable only to the quantum of deduction, whereas section 80B(5) of the Act deals with the allowability of deduction from the gross total income. Infact, assessee has computed the deduction u/s. 80-IA by treating each eligible business as a separate unit as per the principles laid do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned income from eligible business units. Ld. DR further tries to bring out a situation where there is income earned from eligible business but is set-off against other business income and therefore assessee does not pay tax on such income. It is submitted that the Ld. DR is trying to blow hot and cold with theories and not support the same with the facts of the Assessee s case as well any judicial precedent on this aspect. 5. Ld. DR submitted that the facts of AY 2014-15 are identical to that of AY 2013-14 (refer to Para 30 to 32 / Page 14-15). It may kindly be noted that the above rebuttals made may kindly be applied to Ld. DRs contention for AY 2014-15 also. 6. Further, for AY 2016-17, it is submitted that the Respondent Assessee is having a loss at the Gross Total Income stage and therefore no deduction u/s. 80-IA is claimed for the concerned year. Accordingly, there is no dispute for the AY 2016-17 before Your Honours. The Respondent Assessee most humbly submits that the above submission may kindly be taken on record for effective disposal of appeal. In case, Your Honours require any further details/clarification/documents in sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e computed by the assessee, the assessee has netted off the profits from the eligible units and non-eligible units and accordingly, the net loss from the business was shown at ₹ 22.71 crores, which has been shown by the assessee in the return of income as business loss. He has further claimed deduction from the gross total income from the profit of eligible units u/s 80IA and in Form 10CCB issued by the CA in this regard, which is also placed on record. The dispute between the assessee and the revenue is only, whether the assessee can claim deduction u/s 80IA from the gross total income of the assessee. Similar issue has been decided by the Hon ble Supreme Court in the case of CIT Vs. Reliance Energy Ltd., [2021] 127 taxmann.com 69, on which reliance placed by the ld. A.R. DR. The entire decision is reproduced as under for the sake of clarity. 1. By an order of assessment dated 31.01.2005, the Assessing Officer restricted the eligible deduction under Section 80-IA of the Income Tax Act, 1961 (hereinafter the Act ) to the extent of business income only. On 23.03.2006, the Commissioner of Income-Tax (Appeal)-I (hereinafter the Appellate Authority ) partly allowed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, along with other deductions available to the Assessee, to the extent of gross total income and restricted the deduction allowed under Section 80-IA at ₹ 354,00,75,084/-, by limiting the aggregate of deductions under Sections 80-IA and 80-IB of the Act to business income of the Assessee. 4. The Assessing Officer rejected the contention of the Assessee that Section 80AB of the Act is not applicable. It was held that Section 80AB of the Act makes it clear that for the purposes of deduction in respect of certain incomes, deduction had to be given on the income of the nature specified in the relevant section and allowed against income of that nature alone. The Assessing Officer elaborated on this point by stating that income from business alone had to be considered for allowing any deduction computed on income from business and using the same analogy, deduction computed on income from other sources should be allowable against income from other sources only. As the deduction under Section 80-IA of the Act pertains to profits and gains from a business undertaking, the deduction is allowable only against income from business . It was held by the Assessing Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of certain inter-corporate dividends, was allowable on the gross amount of the dividends received. It was decided to undo the decision of this Court as it was contrary to the legislative intent, which was that deduction under Section 80M was to be allowed on the dividend income as computed under the Act, i.e., on the net income after deduction of admissible expenses. The Appellate Authority proceeded to hold that Section 80AB places a ceiling on the quantum of deductions in respect of incomes contained in Part-C of Chapter VI-A. Such deductions are to be computed on the net eligible income, which will be deemed to be included in the gross total income. The Appellate Authority observed that Section 80AB is limited to determining the quantum of deductible income included in the gross total income. Following a decision of the Income Tax Appellate Tribunal, Mumbai dated 25.04.2003 in Royal Cushion Vinyl Products Ltd. v. Dy. Commissioner of Income Tax, 1 (1979) 3 SCC 538 Mumbai (ITA No. 770/MUM/98), the Appellate Authority set aside the order of the Assessing Officer on this count. The Appellate Authority directed the Assessing Officer not to restrict the deduction admissible under Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction (5), therefore, is 2 (1978) 2 SCC 644 3 (2008) 4 SCC 22 4 (2003) 5 SCC 590 concerned with computation of the deduction, which is at a stage prior to allowing the deduction so computed. He submitted that there is no dispute that the computation of deduction is only from the eligible business. The claim of the Assessee, as accepted by the Appellate Authority, is that there is no restriction on taking into account income from any other source while allowing the deduction computed under Section 80-IA, subject to the aggregate of all deductions under Chapter VI-A not exceeding the gross total income . He relied upon judgments of this Court in CIT (Central), Madras v. Canara Workshops (P) Ltd., Kodialball, Mangalore5 and Synco Industries (supra) to argue that sub-section (5) of Section 80-IA of the Act does not restrict permissible deduction under sub-section (1) to be allowed against business income only. The learned Senior Counsel for the Assessee relied upon the judgment of the Bombay High Court in Commissioner of Income-tax v. Tridoss Laboratories Ltd.6 to argue that the Appeal should not be allowed. 9. The controversy in this case pertains to the deduction under Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h respect only to computation of deduction on the basis of net income . 10. Sub-section (1) and sub-section (5) of Section 80-IA which are relevant for these Appeals are as under: 80-IA. Deductions in respect of profits and gains from industrial undertakings or enterprises engaged in infrastructure development, etc.- (1) Where the gross total income of an assessee includes any profits and gains derived by an undertaking or an enterprise from any business referred to in sub-section (4) (such business being hereinafter referred to as the eligible business), 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 of an amount equal to hundred per cent. of the profits and gains derived from such business for ten consecutive assessment years. **** (5) Notwithstanding anything contained in any other provision of this Act, the profits and gains of an eligible business to which the provisions of sub- section (1) apply shall, for the purposes of determining the quantum of deduction under that sub-section for the assessment year immediately succeeding the initial assessment ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he other contention of the Revenue is that sub-section (5) of Section 80-IA refers to computation of quantum of deduction being limited from eligible business by taking it as the only source of income. It is contended that the language of sub-section (5) makes it clear that deduction contemplated in sub-section (1) is only with respect to the income from eligible business which indicates that there is a cap in sub-section (1) that the deduction cannot exceed the business income . On the other hand, it is the case of the Assessee that sub-section (5) pertains only to determination of the quantum of deduction under sub-section (1) by treating the eligible business as the only source of income. It was submitted by Mr. Vohra, learned Senior Counsel, that the final computation of deduction under Section 80-IA for the assessment year 2002-03 as accepted by the Assessing Officer, was arrived at by taking into account the profits from the eligible business as the only source of income . He submitted that, however, sub-section (5) is a step antecedent to the treatment to be given to the deduction under sub- section (1) and is not concerned with the extent to which the computed ded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uctions in order to arrive at the total income of the assessee. The Assessee also relied on the judgment of this Court in Canara Workshops (P) Ltd., Kodialball, Mangalore (supra) to emphasize the purpose of sub-section (5) of Section 80-IA. In this case, the question that arose for consideration before this Court related to computation of the profits for the purpose of deduction under Section 80-E, as it then existed, after setting off the loss incurred by the assessee in the manufacture of alloy steels. Section 80-E of the Act, as it then existed, permitted deductions in respect of profits and gains attributable to the business of generation or distribution of electricity or any other form of power or of construction, manufacture or production of any one or more of the articles or things specified in the list in the Fifth Schedule. It was argued on behalf of the Revenue that the profits from the automobile ancillaries industry of the assessee must be reduced by the loss suffered by the assessee in the manufacture of alloy steels. This Court was not in agreement with the submissions made by the Revenue. It was held that the profits and gains by an industry entitled to benefit under ..... 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