2012 (2) TMI 578 - AT - Income Tax

Summary

Issues involved: The judgment involves the interpretation of sections 80-IA, 70(1) of the Income Tax Act, 1961 regarding set off of losses from an industrial undertaking and windmill business against other income.

Summary:

Issue 1: Set off of loss from industrial undertaking u/s 80-IA:
The appeal by the revenue was against the CIT(A)'s order regarding the set off of loss from the industrial undertaking. The CIT(A) held that the Assessing Officer was incorrect in not allowing the set off of the loss against other income, citing section 80-IA and 80-IA(5) of the Act. The revenue contended that the non-obstante clause in section 80-IA(5) should prevail over section 70(1) for computing income/loss from the windmill business separately. The Tribunal upheld the CIT(A)'s decision based on the judgment in a similar case, affirming that the loss from the industrial undertaking can be set off against other heads of income.

Issue 2: Treatment of unabsorbed depreciation from windmill business:
The AO disallowed the claim of loss from the windmill business, stating that the income from this source should be computed independently and any unabsorbed depreciation cannot be set off against other income. The CIT(A) directed the AO to allow set off of the entire loss from the windmill business against other heads of income. The Tribunal, following a similar precedent, affirmed the CIT(A)'s decision, emphasizing that the deeming provision of section 80-IA(5) cannot override section 70(1) for set off of losses from one source against income from another source under the same head.

Conclusion:
The Tribunal dismissed the appeal by the revenue, upholding the CIT(A)'s decision to allow the set off of loss from the windmill business against other heads of income. The judgment was based on the interpretation of relevant provisions of the Income Tax Act and previous judicial decisions, affirming the assessee's right to set off losses as per the applicable sections.