2015 (5) TMI 825 - HC - Income Tax

Loss incurred in business of power generation entitled to deduction u/s 80 IA - whether can be set off against business income from manufacturing unit ignoring the provision of section 80-IA(5)? - Held that - No reason in our referring to the legislative background and these provisions in further details or considering and interpreting them for the present appeals. Once the statement of facts about which there can be no dispute show that there was no deduction claimed under section 80-IA for the assessment years in question then there was no occasion for the Tribunal and equally us to have gone into these questions. In any event merely because the Tribunal has gone into and considered them we are not obliged to go into the same given the above admitted factual background. Therefore by clarifying that as and when this question arises and in relation to the same assessee in future if the deduction is claimed under section 80- IA for eligible unit then it would be open for the Revenue to project all questions and propose them as substantial questions of law. In that event they can raise all contentions and equally pertaining to the setting off of the said losses and in relation to the eligible section 80- IA unit from the income of the non section 80-IA ineligible unit. NO substantial questions of law - Decided against revenue.

Summary

Issues:
1. Interpretation of section 80-IA of the Income Tax Act regarding set off of losses between eligible and ineligible units.

Analysis:

The High Court of Bombay heard an appeal by the Revenue challenging the Income Tax Appellate Tribunal's order related to assessment years 2005-06 to 2008-09. The Tribunal's decision arose from the Commissioner of Income Tax (Appeals) partially allowing the assessee's appeals against the assessment under section 143(3) of the Income Tax Act, 1961 for the mentioned years. The primary issue revolved around whether the loss incurred in the business of power generation eligible for deduction under section 80-IA could be set off against the business income from a manufacturing unit, disregarding the provision of section 80-IA(5).

The Revenue contended that the Tribunal's conclusions could have significant implications. The assessee, engaged in manufacturing and power generation businesses, claimed losses from the power generation unit eligible for deduction under section 80-IA for the years in question. These losses were set off against profits from the manufacturing unit, resulting in a positive income. The Assessing Officer disallowed the claim of set off, relying on a Tribunal decision. However, the Commissioner (Appeals) partly granted relief to the assessee. The Revenue argued that the Tribunal's order and the relief granted raised substantial legal questions.

The Court examined the grounds in the assessee's appeal before the Tribunal and found that the questions raised did not align with the substantial question of law proposed by the Revenue. The Tribunal's order did not address the specific grievance raised by the assessee in the present appeal. The Court clarified that since no deduction was claimed under section 80-IA for the relevant assessment years, there was no need to delve into the legislative provisions in detail. The Court emphasized that if the deduction is claimed in the future, the Revenue could raise substantial legal questions regarding the set off of losses between eligible and ineligible units. Consequently, the Court disposed of the appeals, stating that they did not raise any substantial questions of law and ordered no costs to be paid.