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2015 (12) TMI 703 - AT - Income TaxDeduction u/s 80IC - as per revenue deduction u/s 80IC can only be allowed after arriving at the gross total income by combining the income of both the units i.e. Noida unit and Roorkee unit and excess deduction claimed by the assessee was rightly denied to him - CIT(A) allowed appeal of the assessee directing AO to consider the profits & gains of Roorkee Unit only for allowing deduction u/s 80IC of the Act and also to determine the losses of NOIDA Unit to be carried forward - Held that - CIT(A), following the dicta laid down by Hon ble High Court in the case CIT vs Dewan Krafts (2007 (2) TMI 149 - HIGH COURT , DELHI), held that quantum of deduction u/s 80IA(J) of the Act is to be computed on eligible unit as if eligible unit was the only source of income of the assessee. In the case of CIT vs Sona Koyo Steering Systems Ltd. (2010 (2) TMI 83 - DELHI HIGH COURT ), their lordships also expressed the similar view which supports the conclusion of the first appellate authority. Finally, we reach to a logical conclusion that the CIT(A) granted relief to the assessee on valid reasons - Decided against revenue
Issues Involved:
1. Deduction under Section 80IC of the Income Tax Act, 1961. 2. Setting off losses of one unit against the profits of another unit. Issue-Wise Detailed Analysis: 1. Deduction under Section 80IC of the Income Tax Act, 1961: The Revenue appealed against the CIT(A)'s decision to allow the assessee's claim for deduction under Section 80IC by considering only the profits and gains of the Roorkee Unit and not setting off the losses of the NOIDA Unit. The Revenue argued that the deduction should be allowed only after combining the income of both units, citing the Supreme Court decision in Synco Industries Ltd. vs AO. The assessee supported the CIT(A)'s decision, relying on the Delhi High Court's judgment in CIT vs Sona Koyo Steering Systems Ltd., which held that each unit should be treated independently for the purpose of Section 80IC deduction. The Tribunal analyzed the relevant judgments, including the Delhi High Court's decision in CIT vs Dewan Kraft System Pvt. Ltd., which supported the assessee's stance. The Tribunal noted that the Supreme Court in Synco Industries Ltd. primarily addressed the computation of gross total income and not the specific issue of setting off losses between units for Section 80IC deduction. The Tribunal concluded that the CIT(A) correctly followed the Delhi High Court's dicta, treating the eligible unit as the only source of income for computing the deduction under Section 80IC. Therefore, the Tribunal upheld the CIT(A)'s decision, dismissing the Revenue's grounds. 2. Setting off losses of one unit against the profits of another unit: The Revenue contended that the CIT(A) erred by not appreciating the Supreme Court's decision in Synco Industries Ltd., which they claimed overruled the Delhi High Court's judgment. The Tribunal clarified that the Supreme Court's decision addressed the computation of gross total income and the impact of earlier years' losses but did not mandate setting off losses of one unit against the profits of another for Section 80IC purposes. The Tribunal reiterated that the Delhi High Court in CIT vs Dewan Kraft Systems P. Ltd. and CIT vs Sona Koyo Steering Systems Ltd. held that each unit should be treated separately and independently for computing deductions under Section 80IC. The loss-making units should not affect the deduction calculation of profit-making units. The Tribunal found no reason to interfere with the CIT(A)'s order, which correctly followed the High Court's rulings. Consequently, the Tribunal dismissed the Revenue's appeal. Conclusion: The Tribunal upheld the CIT(A)'s decision to allow the deduction under Section 80IC by considering only the profits of the Roorkee Unit and not setting off the losses of the NOIDA Unit. The Tribunal found the CIT(A)'s approach consistent with the Delhi High Court's judgments and dismissed the Revenue's appeal. Order: The appeal of the Revenue was dismissed, and the order was pronounced in the open court on 8.12.2015.
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