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2016 (2) TMI 574 - HC - Income TaxDeduction under Section 80-IA - Whether the Tribunal was right in holding that the provisions of Section 80-AB over-ride Section 80-IA read with Section 115-JA and so the appellant is not entitled to the deduction? - Held that - Assessee admittedly maintained a consolidated set of books of accounts in respect of both the units. If an Assessee does not maintain two sets of books of accounts in respect of different units, then the question of eligibility would arise only if there was a positive income. The question of deduction will not arise, if there was no positive income. In this case the Assessee having maintained single set of books of accounts, wants to claim that there was a positive income in Pondicherry unit but there was a loss in Chennai unit. Therefore, the Assessee is not entitled to the said benefit, in view of the decision of the the Supreme Court in IPCA Laboratory vs. Deputy Commissioner of Income Tax 2004 (3) TMI 9 - SUPREME Court . - Decided against assessee
Issues:
1. Eligibility for deduction under Section 80-IA of the Income Tax Act, 1961 for an Assessee maintaining consolidated books of accounts. 2. Claim of deduction for deferred revenue expenditure in computing the income from business. 3. Interpretation of provisions of Section 80-AB vis-a-vis Section 80-IA and Section 115-JA. 4. Eligibility of a computer software manufacture concern for deduction under Section 80-IA. Analysis: Issue 1: Eligibility for deduction under Section 80-IA The Assessee, having two units in Chennai and Pondicherry, maintained a single consolidated set of books of accounts for both units. The dispute arose when the Assessee claimed a deduction under Section 80-IA for the income from the Pondicherry unit. The Tribunal held that since there was no taxable income despite the eligible unit having a net profit, the Assessee was not entitled to the deduction. The High Court, relying on the Supreme Court decision in IPCA Laboratory vs. Deputy Commissioner of Income Tax, emphasized that maintaining separate books of accounts is crucial for eligibility for deduction. The Court dismissed the appeal, stating that the Assessee cannot claim the benefit without separate accounts. Issue 2: Claim of deduction for deferred revenue expenditure The Assessing Officer computed the MAT income under Section 115JA of the Act, resulting in a taxable income for the Assessee. The Assessee contended that the deduction for deferred revenue expenditure should not have been denied and claimed the deduction under Section 80-IA for the Pondicherry unit. The Commissioner of Income Tax (Appeals) partly allowed the appeal, upholding the Assessee's contention regarding deferred revenue expenditure but denying eligibility for Section 80-IA. The High Court affirmed the decision, emphasizing the importance of maintaining separate books of accounts for different units to claim deductions accurately. Issue 3: Interpretation of Section 80-AB vis-a-vis Section 80-IA and Section 115-JA The Tribunal held that the provisions of Section 80-AB override Section 80-IA read with Section 115-JA, thereby denying the Assessee the deduction. However, the High Court did not delve into this issue in detail as it found the Assessee ineligible for the deduction due to the consolidated books of accounts maintained for both units. Issue 4: Eligibility of a computer software manufacture concern for deduction under Section 80-IA The Tribunal held that the Assessee, a computer software manufacture concern, was not eligible for deduction under Section 80-IA as the concern did not fall within the items covered by the section. This decision was not the primary basis for the dismissal of the appeal by the High Court, which primarily focused on the lack of separate books of accounts affecting the Assessee's eligibility for the deduction. In conclusion, the High Court dismissed the appeal, emphasizing the importance of maintaining separate books of accounts for different units to accurately claim deductions under the Income Tax Act. The judgment highlighted the significance of compliance with statutory requirements for claiming tax benefits.
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