2018 (8) TMI 2011 - AT - Income Tax

Deduction u/s 80IB - Calculation on the gains derived for such undertaking and same cannot exceeded the profit derived for said undertaking - HELD THAT - We also observe that in the case of decision of ACIT v. Goldmine Shares Stock Finance Pvt. Ltd. 2008 (4) TMI 405 - ITAT AHMEDABAD it has been held that the deduction would be limited to gross total income. Therefore, the reliance by the assessee is misplaced as the said decision pertained to brought forward losses and depreciation and not carry forward of unabsorbed deduction under section 80IB. Thus, the facts of said case are entirely different as in the case of the assessee it has claimed set-off of unabsorbed profit of eligible business, which cannot be carry forward and set-off against the profits on non eligible unit in subsequent assessment years - in our humble understanding of provisions of the Act and considering the provision of section 72 of the Act. We are of the view that the CIT (A) has justified in refusing the claim of the assessee.

Summary

Issues involved:
1. Disallowance of deduction u/s. 80IB(10) to the Assessee.
2. Non-allowance of notionally brought forward profits of eligible unit to be set-off.
3. Application of the decision in ACIT v. Goldmine Shares & Stock Finance Pvt. Ltd. [2008] 113 ITD 209 (Ahd) (SB) for deduction claims.
4. Interpretation of provisions under section 80IB and section 72 of the Income Tax Act.

Detailed Analysis:
1. The judgment deals with three appeals by the Assessee against the orders of the Commissioner of Income Tax (Appeals) for Assessment Years 2010-11, 2011-12, and 2012-13 regarding the disallowance of deductions u/s. 80IB(10). The Assessee claimed deductions based on unabsorbed profits from earlier years, which were not allowed by the authorities. The issue revolved around the computation and set-off of profits from eligible and non-eligible units for deduction purposes.

2. The primary contention was whether the Assessee could claim unabsorbed deductions from a previous year in subsequent assessment years when there were profits in non-eligible units. The Assessee relied on the decision in ACIT v. Goldmine Shares & Stock Finance Pvt. Ltd. [2008] 113 ITD 209 (Ahd) (SB) to support their claim. However, the authorities rejected the claim, stating that the deduction could not exceed the gains derived from the eligible unit in the relevant year. The Tribunal upheld the authorities' decision, emphasizing that the provisions of section 80IB limited the deduction to the profit derived from the eligible undertaking.

3. The judgment analyzed the provisions of section 80IB and section 72 of the Income Tax Act in light of the Assessee's claim. It was observed that the decision in ACIT v. Goldmine Shares & Stock Finance Pvt. Ltd. [2008] 113 ITD 209 (Ahd) (SB) pertained to brought forward losses and depreciation, not the carry forward of unabsorbed deductions under section 80IB. The Tribunal concluded that the Assessee's reliance on the said decision was misplaced, as the facts of the case differed. The Tribunal held that the Assessee could not carry forward unabsorbed profits from earlier years and set them off against profits from non-eligible units in subsequent assessment years.

4. The judgment highlighted the importance of interpreting the provisions of the Income Tax Act accurately to determine the eligibility and computation of deductions under section 80IB. It emphasized that the deduction under section 80IB should be limited to the gains derived from the eligible undertaking and could not exceed the profit derived from that specific unit. The Tribunal dismissed the appeals for all three assessment years, affirming the lower authorities' decisions to disallow the deductions claimed by the Assessee based on unabsorbed profits from earlier years.