2020 (5) TMI 333 - HC - Income Tax

Deduction u/s 80IA - Tribunal held profit making power generating unit of the assessee should be taken into account and not the loss making units in computing the total income of the assessee for its eligible business to allow deduction u/s 80IA - deduction u/s 80IA windmill or eligible business wise - HELD THAT - Issue involved in this appeal is squarely covered by an order in the case of COMMISSIONER OF INCOME TAX AND ANOTHER Vs. SWARNAGIRI WIRE INSULATIONS P. LTD. 2013 (2) TMI 202 - KARNATAKA HIGH COURT - Decided against revenue.

Summary

Issues:
1. Interpretation of provisions under Section 80IA of the Income Tax Act, 1961 regarding the eligibility for deduction.
2. Whether profit-making power generating units or all units, including loss-making ones, should be considered for computing total income.

Analysis:
1. The appeal under Section 260-A of the Income Tax Act, 1961 was admitted by the Karnataka High Court based on substantial questions of law. The first issue raised was whether only the profit-making power generating unit of the assessee should be considered for deduction under Section 80IA, excluding the loss-making units. The Tribunal's decision was questioned in this regard.

2. The second issue involved whether the deduction under Section 80IA should be windmill-wise or eligible business-wise, contrary to the provisions of the Act. The Tribunal's decision to consider windmills as separate units instead of part of a single undertaking or enterprise was challenged, emphasizing that energy generation is one undertaking and windmills are units of the same enterprise.

3. During the hearing, the respondent's counsel referred to a previous order in a similar case, Commissioner of Income Tax and Another Vs. Swarnagiri Wire Insulations P. Ltd., which had addressed the issue at hand. The counsel argued that the current appeal was covered by the legal proposition established in the earlier judgment.

4. The revenue's counsel could not dispute the legal proposition presented by the respondent, leading to the court answering the substantial questions of law against the revenue. Consequently, the appeal was dismissed based on the interpretation of the provisions under Section 80IA of the Income Tax Act, 1961, as clarified by the previous judgment.