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TMI Blog2005 (7) TMI 584X X X X Extracts X X X X X X X X Extracts X X X X ..... uction under section 80-I of the Act in excess of Rs. 61,79,383 without setting off the notional carry forward loss in the eligible undertaking of the assessee in the earlier year which had been adjusted against the profit of the undertaking of the assessee in the earlier previous year and directed the Assessing Officer to set off the notional carried forward loss of the eligible unit against the current year s profit as the earlier order passed by the Assessing Officer under section 143(3) of the Income-tax Act was erroneous and prejudicial to the interest of the Revenue. 2. At the outset, the assessee urged that invoking of provisions of section 263 is bad in law as the twin conditions, i.e., erroneous and prejudicial to the interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 80A or 80B of the Act, and they have dismissed the claim of the assessee that in view of section 80-I(6) loss from one unit cannot be set off against the profits of another unit. Section 80-I(6) is only for computation of quantum of deduction but the other governing provisions like sections 80A and 80B will continue to be applicable notwithstanding the non obstante clause in section 80-I(6). 3. The learned counsel for the assessee vehemently argued that section 80-I(6) is relevant only in computation of income and apportionment of expenses attributable to the eligible undertaking for the year in question. It does not authorize notional carry forward of losses/allowance from earlier years when such losses are not quantified in the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustrial undertaking was only source of income of the assessee during the relevant assessment year and as per this section, if there is a loss of the eligible unit in any assessment year, can be set off to any other income from other business of the assessee. However, the loss which was actually set off is required to be notionally carried forward and to be considered in determining the deduction under section 80-I of the Act and adjusted against the eligible profits and gains of the eligible undertaking in the subsequent years. The learned Departmental Representative relied on the decision of the Mumbai Bench of the Tribunal in the case of Tolani Ltd. ( supra ) wherein it was held that after deducting expenses, depreciation, disallowance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to another case where there is no other business to set off such losses in the respective assessment years. Otherwise, it would lead to unreasonable result. The judgment in Balmer Lawrie Co. Ltd. s case ( supra ) relied on by the assessee is not applicable to the facts of the case as that case was decided in the context of section 80HH of the Income-tax Act where there was no legal fiction in the section 80HH as in section 80-I(6), as the relief under section 80-I(6) has to be included as if the profit and gains of industrial undertaking were the only source of income of the assessee during the previous year. The judgment of Hon ble Supreme Court relied on by the assessee ( supra ) is also distinguishable. The judgment was delivered i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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