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TMI Blog2006 (7) TMI 517X X X X Extracts X X X X X X X X Extracts X X X X ..... th the manufacturing units are separately eligible for deduction under section 80-IA of the Act. 4. In assessment year 1998-99, the assessee had earned a profit of Rs. 1,94,57,205 for the Polymer Division and whereas the assessee incurred a loss of Rs. 2,91,31,057 in Dairy Division. Net loss after setting off of profit of Polymer Division against loss of Dairy Division worked out to Rs. 96,73,842 as per provisions of section 70 of the Act. Similarly, for assessment year 2001-02, the assessee had disclosed net profit of Rs. 1,35,65,085 in respect of its Polymer Division and shown net loss of Rs. 4,70,70,122 from its Dairy Division. Thus, the assessee disclosed total loss of Rs. 3,36,05,036 for assessment year 2001-02 after considering profit/loss of aforesaid two units. 5. In assessment year 1998-99, the assessee claimed deduction under section 80-IA of the Act of Rs. 73,87,641 being 30 per cent of Rs. 2,46,25,481, the profit of Polymer Division. Similarly, for assessment year 2001-02, the assessee claimed deduction under section 80-IA of the Act of Rs. 39,56,810, profits of its Polymer Division. 6. The Assessing Officer stated that any deduction under Chapter VI-A is al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... representative of the assessee also placed reliance on the decision of the Hon ble Jammu Kashmir High Court in the case of CIT v. R.B. Jodha Mal, Bishan Lal [2005] 142 Taxman 310 and submitted that it was held that each industry must be considered only one industry on its own working for determining deduction under section 80HH of the Act. The Ld. authorized representative of the assessee submitted that similar issue has also been considered by the Delhi Bench of I.T.A.T. in the case of Dy. CIT v. Delhi Iron Steel Co. Ltd. [2004] 85 TTJ (Delhi) 103 and it was held that for the purposes of section 80-IA of the Act, deduction has to be computed as if the said eligible business was the only source of income of the assessee during the relevant assessment year. He submitted that deduction under section 80-IA of the Act is to be given only on the profits of priority industry without deduction of loss arising in other business activity. The ld. authorized representative of the assessee submitted that loss occurred to the assessee in the Dairy Division should not be set off against profit of the Polymer Division. Therefore, deduction claimed by the assessee should be allowed. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2000] 243 ITR 26 (SC) and submitted that deduction under Chapter VI-A is to be allowed only on net income and not on gross income. He further submitted that the Hon ble High Court of Allahabad in the case of CIT v. Chhata Sugar Co. Ltd. [2005] 277 ITR 256 has held that special deduction under section 80HH of the Act, which falls in Chapter VI-A, is to be computed after setting-off of losses. He further submitted that the Apex Court has also held in the case of IPCA Laboratory Ltd. v. Dy. CIT [2004] 266 ITR 521 4 that section 80AB of the Act has been given overriding effect over all other sections in Chapter VI-A. He further submitted that Apex Court has also held in the case of IPCA Laboratory Ltd. ( supra ) that even though a liberal interpretation has to be given to such a provision, the interpretation has to be as per wording of section. The ld. D.R. submitted that in view of subsequent decisions of the Apex Court and the decisions of the Hon ble jurisdictional High Court, the decision of the Lucknow Bench of ITAT in the case of Arif Industries Ltd. ( supra ) is not valid. The Ld. D.R. further submitted that other decisions cited by the Ld. authorized representative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r deduction under Chapter VI-A, but one of the units was having profit and the other was incurring loss, it was held that the unit having profit will be entitled to claim deduction under section 80HH of the Act without adjusting losses of other unit. We are of the considered view that the said decision is not relevant after the decision of the Apex Court in the case of IPCA Laboratory Ltd. ( supra ) wherein it has been held that for giving deduction under section 80HHC of the Act, the profits earned from export of both self-manufacturing goods and trading goods are to be considered and if after such adjustments there is a profit the assessee would be entitled to deduction under section 80HHC of the Act. It was held that if there is a loss, the assessee would not be entitled to deduction. Their Lordships of the Apex Court while deciding the above case of IPCA Laboratory Ltd. ( supra ) also considered provisions of sections 80AB and 80B(5) of the Act. We also observe on going through the provisions of sections 80A, 80AB and 80B(5) of the Act that computation of income of eligible business is to be made in accordance with provisions of the Act as if such eligible business was the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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