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TMI Blog2012 (11) TMI 507X X X X Extracts X X X X X X X X Extracts X X X X ..... derived by it from eligible unit 4.14 MW wind energy unit at 4,72,28,143. In the case of Meera Cotton & Synthetic Mills (P.) Ltd. Versus Assistant Commissioner of Income-tax, Ward 9(2), Mumbai [2009 (2) TMI 506 - ITAT MUMBAI] after considering the decision of the Hon'ble Supreme Court in the case of M/s Synco Industries Ltd Versus Assessing Officer [2008 (3) TMI 13 - SUPREME COURT ] clearly held that the stage at which set off has to be done is only after aggregation of income under all heads. The CIT(A) did not agree with this reasoning of the ITAT which is held to be bad as the CIT(A) being an authority lower in the tier of authorities under the Act to that of the ITAT, is bound to follow the decision of the ITAT and cannot refuse it without any valid reasons - in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer to following judgments; (a) Karnataka Power Corpn. Ltd. v. CIT, Bangalore) ITAT Bangalore (ITA No. 294/Bang/2009, dated 10-7-2009) (b) Asstt. CIT v. Goldmine Shares & Finance (P.) Ltd. [2008] 113 ITD 209 (Ahd.) (SB). (c) Jt. CIT v. Associated Capsules (P.) Ltd. [2008] 114 ITD 189 (Mum.). (d) Meera Cotton & Synthetic Mills (P.) Ltd. v. Asstt. CIT [2009] 29 SOT 177 (Mum.). wherein it has been laid down that deduction u/s 80IA is to be allowed unit wise without deducting losses during the other units. 5. The Assessing Officer passed order dated 23-12-2009 wherein she adjusted the losses (depreciation of WM-II & WM III with the profit of WM I and disallowed the deduction u/s 80IA though gross total income of assessee was positive and more than deduction claimed u/s 80IA. After setting off loss (unabsorbed depreciation) the assessee had gross total income of ₹ 9,87,72,464/-. Deduction u/s 80IA amounting to ₹ 4,16,36,240/- was claimed in respect of WM I unit. The Assessing Officer passed order u/s 143(3) read with Sec. 263 of the Act, setting off unabsorbed depreciation against the profits of the Wind Mill-I wholly disallowing the deduction claimed u/s 80IA. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The first appellate authority confirmed the view of the AO. Similar was the fate of the assessee before the Tribunal and the High Court. It was argued before the S.C that sec.801(6) entitles it to deduction by considering such industrial undertakings as the only source of income of the assessee during the previous year relevant to the assessment year under consideration and hence the loss suffered by the assessee in the earlier years ought not to have been considered for the purposes of granting deduction under these sections in the current year. Jettisoning the assessee's point of view the Supreme Court held that the deduction under Chapter VIA are allowed from the gross total income in accordance with sec.80A and since the gross total income of the assessee was NIL, hence there was no scope for allowing any deduction". Since such decision is binding under Article 141 of the Constitution of India, the Hon'ble High Court of Mumbai distinguished the facts to hold that the appellant Meera Cotton deserves relied vide para-9 of the order reproduced below; "We find that there is absolutely no similarity in the facts of that case with those under consideration for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt, that the High Court was justified in holding that the loss from the oil division was required to be adjusted before determining the gross total income and as the gross total income was "nil" the assessee was not entitled to claim deductions under Chapter VI-A which included sections 80HH and 80-I. The Hon'ble Court held that the effect of clause (5) of section 80B of the Income-tax Act, 1961, is that "gross total income" will be arrived at after making the computation as follows: (i) making deductions under the appropriate computation provisions ; (ii) including the incomes, if any, under sections 60 to 64 in the total income of the individual ; (iii) adjusting intra-head and/or inter-head losses ; and (iv) setting off brought forward unabsorbed losses and unabsorbed depreciation, etc. Only if the gross total income so determined is positive the question of allowing the deductions under Chapter VI-A would arise, not otherwise. The words "includes any profits" in section 80-I(1) are important and indicate that the gross total income of an assessee shall include profits from a priority undertaking. While computing the quantum of deduction under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the view taken by the Assessing Officer. On appeal the Tribunal held that sub-section (1) of section 80-IB provides that where the gross total income of an assessee includes any profits and gains derived from any business referred to in sub-sections (3) to (11B), there shall be allowed, in computing the total income of the assessee, a deduction from such profits and gains of an amount equal to such percentage and for such number of assessment years as specified in this section. Sub-section (2) states that this section applies to any industrial undertaking which fulfils all the conditions stipulated in this sub-section. The act of the Assessing Officer allowing deduction under this section, albeit at a lower profit, showed that all other requisite conditions making the assessee eligible for deduction, had been satisfied. If there was a profit derived from a particular industrial undertaking, that would qualify for deduction without reduction of loss suffered by any other eligible industrial undertaking(s). The gross total income of the assessee was ₹ 152.08 lakhs after adjusting the losses suffered by it in the eligible as well as non-eligible units. There were no brought forw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ought not to have been considered for the purposes of granting deduction under these sections in the current year. Jettisoning the assessee's point of view the Hon'ble Supreme Court held that the deductions under Chapter VI-A are allowed from the gross total income in accordance with section 80A and since the gross total income of the assessee was nil, hence there was no scope for allowing any deduction. We find that there is absolutely no similarity in the facts of that case with those under consideration for the reason that the gross total income of the assessee is ₹ 152.08 lakhs whereas the amount of deduction under section 80-IB is only at ₹ 100.13 lakhs, thereby leaving the total income at a positive figure of ₹ 51.95 lakhs. That was a case in which the gross total income was nil and the Hon'ble Supreme Court held that in the absence of positive gross total income, there cannot be granted any deduction under those sections. Moreover in that case there was a brought forward loss from the eligible industrial undertaking, which is not so in the present case. Section 80A(1) provides that in computing the total income of an assessee, there shall b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 100.13 lakhs is obviously less than the gross total income. In our considered opinion the learned Commissioner of Income-tax (Appeals) has erred in interpreting the relevant provision when he held that the losses suffered by the assessee in two eligible units be reduced from the income of the other eligible unit for granting the deduction under section 80-IB. Since the facts of the case in the case of Synco Industries Limited [2008] 299 ITR 444 (SC) lie in an altogether different compartment, we hold that the ratio of that case cannot be considered for application to the assessee's case. Accordingly the impugned order is overturned and the assessee is allowed deduction under section 80-IB on the profit derived by it from eligible unit No. 3 at ₹ 100.13 lakhs." 11. The facts of the present appeal are identical to the facts as it prevailed in the case of Meera Cotton Synthetic Mills (P.) Ltd. (supra). The computation of total income of the Assessee is as follows: The Statement of total income for Income-tax, for the assessment year 2004-05. Extrusions Wind Energy Total Profit as per P/L a/c 108228264 37717523 7661904 -6641473 146966218 Add: Prov. for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome. In our considered opinion the learned Commissioner of Income-tax (Appeals) has erred in interpreting the relevant provision when he held that the losses suffered by the assessee in two eligible units be reduced from the income of the other eligible unit before granting the deduction under section 80-IA. Since the facts of the case in the case of Synco Industries Ltd. (supra) lie in an altogether different compartment, we hold that the ratio of that case cannot be considered for application to the assessee' s case. Accordingly the impugned order is overturned and the assessee is allowed deduction under section 80-IA on the profit derived by it from eligible unit 4.14 MW wind energy unit at ₹ 4,72,28,143. 14. We find that the CIT(A) in the present case has disregarded the binding decision of the ITAT. The basis on which the CIT(A) refused to follow the order of the ITAT in assessee's own case for the assessment year 2006-07 cannot be sustained. In the case of Meera Cotton & Synthetic Mills (P) Ltd. (supra) the Bombay Bench of the ITAT after considering the decision of the Hon'ble Supreme Court in the case of Synco Industries Ltd. (supra) had clearly held tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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