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TMI Blog2013 (2) TMI 202X X X X Extracts X X X X X X X X Extracts X X X X ..... deeming provision of a particular section cannot be breathed into another section. Therefore, the deeming provision contained in section 80-IA(5) cannot override section 70(1) of the Act. The assessee incurs loss after claiming eligible depreciation. Hence, section 80-IA becomes insignificant since there is no profit from which this deduction can be claimed. Section 70(1) comes to the rescue of the assessee, whereby he is entitled to set off the losses from one source against income from another source under the same head of income. However, once set off is allowed under section 70(1) from the income from another source under the same head, another deduction on the same count is not permissible, i.e., during the subsequent years if the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /deprecia-tion from windmill operation. The assessee was in receipt of Rs. 5.51 lakhs from Tamilnadu Power Corporation for the sale of power from windmill during the accounting year under dispute. The assessee had set off this profit against the depreciation on power windmill and after adjusting the same, the unabsorbed depreciation remained at Rs. 73.20 lakhs. The asses-see in its original return of income had shown the profits from its business activities at Rs. 60 lakhs and after claiming depreciation of Rs. 55.56 lakhs, furnished "nil" income. The claim of depreciation was negated by the Assessing Officer on the ground as aforesaid that the windmill was not installed in that accounting year. In the revised computation it claimed deducti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t off against the eligible business and bringing the profits of Rs. 60,00,829 attri-butable to the regular business activity of manufacturing of copper wires is justified. 4. Against the said order of the Commissioner of Income-tax (Appeals), the assessee preferred an appeal. The Tribunal held the carried forward loss of the eligible business was required to be set off first against the income of the subsequent years of eligible business while determining the profits eligible for deduction under section 80-IA of the Act and set off losses from other sources under the same head is not permissible. However, it should not forgotten that section 80-IA of the Act is a beneficial section permitting certain deduction in respect of certain income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... off the profits of one business against the losses incurred in another business. 5. The Supreme Court had an occasion to consider the same question in the case of Synco Industries Ltd. v. Assessing Officer (Income-tax) reported in [2008] 299 ITR 444 (SC) and at para. 13 it has been held as under (page 454) : "The contention that under section 80-I(6) the profits derived from one industrial undertaking cannot be set off against loss suffered from another and the profit is required to be computed as if profit making industrial undertaking was the only source of income, has no merit. Section 80-I(1) lays down that where the gross total income of the assessee includes any profits derived from the priority undertaking/unit/division, then i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be computed in the manner provided under the Act which presupposes that the gross total income shall be arrived at after adjusting the losses of the other division against the profits derived from an industrial undertaking. If the interpretation as suggested by the appellant is accepted it would almost render the provisions of section 80A(2) of the Act nugatory and, therefore, the interpretation canvassed on behalf of the appellant cannot be accepted. It is true that under section 80-I(6) for the purpose of calculating the deduction, the loss sustained in one of the units, cannot be taken into account because sub-section (6) contemplates that only the profits shall be taken into account as if it was the only source of income. However, sec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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