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TMI Blog2013 (11) TMI 135X X X X Extracts X X X X X X X X Extracts X X X X ..... section 80-I(6), the Assessing Officer has to treat the profits derived from an industrial undertaking as the only source of income in order to arrive at the deductions under Chapter VI-A - The non obstante clause appearing in section 80-I(6), is applicable only to the quantum of deduction, whereas, the gross total income under section 80B(5) which is also referred to in section 80-I(1) is required to 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. Section 80A(2) and section 80B(5) are declaratory in nature. They apply to all the sections falling in Chapter VI-A. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g sections 70 and 71. 4. The decision of the High Court of Karnataka, Circuit Bench Dharwad, in the case of CIT v. Swarnagiri Wire Insulations P. Ltd. [2012] 349 ITR 245 (Karn) in I. T. A. No. 5050 of 2010 has been accepted by the Department merely on the ground of monetary ceilings fixed by the Central Board of Direct Taxes for filing special leave petition." The assessee is an individual. Among other businesses, the assessee also carried on the business of power generation through windmill. It is not in dispute that the assessee was entitled to claim deduction under section 80-IA(2) of the Income-tax Act, 1961 in respect of profits derived from the business of generation of power by windmill. The assessee incurred a net loss of Rs. 3, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts eligible for deduction under section 80-IA of the Act and set off of losses from other sources under the same head is not permissible. However, it should not be forgotten that section 80-IA of the Act is a beneficial section permitting certain deductions in respect of certain income under Chapter VI-A of the Act. A provision granting incentive for promotion of economic growth and development in taxing statutes should be liberally construed and restriction placed on it by way of exception, should be construed in a reasonable and purposive manner so as to advance the objects of the provision. It is a generally accepted principle that the deeming provision of a particular section cannot be breathed into another section. Therefore, the deemi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Insulations P. Ltd. [2012] 349 ITR 245 (Karn), I. T. A. No. 5050 of 2010 dated May 27, 2011. The hon'ble jurisdictional High Court has followed the judgment of the hon'ble Supreme Court in the case of Synco Industries Ltd. v. Assessing Officer (Income-tax) reported in [2008] 299 ITR 444 (SC). The relevant finding of the jurisdictional High Court is reproduced below (page 248 of 349 ITR) : "The Supreme Court had an occasion to consider the same question in the case of Synco Industries Ltd. v. Assessing Officer (Incometax) reported in [2008] 299 ITR 444 (SC) and at paragraph 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 l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der to arrive at the deductions under Chapter VI-A. However, this court finds that the non obstante clause appearing in section 80-I(6) of the Act, is applicable only to the quantum of deduction, whereas, the gross total income under section 80B(5) which is also referred to in section 80-I(1) is required to 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 canno ..... X X X X Extracts X X X X X X X X Extracts X X X X
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