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TMI Blog2015 (3) TMI 455X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner of Income Tax Vs. Arif Industries Ltd. (2010 (3) TMI 857 - Allahabad High Court ) wherein held Section 80A(2) and Section (5) are declaratory in nature. They apply to all the Sections falling in Chapter VI-A. They impose a ceiling on the total amount of deduction and therefore the non-obstante clause in Section 80-I(6) cannot restrict the operation of Sections 80A(2) and 80B(5) which operate in different spheres. As observed earlier Section 80-I(6) deals with actual computation of deduction whereas Section 80- I(1) deals with the treatment to be given to such deductions in order to arrive at the total income of the assessee and therefore while interpreting Section 80-I(1), which also refers to gross total income one has to read the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r on the facts and in the circumstances of the case the ITAT is correct in allowing deduction u/s 80 IA on profits of the new eligible industrial unit without setting off the losses of other unit against the profit of the new industrial undertaking in view of the specific provisions contained to the contrary in Section 80 AB and Section 80B(5) of the Income Tax Act, 1961? 3. The year of assessment involved in this appeal is 1995-96. The assessee claimed deduction of a sum of ₹ 47,59,806/- being 30% of gross profit ₹ 1,58,66,020/- under Section 80 IA of Income Tax Act, 1961 (hereinafter referred to as the Act, 1961 ). The assessee claimed that amount of ₹ 1,58,66,020/- represents the income of new unit called C.V. Cabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he profit of that industrial unit which is eligible though the deduction cannot exceed the gross total income so as to result in an overall loss which is prohibited u/s 80A(2). It is, therefore, held that the deduction u/s 80 IA is to be computed on the profit of such industrial undertaking which, in the present case, is ₹ 1,58,66,020/-. The deduction admissible on this profit @ 30% is ₹ 47,59,806/-. Since the gross total income as computed by the A.O. is more than this deduction, the deduction u/s 80 IA is admissible as a whole out of the gross total income so computed by the A.O. Accordingly, the deduction under section 80 I is admissible to the assessee at ₹ 47,59,806/- as against allowed by the A.O. at ₹ 22,33,15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certain provisions, the Supreme Court would lean in favour of the predominant view. therefore, this Court is of the opinion that the High Court was justified in holding that gross total income must be determined, by setting off against the income, the business losses of earlier years, before allowing deduction under Chapter VI-A and if the resultant income is 'Nil', then the Assessee cannot claim deduction under Chapter VI-A. 12. 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 merits. Section 80-I (1) lays down ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uction, whereas, the gross total income under Section 80B(5) which is also referred to in Section 80I(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 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 con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion Bench in Commissioner of Income Tax Vs. Arif Industries Ltd., (2011) 339 ITR 6 and this Court has also taken the same view. 9. Sri Krishna Agrawal, learned counsel appearing for assessee could not dispute that in view of the Apex Court's decision in Synco Industries Ltd. vs. Assessing Officer, Income Tax, Mumbai (supra) and this Court's decision in Commissioner of Income Tax Vs. Arif Industries Ltd. (supra), the substantial question of law formulated in this appeal has to be answered in favour of Revenue. Though he placed reliance on a decision of Andhra Pradesh High in Commissioner of Income Tax Vs. Visakha Industries Ltd., (2001) 251 ITR 471 and Delhi High Court's decision in Commissioner of Income Tax Vs. Dewan Kraft S ..... X X X X Extracts X X X X X X X X Extracts X X X X
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