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TMI Blog2017 (1) TMI 1326X X X X Extracts X X X X X X X X Extracts X X X X ..... the computation, but the AO has not gone into the said computation and the allocation on the ground that the assessee is not eligible for deduction u/s 80IC as it has filed the return after the stipulated time u/s 139(1). Therefore, we remit the issue of computation of allocation of both the common expenditure and also the profit attributable to the smaller components of the eligible unit to the AO for verification and allowance thereafter in accordance with law. Whether the losses of the earlier years which has already been set off against the other incomes can be notionally brought forward and set off from the income of the eligible unit before allowing the deduction u/s 80IA is covered in favour of the assessee by the decision of the Hon'ble Madras High Court in the case of Velayudhaswamy Spinning Mills Private Limited vs. ACIT, reported in [2010 (3) TMI 860 - Madras High Court ] - ITA No. 613/Hyd/2013, ITA No. 700/Hyd/2013 - - - Dated:- 21-12-2016 - Smt. P. Madhavi Devi, Judicial Member And Shri B. Ramakotaiah, Accountant Member For Assessee : Shri A.V. Raghuram For Revenue : Shri K.J. Rao, DR ORDER Per Smt. P. Madhavi Devi, J.M. Both are cross appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which are reproduced at Para 3.1 of the assessment order. In accordance with the directions of the Add. CIT, the AO examined the activities of the assessee and found that the assessee itself has confirmed that some of its smaller components which were part of sales kit are not eligible for deduction as per the direction of the Add. CIT. Accordingly, the assessee had computed the profit attributable to such components at ₹ 81.00 lakhs and thereafter bifurcated the same amongst three eligible units. The AO, however, held that since the return of income has not been filed within the time limit u/s 139(1) of the Act, he held that the same is not allowable. 4. Further, the AO observed that the assessee had not properly allocated the common expenditure between the taxable and exempt units. He observed that there was loss of ₹ 71,96,460 of the head office. The AO held that the said loss has to be allocated amongst all the four nits in proportion of their turnover. As no deduction was being allowed u/s 80IC, the AO did not make any adjustment of this loss also. 5. Further, as per the provisions of sub section V of section 80IA, the AO observed that for the purpose of ded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The order of the CI(A) is erroneous in law and on facts of the case. 2. The learned CI(A) erred in giving relief to the assessee by directing the AO to compute the deduction claimed u/s 80IC of the Act on the basis of information filed as per the directions given u/s 144A, without affording an opportunity to the Assessing Officer for verifying the correctness of the same. 3. The learned CI(A) ought to have given an opportunity to the AO for verifying the correctness of the working given by the assessee under Rule 46A of the IT Rules. 4. The learned CIT(A) erred in holding that the Return filed is valid Return u/s 139(1) of the Act as the assessee has not produced satisfactory evidence that the Return is filed in time. 5. Any other grounds that may be urged at the time of hearing 7. Against the order of the CIT (A), confirming part of the assessment order, the assessee has raised the following grounds of appeal: 1. The order of the Ld. CIT(A) is erroneous both on facts and in law in so far as it is prejudicial to the assessee. 2. The Ld. CT(A) erred in holding that while allowing deduction u/s.80-IC, losses of earlier years that are already set off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on u/s 80IC of the Act. He submitted that this issue as to whether the losses of the earlier years which has already been set off against the other incomes can be notionally brought forward and set off from the income of the eligible unit before allowing the deduction u/s 80IA is covered in favour of the assessee by the decision of the Hon'ble Madras High Court in the case of Velayudhaswamy Spinning Mills Private Limited vs. ACIT, reported in [2012] 340 ITR 477 (Mad.). It is submitted that this Tribunal in the case of Hyderabad Chemicals Supply Ltd vs. ACIT, Hyderabad in ITA No.352/Hyd/2005, dated 21.01.2011 for the A.Ys 2008-09 and 2010-11 has taken note of the CBDT Circular dated 15.2.2016 to hold that the income of the assessee from the eligible unit is to be considered from that year alone on a standalone basis. The copies of the orders of the Tribunal are placed before us. Further, it is also brought to our notice that the SLP filed by the Revenue against the judgment dated 11.03.2010 by the Hon'ble Madras High Court in the case of Velayudhaswamy Spinning Mills Pvt Ltd has been rejected by the Hon'ble Supreme Court vide SLP No.33475/2012 dated 5.9.2016. Therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Tribunal, however, where the judgment of the non jurisdictional High Court, though the only judgment on the point, has been rendered without having been informed about certain statutory provisions that are directly relevant, it is not to be followed. In our opinion, judgment of Special Bench in the case of Gold Mine Shares Finance (P) Ltd. (113 ITD 209) (SB) (Ahmadabad) squarely applicable to the facts of the present case and applying the ratio laid down by this order of the Special Bench of this Tribunal, we inclined to decide the issue against the assessee relating to allowability of deduction u/s 80IA that in terms of provisions of u/s 80IA(5) of the IT Act, the profit from the eligible business for the purpose of determination of the quantum of deduction u/s 80IA of the Act has to be computed after deduction of the notional brought forward losses and depreciation of eligible business even though they have been allowed set off against other income in earlier years . 13. Further, we also find that the Hon'ble Supreme Court has confirmed the order of the Hon'ble Madras High Court in the case of Velayudhaswamy Spinning Mills P Ltd (cited Supra) by dismissing th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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