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TMI Blog2017 (12) TMI 625X X X X Extracts X X X X X X X X Extracts X X X X ..... der Section 80-IA regardless of whatever interpretation they want to place on the provisions of Section 80IA. In the facts of the present case, the question of bifurcation of depreciation in view of the two lines of business, etc. wanes, as the amount of depreciation, even on bifurcation, which would be reduced from the gross receipts of the undertaking eligible for deduction under section 80IA of the Act, would be significantly higher. We do not, therefore, in the facts of the present case, find any good ground or reason to interfere with the impugned order passed by the Tribunal. The question of law is accordingly, in the facts of the present case, answered against the appellant-assessee and in favour of the Revenue. - INCOME TAX APPEAL No. 57/2005 - - - Dated:- 27-11-2017 - MR. SANJIV KHANNA MS. PRATHIBA M. SINGH JJ. Appellant Through Mr. S. Krishnan, Advocate. Respondent Through Mr. Sanjay Kumar, Advocate Mr. Rahul Chaudhary, Sr. Standing Counsel for the Revenue. SANJIV KHANNA, J. (ORAL): The present appeal by the assessee-M/s RRB Consultants and Engineers Private Limited relates to Assessment Year 1996-97 and arises from the order of the Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant in the first appeal partly succeeded as the Commissioner of Income Tax (Appeals) held that the depreciation on wind mills was to be first allowed, i.e., reduced from the entire income of the assessee and the balance amount thereafter has to be deducted from the income earned by the assessee from sale of power, for computing benefit under Section 80-IA of the Act. He observed that depreciation was to be allowed under Section 32, which falls under Chapter IV of the Act relating to computation of business income. Further, depreciation was to be allowed against the composite business income, i.e., profits earned by the assessee by way of commission from consultation and sale of wind mills as well as sale of electricity. He held that the wind mills were being used for more than one activity and, therefore, it does not follow that depreciation would be allowed only against income of one activity and not other. 7. Aggrieved, the Revenue preferred an appeal before the tribunal, which as is apparent from the fact that the appellant-assessee has filed the present appeal, has accepted the contention of the Revenue. The Tribunal in the impugned order has held as under:- 10. A peru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of these wind turbines in the other business of the Assessee, viz., consultancy, marketing and sale of wind turbines in our view was only incidental and the primary purpose was to generate power. Even going by the provisions of Section 80-IA(5), the entire depreciation on these machinery has to be deducted from the receipts generated from the business of generation of power. 11. If we were to accept the computation of income for the purpose of Section 80-IA as adopted by the assessee, then that would amount to allowing deduction on the income from the business of consultancy, marketing and sales carried on by the assessee also. That would be against the provisions of Section 80IA(1), which allows deduction only on the profits derived from the eligible business. This would be against the decision of the Honourable Supreme Court in the case of Pandian Chemicals (supra). The decisions relied upon by the ld. Counsel for the assessee are on the point that while allowing deduction of expenses, the expenses can not be bifurcated as between the exempt income and chargeable income and deduction of expenditure attributable to chargeable income can not alone be allowed. These decisions a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or deduction under Section 80-IA. It is an accepted and admitted position that the appellant-assessee was entitled to depreciation of over ₹ 3.24 crores on the wind mills, which were installed and used for generating electricity and also commission income. Thus, the depreciation, which was to be allowed and given on the wind mills was almost fifteen times the income earned by the appellant-assessee from generation of electricity, which was eligible for deduction under Section 80-IA. This being the position, we do not think the appellant-assessee would be entitled to deduction on the gross receipt without reducing depreciation under Section 80-IA regardless of whatever interpretation they want to place on the provisions of Section 80IA. The view we have taken is in consonance and in conformity with the view expressed by this Court in ITA 579/2007 Dabur India Ltd. versus Commissioner of Income Tax , Delhi that deduction under Section 80-IA is on the net amount earned by the eligible undertaking, i.e., after computing the income of the eligible undertaking in terms of Chapter IV of the Act, which includes Section 32 relating to depreciation. Recent decision of the Supreme C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... computed as if such eligible business is the only source of income of the assessee. Therefore, the devices adopted to reduce or inflate the profits of eligible business have got to be rejected in view of the overriding provisions of sub-section (5) of Section 80-IA, which are also required to be read into Section 80-IB. We may reiterate that Sections 80-I, 80-IA and 80-IB have a common scheme and if so read it is clear that the said sections provide for incentives in the form of deduction(s) which are linked to profits and not to investment. 34. On an analysis of Sections 80-IA and 80-IB it becomes clear that any industrial undertaking, which becomes eligible on satisfying sub-section (2), would be entitled to deduction under sub-section (1) only to the extent of profits derived from such industrial undertaking after specified date(s). Hence, apart from eligibility, sub-section (1) purports to restrict the quantum of deduction to a specified percentage of profits. This is the importance of the words derived from industrial undertaking as against profits attributable to industrial undertaking . XXXXX 23. The aforesaid conclusion of the Full Bench is based on the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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