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TMI Blog2019 (3) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... totality and only if the resultant figure were positive, would the assessee be entitled to its claim. Thus, the judgment M/S SYNCO INDUSTRIES LTD VERSUS ASSESSING OFFICER [2008 (3) TMI 13 - SUPREME COURT] considers the interplay between the income and losses arising from eligible units alone, all of which are eligible for deduction under Chapter VIA, and would not apply to the facts and circumstances of the present case whether the claim under Section 80I was restricted only to the 16 MW unit at Karnataka. Mr.Senthil Kumar, fairly, does not dispute this position. - Decided in favour of assessee. - T.C.(A).No.1045 of 2009 - - - Dated:- 28-1-2019 - Dr. Justice Vineet Kothari And Dr. Justice Anita Sumanth For the Appellant : Mr.T.R.Senthil Kumar, Senior Standing Counsel, and Mrs.K.G.Usharani For the Respondent : Mr.R.Vijayaraghavan, for M/s.Subbarayar Aiyar Padmanabhan JUDGMENT DR.ANITA SUMANTH, J. Revenue has filed this appeal under Section 260A of the Income Tax Act (in short, 'the Act') aggrieved by order dated 16.03.2009, passed by the Income Tax Appellate Tribunal, (in short, 'Tribunal') in respect of Assessment Year 2004-2005. 2. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peals) before whom the assessee filed an appeal challenging the order of assessment dismissed the same. The argument of the assessee was that it had claimed the deduction only in regard to the 16 MW unit at Karnataka ('eligible unit') and the other two units were only co-generation units in respect of which no deduction had been claimed. Thus, there was no question, according to the assessee, of setting off the losses of the two units against the profits of the eligible unit. The CIT(A) found from the record that the return of income filed by the assessee had been accompanied by a consolidated balance sheet and profit and loss account for the entity as a whole. Thus, according to him, the assessee had not substantiated its submission that it owned and managed three separate and identifiable undertakings, generating power. He noticed that no evidence had been produced by the assessee in respect of its claim that there existed separate undertakings and even in the depreciation statement filed along with the tax audit report, depreciation in respect of the co-generation units was included as part of the block of assets. 7. The CIT(A) further notes that at the time of app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16 MW Cogeneration Plant situated at Alaganchi, Mysore District, ii) Power Purchase Agreement with Tamil Nadu Electricity Board dated 24.04.2002 for 20 MW Co-generation Plant situated at Alathukombai, Erode District and iii) Power Purchase Agreement with Karnataka Power Transmission Corporation Ltd dated 11.03.2004 for 20 MW Co-generation Plant situated at Alaganchi, Mysore District. 12. The terms and conditions contained in each PPA are different and distinct from each other. Thus the mere fact that consolidated financials have been prepared for the entire business would not disentitle the assessee from claiming deduction under section 80IA in respect of the one undertaking of its choice. In fact, separate statements have been maintained by the assessee and filed before the Commissioner of Income Tax (Appeals) detailing separate project cost and source of finance in respect of each unit. The assessee has categorically exercised its claim before the Assessing Officer for deduction under section 80IA in respect of only the 16 MW unit at Karnataka. 13. We may, at this juncture, usefully refer to the provisions of section 80IB(5) of the Act which provides that in determining ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd gains of an amount equal to 20%. The words includes any profits'' used by the legislature in Section 80-I(1) are very important which indicate that the gross total income of an assessee shall include profits from a priority undertaking. While computing the quantum of deduction under Section 80-I(6) the Assessing Officer, no doubt, has to treat the profits derived from an industrial undertaking as the only source of income in order to arrive at the deduction 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 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 appell ..... X X X X Extracts X X X X X X X X Extracts X X X X
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