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TMI Blog2019 (3) TMI 1578X X X X Extracts X X X X X X X X Extracts X X X X ..... It was common ground that the issues involved in all the appeals were identical, they were therefore heard together and are being decided by this consolidated order. For the sake of convenience, we shall be dealing with the facts in ITA No.1674/Chd/2017 for assessment year 201314 for adjudication and the decision rendered therein shall apply mutatis mutandis to the other appeal of the assessee in ITA No.1675/Chd/2017 also. 2. It was pointed out that the issue involved in both the appeals related to the calculation of the quantum of deduction u/s 80IC of the Act whether it was to be calculated taking each eligible entity separately or after netting the profits/losses of all the eligible entities. 3. Brief facts relating to the issue are that the assessee company had five manufacturing units during the year, which are namely Unit -1 at Plot No. 58, Sector-1, Parwanoo, Unit -III, Unit -IV at Barotiwala, Unit-V at Plot No. 22-24, Sector-1, Indl. Area, Parwanoo and Unit-VII. The details of year of commencement/substantial expansion and the deduction claimed u/s 80IC with respect to the eligible units is tabulated as under:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,41,014/- ₹ 9,81,57,572/- (-) 3,40,35,116/- (-) 1,36,26,342/- ₹ 1,56,86,643/- ₹ 9,65,23,771/- BF losses of earlier year Nil Nil (-)11,36,14,936/- (-)3,36,25,890/- (-)64,96,872/- Net income after setting of the losses ₹ 3,03,41,014/- ₹ 9,81,57,572/- (-)14,76,50,052/- (-)4,72,52,232/- ₹ 91,89,771/- Deduction u/s 80IC claimed by the assessee ₹ 91,02,304/- (30%) ₹ 2,94,47,272/- (30%) Nil Nil ₹ 91,89,771/- ₹ 4,77,39,347/- Deduction as calculated by the A.O. Particulars ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the deduction u/s 80IC. The same be considered separately for the purposes of deduction u/s 80IC as per law. 2. As per facts and circumstances of the case and provisions of law, the Commissioner of Income Tax (Appeals) has erred reducing the profits of Unit VII ₹ 1,56,86,643 which is eligible for 100% deduction from profits of Unit III. The same be considered separately for the purposes of deduction u/s 80IC as per law. 3. As per facts and circumstances of the case and provisions of law, the Commissioner of Income Tax (Appeals) has restricting the deduction to ₹ 1,95,145 u/s 80IC. The claim of assessee amounting to ₹ 4,77,39,347 u/s 80IC be allowed. 4. The assessee craves permission to add or amend the above grounds at the time of hearing. 5. At the outset, it was pointed out that the issue involved in the present appeal has already been adjudicated in favour of the assessee by the I.T.A.T. in assessee s case itself relating to assessment years 2010-11 to 2012-13 vide their order in ITA Nos.883 to 885/Chd/2017 dated 6.12.2018. Copy of the order was placed before us. Our attention was drawn to the findings of the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o section 80AB included therein and which dealt with deduction to be made with reference to income included in the gross total income. The same is reproduced hereunder for clarity: 80AB. [Deductions to be made with reference to the income included in the gross total income. Where any deduction is required to be made or allowed under any section [][* * *] included in this Chapter under the heading C-Deductions in respect of certain incomes in respect of any income of the nature specified in that section which is included in the gross total income of the assessee, then, notwithstanding anything contained in that section, for the purpose of computing the deduction under that section, the amount of income of that nature as computed in accordance with the provisions of this Act (before making any deduction under this Chapter) shall alone be deemed to be the amount of income of that nature which is derived or received by the assessee and which is included in his gross total income.] 15. Reading the same, the Hon'ble High Court held that there can be no manner of doubt that only income from a priority undertaking is to be taken into consideration w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y laid down the law in this regard that section 80AB would prevail over the other sections provided in Chapter VI A of the Act dealing with the deduction of incomes ,and since section 80AB provided for the computation of income eligible for deduction in accordance with the provisions of the Act, the profits and losses of all priority units needed to be set off and in the balance income only deduction was to be calculated. 16. The point to be noted is that the Hon'ble High Court followed the decision of the Hon'ble Apex Court in the case of IPCA Laboratories Ltd. (supra) wherein the Hon'ble Apex Court was seized with the issue of deduction u/s 80HHC of the Act and the Hon'ble Apex Court had held that since section 80AB of the Act provided for a notwithstanding clause and there being no such corresponding clause provided for in section 80HHC the provision of section 80AB would override the provisions of section 80HHC of the Act. This is a very important observation of the Hon'ble High Court and it is from this that a distinction can be drawn vis- -vis deduction claimed u/s 80IC of the Act, which is the fact in the present case. For clarity the relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prevail over the provisions of section 80AB of the Act which was absent in the case of section 80HHC, as noted by the Hon'ble Apex Court in the case of IPCA Laboratories Ltd. (supra). Therefore, the proposition laid down by the Hon'ble Jurisdictional High Court in the case of Him Teknoforge Ltd. (supra) that the profits and losses of the priority units are to be clubbed for calculating eligible deduction under Chapter VI A having been borrowed from the law laid down by the Hon'ble Apex Court in the case of IPCA Laboratories Ltd. (supra), which is clearly distinguishable from the present case, as pointed out above, the same will not apply to deduction claimed u/s 80IC of the Act. As stated above, the provisions of section 80IC will prevail over section 80AB of the Act and the deduction will have to be calculated as provided for in section 80IC(7) of the Act, as per which for the purpose of determining the quantum of deduction the eligible undertaking is to be treated as the only source of income of the assessee during the previous year, thus treating each eligible undertaking or enterprise as a separate unit for the purpose of calculating deduction. 18. Even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents, right from Padmasundara Rao vs State of TN 255 ITR 147(SC), Mohammad Vs CWT 224 ITR 672(SC) Pandian Chemicals Ltd. vs CIT 262 ITR 278(SC).In view of the same since the words used in section 80IC categorically state that the provisions of sub section 5 to section 80IA shall apply to the eligible undertaking or enterprise, they have to be read as such and applied to each undertaking, meaning thereby that the profits of each eligible undertaking has to be treated as if it were the only source of income of the assessee. 21. Further as rightly pointed out by the Ld. counsel for assessee that if the interpretation given in the case of Him Teknoforge Ltd. (supra) is applied for the purpose of section 80IC, it would lead to an anomalous situation creating a difficulty for calculating the quantum of deduction, since as rightly pointed out by the Ld. counsel for assessee, the section provides for different rates of deduction of profits for different years in case of specific undertakings and if netting of profits and losses of all eligible undertakings are resorted to, as laid down in the decision of Him Teknoforge Ltd. (supra), in a situation where the different eligibl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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