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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 ..... 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:- Unit Date of Substantial Expansion/Commencement of Commercial Production Income / (Loss) for the year Rs. 80 1C deduction Claimed by the Assessee I Parwano o Substantial Expansion 28.02.2005 3,03,41,014 @ 30% Rs. 91,02,304 III Barotiwala Commencement of Commercial Production on 18.8.2004 and further substantial expansion was done on 29.3.2008 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rofits of Barotiwala Unit III - (-) 4,76,61,458/- (3,40,35,116/-1,36,26,342/-) Losses of the Barotiwala Unit-IV set off with the unit III +3,40,35,116/- Losses of the Parwanoo Unit V set off with the Unit III +1,36,26,342/- Nil - Net eligible profit Rs. 3,03,41,014/- Rs. 5,04,96,114/- Nil Nil Rs. 1,56,86,643/- Rs. 9,65,23,771/- BF losses of earlier year not allowed to be set off (as assessee had not claimed the losses in its income tax return Nil Nil Nil Nil Nil Nil Recomputed Deduction u/s 80IC Rs. 91,02,304/- 30% Rs. 1,51,48,834/- @ 30% Nil Nil Rs. 11,56,86,643/- @ 100% Rs. 3,99,37,781/- 4. The Ld.CIT(A) upheld the order of the A.O. Aggrieved by the same the assessee has come up in appeal before us, raising the following grounds of appeal: "1. As per facts and circumstances of the case and provisions of law, the Commissioner of Income Tax (Appeals) has erred in upholding the action of the assessing officer in respect of the adjustment of the losses of Unit IV & Unit V against the profits of Unit III for considering the deduction u/s 80IC. The same be considered separately for the purposes of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the purpose of grant of tax benefits. The contention of the assessee, on the other hand, was that the deduction was to be computed only on the profits and gains derived from industrial undertakings to which the benefit was granted and was not relatable to the gross total income of the assessee but only to the gross income from that particular industrial undertaking. On going through the order of the Hon'ble High Court in the case of Him Teknoforge Ltd. (supra), we find that the question of law before the Hon'ble Jurisdictional High Court was that whether deductions u/s 80HH/80IA of the Act were allowable on the profits of each unit separately. The Hon'ble High Court after considering the provisions of the Act and various judicial decisions in this regard, held that while calculating the deduction under Chapter VI-A, under which the deductions were allowed, only the profits of priority units, meaning thereby the eligible units, were to be taken into consideration. 14. The Hon'ble High court analyzed the relevant provisions of chapter VI A ,specifically referring to section 80AB included therein and which dealt with deduction to be made wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CA Laboratories Ltd. (supra) and Induflex Products Pvt. Ltd. (supra), while dealing with the issue of deduction allowable u/s 80HHC, had held that section 80AB had a notwithstanding clause and thus had a overriding effect over all other sections in Chapter VIA, which included section 80HHC also. The Hon'ble apex court noted in the said decision that section 80HHC did not provide that its provision would prevail over section 80AB or any provisions of the Act. Thus the Hon'ble Apex Court held that the section 80HHC would be ignored by 80AB and, therefore, as per section 80AB of the Act the amount of income eligible for deduction would have to be computed in accordance with the provisions of the Act which meant that the profits and losses of units would have to be set off against each other, since the section providing for set off of losses preceded the Chapter VI-A dealing with deduction under the Act. Following this proposition laid down by the Hon'ble Apex Court in the case of IPCA Laboratories Ltd. (supra) the Hon'ble High Court held that the Hon'ble Apex Court had clearly laid down the law in this regard that section 80AB would prevail over the other section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions in respect of certain undertakings or enterprises in certain special category States (1) Where the gross total income of an assessee includes any profits and gains derived by an undertaking or an enterprise from any business referred to in sub-section (2), there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such profits and gains, as specified in sub-section (3)." 7) The provisions contained in sub-section (5) and sub-sections (7) to (12) of section 80-IA shall, so far as may be, apply to the eligible undertaking or enterprise under this section." 17. As per section 80IC(7), the provisions of section 80IA(5) have been made applicable to the undertaking or enterprises eligible for deduction u/s 80IC of the Act. And, section 80IA(5) begins with a notwithstanding clause . Thus when provisions of section 80IC are read alongwith the provisions of section 80AB of the Act, we find that section 80IC of the Act clearly provides that its provisions are to prevail over the provisions of section 80AB of the Act which was absent in the case of section 80HHC, as noted by the Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igible undertaking or enterprises meaning thereby that the word 'business' used in section 80IA(5) is to be substituted with eligible undertaking. Therefore, for the purpose of section 80IC(7), we agree with the Ld. counsel for assessee, it is the profits of each eligible undertaking which are to be treated and taken separately as being the only source of the income during the impugned year and allowed deduction thereof as opposed to treating the eligible business of all eligible undertakings u/s 80IA(5) of the Act as being the only source of income for the impugned years as stipulated u/s 80IA(5) of the Act. 20. The first and primary rule of construction is that the intention of the legislature must be found in the words used by the legislature itself. Every word of a statute has to be assumed to have been deliberately and consciously incorporated therein by the legislature and if the language of a statute is clear and explicit, effect must be given to each word. The Hon'ble Apex court has time and again reinforced this rule of interpretation of statutes in its judgements, right from Padmasundara Rao vs State of TN 255 ITR 147(SC), Mohammad Vs CWT 224 ITR 672(SC) & Pandia ..... X X X X Extracts X X X X X X X X Extracts X X X X
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