9911796707
TMI Blog2021 (9) TMI 357X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. The ld. CIT(A) erred in not considering that section 14A provides for expenditure incurred for earning exempt income. 3. The ld. CIT(A) erred in allowing deduction u/s 80IA on Gross total income instead of on business income." 3. The brief facts as taken from AY 2013-14 are that the assessee company filed its return of income for the AY 2013-14 on 30/11/2013 admitting Nil income after claiming deduction u/s 80IA amounting to Rs. 5,53,81,200/- and book profits u/s 115JB at Rs. 1,31,18,630/-. The case was selected for scrutiny and statutory notices were issued to the assessee. 3.1 During the course of assessment proceedings, the AO noticed from the profit & loss account that the assessee company had debited an amount of Rs. 68,75,000/- towards filing fees for increase of authorized capital. According to AO, this expenditure was towards the increase in share capital which is a balance sheet item and of enduring nature as such is in nature of capital expenditure and, hence, the said sum of Rs. 68,75,000/- added back to the income of the assessee. 3.2 Further, the AO noted that the Assessee company was in receipt of exempt income (dividend from mutual funds and equities) of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome of the assessee or to be restricted to income under the head "Profits and gains of business or profession". 2. In this regard, it is humbly submitted that the Hon'ble ITAT, B-bench, Hyderabad, with the same combination of Hon'ble Accountant Member and Judicial Member, in the assessee's/ respondent's own case for the AY 2011-12, vide order in ITA No. 1024/H/2017, dated 17-06-2021, has held that the assessee is not eligible to claim deduction u/s.80IA of the Act, from the income from house property. The relevant portion of the decision is reproduced below, for your kind reference: "2.1 In view of the above of our discussion, the assessee is not eligible to claim the deduction u/s 80IA of the Act. The legislature has clearly spelt out in the deduction provisions that which incomes are eligible to claim deduction u/s 80IA, and therefore, the assessee cannot go beyond the provisions and claim deduction u/s 80IA. The deduction provisions should be interpreted strictly and if there is any ambiguity, it goes to in favour of revenue. this proposition we rely on the judgment of Hon'ble Supreme Court in the case of Ramnath & Co. Vs. CIT in CIVIL APPEAL Nos. 2506-2509 OF 2020 (Arisin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e from other sources 17,65,05,274 5 Total income from various heads other than "Profits and gains of business or profession" (+) 28,24,69,118 6. However, while computing the total income, the assessee claimed set off of the loss under the head business of (-) Rs. 22,70,87,917/- against the income from other heads of (+) Rs. 28,24,69,118, and arrived at the gross total income of Rs. 5,53,81,200/- (28,24,69,118 - 22,70,87,917) before applying provisions of Chapter VIA of the Act. Further, the assessee has claimed deduction under Chapter VIA of the Act i.e., under section 80IA of the Act, towards profits from 4 power generating units, to the extent of Rs. 17,26,49,292/- and restricted the same to the extent of gross total income of Rs. 5,53,81,200/-. As such, the assessee has computed income from eligible business in respect of 4 power generating units by applying the provisions of section 80IA(5) of the Act to the extent of Rs. 17,26,49,292/- without adjusting loss from other 3 power generating units aggregating to (-) Rs. 38,31,92,221/-. The details of income and loss in respect of 4 power generating units and 3 power generating units, respectively, are tabul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wer generating units aggregating to Rs. 17,26,49,292/- and the same is not subjected to tax implying that the income from eligible business is totally exempt from tax. Thus, the assessee need not to pay any taxes on Rs. 17,26,49,292/-, but at the same time the assessee cannot claim set off of such exempted income/profits against the gross total income. By doing so, what the assessee is actually claiming is deduction towards income admitted under other heads of income i.e., "Income from house property", "Capital gains", and "Income from other sources", in the guise of claiming deduction towards profits/income derived from eligible business, leading to double deduction, i.e., firstly, by way of total exemption from tax and secondly, by claiming deduction of the same amount against income from other heads of income. 10. On the other hand, as seen from the language of provisions of section 80IA of the Act, the intention of the legislature is totally different i.e., to provide tax- holiday period of 10 AYs directly linked to profit/income derived from the eligible business, implying that the assessee is exempt from payment of tax in respect of profits/income derived from eligible busi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no.2 at page no.3 and para no.12 at page no.13 & 14 of the Supreme Court Order). 2. Secondly, the quantum of income derived from eligible business and allowable deduction u/s.80IA(1) of the Act, as the case may be, shall be computed by applying the provisions of sub-section (5) of section 80IA of the Act, wherein such amount of deduction shall be computed treating the eligible business as the only source of income. However, the Hon'ble Supreme Court held that sub-section (5) cannot be pressed into service for reading a limitation of the deduction under sub-section (1) only to business income. (Please refer para no.15 at page no.17 & 18). 3. Thirdly, after computing the income derived from the eligible business and quantum of deduction u/s.80IA(5) of the Act, the assessee is eligible to claim such amount as deduction against the gross total income of the assessee. 15. On the other hand, in the instant case, as explained earlier, it is an admitted fact that, as per the profit and loss account as well as statement of computation of total income, the assessee has disclosed loss from business to the extent of (-) Rs. 22,70,87,917/-. Whereas, in the case of Reliance Energy Ltd (sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sclosed under other heads. 19. In view of this, as per the law laid down by the Hon'ble Supreme Court in the case of Reliance Energy Ltd (supra), without there being any positive income under the head "Profits and gains of business or profession", before allowing deduction under Chapter VIA of the Act, the assessee is not eligible to claim deduction of income separately computed in respect of eligible units. This particular proposition of law was already laid down by the Hon'ble Supreme Court in IPCA Laboratory Ltd. vs Deputy Commissioner of Income-tax [2004] 135 Taxman 594 (SC). The Head Note of the judgment as extracted from ITR is given below, for kind reference of the Hon'ble Bench "WORDS AND PHRASES - "PROFIT", MEANING OF. Undoubtedly section 80HHC has been incorporated in the Income-tax Act, 1961, with a view to providing incentive for earning foreign exchange. Even though a liberal interpretation has to be given to such a provision the interpretation has to be as per the wording of the section. If the wording of the section is clear, then benefits which are not available cannot be conferred by ignoring or misinterpreting words in the section. A plain reading of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section of this Chapter". This would include section 80HHC. Section 80AB further provides that "notwithstanding anything contained in that section". Thus section 80AB has been given an overriding effect over all other sections in Chapter VIA. Section 80HHC does not provide that its provisions are to prevail over section 80AB or over any other provision of the Act. Section 80HHC would thus be governed by section 80AB. Decisions of the Bombay High Court and the Kerala High Court to the contrary cannot be said to be the correct law. Section 80AB makes it clear that the computation of income has to be in accordance with the provisions of the Act. If the income has to be computed in accordance with the provisions of the Act, then not only profits but also losses have to be taken into consideration." 20. Also, reliance is placed on the following judicial precedents wherein similar proposition of law was re-iterated by the Hon'ble SC (case-laws annexed): 1) Liberty India Ltd. vs CIT (2009) 317 ITR 218 (SC) 2) Synco Industries Ltd. vs AO (2008) 299 ITR 444 (SC) 3) A.M. Moosa vs CIT (2007) 163 Taxman 741 (SC) 4) CIT vs Shirke Construction Equipments Ltd. (2007) 161 Taxman 212 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the gross total income. 25. Thus, it is clearly implied that the intention of legislature is not to tax income derived from eligible business in a particular F.Y./A.Y., and such incentive is extended for a period of 10 Assessment Years. Further, the procedure as to how to allow such incentive/deduction towards the income derived from the eligible business is embedded in the machinery provisions of section 80IA of the Act. 26. This tax incentive/ tax-holiday was initially allowed on certain percentage of profits/income derived from eligible business, i.e., for example 20% of the profits/income. In view of this, in stead of drafting the provision as exemption from tax i.e., under Chapter III of the Act, included under deduction provisions i.e., under Chapter VIA of the Act., so that out of 100% of such income/profits included in the "Profits and gains of business and profession" which in-turn is included in the gross total income, only 20% or so will be exempted from tax by way of deduction of such 20% of income/profit from the gross total income. However, latter, it was made 100% exemption from tax. 27. In a case, where there is no income derived from the eligible business w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficient gross total income, the same can be carried-forward to subsequent AYs and claimed as deduction. As such, there is a stark difference between profit linked incentives as contained in Chapter VIA of the Act and investment linked one as contained under Chapter IV of the Act. It is humbly requested that the same may considered while deciding the issue, keeping in view the decision of the Hon'ble SC in host of decisions (supra). AY 2014-15 / ITA No. 165/H/2020: 30. The facts and circumstances involved in the case of respondent for the AY 2014-15 are identical. To be precise, for the AY 2014-15, the assessee claimed loss under the head "Profits and gains of business or profession" of (-) Rs. 1,10,08,215/-. However, while computing the total income, the assessee claimed set off of the loss under the head business of (-) Rs. 1,10,08,215/- against the income from other heads of (+) Rs. 18,66,98,748/-, consisting of "Income from house property" of Rs. 13,63,103/- and "Income from other sources" of Rs. 18,53,35,645/-, and arrived at the gross total income of Rs. 17,56,90,533 /- before applying provisions of Chapter VIA of the Act. 31. Further, the assessee has claimed deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n addition made u/s. 14A by restricting the disallowance to the extent of exempt income by relying on the Hon'ble ITAT order in Assessee's own case for the earlier year. Further, Ld. CIT(A) provided relief on section 80-IA by allowing the deduction to the extent of GTI and not restricting it ONLY against Income from Business or Profession. Aggrieved by the order of Ld. CIT(A), Department is into appeal before Hon'ble ITAT. During the course of hearing on 23 June 2021 our authorized representative (AR) argued that: a) 14A issue: The issue is covered in favour of the assessee vide Hon'ble ITAT order in Assessee's own case bearing ITA No. 1024/Hyd/2017 dated 17.06.2021; b) 80-IA issue: The AR submitted that even though there is an against order in assessee's own case for the earlier year, now the issue is covered in favour of assessee by recent Hon'ble SC decision in the case of CIT vs. Reliance Energy Ltd. [Civil Appeal No. 1327 of 2021 (SC)] Post the arguments, Your Honours requested the AR to file a detailed working of computation of deduction u/s 80IA of the Act. In compliance thereof, on 23 June, 2021, a short summary sheet was filed vide email dated 23 June, 2021 providi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpilation of judgements ('COJ')] b. NSL Renewable Power Private Limited vs. DCIT (AY 2010-11) (ITA No. 2146/Hyd/2017) (Page 19 to 32 of COJ) (Assessee's own case) c. NSL Renewable Power Private Limited vs. DCIT (AY 2012-13) (ITA No. 988/Hyd/2017) (Page 33 to 42 of COJ) (Assessee's own case) d. Meera Cotton & Synthetic Mills (P) Ltd vs. ACIT (2009) 29 SOT 177 (Mum.Trib.) B. Rebuttal to Department's submissions: As regard the Ld. DR's submission, we would like to place on record our rebuttals. 1. At the outset, Ld. DR relied on Assessee's own case for AY 2011-12 (ITA No. 1024/Hyd/2017) wherein Your Honours have held that the assessee is not eligible to claim deduction u/s. 80-IA of the Act, from the income from house property and submitted that in accordance with 'The Rule of Consistency' and 'The Doctrine of Judicial Discipline', the order of Learned Commissioner of Income Tax (Appeals) be set-aside and the action of Learned Assessing Officer be restored. Our submission: a. Post the ITAT Order for AY 2011-12 the Hon'ble Supreme Court in the case of CIT vs. Reliance Energy Ltd. [Civil Appeal No. 1327 of 2021 (SC)] [Page 1 to 18 of COJ] have decided the issue in favour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that the issue raised by Ld. DR before Your Honours with respect to set-off the losses of 3 power generating units against the profit of 4 units and that after such set-off of inter-unit losses, no income relatable to any of the eligible units forms part of gross total income and therefore no deduction u/s. 80-IA is eligible, is not in dispute and that no such observations are made by the Ld. AO in the assessment order. Reliance is placed on the Hon'ble Special Bench decision of Mumbai ITAT in the case of Mahindra & Mahindra Ltd. vs. DCIT [(2009) 122 TTJ 577 (Mum) (SB)] (A copy of the Order is attached at Page 77 to 139) wherein it has been held that the Departmental Representative has no jurisdiction to go beyond the order passed by the AO. It has further been observed in the said case that the scope of argument of the Departmental Representative should be confined to supporting or defending the impugned order and he cannot be permitted to set up an altogether different case. Therefore, the Ld. DR should not be permitted to go beyond the issue disputed by the Ld. AO in his order. b. Without prejudice to above contention, it is respectfully submitted that the issue of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... restricted the deduction to the extent of business income and this was done by him in total disregard of the previsions of sub-section (7) of section 80-IA of the Act as mentioned above. 15. Thus, the Kalamb unit being the only unit of the assessee eligible for deduction under section 80-IA of the Act is to be treated as an independent unit and the same is to be treated as the only source of income for assessee for the purpose of computing deduction under section 80-IA of the Act. The deduction claimed by the assessee under section 80-IA of the Act, thus, is in accordance with the said provisions and as such we find that there is no infirmity in the impugned order passed by the Income-tax Appellate Tribunal". 13. In the case of Punit Construction Co (Supra), the Coordinate Bench of the Tribunal at Mumbai has considered various judicial precedents including the decision of the hon Apex Court in the case of Plastiblends India Ltd vs. Add. CIT which was relied upon by the learned DR, and has held as under: "13. In this case, the assessee is into two segment of business i.e. construction business which is non eligible and power generation business which is eligible business u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is overturned and the assessee is allowed deduction under section 80-IA on the profit derived by it from eligible unit 4.14 MW wind energy unit at Rs. 4,72,28,143. 14. We find that the CIT(A) in the present case has disregarded the binding decision of the ITAT. The basis on which the CIT(A) refused to follow the order of the ITAT in assessee's own case for the assessment year 2006-07 cannot be sustained. In the case of Meera Cotton & Synthetic Mills (P) Ltd. (supra) the Bombay Bench of the ITAT after considering the decision of the Hon'ble Supreme Court in the case of Synco Industries Ltd. (supra) had clearly held that the stage at which set off has to be done is only after aggregation of income under all heads. The CIT(A) did not agree with this reasoning of the ITAT. The facts of the present case are clearly identical to the facts, as it prevailed in the case of Meera Cotton & Synthetic Mills (P) Ltd. (supra). The CIT(A) being an authority lower in the tier of authorities under the Act to that of the ITAT, is bound to follow the decision of the ITAT. In our view, the CIT(A) in the present case has for no valid reason refused to follow the decision of the Hon'ble IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igible units. 18. As regards the third ground of the appeal against the observations of the CIT (A) that it is only the business income of the eligible unit and not the gross total income eligible for deduction u/s 80IA of the Act, we find that the case law relied upon by the assessee and in support of ground No.2 are also applicable to this issue. Respectfully following the same, we delete the findings of the CIT (A). Thus, the contention raised by Ld. DR of setting off losses of one unit with the profit of other units should be rejected as without merits. 3. Further, Ld. DR submitted that in terms of section 80-IA(5) of the Act, the Assessee is not paying tax on the profits of eligible unit as well as claiming set-off of such income/profits against the GTI. Thus, Ld. DR is alleging that the Assessee is claiming double deduction of same income which is not permitted by placing reliance on the Hon'ble SC decision in the case of Escorts Ltd. (1993) 199 ITR 43 (SC). Our submission: a. It is respectfully submitted, that the Ld. DR is misinterpreting the provisions of sub-section 5 of section 80-IA of the Act. The scope of section 80-IA(5) of the Act is limited only to the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , even if the assessee computes deduction u/s. 80IA, there is no guarantee that the benefit of deduction will be granted to the assessee. Since, the deduction will be granted only if there is a positive GTI (which comprises of all the heads of income). As per the computation mechanism u/s. 80-IA there can be a claimable amount, but if the GTI is a negative figure, the assessee will not be granted deduction as per section 80A of the Act (since the deduction has to be restricted to GTI). Hence there is no question of double deduction. Your Honours attention is invited to the facts of AY 2016-17 itself, refer to table below: Particulars Amount (Rs.) Income from Business or Profession (375,711,970) Income from House Property 1,167,323 Short term Capital Gains 26,671,450 Income from other sources 157,480,998 Gross Total Income (190,392,200) Deduction computed u/s. 80-IA at Rs. 589,89,757 but restricted to NIL on account of negative GTI NIL 4. Ld. DR further in his submissions tried to distinguish the Hon'ble SC decision in the case of Reliance Energy (supra). We would like to specifically highlight each point of distinction and our rebuttals as follows: Para /Page ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 80-IA nor coming out from Hon'ble SC judgement or any other judgements on this issue. Para 19 / Page 9 to 11 Ld. DR relied on the decision of Hon'ble SC in the case of IPCA Laboratory Ltd. vs. DCIT (2004) 135 Taxman 594 (SC) wherein it has been held that: "The word "profit" in sub-sections (1) and (3)(a) and (b) of section 80HHC means a positive profit. In other words, if there is a loss then no deduction would be available under sub-section (1) or sub-section (3)(a) or sub-section (3)(b). In arriving at the figure of positive profit, both the profits and the losses will have to be considered. If the net figure is a positive profit then the assessee will be entitled to deduction; if the net figure is a loss then the assessee will not be entitled to deduction" It is submitted that the reliance placed by Ld. DR on the decision of IPCA Laboratory Ltd. is applicable only for the purpose of calculating deduction u/s. 80HHC of the Act. It is submitted that section 80HHC(3)(c) talks about adjusted profits of export business which means the profit after adjusting losses, if any from any other export business. No such concept of adjusted profit from different units is provided u/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions relating to the calculation of deduction u/s. 80HHC of the Act. Refer to rebuttals at Page 10 above against the case of IPCA Laboratory (supra). 4) CIT vs Shirke Construction Equipments Ltd. (2007) 161 Taxman 212 The Hon'ble SC in the Shirke Construction decision is applicable only for the provisions relating to the calculation of deduction u/s. 80HHC of the Act. Refer to rebuttals at Page 10 above against the case of IPCA Laboratory (supra). Para 22 / Page 11 Ld. DR reiterated that the Assessee cannot claim the benefit of Hon'ble SC judgement in the case of Reliance Energy (supra) in bits and pieces. We agree with the submission of Ld. DR and would like to reiterate that the facts of Reliance Energy (supra) and Assessee are similar and the decision held by Hon'ble Apex court should be applied in its entirety. A chart showing similarity of facts between assessee and in the case of Reliance Energy is annexed as Attachment-1 below. Para 25 / Page 12 Ld. DR submitted that the procedure as to how to allow incentive/deduction towards the income derived from the eligible business is embedded in the machinery provisions of section 80-IA of the Act. It is submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted that the case law relied upon by the ld. AR is not applicable to the case of the assessee on the ground that the profit element from the eligible units are not included in the gross total income of the assessee in the case decided by the Hon'ble Supreme Court, on which reliance placed by the ld. AR. He submitted that in the case decided by the Hon'ble Supreme Court, there was a profit element from the eligible units, which included in the gross total income of the assessee and, therefore, the Hon'ble Supreme Court has decided the issue in favour of the assessee. In paras 12, 13 & 14 of its judgement, the Hon'ble Supreme Court has clearly stated that there must be positive income from the eligible units to claim deduction u/s 80IA, whereas, in assessee's case, there is no such instance as the assessee has shown loss of business income of Rs. 22 crores, which is clear from the computation of income submitted by the assessee after setting off of profit/loss from the eligible business and non-eligible business; the assessee's income is negative. He, therefore, submitted that it cannot be said that the profit of the eligible units are included in the gross total income of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -03 for which the income-tax return was filed by the Assessee on 31.10.2002 declaring the total income as 'NIL'. The return was subsequently revised on 06.12.2002 and thereafter, on 30.03.2004. At the time of the assessment proceedings, the Assessee submitted a revised computation of income by revising its claim of deduction under Section 80-IA of the Act. 3. The Assessee is in the business of generation of power and also deals with purchase and distribution of power. The Assessee-Company generated power from its power unit located at Dahanu. In respect of deduction under Section 80- IA of the Act, the Assessee was asked to explain as to why the deduction should not be restricted to business income, as had been the stand of the Revenue for the assessment year 2000-01. The Assessee had revised its claim under Section 80-IA of the Act to Rs. 546,26,01,224/-, having admitted that there was an error in calculation of income-tax depreciation. The Assessing Officer considered the revised claim of the Assessee under Section 80-IA and determined the amount eligible for deduction under Section 80-IA at Rs. 492,78,60,973/- against the Assessee's claim of Rs. 546,26,01,224/-. However, the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore the Appellate Authority that the conclusion of the Assessing Officer on deduction under Section 80-IA of the Act being restricted to 'business income' needs to be set aside. The Assessee contended that the observation of the Assessing Officer that deduction under a particular section is permissible only against income under that particular head was erroneous. Deductions related to various incomes under various sections of Chapter VI-A have to be quantified in accordance with the respective sections. The Assessee urged before the Appellate Authority that the deductions so quantified under various sections under Chapter VI-A have to be aggregated and allowed against the 'gross total income'. Finally, the submission of the Assessee before the Appellate Authority was that restricting the deduction under Section 80-IA of the Act to the extent of 'business income' was unjustified. With reference to Section 80AB, the Assessee contended that the operation of the said section related only to quantification of deduction on the basis of net income. 6. The Appellate Authority partly allowed the Appeal filed by the Assessee by an order dated 23.03.2006 and reversed the finding of the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Section 80-IA of the Act should be restricted to 'business income' only. Mr. Arijit Prasad, learned Senior Counsel appearing on behalf of the Revenue, submitted that Section 80AB of the Act contemplates deductions in respect of incomes against income of the nature specified in the relevant section. He further submitted that Section 80-IA(5) makes it clear that the determination of quantum of deduction under sub-section (1) of Section 80-IA should be on the basis that the source of income from the eligible business was the only source of income of an assessee and therefore, the deduction so determined should be allowed only against 'business income'. According to him, the phrase 'derived ... from' in sub-section (1) of Section 80-IA of the Act indicates that the computation of deduction is restricted only to the profits and gains from the eligible business. He relied upon the judgment of this Court in Cambay Electric Supply Industrial Co. Ltd. v. CIT 2, followed in Synco Industries Ltd. v. Assessing Officer, Income Tax, Mumbai & Anr. 3 and Pandian Chemicals Ltd. v. Commissioner of Income Tax, Madurai4. 8. In response, the Assessee supported the order passed by the Appellate Auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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." As stated above, Section 80AB was inserted in the year 1981 to get over a judgment of this Court in Cloth Traders (P) Ltd. (supra). The Circular dated 22.09.1980 issued by the CBDT makes it clear that the reason for introduction of Section 80AB of the Act was for the deductions under Part C of Chapter VI-A of the Act to be made on the net income of the eligible business and not on the total profits from the eligible business. A plain reading of Section 80AB of the Act shows that the provision pertains to determination of the quantum of deductible income in the 'gross total income'. Section 80AB cannot be read to be curtaili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction of an amount equal to 100% of the profits and gains derived from such business for 10 consecutive assessment years; and d) in computing the 'total income' of the Assessee, such deduction shall be allowed. 12. The import of Section 80-IA is that the 'total income' of an assessee is computed by taking into account the allowable deduction of the profits and gains derived from the 'eligible business'. With respect to the facts of this Appeal, there is no dispute that the deduction quantified under Section 80-IA is Rs. 492,78,60,973/-. To make it clear, the said amount represents the net profit made by the Assessee from the 'eligible business' covered under sub-section (4), i.e., from the Assessee's business unit involved in generation of power. The claim of the Assessee is that in computing its 'total income', deductions available to it have to be set-off against the 'gross total income', while the Revenue contends that it is only the 'business income' which has to be taken into account for the purpose of setting-off the deductions under Sections 80-IA and 80-IB of the Act. To illustrate, the 'gross total income' of the Assessee for the assessment year 2002-03 is less tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resorting to interpretation of sub- section (5). 14. It will be useful to refer to the judgment of this Court relied upon by the Revenue as well as the Assessee. In Synco Industries (supra), this Court was concerned with Section 80-I of the Act. Section 80-I(6), which is in pari materia to Section 80-IA(5), is as follows: " 80-I(6) Notwithstanding anything contained in any other provision of this Act, the profits and gains of an industrial undertaking or a ship or the business of a hotel or the business of repairs to ocean-going vessels or other powered craft to which the provisions of sub-section (1) apply shall, for the purposes of determining the quantum of deduction under sub- section (1) for the assessment year immediately succeeding the initial assessment year or any subsequent assessment year, be computed as if such industrial undertaking or ship or the business of the hotel or the business of repairs to ocean-going vessels or other powered craft were the only source of income of the assessee during the previous years relevant to the initial assessment year and to every subsequent assessment year up to and including the assessment year for which the determination is to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pressed into service for reading a limitation of the deduction under sub-section (1) only to 'business income'. An attempt was made by the learned Senior Counsel for the Revenue to rely on the phrase 'derived ... from' in Section 80-IA (1) of the Act in respect of his submission that the intention of the legislature was to give the narrowest possible construction to deduction admissible under this sub-section. It is not necessary for us to deal with this submission in view of the findings recorded above. For the aforementioned reasons, the Appeal is dismissed qua the issue of the extent of deduction under Section 80-IA of the Act. Civil Appeal No. 1327 of 2021, Civil Appeal No. 1329 of 2021, Civil Appeal No. 2537 of 2016, Civil Appeal No. 1408 of 2021 and Civil Appeal No. 1508 of 2021 are disposed of in terms of the above judgment. Civil Appeal No. 1509 of 2021 is de-tagged as the questions arising therein are not related to the aforementioned issue." 9.2 Considering the elaborate written submissions of both the parties and the recent judgment of the Hon'ble Supreme Court in the case of CIT Vs. Reliance Energy Ltd., (supra), we deem it fit and proper to remit the issue back t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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