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TMI Blog2025 (1) TMI 570X X X X Extracts X X X X X X X X Extracts X X X X ..... he case and in law, the learned CIT-A erred in confirming reworking of deduction u/s 80-IC at Rs. 2,38,28,650/- by the assessing officer, ignoring the consistent basis followed by the appellant in the past and accepted by the department. 2. On facts, in circumstances of the case and in law, the learned CIT-A ought to have held that deduction u/s 80-IC be computed @ 30% of the profit of eligible unit without setting off loss of non-eligible unit. 3. On facts, in circumstances of the case and in law, learned CIT-A ought to have deleted interest of Rs. 14,03,853/- u/s 234B of the Income Tax Act, 1961. 4. On facts, in circumstances of the case and in law, learned CIT-A ought to have deleted interest of Rs. 98,979/- u/s 234C of the Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Others vs. Dy. CIT ITA No. 704/JP/2018, direction was given by Hon. Jaipur Tribunal to allocate common expenditure in proportion to sales of eligible undertaking and non-eligible undertaking. Thus this basis of allocation has been approved by Judicial Authority and is prudent and rational. This method has been followed by the assessee for past number of years consistently and accepted by the department in the past. Hence there is no reason to deviate from this rational basis in the current year even assuming it suits revenue in one year/E TAX DEPAR Kind attention of learned A.O. is drawn to decision of Hon'ble Delhi High Court reported in C/Tvs. EHPT India (P) Ltd. (2013) 350 ITR 41 in which it was held that "Where the AO has acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - has been allocated in the proportion of sales between eligible and non-eligible undertaking. The interest paid on CCD of Rs. 2,00,00,000/- has been allocated as under:- Particulars FY 2012-13 FY 2013-14 FY 2014-15 FY 2015-16 Eligible Undertaking 164,986,277 169,172,428 181,174,188 229,964,858 Non-Eligible Undertaking 9,762,127 13,317,885 103,221,356 227,732,877 Total Revenue 174,748,404 182,490,313 284,395,544 457,697,735 6. Similarly, remuneration to Mr. Anil Prabhakaran was allocated on the basis of sales. The allocation was not accepted by the AO who was of the firm belief that management fees and renumeration paid to managing director has to be allocated on gross profit basis and accordingly re-all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 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 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uses only the work "undertaking or enterprise". This distinction, in our view, is very critical and important. Literally interpreting the applicability of the provisions of section 80IA(5) is "business specific" and, therefore, includes all eligible undertakings carrying out eligible business. On the other hand, section 80IC(7) states that the provisions of section 80IA(5) would apply to eligible 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 eligible units are entitled to different rates of deduction of profits, it would be difficult to determine the rate to be applied to the remaining profits since there is no section or provision in the entire Act dealing with such a situation. We therefore, agree with the Ld. counsel for assessee that the decision in the case of Him Tekn ..... X X X X Extracts X X X X X X X X Extracts X X X X
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