I-T- Whether losses suffered by Sec 80IA unit can be set off against profit from manufacturing unit not covered under provisions of Sec 80IA - YES: HC

I-T- Whether losses suffered by Sec 80IA unit can be set off against profit from manufacturing unit not covered under provisions of Sec 80IA - YES: HC 

MUMBAI: THE issue before the Bench is - Whether the loss incurred in business of power generation which is entitled to deduction under section 80IA can be set off against business income

from manufacturing unit ignoring the provision of section 80-IA(5). YES is the answer.

Facts of the case

The assessee company is engaged in the business of manufacture of material handling equipment and generation of power. It had installed windmills and that was a unit eligible for deduction u/s 80-IA. The other unit of the assessee was not entitled for any such deduction. The assessee claimed loss on account of the 80-IA unit for all these AYs viz. 2005-06 to 2008-09. These losses incurred in the eligible unit had been adjusted against profits of ineligible unit. After adjusting these losses, positive income had been determined and tax had been paid. For these years where the 80-IA unit incurred losses, there was no claim for deduction u/s 80-IA by the assessee. The grievance was that the assessee by filing revised claim had also claimed these losses in section 80-IA unit as carried forward losses and eligible for adjustment against income for subsequent years in eligible unit as share profits u/s 80-IA. The AO had disallowed this claim of set off of loss of eligible units against the income of ineligible units in the same year. The losses were, therefore, added in the income of the assessee. The AO relied upon the decision of the special bench of the Tribunal at Ahmedabad in the case of Gold Mine Shares and Finance Pvt. Ltd. However, CIT(A) in the appeal by the assessee partly granted relief.

Held that,

++ we have not found anything in the Tribunal's order and dealing with the grievance of the assessee being made subject matter of the present appeals. Thus, this is not an appeal projecting a grievance that the special bench decision has been misapplied and/or not applied or incorrectly applied. This is not a case where the losses incurred by the section 80-IA unit having been set off against the income from the non section 80-IA unit that course was impermissible. We do not see any reason in our referring to the legislative background and these provisions in further details or considering and interpreting them for the present appeals. Once the statement of facts about which there can be no dispute show that there was no deduction claimed under section 80-IA for the assessment years in question, then, there was no occasion for the Tribunal and equally us to have gone into these questions. In any event, merely because the Tribunal has gone into and considered them, we are not obliged to go into the same given the above admitted factual background. Therefore, by clarifying that as and when this question arises and in relation to the same assessee in future, if the deduction is claimed u/s 80-IA for eligible unit, then, it would be open for the Revenue to project all questions and propose them as substantial questions of law. In that event, they can raise all contentions and equally pertaining to the setting off of the said losses and in relation to the eligible section 80-IA unit from the income of the non section 80-IA ineligible unit. Keeping that course open and equally the contentions of both sides, we dispose of these appeals. They do not raise any substantial questions of law.