Deduction under section 80IB: Profits of specific undertaking must not be offset by losses.

The Tribunal upheld the Commissioner of Income Tax (Appeals)' decision that the deduction under section 80IB should be based on the profits of a specific undertaking without offsetting losses from other eligible units. The Tribunal emphasized that only profitable industrial undertakings should be considered for computing the deduction, and loss-making units should not impact the calculation. The appeal by the Revenue was dismissed, and the Tribunal found no legal basis to challenge the established proposition, citing previous decisions supporting this interpretation.

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Issues:
- Whether the loss of one unit of business should be adjusted against the profit of another unit of business to arrive at the Gross Total Income for availing deduction u/s 80IB.

Analysis:
The appeal was filed by the Revenue against the order of the Commissioner of Income Tax (Appeals) dated 11.10.2013. The Revenue contended that the loss of one unit of business should be adjusted against the profit of another unit of business to determine the Gross Total Income for claiming deduction under section 80IB. However, the assessee argued that each unit should be treated as a separate and independent entity under section 80-I(6) of the Income Tax Act. The assessee relied on various decisions of the Tribunal and the Delhi High Court, particularly the case of Sona Koyo Steering Systems Ltd., where it was held that the deduction under section 80-I is allowable without setting off losses of other units. The court emphasized that only profitable industrial undertakings should be considered for computing the deduction, and loss-making units should not impact the calculation.

The Tribunal noted that section 80-IA(5) is similar to section 80-I(6) and provides that profits and gains of an eligible business should be computed as if it were the only source of income for the assessee. The Tribunal also highlighted section 80-IB(13), which applies the provisions of section 80-IA(5) to eligible businesses under section 80IB. The Tribunal agreed with the CIT(A) that the law laid down by the Delhi High Court in the Sona Koyo Steering Systems Ltd. case was correctly applied. Additionally, the Tribunal referred to a decision of a co-ordinate bench in the case of Meera Cotton & Synthetic Mills Ltd., where it was held that deduction under section 80IB should be based on the profits of a specific undertaking without offsetting losses from other eligible units.

The Tribunal found no legal basis presented by the Revenue to challenge the established proposition. Consequently, the Tribunal upheld the CIT(A)'s findings on the legal issue in question and dismissed the Revenue's appeal. The order was pronounced in the open court on 29.07.2015.

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