Tribunal Upholds Section 80IB Claim for Aluminium Paste Unit

The Tribunal dismissed the Revenue's appeal, upholding the decision of the ld. CIT(A) to grant the claim under section 80IB without setting off losses against the profits of the Aluminium Paste Unit. The Tribunal emphasized the need for separate consideration of units for deduction under section 80IA or 80IB if separate accounts were maintained and there was no interdependence. The decision was based on the assessee's maintenance of separate accounts for its units and distinguished the case law relied on by the Revenue.

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Issues:
- Interpretation of section 80IB of the Income Tax Act, 1961 regarding setting off losses against profits of an industrial undertaking.

Analysis:
1. The appeal pertains to the interpretation of section 80IB of the Income Tax Act, 1961, specifically related to setting off losses against profits of an industrial undertaking. The Revenue challenged the order of the ld. Commissioner of Income Tax (Appeals) which granted a claim under section 80IB without setting off losses against the profits of the Aluminium Paste Unit. The primary contention was that the gross total income should be computed after adjusting losses of other divisions against the profits derived from the industrial undertaking, as per section 80B(5) of the Act.

2. The assessee, engaged in the manufacture and sale of metallic powders, filed its return of income for the assessment year 2011-12. After scrutiny, the assessment was completed under section 143(3) of the Act, assessing the total income at a specific amount after disallowances. The ld. CIT(A) partly allowed the appeal filed by the assessee, leading to the Revenue's appeal before the Tribunal.

3. The Tribunal considered the arguments presented by both sides along with the orders of the authorities below. It reviewed the Tribunal's order in the assessee's own case for the assessment year 2010-11, where it was observed that each unit should be separately considered for deduction under section 80IA or 80IB if separate accounts were maintained and there was no interlacing or interdependence. The Tribunal upheld the order of the ld. CIT(A) based on this reasoning.

4. The Tribunal emphasized that the case law relied on by the Revenue, Synco Industries Ltd. v. Assessing Officer, was distinguishable as it involved a brought forward loss from the eligible undertaking, which was not the situation in the present case. As the assessee maintained separate accounts for its units, the Tribunal dismissed the Revenue's ground, following the decision of the Coordinate Bench in the assessee's earlier assessment years.

5. Therefore, the Tribunal dismissed the appeal filed by the Revenue, affirming the decision of the ld. CIT(A) to grant the claim under section 80IB without setting off losses against the profits of the Aluminium Paste Unit. The judgment was pronounced on 11th August 2016 at Chennai.

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