Tribunal Upholds Deduction Order for Units II & III, Dismisses Revenue's Appeals Due to No Brought Forward Losses.

The Tribunal, by majority decision, upheld the CIT(A)'s order allowing the deduction under section 80-I for Unit Nos. II and III, affirming the rational allocation of expenses among units. The issue of set-off of brought forward losses was deemed academic due to the absence of such losses. Consequently, the revenue's appeals were dismissed.

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Issues Involved:
1. Deduction under section 80-I for Unit Nos. II and III.
2. Allocation of expenses among different units.
3. Set-off of brought forward losses before allowing deduction under section 80-I.

Detailed Analysis:

1. Deduction under section 80-I for Unit Nos. II and III:
The revenue challenged the CIT(A)'s direction to allow deduction under section 80-I for Unit Nos. II and III, arguing that the allocation of expenses among the units was arbitrary and inflated profits for Units II and III. The CIT(A) analyzed the working of various units and found the allocation of expenses by the assessee to be rational, thus justifying the deduction under section 80-I. The Tribunal upheld the CIT(A)'s findings, noting that the nature of printing and consumption of materials differed between the units, and the expenses were allocated on a rational basis.

2. Allocation of Expenses Among Different Units:
The Assessing Officer (AO) argued that the expenses in Unit No. I were inflated while those in Units II and III were deflated to claim higher deductions under section 80-I. The CIT(A) and the Tribunal found that:
- Paper Consumption: Unit No. I purchased paper, while Unit No. III did job work on paper supplied by publishers.
- Ink Consumption: Unit No. I had 14 old machines consuming more ink compared to Unit No. III's single modern machine.
- Salaries and Production Charges: Higher in Unit No. I due to senior workers and more machines.
- Subscription Deposit Scheme: Expenses were rightly allocated to Unit No. I as the scheme was in place since 1972, before the other units were established.

The Tribunal found no defects in the books of accounts maintained separately for each unit and upheld the CIT(A)'s decision, dismissing the revenue's appeal.

3. Set-off of Brought Forward Losses Before Allowing Deduction Under Section 80-I:
The revenue also challenged the CIT(A)'s direction to allow deduction under section 80-I before setting off brought forward losses. The CIT(A) clarified that any loss from earlier years should be adjusted from the current year's profit as per section 80-I(6). The Tribunal noted that there were no brought forward losses as the assessed income for 1992-93 was positive. Therefore, this ground of appeal was deemed academic and infructuous.

Separate Judgment by Judicial Member:
The Judicial Member disagreed with the Accountant Member's proposed order, arguing that the allocation of expenses was disproportionate and needed re-examination. He proposed restoring the matter to the AO for detailed enquiry and re-computation of deduction under section 80-I. However, the Third Member (President) concurred with the Accountant Member, confirming the CIT(A)'s order and dismissing the revenue's appeals.

Conclusion:
The Tribunal, by majority view, upheld the CIT(A)'s order allowing deduction under section 80-I for Unit Nos. II and III and found the allocation of expenses to be rational and justified. The issue of set-off of brought forward losses was rendered academic as there were no such losses. The revenue's appeals were dismissed.

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