TaxTMI 
TaxTMI 
2005 (9) TMI 272
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....of loss of earlier years brought forward notionally for the purpose of deduction under section 80-I of the Act. 2. The facts of the case as apparent from record are that in assessment year 1995-96 the claim of assessee for deduction under section 80-I was rejected by the Assessing Officer in assessment order on 29-3-2000. On appeal, the ld. CIT(A) allowed the claim of the assessee in principle vide his order dated 18-10-2000 and directed the Assessing Officer to verify and allow the claim if the assessee was otherwise eligible for deduction under section 80-I. While giving effect to the appellate order, the Assessing Officer allowed the claim of the assessee in full amounting to Rs. 23,28,397 without setting off brought forward notionally ....
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....bsorbed depreciation allowances and losses for earlier years pertaining to the eligible unit amounting to Rs. 160.59 lakhs while computing the profit of the unit for assessment year 1995-96 within the terms of section 80-I(6) of the Act. The eligible unit for deduction under section 80-I has to be treated as a self-contained independent undertaking and the profit thereof has to be computed in accordance with the relevant provisions of the Income-tax Act. He relied on the decision of Hon'ble Bombay High Court in the case of Synco Industries Ltd. v. Assessing Officer of Income-tax [2002] 254 ITR 608 and of the Calcutta High Court in the case of CIT v. Balmar Lawrie & Co. Ltd. [1995] 215 ITR 249. He, therefore, came to the conclusion that ....
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....at section 80HH does not have clause equivalent to section 80-I(6). The Tribunal in the case of TTK Pharma Ltd. referred to above has not considered the provisions of section 80-I(6) of the Act which creates a legal fiction to brought forward depreciation allowance and losses notionally treating the eligible unit as independent unit for the purpose of deduction under section 80-I of the Act. Therefore, decision rendered in the case of TTK Pharma Ltd. by the ITAT is per incuriam. In the case of Sri Ramakrishna Mills (Cbe.) Ltd., the provisions of section 80-I(6) were considered and, therefore, the decision rendered by the Tribunal in this case is applicable to the facts of the present case. It was further submitted that in the case of Rajapa....
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....ol. 2, 5th Edn., which is reproduced below: "... in other words, for the purpose of determining the quantum of 'tax holiday' profits under section 80-IA the taxable income of the eligible business of the industrial undertaking is to be ascertained as if such undertaking were an independent unit owned by the assessee concerned and the assessee had no other source of income. Consequently, the unabsorbed losses, unabsorbed depreciation, etc., relating to the eligible industrial undertaking, etc., are to be taken into account in determining the quantum of deduction under section 80-IA even tough these may actually have been set off against the profits of the assessee from other sources." 7. We have considered the matter in the light ....
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....uantum of deduction under section 80-IA even though these may actually have been set off against the profits of assessee from other sources." 8. In the case of Rajapalayam Mills Ltd. v. CIT [1978] 115 ITR 777, Hon'ble Supreme Court held that section 15C(3) does not enact any legal fiction providing that the profits or gains of new industrial undertaking shall be computed as if the new industrial undertaking were the only business of the assessee from the date of its establishment. There was nothing in section 15C(3) or any other provisions of the Act which required that in computing the profits or of a new industrial undertaking under section 10, depreciation allowance or development rebate in respect of the new industrial undertaking ....