TaxTMI 
TaxTMI 
2009 (9) TMI 948
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....only two issues, viz., (i) denial of deduction u/s 80-IA in full; & (ii) disallowance of provision for leave encashment of Rs. 27,99,772/-. 3. The assessee company was engaged in the business of manufacture and sale of aluminum extrusions and generation and sale of wind energy. Out of four units engaged in power generation, one unit was incurring losses. The assessee company had claimed 100% deduction u/s 80IA amounting to Rs. 4.16 crores being the profit earned by one of the profit making units. However, the AO took a stand that since s.80 IA provides for computing profit of 'eligible business', all units generating power had to be considered as a single 'eligible business of power generation'. The total profit earned by th....
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....rived or received by the assessee and which is included in his gross total income.' (v) In other words, sec.80AB is an omnibus provision that governs all the other sections providing for deductions under Chapter VIA of the Act. Sec.80AB makes it clear that the computation of income has to be in accordance with the provisions of the Act. If the income has to be computed in accordance with the provisions of the Act, then not only profits but also losses have to be taken into consideration. (vi) Reliance is also placed on the decision of the Supreme Court in CIT v. Shirke Construction Equipment Ltd. (2007) 291 ITR 380 which gave a categorical finding that Sec.80HHC was governed by Sec.80AB and that unabsorbed losses of earlier years u/s ....
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....ofit derived from such unit was eligible for deduction u/s 80IA de horse the profit or loss derived from other independent units of the assessee; (ii) that the wind mill unit in whose profit the deduction u/s 80IA claimed was an independent and viable unit irrespective of the functions of the other units and thus it was an undertaking by itself which was eligible for deduction u/s 80IA; (iii) Sec.80IA(5) refers to the unit by itself de horse the other units for the purpose of ascertaining the profit eligible for deduction u/s 80IA; & (iv) the case laws cited by the lower authorities were distinguishable and accordingly denial of deduction u/s80IA was opposed to law and to the principles of natural justice. 5.1. During the course....
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....ed the deduction on the basis of the profits of the four units without setting off of loss of three units. However, the AO, relying on the decision of Hon'ble Supreme Court in the case of IPCA Laboratory Ltd. v. DCIT (266 ITR 521), computed the deduction after setting off of the loss of three units from the profit of four Units. On an appeal, the CIT(A), relying on the findings of the Hon'ble Apex Court in the cases of IPCA Laboratory ltd. referred supra and also in CIT v. B.Mohanachandran Nair reported in 285 ITR 226, upheld the action of the AO. 6.2. The issue was brought before the Hon'ble Tribunal for further adjudication. After considering the rival submissions and analyzing the provisions of sections 80AB, 80IA (1) and 80IA (5), th....
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....er units; (b) in case of loss suffered by the eligible unit, such loss would not be set off against profits of other units/other business/other incomes in the initial year of the assessment or subsequent years of eligible years of assessment; (c) where losses of the eligible unit remained to be adjusted against that very source, they are to be carried forward to subsequent year(s) and set off in the succeeding year(s) and on the balance profit alone the deduction admissible would be computed; (d) where there are no losses of the eligible unit carried forward (in view of set off against profits of that very source), it is the mandate of law that the losses of earlier years, though already absorbed against other sources, they are onc....