AI Drafter 
TaxTMI 
TaxTMI 
2013 (7) TMI 979
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....e filed Return of income for the Assessment Year 2006-07 declaring total income of Rs. 43,16,14,095/- on 21/6/2006. The assessee also filed audited final accountants; Directors Report; computation of Income; tax audited report in Form No.3 CD and in Form No.10 CCB. It appears that the case was selected for scrutiny by issuing notice under section 143(2) dtd. 18/9/2007. A detailed questionnaire along with the statutory notice under section 142(1) was issued on 18/10/2007. In response to the same, the representative of the assessee attended from time to time and furnished details called for, which were placed on record. It appears that the assessee Company is a Public Limited Company engaged in the business of manufacturing of thermoplastic mouldings, prefab structures etc. in its plastic division and manufacturing of blended and common fabrics and yarns in its textile division. That approximately 73% of the major business was undertaken in its plastic division under which the assessee Company was manufacturing its various products under the brand name of Sintex. That the assessee Company had two units, one located at Baddi in Himachal Pradesh and another at Daman (U.T.). That during....
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....nits i.e. Baddi Unit and CPP unit, the tribunal has allowed the appeal preferred by the Department and has dismissed the Cross Objection of the assessee. 3.4 Being aggrieved by and dissatisfied with the impugned judgement and order passed by the ITAT, the assessee has preferred both these appeals with the following substantial question of law : "Whether the tribunal was right in law in reducing the eligible profits under section 80IA of CPP unit and section 80IB of Baddi Unit by losses of Daman unit?" 4. Considering the above, the short question which is posed for consideration of this Court is, whether the loss from the Baddi unit is required to be adjusted before determining the gross total income of the assessee? Whether the tribunal erred in upholding the adjustment of loss from eligible unit against the profit of another eligible unit while computing deduction under section 80IA and 80IB of the Income Tax Act? 5. Mr. J.P. Shah, learned counsel appearing on behalf of the assessee has vehemently submitted that as such the decision of the Hon'ble Supreme Court in the case of Synco Industries Ltd. v. Assessing Officer (Income-Tax) [2008] 299 ITR 444 as such cannot ....
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....he Hon'ble Supreme Court, in the case of Canara Workshops (P.) Ltd. (supra) and Synco Industries Ltd. (supra). 5.3 Mr. J.P. Shah, learned counsel appearing on behalf of the assessee has further relied upon the decision of the Hon'ble Supreme Court in the case of Liberty India v. CIT [2009] 317 ITR 218 5.4 Mr. J.P. Shah, learned counsel appearing on behalf of the assessee has also relied upon the decision of the Delhi High Court in the case of CIT v. Bharat Heavy Electricals Ltd. [2013] 352 ITR 88, by submitting that the Delhi High Court considering the decision of the Hon'ble Supreme Court in the case of Canara Workshops (P.) Ltd. (supra) has held that for the purpose of special deduction under section 80HHB, losses in one unit is not to be set off against the profit in another unit. 5.5 Mr. J.P. Shah, learned counsel appearing on behalf of the assessee has further submitted that even in the case of Synco Industries Ltd. (supra) the Hon'ble Supreme Court has specifically observed in para 13 that while computing the quantum of deduction under section 80-I(6), the Assessing Officer, no doubt, has to treat the profits derived from an industrial undertaking as ....
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....reliance placed upon the decisions of the Hon'ble Supreme Court in the case of Canara Workshops (P.) Ltd. (supra), in the case of Bharat Heavy Electricals Ltd. (supra) and in the case of Liberty India (supra) and decision of the Allahabad High Court in the case of Modi Xerox Ltd. (supra), are concerned, it is submitted by Ms. Paurami Sheth, learned counsel appearing on behalf of the Department that none of the aforesaid decisions would be applicable to the facts of the present case. It is submitted that in the aforesaid cases the controversy was with respect to granting special deductions which was available to a particular unit of the assessee and therefore, it was held that considering the loss of another unit special deduction in the form of incentive etc. to particular unit cannot be denied. It is submitted that as such the Bombay High Court in the case of Synco Industries Ltd. (formerly known as Synco Textiles (P.) Ltd. v. Assessing Officer [2002] 254 ITR 608 against which SLP was preferred before the Hon'ble Supreme Court in the decision of Synco Industries Ltd. (supra) had considered the decision of the Hon'ble Supreme Court in the case of Canara Workshops (P.) L....
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....of sales of units. As such the question raised in the present appeals is squarely covered by the decision of the Hon'ble Supreme Court in the case of Synco Industries Ltd. (supra). In the said decision, the Hon'ble Supreme Court also noted the decisions of various High Courts taking view that deduction under Chapter VI-A of the Act would be available only if the computation of the gross total income as per the provisions of the Act are setting off carried forward loss and unabsorbed depreciation of earlier years is not "nil". In the said decision the Hon'ble Supreme Court also considered the decision of the Madras High Court in the case of CIT v. Madras Motors (P.) Ltd. [1984] 150 ITR 150 taking view that while considering the gross total income, deduction under Chapter VI-A is contemplated only after total income is computed after setting off of the unabsorbed depreciation as per section 72 is evident and therefore, section 72 has to be applied before total income of the assessee is determined i.e. before deduction under Chapter VI-A are allowed. In the aforesaid decision, the Hon'ble Supreme Court has specifically held that the contention that under section 80I....
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....esaid decision of the Hon'ble Supreme Court, as such no error and/or illegality has been committed by the tribunal in reducing eligible profits under section 80IA of CPP unit and under section 80IB of Baddi unit by adjusting loss of Daman unit. 8.2 Now, so far as the reliance placed upon the decision of the Hon'ble Supreme Court in the case of Canara Workshops (P.) Ltd. (supra) is concerned, on considering the controversy in the aforesaid decision and the facts in the said case, we are of the opinion that the said decision would not apply to the present case. In the case before the Hon'ble Supreme Court, the assessee was a Public Limited Company engaged in the business of manufacture of automobile spares. During the assessment year 1965 it commenced another activity, viz. manufacture of Alloy steels. Both the activities falled within Fifth Schedule of the Act. The assessee sustained loss in the manufacture of alloy steels whereas profits were earned from the business of automobile spares. The assessee claimed relief under section 80E as it than stood. The Assessing Officer declined to grant relief on the ground that the assessee has ignored loss incurred in Alloy Ste....
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....the case of Liberty India (supra) is concerned, on facts, the said decision shall not be applicable. In the case before the Hon'ble Supreme Court, the dispute was with respect to special deduction claimed with respect to a particular unit and one unit was found to be eligible for claiming such special deduction. Thus, on facts, the said decision shall not be applicable to the facts of the present case. 8.4 Now, so far as the reliance placed upon the decision of the Allahabad High Court in the case of Modi Xerox Ltd. (No.2) (supra) is concerned, considering the facts and the special deduction claimed under section 80HH and 80I, the said deduction also would not be of any assistance to the appellant. 8.5 Similarly, on facts, the decision in the case of the Delhi High Court in the case of Bharat Heavy Electricals Ltd. (supra), also shall not be of any assistance to the appellant. It is also required to be noted that before the Delhi High Court, decision of the Hon'ble Supreme Court in the case of Synco Industries Ltd. (supra) was not brought to the notice of the Delhi High Court and therefore, the Delhi High Court had no occasion to deal with and/or consider the decision....