TaxTMI 
TaxTMI 
2017 (7) TMI 498
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....2. The record shows that six (6) appeals have been disposed of by the one bench of the Tribunal, by a common order, while the other six (6) appeals have been disposed of by another bench of the Tribunal via another common order. As a matter of fact, one member of the Tribunal is common to both orders. 2.1. Counsel for parties are agreed that there is a common thread and rationale running through the impugned orders of the Tribunal, which has left both sides aggrieved. 2.2. In order to give a synoptic view of the various assessment orders and orders-in-appeal passed, albeit, qua different periods by the authorities below, we have set forth the details pertaining to the same, in the form of a table set out hereafter: T.C.(A) Nos. Filed by Assessment year Assessment Order CIT(A) order Order of the Tribunal 533/2010 Revenue 2000-01 29.12.2006 31.7.2008 28.08.2009 534/2010 Revenue 2001-02 29.12.2006 31.7.2008 28.08.2009 535/2010 Revenue 2002-03 31.12.2007 31.7.2008 28.08.2009 536/2010 Revenue 2003-04 31.12.2007 31.7.2008 28.08.2009 537/2010 Revenue 2004-05 29.12.2006 31.7.20....
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....he Tribunal via the aforementioned impugned orders, has sustained the views taken by the CIT(A)s. 4.4. It is, on account of this, both the Assessee and the Revenue are aggrieved and, thus, have preferred the captioned appeals. 5. The second aspect, which arises for consideration, is embedded in T.C.(A)Nos.1219 and 1220 of 2010. As regards this aspect, the Assessee is aggrieved by the fact that the Tribunal has upheld the computation of deduction under Section 80IA, by allowing for squaring off loss incurred by, one, Unit, albeit, for earlier years. This, according to the Assessee, is contrary to the judgment of the Tribunal rendered in : Rangamma Steels and Malleables V. Assistant Commissioner of Income Tax. 6. Before we proceed further, it may be relevant to cull out the questions of law, which have been framed qua the captioned appeals: T.C.(A)Nos. 533 to 538 of 2010: (i). Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that the Assessing Officer cannot reconsider the issue of granting the deduction under Section 80IB after the lapse of time, even if there is a survey in the premises of the as....
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.... (i) Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that deduction under Section 80IB is not proper? 7. Having regard to the above, and in order to adjudicate upon the captioned appeals, the following broad facts are required to be noticed. The facts, which we have been able to glean from the records placed before us, are as follows: 8. The Assessee, it appears, at the relevant point in time, was in the business of manufacturing High Tensile Precision Fasteners (in short Fasteners), which are also referred to as "nuts" in the market. These nuts are extensively used in the automobile industry. 8.1. It appears that the Assessee, which is a partnership firm, comprised of one Mr.L.M.Shah and his son Mr.A.L.Shah. The Assessee firm was constituted in March, 1998. 8.2. During the period relevant for Assessment year (A.Y.) 1998-99, the Assessee purchased two Nut former machines. This was followed by the Assessee purchasing in May, 2002, one more Nut Former machine, though, via the import route. For the next five (5) years, relevant for A.Ys.1998-99 and 2002-03, the Assessee claimed deduction at the rate of 100% of the profit....
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....ineering. 10. The Assessing Officers, in order to show connection between aforementioned entities and, to demonstrate the untenability of Assessee's stand that Units I and II were independent undertakings, which would be eligible for deduction under Section 80IB, adverted, broadly, to stages/process involved in the manufacture of fasteners/nuts. While alluding to the manufacturing process, an attempt was made to link each process to an entity or entities, as the case may be. In this behalf, the record discloses the following: (i) Process of "wire rod pickling" and "phosphating" is carried on by BPL (ii) The next stage, which involves, "forging" is carried out by FX, FOX and the Assessee, by using Nut Former Machines. (iii) The third stage, which involves, "Nut Tapping" is also carried out by FX, FOX and the Assessee. (iv) The last stage, which involves plating of the goods, is carried out by BPL. 10.1. Besides the above, certain secondary operations, such as, "cap cutting", "curling" and "drilling" is carried out by FX, FOX and the Assessee. 10.2. The tools and dyes required in the carrying out of operations, such as, nut forging and nut tapping were, appar....
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....Sec.80IA (4)(iv) of the Income Tax Act clearly states that the undertaking which is engaged in generation of Powerand hence, the profits have to be arrived for windmill division together as an undertaking and not as a individual division. Further, the assessee had also got a loss of Rs. 2,59,37,516/- on account of depreciation in the windmill business in the Asst. Year 2005-06. As per the provision of 80AB, the deduction shall be allowable only on the gross total income (i.e.,) after setting-off of the earlier losses. Accordingly, if the loss of the current Asst. Year (i.e.,) Asst. Year 2006-07 is adjusted (i.e., Rs. 1,31,20,482 - Rs. 33,85,137 = Rs. 97,35,345/-), the balance of Rs. 9,73,53,450/- is adjusted against the earlier years loss of Rs. 2,59,37,516/-, there will be no profit left for deduction u/s 80IA of the Income Tax Act. T.C.(A)No.1220 of 2010 (A.Y.2007-08): On the other hand, on perusal of records revealed that the assessee-firm has computed the amount eligible u/s 80-IA at Rs. 1,44,07,087/- to Wind Power Division-I and Rs. 86,93,342/- in Power Division-II. The provision of 80IA(4)(iv) of the Income Tax Act clearly states that the undertaking which is enga....
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..... 20.1. The Assessee in order to claim deduction at the prescribed percentage qua profits and gains derived from an industrial undertaking, which is required to demonstrate that it fulfils the following negative and positive attributes as set out in sub-section (2) of Section 80IB. (i) It is not formed by splitting up, or the reconstruction of a business already in existence; (ii) It is not formed by the transfer to a new business of machinery or plant previously used for any purpose; (iii) It manufactures or produces any article or thing, not being any article or thing specified in the list in the Eleventh Schedule or operates one or more cold storage plant or plants, in any part of India. (iv) Where the industrial undertaking uses power, to aid in the manufacture or production of articles or things, it is required to employ 10 or more workers. In cases, where, manufacturing process is carried out without the aid of power, the number of workers employed should not be less than 20. 20.2. As would be evident, the first two attributes have negative connotations, while 3rd and 4th attributes are positive in nature. 20.3. Interestingly, in so far as the prohibition....
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.... u/s80-IB cannot be denied. The mere fact that certain items of plant and machinery which were previously used in the business of the sister concerns were transferred, that too in the second year of its commencing the business will not disentitled the appellant firm to the benefits granted by law and to do so would amount to giving a very narrow interpretation which will go against the spirit behind the provision granting the relief. 4.11.5. In order to see whether the appellant firm had been formed as a result of transfer of assets in a substantial manner from the other two concerns, M/s.Fastenex Pvt. Ltd. or Formex, it is necessary to analyse the assets position as well as the manner of functioning and the net profit results of these concerns, year-wise. As already indicated, the capital of these concerns remained intact when the appellant firm was formed. It is only that certain second-hand machinery items Tapping machines that were transferred to the firm through M/s.Toolex Pvt. Ltd. a quick glance of the profits of these two concerns for the accounting periods relevant for the assessment years 1999-2000 to 2005-06 will show that these concerns had been functioning in their ....
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....took over the entire activity of manufacturing nuts from Formex will not disentitle it to the benefit of deduction u/s 80-IB. 4.11.6.As far as the affairs of M/s.Fastenex Pvt. Ltd. are concerned, this is a limited company and it had been showing only service charges as income against which it had claimed huge expenditure by way of job work right through from the financial year 1999-2000 upto 2004-05. On a perusal of the profit and loss account statements of this company, it is seen that it had been showing income from the activity of generating power from wind mills also. And it had been claiming deduction u/s 80-IA/80-IB. The break-up details of service charges, expenditure and net profit for this concern are furnished in the table given below: Financial Year Service charges (Rs.) Sales under sales Tax Act (Rs.) New Profit (Rs.) 2004-05 1,80,12,180.22 ---- 44,84,865.96 2003-04 1,45,85,324.99 ---- 8,33,617.16 2002-03 1,52,46,764.62 8,49,957.80 5,36,238.68 2001-02 164,72,781.23 ---- 63,93,211.60 2000-01 4,52,989.33 4.11.7.Thus, even on an....
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....ion under Section 80IB of the 1961 Act, as it was not carrying out manufacturing activity; it was an aspect, which was also examined by the CIT(A) in the very same order. The CIT(A), after a detailed analysis, came to the conclusion that the Assessee was performing the most vital function, which was nut tapping. 21.5. In this regard, the following observations and findings of fact returned by the CIT(A), need to be noticed. "5. Now coming to the question as to whether the appellant firm had carried on any manufacturing activity at all in the light of the fact that certain processes were got done by the firm on job-work basis only, the salient features of the impugned order on this aspect of the issue had been narrated in paragraphs Nos.4.1(i) to 4.1(f) and 4.1(viii) above. It is because the appellant firm had got done certain processes through its connected concerns, viz., Fastenex, Formex and Brigtenex, and the percentage of sales turnover were quite high when compared to the consumption of the raw materials for a number of accounting periods including the impugned year, the Assessing Officer was of the view that the appellant firm by itself had not carried on any manufactur....
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.... Tapping. Certain secondary operations like assembly, welding, Curl cutting etc. are also carried out. The two main stages are producing Blanks and Tapping. Blanks are stated to be only semi-finished components which do not have a markettable value and 'forging' is the process of producing 'blanks' with the help of machinery called 'Nut Formers'. The various stages of processing as explained by the representative are briefly stated as under : Leo Fasteners procures raw materials/ components and processes them for manufacture of nuts. The raw materials (wore rods) procured are pickled, phosphated and then wire drawn using the services of sister concerns. Then such wire drawn rods are converted into blanks either by themselves or through outsourcing. Later, the main and vital process (nut tapping) which adds utility value for the nuts and makes the products usable is being performed by M/s.Leo Fasteners. In case of certain special nuts, secondary operation like assembly, welding etc. is done which enhances the performance of the nuts and also creates greater value addition. These processes are also performed by the unit which effects the sale of nuts. ....
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....e will give a general idea of the various processes involved in bringing out the final product nut from the raw materials, wire rods. It is seen from a careful study of the submissions made that there are tow important stages in the various processes involved in the manufacture of nut Nut Forging, which produces blanks and Tapping/Threading. It has been explained above that it is only the process called 'Nut Tapping' which bring about the vital change in the raw material to make the final product commercially and qualitatively different from the raw material. 'Nut Tapping' is nothing but the act of threading the nuts. It was submitted that although upto the stage of producing nut blanks, the processes of pickling, phosphating and forging are done by the appellant firm with the help of the sister concerns on job work basis, the main activity of nut tapping/threading which is crucial to produce a nut, is being done only by the appellant firm. It was also highlighted that after the stage of Nut tapping, the materials are subjected to further processes viz., crimping and welding which are carried out only by the appellant firm and further the process of plating the nuts....
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....ex Pvt. Ltd. The next stage of processing called forging was done in a shared manner by three concerns, viz., M/s.Fastenex, Formex and M/s.Leo Fasteners by using nut former machines. (b) The next processing of nut tapping work was also done by the above three concerns in a shared manner. (c) The final plating of the nuts was done by M/s.Brightenex Pvt. Ltd. (d) Certain secondary operations like cap-cutting, curling and drilling were also done by the three concerns, M/s.Fastenex, Formex and M/s.Leo Fasteners. (e) The tools and dies required in the operation of nut forging and nut tapping were supplied by M/s.Toolex pvt. Ltd. and certain other services were also rendered by this concern. (f) The appellant firm had also shown certain payments having been made to other concerns in the Group for getting components and services which would make it clear that it had not carried on all the processes involved in the manufacturing of nuts." (emphasis is ours) 23.1. Furthermore, the Assessee relied upon its excise returns to establish that it was a new and separate undertaking involved in the manufacture of fasteners/nuts. 23.2. Despite the said record, the CIT(A) decl....
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....f the nuts that were turned out by the Unit-II and the additional processing to be done on the materials used to that there could be a better product qualitatively. It has been stated that the processing itself was different. But, still, Unit-II cannot be said to be having an independent status as a new industrial undertaking. And the introduction of certain techniques in the processing cannot amount to bringing about a different processing altogether. There is nothing to indicate that a nut could be manufactured by Unit -II by adopting totally a new process. In fact, as shown in the earlier paragraphs, upto the stage of producing Nut Blanks, the processing were done by other concerns in the group on job-work basis for both the units of the appellant firm. It is all the same processes. 6.3.1. As rightly observed by the Assessing officer, Unit-II was able to make a turnover of Rs. 6.44 Crores by purchasing manufactured nut blanks from Unit-I to the extent of Rs. 3.16 Crores. Apart from these purchases, Unit-II might be involved in manufacturing nuts of different quality on its own and it could have been performing all the operations right from stage one. But, all the activities p....
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....ust be given the status of a new industrial undertaking. But, as will be seen from the discussions to emerge in the following paragraphs, this view is incorrect, because, there are certain other vital facts viz., the transactions between Unit-I and Unit-II that are to be taken into consideration before forming any opinion. 6.5. The way in which the Unit-II had been formed is not similar to the way in which the firm itself was formed way-back in the year 1998. The subtle distinction that has to be made is that at that point of time, a new legal entity was formed as partnership between Shri L.M.Shah and Shri A.L.Shah and the firm enjoyed an independent legal status whereas, Unit-II of the firm is not so. The appellant firm M/s. Leo fasteners was started as an integrated unit by itself in which articles were being produced. Whereas, formative of Unit-II was not so and obviously, it had been formed through diversion of funds and stock of Unit-I. 6.6. As seen from the copy of the order in No.6346/99/B1/CTD dated 6.8.2003 of the Deputy Commercial Tax Officer, Puducherry, wherein the tax holiday period had been extended for a further period of 4 years from 18.3.2003 to 17.3.2007, th....
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....t and the further discussions as in the above paragraphs will only lead us to the inference that though the appellant firm had tried to make it appear that the Unit-II is a new industrial undertaking by showing that fresh capital had been introduced, substantial investments had been made in fixed assets including buildings and plant and machinery, sufficiently new labour force had been deployed, etc., still, its activities cannot be viewed independently and it cannot be said to have an independent existence. What the partners of the appellant firm would have done under normal circumstances for expanding their business, had been done in the name of Unit-II and what the firm would have done to improve its already existing product had been done in the name of Unit-II. Above all, there had been transfer of stock- semi-furnished (nut blanks) from Unit-I to Unit-II, which is nothing but transfer of working capital. And by this process, the firm had tried to claim double advantage. The sale of nut blanks to Unit-II had been included in the computation of the profits of Unit-I for the purposes of claiming deduction u/s 80-IB at 25% for the impugned accounting period. And also, in addition ....
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....ered to be a new undertaking both in its formation as well as in its activities. (vi).The formation of Unit-II by the appellant firm was with a view to divert its profits so that it could claim deduction u/s 80-IB not only at a higher rate but also for a longer period of time. That is, if Unit-II were to be accepted as a new industrial undertaking, then the appellant firm could have continued to claim the benefit of deduction u/s 80-IB for a further period of ten years which deserves to be discouraged. This cannot be considered to be an act of tax planning. .........." (emphasis is ours) 23.3. This rationale and reasoning was dittoed by the Tribunal. 23.4. The reasoning provided by CIT(A), which has been accepted by the Tribunal, for denying the relief to the Assessee to Unit II are as follows: (i). Even, if, there was improvisation in the production of the final product, i.e.,fasteners/nuts, it was not a commercially different product. (ii). That Unit II could be considered as an expansion of Unit I. This improvisation on the product could have been brought about in Unit I. The fact that fasteners/nuts manufactured in Unit No.II were qualitatively different from ....
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....ible for deduction under Section 80IB of the 1961 Act. 24. The most frequently cited case in the context of Section 80IB is the judgment of the Supreme Court in the matter of Textile Machinery Corporation Limited, Calcutta V. The Commissioner of Income Tax West Bengal, Calcutta (1977) 2 SCC 368. 24.1. This was the decision, which was rendered under Section 15 C of the Income Tax Act, 1922. The provisions of Section 15C was somewhat similar to Section 80IB of the 1961 Act. 24.2. In that case, the Supreme Court was called upon to rule, whether the Assessee would be entitled to deduction in the background of the following facts. 24.3. The facts, broadly, which obtain in the said case, are as follows: The Assessee was in the business of manufacture of boilers, machinery parts, wagons etc. The Assessee had established Steel Foundry Division and a Jute Division. These divisions produce goods, which were required by the Assessee. The Assessee also procured material from outside agencies. The Assessee had maintained separate accounts. In this case too, no old assets were used in the aforementioned two divisions. The Tribunal, in the said case, had allowed the claim for deduc....
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....st is not whether the new industrial undertaking connotes expansion of the existing business of the assessee but whether it is all the same a new and identifiable undertaking separate and distinct from the existing business. No particular decision in one case can lay down an inexorable test to determine whether a given case comes under section 15C or not. In order that the new undertaking can be said to be not formed out of the already existing business, there must be a new emergence of a physically separate industrial unit which may exist on its own as a viable unit. An undertakings is formed out of the existing business if the physical identity with the old unit is preserved. This has not happened here in the case of the two undertakings which are separate and distinct. It is clear that the principal business of the assessee is heavy engineering in the course of which it manufactures boilers, wagons, etc. If an industrial undertaking produce certain machines or parts which are, by themselves, identifiable units being marketable commodities and the undertaking can exist even after the cessation of the principal business of the assessee, it cannot be anything but a new and separ....
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....usiness. Now in the instant case there is no formation of any industrial undertaking out of the existing business since that can take place only when the assets of the old business are transferred substantially to the new undertaking. There is no such transfer of assets in the two cases with which we are concerned. We will now deal with the question whether the two undertakings the assessee are formed by reconstruction of the existing business. The word 'reconstruction' is not defined in the Act but has received judicial interpretation. In re South African Supply and Cold Storage Company, Wild v. Same Company(1), Buckley, J. dealing with the meaning of the word 'reconstruction' in a company matter observed as follows :-- "What does 'reconstruction' mean ? To my mind it means this. An undertaking of some definite' kind is being carried on, and the conclusion is arrived at that it is not desirable to kill that undertaking, but that it is desirable to preserve it in some form, and to do so, not by selling it to an outsider who shall carry it on--that would be a mere sale--but in some altered form to continue the undertaking in Such a manner as that th....
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....subject always to the time-schedule in the section :-- (1) investment of substantial fresh capital in the industrial undertaking set up, (2) employment of requisite labour therein, (3) manufacture or production of articles in the said undertaking, (4) earning of profits clearly attributable to the said new undertaking, and (5) above all, a separate and distinct identity of the industrial unit set up. We may add that there is no bar to an assessee carrying on a particular business to set up a new industrial undertaking on account of which exemption of tax under section 15C may be claimed. The legislature has advisedly refrained from inserting a definition of the word 'reconstruction' in the Act. Indeed, in the infinite variety of instances of restructuring of industry in the course of strides in technology and of other developments, the question has to be left for decision on the peculiar facts of each case. If any undertaking is not formed by reconstruction of the old business that undertaking will not be denied the benefit of section 15C simply because it goes to expand the general business of the assessee on some directions. As in the instant case, once the ne....
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....le produced and/or manufactured by the Assessee is commercially no different from what Unit I manufactured, according to us, is not a ground on which deduction claimed under Section 80 IB can be denied to the Assessee. 26.7. The only condition that the Assessee, in this behalf, is required to fulfill is that, they should manufacture and produce an article or thing. Sub-clause (iii) of sub-section (2) of Section 80IB of the 1961 Act does not require that, in order to claim deduction, the article or any manufacture must be commercially different from that which is manufactured under the aegis of the existing business. 26.8. Employing such a test would, in our view, result in altering the scope, and the effect of sub-clause (iii) of Section 80IB(2) of the 1961 Act and adding a condition, which is not provided for by the legislature. 27. In so far as the aspect of transfer of machinery is concerned qua Unit I, the CIT(A)s and the Tribunal have accepted the fact that the machinery, if transferred is below the permissible limit of 20% of the total value of plant and machinery, it cannot be viewed as violation of the conditions prescribed under Section 80IB of the 1961 Act for cl....
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....t, despite which, the Supreme Court made the following apposite observations: " Words of a statute are undoubtedly the best guide. But if their meaning gets clouded then the courts required to clear the haze. Sub-section (2) advances the objective of sub-section (1) by including in it every undertaking except if it is covered by clause (i) for which it is necessary that it should not be formed by transfer of building or machinery. The restriction or denial of benefit arises not by transfer of building or material to the new company but that it should not be formed by such transfer. This is the key to the interpretation. The formation should not be by such transfer. The emphasis is on formation not on use. Therefore it is not every transfer of building or material but the one which can be held to have resulted in formation of the undertaking. " 28.2. In this case, the Supreme Court was called upon to rule whether carrying on business by a new undertaking in a premises leased from another business would disentitle the Assessee to claim deduction under Section 15 C of the 1922 Act. The Supreme Court, as indicated above, ruled in favour of the Assessee by stressing on the fact th....
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....e able to deprive such an entity of exemption under Section 80IB of the 1961 Act. The distinction, separateness and independence of an industrial undertaking cannot be made dependent only on the attribute of ownership. 29.3. Therefore, for all these reasons, we are of the view that both CIT(A)s as well as the Tribunal were wrong in concluding that the Assessee could not claim deduction under Section 80IB of the 1961 Act vis-a-vis Unit II. 30. At this stage, we must deal with one last argument advanced on behalf of the Revenue, which is that, the Tribunal ought to have directed the Assessing Officer to reconsider the issue, based on the material on record, as to whether or not, vis-a-vis Unit I, the Assessee ought to be given deduction as claimed. 30.1. In this regard, the provisions of Section 80IB(13) read with Section 80 IA(10) were relied upon by the Revenue. According to us, this course is not commended, as the material on record has been thoroughly appraised at each level, i.e., by the Assessing Officer, followed by CIT(A)s and the Tribunal, via its orders dated 28.08.2009 and 12.11.2010. 30.2. Therefore, no reconsideration of material was required, as suggested by....
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....is current income. 31.8. In coming to this conclusion, the Division Bench, inter alia, relied upon the judgment of the Supreme Court, in Liberty India V. CIT [2009] 317 ITR 218 (SC). The observations made in that behalf are extracted hereafter, for the sake of convenience. Heading C is relevant for considering the issue in these appeals. The relevant provisions that are to be considered are sections 80-1, 80-IA and 80-IB. In the case of Liberty India v. CIT, [2009] 317 ITR 218 (SC); [2009] 225 CTR (SC) 233; [2009] 28 DTR (SC) 73, the apex court considered the scope of sections 80-1, 80-IA and also section 80-IB of the Act, wherein, it has been held that Chapter VI-A provides for incentives in the form of tax deductions essentially belong to the category of profit-linked incentives. Therefore, when section 80-IA/80-IB refers to profits derived from eligible business, it is not the ownership of that business which attracts the incentives. Further, it has been held that sections 80-IB/80-IA are the code by themselves as they contain both substantive as well as procedural provisions. The Supreme Court further observed in the said judgment that sub-section (5) of section 80-IA pro....
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.... sub-section (1) apply shall, for the purposes of determining the quantum of deduction under that sub-section for the assessment year immediately succeeding the initial assessment year or any subsequent assessment year, be computed as if such eligible business were the only source of income of the assessee during the previous year relevant to the initial assessment year and to every subsequent assessment year up to and including the assessment year for which the determination is to be made. 16.From a reading of sub-section (1), it is clear that it provides that where the gross total income of an assessee includes any profits and gains derived by an undertaking or an enterprise from any business referred to in subsection (4), i.e., referred to as the eligible business, there shall, in accordance with and subject to the provisions of the section, be allowed, in computing the total income of the assessee, a deduction of an amount equal to 100 per cent, of the profits and gains derived from such business for ten consecutive assessment years. Deduction is given to eligible business and the same is defined in sub-section (4). Sub-section (2) provides option to the assessee to choose 1....
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....beyond the purpose for which it is created." (emphasis is ours) 31.9. As a matter of fact, this view has been followed by Madras High Court in a decision rendered on 12.01.2015 in a batch of Tax Case Appeals, the lead Appeal being: T.C.(A)No.408 of 2014, titled: Commissioner of Income Tax V. Eastman Exports Global Clothing Private Limited. 32. Therefore, following the the ratio of the judgments of the Division Bench of this Court, referred to above, it is quite clear, that if, once the Assessee has exercised the option of choosing the initial Assessment year, only losses of the years beginning from the initial Assessment Year can be brought forward. The Revenue cannot notionally bring forward losses of earlier years, which have been set off against other income of the Assessee. 32.1. Furthermore, having regard to the other aspect of the matter, which is, whether or not, the two power generating units should have been considered separately, one can once again, rely upon the judgment of the Division Bench in the matter of : Velayudhaswamy Spinning Mills Pvt. Ltd. V. Assistant Commissioner of Income Tax (2012) 340 ITR 477 (Madras), wherein, quite clearly, after analysing t....
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.... computing the deduction claimed by the Assessee under Section 80 IA of the 1961 Act, the Assessing Officer ought to have treated the two power divisions as a separate undertakings and furthermore, desisted from setting off the losses of earlier years against the profits of the Assessment Years in issue, by bringing them forward notionally, despite the fact that they had already been set off, as claimed by the Assessee in the earlier years. 35. For the foregoing reasons, T.C.(A) Nos.533 to 538 of 2010, preferred by the Revenue are dismissed. The questions of law raised therein are answered against the Revenue and in favour of the Assessee. 36. Similarly, T.C.(A)Nos.787 and 788 of 2014, preferred by the Revenue, are also dismissed. 36.1. We must, however, indicate that the question of law was not, appropriately, framed, as indicated in our narration above. 36.2. The Tribunal vide its order dated 12.11.2010 has allowed the Assessee's claim for deduction under Section 80IB vis-a-vis Unit I, while disallowing the same in respect of Unit II. Therefore, the Revenue's grievance, if at all, could have been directed towards the Tribunal's view qua Unit I. 36.3. Th....