2021 (1) TMI 606

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....ssee brought to our notice the written submission, which is reproduced below:- a) The Assessee has earned the following net taxable incomes from each of its respective units Reporting unit Deduction u/s 35AD (Rs) Net Income (Rs) Mumbai -- 3,99,40,374 Chandigarh 1,10,94,787 5,62,11,853 Indore -- 64,07,686 Ahmadabad -- 1,87,27,261 Hyderabad -- 2,97,769 HUL -- 2,51,887 Mohali -- (2,38,412) Net Taxable Income / (Loss)   12,15,98,418 b) For AY 2011-12, the Assessee had claimed the deduction under Section 35AD of the Act, only in respect of the Chandigarh unit. This resulted in a loss in respect of the Chandigarh unit of Rs. 35,94,62,610/-. ....

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....ssessee. d) Being aggrieved by the action of the Ld. CIT(A) the Assessee filed an appeal before the Hon. ITAT. e) The Assessee, during the course of the hearing pointed out the distinction between Section 35AD and Section 73A of the Act. The Assessee pointed out that even if a unit did not fulfill the conditions enabling it to qualify for the deduction Section 35AD of the Act, yet, if it came within the definition of "Specified Business" as defined under Section 35AD(8)(c)(iv) of the Act, the loss in respect of any "Specified Business" would be available for set off against the profits of such unit, even though such unit, by itself, did not qualify for the deduction under Section 35AD of the Act. f) The Assessee, ....

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....tly observed: "Ld.AR has submitted that it is not claiming the benefit in Indore branch and accordingly, it should be eliminated" j) In para 18 on page 22 of its order, the Hon. ITAT has correctly observed: "As far as deduction for Indore unit is concerned, the assessee is not claiming the deduction for this Indore hotel and finally he submitted that the Section 35AD is introduced as incentive provisions, it should be interpreted not in narrow manner" k) The Assessee respectfully submits that while the Hon. ITAT, in para 18 on page 22, has correctly observed that the Assessee is not claiming the deduction u/s 35AD of the Act, in respect of its Indore unit, in para 20 on page 24 of its order (reproduced above) and ....

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....ction and set off u/s 35AD and 73A respectively. While dealing with individual units, we have already adjudicated that the units Mumbai and Indore are specified business units and eligible to set off u/s 73A and can claim deduction u/s 35AD. However, we observe that Indore Unit was established before the cut off dates specified in section 35AD. Accordingly, even though Indore unit is comes under specified business, but cannot claim any benefit u/s 35AD. The same was acknowledged by the assessee. It is fact on record and submission made by assessee that as per the clarification note on Finance Bill 2011, the clarification note state as below:- "Under section 73A, any loss of a "specified business" (under section 35AD) is allowed set....