Deputy Commissioner of Income Tax, Circle - 1(1)(1), Bangalore V. M/s. Atria Power Corporation Private Limited, Bangalore

ITA 1097/BANG/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3686 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 4 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 12-10-2021
• Assessment Year: 2014-2015
• Appeal Filed On: 17-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: V SRINIVASAN
• Keywords: Business income; Earning of tax free income; Capital Gains; CHAPTER IV
• Section: 143(3); 14A; 80IB; 80IA; 148

Judgement Text

ITA NOS.1096 & 1097/BANG/2019 M/S. ATRIA POWER CORPORATION PVT. LTD., BANGALORE IN THE INCOME TAX APPELLATE TRIBUNAL ABENCH: BANGALORE BEFORE SHRI GEORGE GEORGE K., JUDICIAL MEMBERAND SHRI B.R. BASKARAN, ACCOUNTANT MEMBER ITA NOS.1096 & 1097/BANG/2019 ASSESSMENTYEARS:2013-14 & 2014-15 DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE-1(1)(1) BENGALURU VS. M/S. ATRIA POWER CORPORATION PVT. LTD. # 11, 1 ST FLOOR COMMISSARIAT ROAD BANGALORE 560 025 PAN NO : AABCA1880E APPELLANT RESPONDENT APPELLANT BY : SHRI K. SANKAR GANESH, D.R. RESPONDENT BY : SHRI V. SRINIVASAN, A.R. DATE OF HEARING : 12.10.2021 DATE OF PRONOUNCEMENT : 12.10.2021 O R D E R PER B.R. BASKARAN, ACCOUNTANT MEMBER: BOTH THE APPEALS FILED BY THE REVENUE ARE DIRECTED AGAINST THE ORDERS PASSED BY LD. CIT(A)-1, BENGLAURU AND THEY R ELATE TO THE ASSESSMENT YEARS 2013-14 & 2014-15. BOTH THE APPEA LS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CO MMON ORDER, FOR THE SAKE OF CONVENIENCE. 2. THE COMMON ISSUE URGED IN BOTH THE YEARS BY THE REVENUE RELATE TO THE QUANTUM OF DEDUCTION ALLOWED U/S 80IA OF THE INCOME- TAX ACT,1961 ['THE ACT' FOR SHORT]. IN ASSESSMENT YEAR 2014-15, THE REVENUE HAS RAISED ONE MORE ISSUE, I.E, THE REVENUE CHALLENGED THE ITA NOS.1096 & 1097/BANG/2019 M/S. ATRIA POWER CORPORATION PVT. LTD., BANGALORE PAGE 2 OF 11 RELIEF GRANTED BY LD. CIT(A) IN RESPECT OF ADDITION MADE U/S 14A OF THE ACT. 3. WE SHALL FIRST TAKE UP THE DISPUTE RELATING TO D EDUCTION U/S 80IA OF THE ACT IN AY 2013-14. THE ASSESSEE IS ENG AGED IN THE BUSINESS OF GENERATION OF TRANSMISSION OF ELECTRIC POWER THROUGH HYDAL AND SOLAR RENEWABLE ENERGY SOURCES. THE ASSE SSEE RUNS AND OPERATES 5 DISTINCT UNDERTAKINGS ENGAGED IN POWER G ENERATION. OUT OF THE ABOVE SAID 5, UNIT NO.4 IS ELIGIBLE FOR DEDU CTION U/S 80IA(4)(IV) OF THE ACT. 4. THE ASSESSMENT FOR THE ASSESSMENT YEAR 2013-14 W AS COMPLETED BY THE A.O. U/S 143(3) OF THE ACT. IN TH E RETURN OF INCOME, THE ASSESSEE HAD CLAIMED DEDUCTION U/S 80IA OF THE ACT TO THE EXTENT OF RS.1,09,84,906/- AND ACCORDINGLY RETU RNED NIL INCOME. THE A.O. DETERMINED THE TOTAL INCOME AT RS.52,92,98 9/- AFTER MAKING DISALLOWANCE U/S 14A OF THE ACT TO THE EXTEN T OF RS.1,15,54,108/-. THE ASSESSEE CHALLENGED THE DISA LLOWANCE MADE U/S 14A OF THE ACT BY FILING APPEAL BEFORE LD. CIT( A), WHO GRANTED PARTIAL RELIEF TO THE ASSESSEE. THE A.O. THEREAFTE R, PASSED THE ORDER GIVING EFFECT TO THE ORDER PASSED BY LD. CIT(A), WH EREIN THE DEDUCTION U/S 80IA WAS GRANTED AT RS.1,72,46,025/-. 5. THE A.O. SUBSEQUENTLY NOTICED THAT THE ASSESSEE HAS DECLARED LOSS UNDER THE HEAD INCOME FROM BUSINESS AND IT H AS EARNED INTEREST INCOME OF RS.2,95,92,915/-, WHICH WAS DECL ARED UNDER THE HEAD INCOME FROM OTHER SOURCES. ACCORDINGLY, THE A .O. TOOK THE VIEW THAT THE DEDUCTION U/S 80IA OF THE ACT HAS BEE N ALLOWED AGAINST INTEREST INCOME ASSESSED UNDER INCOME FROM OTHER SOURCES. ACCORDINGLY, THE AO TOOK THE VIEW THAT T HE DEDUCTION U/S ITA NOS.1096 & 1097/BANG/2019 M/S. ATRIA POWER CORPORATION PVT. LTD., BANGALORE PAGE 3 OF 11 80IA HAS BEEN WRONGLY ALLOWED AND ACCORDINGLY REOPE NED THE ASSESSMENT BY ISSUING NOTICE U/S 148 OF THE ACT. 6. THE ASSESSEE SUBMITTED BEFORE THE AO THAT THE DE DUCTION U/S 80IA OF THE ACT IS ALLOWABLE IN RESPECT OF UNIT NO. 4 AND THE LOSS OF OTHER UNITS NEED NOT BE ADJUSTED FOR ALLOWING DEDUC TION U/S 80IA OF THE ACT. THE A.O. DID NOT ACCEPT THE SAID CONTENTI ONS OF THE ASSESSEE BY PLACING RELIANCE ON THE DECISION RENDER ED BY THE HONBLE SUPREME COURT IN THE CASE OF LIBERTY INDIA VS. CIT (SLP{C}NO.5827/07), WHEREIN IT WAS HELD THAT THE DE DUCTION U/S 80IB OF THE ACT IS ALLOWABLE IN RESPECT OF PROFIT D ERIVED FROM THE ELIGIBLE BUSINESS. ACCORDINGLY, THE A.O. TOOK THE VIEW THAT THE DEDUCTION U/S 80IA OF THE ACT HAS BEEN ALLOWED ERRO NEOUSLY. ACCORDINGLY, HE DID NOT ALLOW THE DEDUCTION CLAIMED U/S 80IA OF THE ACT IN THE ORDER PASSED U/S 143(3) R.W.S. 147 OF TH E ACT. 7. BEFORE LD. CIT(A), THE ASSESSEE CONTENDED THAT T HE DECISION RENDERED BY HONBLE SUPREME COURT IN THE CASE OF LI BERTY INDIA (SUPRA) WAS ON A DIFFERENT ISSUE I.E. WHERE THE AMO UNT RECEIVED BY WAY OF DUTY DRAWBACK IS ELIGIBLE FOR DEDUCTION U/S 80IA OF THE ACT OR NOT. HENCE THE SAID DECISION IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. THE ASSESSEE SUBMITTED THAT, IN THE I NSTANT CASE, THE ISSUE RELATED TO THE MANNER OF COMPUTATION OF DEDUC TION U/S 80IA OF THE ACT. BY PLACING RELIANCE ON FOLLOWING DECIS IONS, THE ASSESSEE SUBMITTED THAT DEDUCTION U/S 80IA OF THE ACT IS ALL OWED ON THE PROFITS OF ELIGIBLE UNIT AND THE LOSS INCURRED IN O THER UNITS SHOULD NOT BE ADJUSTED FOR DETERMINING THE QUANTUM OF DEDU CTION ELIGIBLE U/S 80IA OF THE ACT. IT WAS FURTHER DEDUCTION SO C LAIMED BY THE ASSESSEE DOES NOT EXCEED GROSS TOTAL INCOME: A) JINDAL ALUMINIUM LTD. (IT APPEAL NO.1021/BANG/2011 B) CANARA WORK SHOPS PVT. LTD. (1986) 27 TAXMAN 262. ITA NOS.1096 & 1097/BANG/2019 M/S. ATRIA POWER CORPORATION PVT. LTD., BANGALORE PAGE 4 OF 11 C) DEWAN KRAFT SYSTEM PVT. LTD. (IT APPEAL NO.977/2005 & 186/2006 DATED 27.2.2007) (DEL). 8. THE LD. CIT(A) WAS CONVINCED WITH THE CONTENTION S OF THE ASSESSEE AND ACCORDINGLY DELETED THE DISALLOWANCE M ADE BY TH A.O. WITH THE FOLLOWING OBSERVATIONS:- (5.1 THE FIRST GROUND OF THE APPELLANT IS REGARDING THE CLAIM U/S 80-IA AGAINST THE ACTION OF THE AO IN ADJUSTING THE LOSS OF NON 80-IA UNIT WITH THE PROFIT OF 80-IA UNIT, BEFORE CO MPUTING THE DEDUCTION U/S. 80-IA ON THE NETTED OF PROFIT. THE A PPELLANT IN SUPPORT OF ITS CLAIM HAS RELIED ON VARIOUS CASE LAW S VIZ. 2927 ITR 305 IN THE CASE OF DEWAN KRAFT SYSTEM LTD (2010), C ANARA WORKSHOP P.L. (1986) 161 ITR 3201, ETC., [2012] 26 TAXMANN.COM 317 (BANG.) IN THE ITAT BANGALORE BENCH 'B' JINDAL ALUMINIUM LTD. IN IT APPEAL NO. 1021 (BANG.) OF 2011. IN THE JINDAL ALUMINIUM LTD. THE HON'BLE ITAT BANGALORE HAS HELD AS UNDER: 'SECTION 80-IA OF THE INCOME-TAX ACT, 1961 - DEDUCT IONS - PROFITS AND GAINS FROM INFRASTRUCTURE UNDERTAKINGS - COMPUTATION OF DEDUCTION - ASSESSMENT YEAR 2004-05 - ASSESSEE CLAIMED UNIT-WISE DEDUCTION WITHOUT DEDUCT ING LOSSES OF OTHER ELIGIBLE UNITS - GROSS TOTAL INCOME OF ASS ESSEE WAS POSITIVE AND MORE THAN DEDUCTION CLAIMED UNDER SECT ION 80-IA - * WHETHER DEDUCTION WAS TO BE ALLOWED AS CLAIMED - HE LD, YES [PARA 13]'. [1986]27 TAXMAN 262 (SC) SUPREME COURT OF INDIA COMMISSIONER OF INCOME- TAX V. CANARA WORKSHOPS (P.) LTD CIVIL APPEAL NOS. 1685 AND 1686 (NT) OF 4,JULY 15, 1986, WHEREIN IT WAS HELD AS UNDER: SECTION 80E [AS IT STOOD PRIOR TO 1-4-1968 (NOW SEC TION 80-1)] OF THE COME-TAX ACT, 1961 - DEDUCTIONS - PRIORITY I NDUSTRIES - WHETHER DEDUCTION DER SECTION 80E IS TO BE ALLOWED FROM PROFITS AND GAINS EARNED BY AN INDUSTRY WITHOUT REDUCING SU CH PROFITS BY SETTING OFF LOSS SUFFERED BY OTHER INDUSTRY OWNE D BY ASSESSEE HELD, YES ITA NOS.1096 & 1097/BANG/2019 M/S. ATRIA POWER CORPORATION PVT. LTD., BANGALORE PAGE 5 OF 11 [2007] 160 TAXMAN 343 (DELH] HIGH COURT OF DELHI DEWAN KRAFT SYSTEM (P.) LTD. IT APPEAL NOS. 977 OF 2005 A ND 186 OF 2006, FEBRUARY 27, 2007, WHEREIN IT WAS HELD AS UND ER: 'SECTION 80-IA OF THE INCOME-TAX ACT, 1961 - DEDUCT IONS - PROFITS AND GAINS FROM INDUSTRIAL UNDERTAKINGS OTHER THAN INFRA STRUCTURE DEVELOPMENT UNDERTAKINGS - ASSESSMENT YEARS 1997-98 AND 1998-99 - ASSESSEE WAS CARRYING ON ITS BUSINESS IN UNITS SITU ATED AT KALAMB WHICH WAS NOTIFIED BACKWARD AREA AND ASSESSEE WAS E NTITLED TO DEDUCTION UNDER SECTION 80-IA DURING ASSESSMENT YEA RS IN QUESTION IN RESPECT OF SAID UNIT - OTHER UNIT OF ASSESSEE WAS S ITUATED AT DELHI AND BENEFIT UNDER SECTION 80-IA WAS NOT AVAILABLE TO SA ID UNIT - ASSESSEE FILED RETURN SHOWING PROFITS FROM KALAMB UNIT AND L OSSES FROM DELHI UNIT AND CLAIMED DEDUCTION UNDER SECTION 80-IA OF C ERTAIN AMOUNT BEING 100 PER CENT PROFIT DERIVED FROM KALAMB UNIT ASSESSING OFFICER ADJUSTED LOSS OF DELHI UNIT AGAINST PROFIT OF KALAM B UNIT AND RESTRICTED DEDUCTION TO SAID AMOUNT - WHETHER IN VI EW OF SECTION 80- 1A(7), KALAMB UNIT, BEING ONLY UNIT OF ASSESSEE ELI GIBLE FOR DEDUCTION UNDER SECTION 80-IA,. WAS TO BE TREATED AS AN INDEP ENDENT UNIT AND SAME HAD TO BE TREATED AS ONLY SOURCE OF INCOME FOR ASSESSEE FOR PURPOSE OF COMPUTING DEDUCTION UNDER SECTION 80-IA AND, THEREFORE, ASSESSING OFFICER WAS NOT JUSTIFIED IN RESTRICTING DEDUCTION - HELD, YES' [2017] 85 TAXMANN.COM 134 (SC) SUPREME COURT OF INDIA MAKINO INDIA (P.) LTD CIVIL APPEAL NO. 1062 OF 2017 APRIL 3, 2017 'SECTION 10A OF THE INCOME-TAX ACT, 1961 - FREE TRA DE ZONE (COMPUTATION OF DEDUCTION) - WHETHER IN VIEW OF JUDGMENT IN CIT V. YOKOGAWA INDIA LTD. [20171 391 ITR 274/244 TAXMAN 273/77 TAXMANN.COM 41 (SC), AFTER AMENDMENT OF SECTION 10A BY FINANCE ACT, 2000 WITH EFFECT FROM 1-4-2001, SAID SECTION HAS BECOME A PROVISION FOR DEDUCTION B UT STAGE OF DEDUCTION WOULD BE WHILE COMPUTING GROSS TOTAL INCOME OF ELIG IBLE UNDERTAKING UNDER CHAPTER IV OF ACT AND NOT AT STAGE OF COMPUTATION O F TOTAL INCOME UNDER CHAPTER VI OF ACT - HELD, YES' THE ISSUE INVOLVED IN THE PRESENT APPEAL IS REGARDI NG THE METHODOLOGY OF COMPUTATION OF THE DEDUCTION U/S. 80(I)A OF THE ACT . THE APPELLANT MADE A CLAIM U/S 80-IA AGAINST THE ACTION OF THE AO IN ADJ USTING THE LOSS OF NON 80- IA UNIT WITH THE PROFIT OF 80-IA UNIT, BEFORE COMPU TING THE DEDUCTION U/S. 80- IA ON THE NETTED OF PROFIT. THE JUDICIAL PRECEDENTS CITED BY THE APPELLANT PARTICULARLY, DEWAN KRAFT SYSTEM (P.) LTD(SUPRA) AND IN THE ITAT BANGALORE BENCH 'B' JINDAL ALUMINIUM LTD IN IT APPEAL NO. 1021 (BANG.) OF 2011[2012] 26 TAXMANN.COM 317 (BANG.), SUPPORT THE VIEW THAT NO ADJUSTMENT OF THE LOSS OF NON 80-IA UNIT WITH THE P ROFIT OF -IA ITA NOS.1096 & 1097/BANG/2019 M/S. ATRIA POWER CORPORATION PVT. LTD., BANGALORE PAGE 6 OF 11 UNIT IS TO BE MADE BEFORE COMPUTING THE DEDUCTION U /S. 80-IA. THUS, IT IS AN TED METHOD TO COMPUTE THE DEDUCTION U/S. 80-IA UNIT -WISE WITHOUT TING LOSSES OF OTHER ELIGIBLE UNITS. RESPECTFULLY, FOLLO WING BINDING JUDICIAL PRECEDENTS I ALLOW THE CLAIM OF THE APPELLANT FOR C OMPUTING THE DEDUCTION U/S. 80-IA UNIT-WISE WITHOUT DEDUCTING LO SSES OF OTHER ELIGIBLE UNITS. IN THE RESULT THE AO IS DIRECTED TO RE-COMPUTE THE SAID DEDUCTION UNDER SECTION 80-IA BY TAKING INTO ACCOUN T THE CONSEQUENT TO ORDER GIVING EFFECT TO THE ORDER DATED 12-03-201 8. 9. WE HEARD THE PARTIES ON THIS ISSUE AND PERUSE D THE RECORD. WE NOTICE THAT THE DECISION RENDERED BY LD CIT(A) FIND S SUPPORT FROM THE DECISION RENDERED BY HONBLE SUPREME COURT IN THE C ASE OF CIT VS. RELIANCE ENERGY LTD (CIVIL APPEAL NO.1327 OF 2021 D ATED 28.4.21). IN THE CASE BEFORE HONBLE SUPREME COURT, THE ASSESSEE THEREIN HAD CLAIMED DEDUCTION U/S 80IA TO THE EXTENT OF RS.546. 26 CRORES. THE AO DETERMINED THE QUANTUM OF DEDUCTION AT RS.492.78 CR ORES. THE GROSS TOTAL INCOME OF THE ASSESSEE CONSISTED OF FOLLOWING INCOME:- BUSINESS INCOME - 355.74 CRORES OTHER SOURCES - 41.62 CRORES ----------- GROSS TOTAL INCOME - 397.36 CRORES ========= THE AO RESTRICTED THE DEDUCTION U/S 80IA AND 80IB T O THE EXTENT OF BUSINESS INCOME OF RS.355.74 CRORES, OUT OF WHICH, THE DEDUCTION ALLOWED U/S 80IA WAS RS.354 CRORES. THE CONTENTION OF THE ASSESSEE WAS THAT THE MAXIMUM AMOUNT OF DEDUCTION S HOULD BE RESTRICTED TO RS.397.36 CRORES (THE AMOUNT OF GROSS TOTAL INCOME) AND NOT 355.74 CRORES, SINCE THE ELIGIBLE AMOUNT OF DEDUCTION WAS HIGHER THAN THE GROSS TOTAL INCOME. THE LD CIT(A), TRIBUNAL AND HIGH COURT ACCEPTED THE CLAIM OF THE ASSESSEE. HEN CE THE REVENUE FILED APPEAL BEFORE HONBLE SUPREME COURT. THE HON BLE APEX COURT UPHELD THE VIEW OF THE HIGH COURT AND DISMISSED THE APPEAL OF THE REVENUE. RELEVANT OBSERVATIONS MADE BY THE HONBLE SUPREME COURT ARE EXTRACTED BELOW:- ITA NOS.1096 & 1097/BANG/2019 M/S. ATRIA POWER CORPORATION PVT. LTD., BANGALORE PAGE 7 OF 11 12. THE IMPORT OF SECTION 80-IA IS THAT THE TOTAL INCOME OF AN ASSESSEE IS COMPUTED BY TAKING INTO ACCOUNT THE ALLOWABLE DEDUC TION OF THE PROFITS AND GAINS DERIVED FROM THE ELIGIBLE BUSINESS. WITH RE SPECT TO THE FACTS OF THIS APPEAL, THERE IS NO DISPUTE THAT THE DEDUCTION QUAN TIFIED UNDER SECTION 80- IA IS RS.492,78,60,973/-. TO MAKE IT CLEAR, THE SAI D AMOUNT REPRESENTS THE NET PROFIT MADE BY THE ASSESSEE FROM THE ELIGIBLE BUSINESS COVERED UNDER SUB-SECTION (4), I.E., FROM THE ASSESSEES BUSINESS UNIT INVOLVED IN GENERATION OF POWER. THE CLAIM OF THE ASSESSEE IS T HAT IN COMPUTING ITS TOTAL INCOME, DEDUCTIONS AVAILABLE TO IT HAVE TO BE SET-OFF AGAINST THE GROSS TOTAL INCOME, WHILE THE REVENUE CONTENDS TH AT IT IS ONLY THE BUSINESS INCOME WHICH HAS TO BE TAKEN INTO ACCOUN T FOR THE PURPOSE OF SETTING-OFF THE DEDUCTIONS UNDER SECTIONS 80-IA AND 80-IB OF THE ACT. TO ILLUSTRATE, THE GROSS TOTAL INCOME OF THE ASSESSE E FOR THE ASSESSMENT YEAR 2002-03 IS LESS THAN THE QUANTUM OF DEDUCTION DETER MINED UNDER SECTION 80-IA OF THE ACT. THE ASSESSEE CONTENDS THAT INCOME FROM ALL OTHER HEADS INCLUDING INCOME FROM OTHER SOURCES, IN ADDITION TO BUSINESS INCOME, HAVE TO BE TAKEN INTO ACCOUNT FOR THE PURPOSE OF AL LOWING THE DEDUCTIONS AVAILABLE TO THE ASSESSEE, SUBJECT TO THE CEILING O F GROSS TOTAL INCOME. THE APPELLATE AUTHORITY WAS OF THE VIEW THAT THERE IS NO LIMITATION ON DEDUCTION ADMISSIBLE UNDER SECTION 80-IA OF THE ACT TO INCOME UNDER THE HEAD BUSINESS ONLY, WITH WHICH WE AGREE. 13. THE OTHER CONTENTION OF THE REVENUE IS THAT SUB -SECTION (5) OF SECTION 80-IA REFERS TO COMPUTATION OF QUANTUM OF DEDUCTION BEING LIMITED FROM ELIGIBLE BUSINESS BY TAKING IT AS THE ONLY SOURCE OF INCOME. IT IS CONTENDED THAT THE LANGUAGE OF SUB-SECTION (5) MAKES IT CLEAR THAT DEDUCTION CONTEMPLATED IN SUB-SECTION (1) IS ONLY WITH RESPEC T TO THE INCOME FROM ELIGIBLE BUSINESS WHICH INDICATES THAT THERE IS A CAP IN SUB-SECTION (1) THAT THE DEDUCTION CANNOT EXCEED THE BUSINESS INCOME. ON THE OTHER HAND, IT IS THE CASE OF THE ASSESSEE THAT SUB-SECTION (5) PERTA INS ONLY TO DETERMINATION OF THE QUANTUM OF DEDUCTION UNDER SUB-SECTION (1) B Y TREATING THE ELIGIBLE BUSINESS AS THE ONLY SOURCE OF INCOME. IT WAS SUBM ITTED BY MR. VOHRA, LEARNED SENIOR COUNSEL, THAT THE FINAL COMPUTATION OF DEDUCTION UNDER SECTION 80-IA FOR THE ASSESSMENT YEAR 2002-03 AS AC CEPTED BY THE ASSESSING OFFICER, WAS ARRIVED AT BY TAKING INTO ACCOUNT THE PROFITS FROM THE ELIGIBLE BUSINESS AS THE ONLY SOURCE OF INCOME. HE SUBMIT TED THAT, HOWEVER, SUB- SECTION (5) IS A STEP ANTECEDENT TO THE TREATMENT T O BE GIVEN TO THE DEDUCTION UNDER SUBSECTION (1) AND IS NOT CONCERNED WITH THE EXTENT TO WHICH THE COMPUTED DEDUCTION BE ALLOWED. TO EXPLAIN THE INTER PLAY BETWEEN SUB- SECTION (5) AND SUB-SECTION (1) OF SECTION 80-IA, I T WILL BE USEFUL TO REFER TO THE FACTS OF THIS APPEAL. THE AMOUNT OF DEDUCTION F ROM THE ELIGIBLE BUSINESS COMPUTED UNDER SECTION 80-IA FOR THE ASSE SSMENT YEAR 2002-03 IS RS. 492,78,60,973 /-. THERE IS NO DISPUTE THAT THE SAID AMOUNT REPRESENTS INCOME FROM THE ELIGIBLE BUSINESS UNDER SECTION 8 0-IA AND IS THE ONLY SOURCE OF INCOME FOR THE PURPOSES OF COMPUTING DEDU CTION UNDER SECTION 80-IA. THE QUESTION THAT ARISES FURTHER WITH REFERE NCE TO ALLOWING THE ITA NOS.1096 & 1097/BANG/2019 M/S. ATRIA POWER CORPORATION PVT. LTD., BANGALORE PAGE 8 OF 11 DEDUCTION SO COMPUTED TO ARRIVE AT THE TOTAL INCOM E OF THE ASSESSEE CANNOT BE DETERMINED BY RESORTING TO INTERPRETATION OF SUBSECTION (5). 14. IT WILL BE USEFUL TO REFER TO THE JUDGMENT O F THIS COURT RELIED UPON BY THE REVENUE AS WELL AS THE ASSESSEE. IN SYNCO INDUS TRIES (SUPRA), THIS COURT WAS CONCERNED WITH SECTION 80-I OF THE ACT. SECTION 80-I(6), WHICH IS IN PARI MATERIA TO SECTION 80-IA(5), IS AS FOLLOWS: 80-I(6) NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISION OF THIS ACT, THE PROFITS AND GAINS OF AN INDUSTRIAL UNDERTAKING OR A SHIP OR THE BUSINESS OF A HOTEL OR THE BUSINESS OF REPAIRS TO OCEAN-GOING VESSELS OR OTHER POWERED CRA FT TO WHICH THE PROVISIONS OF SUB-SECTION (1) APPLY SHALL, FOR THE PURPOSES OF DETERMINING THE QUANTUM OF DEDUCTION UNDER SUBSECTI ON (1) FOR THE ASSESSMENT YEAR IMMEDIATELY SUCCEEDING THE INITIAL ASSESSMENT YEAR OR ANY SUBSEQUENT ASSESSMENT YEAR, BE COMPUTED AS I F SUCH INDUSTRIAL UNDERTAKING OR SHIP OR THE BUSINESS OF T HE HOTEL OR THE BUSINESS OF REPAIRS TO OCEAN-GOING VESSELS OR OTHER POWERED CRAFT WERE THE ONLY SOURCE OF INCOME OF THE ASSESSEE DURI NG THE PREVIOUS YEARS RELEVANT TO THE INITIAL ASSESSMENT YEAR AND T O EVERY SUBSEQUENT ASSESSMENT YEAR UP TO AND INCLUDING THE ASSESSMENT YEAR FOR WHICH THE DETERMINATION IS TO BE MADE. IT WAS HELD IN SYNCO INDUSTRIES (SUPRA) THAT FOR TH E PURPOSE OF CALCULATING THE DEDUCTION UNDER SECTION 80-I, LOSS SUSTAINED IN OTHER DIVISIONS OR UNITS CANNOT BE TAKEN INTO ACCOUNT AS SUB-SECTION (6) CON TEMPLATES THAT ONLY PROFITS FROM THE INDUSTRIAL UNDERTAKING SHALL BE TA KEN INTO ACCOUNT AS IT WAS THE ONLY SOURCE OF INCOME. FURTHER, THE COURT CONCL UDED THAT SECTION 80- I(6) OF THE ACT DEALT WITH ACTUAL COMPUTATION OF DE DUCTION WHEREAS SECTION 80-I(1) OF THE ACT DEALT WITH THE TREATMENT TO BE G IVEN TO SUCH DEDUCTIONS IN ORDER TO ARRIVE AT THE TOTAL INCOME OF THE ASSESSEE . THE ASSESSEE ALSO RELIED ON THE JUDGMENT OF THIS COURT IN CANARA WORKSHOPS ( P) LTD., KODIALBALL, MANGALORE (SUPRA) TO EMPHASIZE THE PURPOSE OF SUB-S ECTION (5) OF SECTION 80-IA. IN THIS CASE, THE QUESTION THAT AROSE FOR CO NSIDERATION BEFORE THIS COURT RELATED TO COMPUTATION OF THE PROFITS FOR THE PURPOSE OF DEDUCTION UNDER SECTION 80-E, AS IT THEN EXISTED, AFTER SETTI NG OFF THE LOSS INCURRED BY THE ASSESSEE IN THE MANUFACTURE OF ALLOY STEELS. SE CTION 80-E OF THE ACT, AS IT THEN EXISTED, PERMITTED DEDUCTIONS IN RESPECT OF PR OFITS AND GAINS ATTRIBUTABLE TO THE BUSINESS OF GENERATION OR DISTR IBUTION OF ELECTRICITY OR ANY OTHER FORM OF POWER OR OF CONSTRUCTION, MANUFAC TURE OR PRODUCTION OF ANY ONE OR MORE OF THE ARTICLES OR THINGS SPECIFIED IN THE LIST IN THE FIFTH SCHEDULE. IT WAS ARGUED ON BEHALF OF THE REVENUE TH AT THE PROFITS FROM THE AUTOMOBILE ANCILLARIES INDUSTRY OF THE ASSESSEE MUS T BE REDUCED BY THE LOSS SUFFERED BY THE ASSESSEE IN THE MANUFACTURE OF ALLO Y STEELS. THIS COURT WAS NOT IN AGREEMENT WITH THE SUBMISSIONS MADE BY THE R EVENUE. IT WAS HELD THAT THE PROFITS AND GAINS BY AN INDUSTRY ENTITLED TO BENEFIT UNDER SECTION ITA NOS.1096 & 1097/BANG/2019 M/S. ATRIA POWER CORPORATION PVT. LTD., BANGALORE PAGE 9 OF 11 80-E CANNOT BE REDUCED BY THE LOSS SUFFERED BY ANY OTHER INDUSTRY OR INDUSTRIES OWNED BY THE ASSESSEE. 15. IN THE CASE BEFORE US, THERE IS NO DISCUSSION A BOUT SECTION 80-IA(5) BY THE APPELLATE AUTHORITY, NOR THE TRIBUNAL AND THE H IGH COURT. HOWEVER, WE HAVE CONSIDERED THE SUBMISSIONS ON BEHALF OF THE RE VENUE AS IT HAS A BEARING ON THE INTERPRETATION OF SUB-SECTION (1) OF SECTION 80-IA OF THE ACT. WE HOLD THAT THE SCOPE OF SUB-SECTION (5) OF SECTIO N 80- IA OF THE ACT IS LIMITED TO DETERMINATION OF QUANTUM OF DEDUCTION UN DER SUB-SECTION (1) OF SECTION 80-IA OF THE ACT BY TREATING ELIGIBLE BUSI NESS AS THE ONLY SOURCE OF INCOME. SUB-SECTION (5) CANNOT BE PRESSED INTO SERVICE FOR READING A LIMITATION OF THE DEDUCTION UNDER SUB-SECTION (1) O NLY TO BUSINESS INCOME. AN ATTEMPT WAS MADE BY THE LEARNED SENIOR COUNSEL F OR THE REVENUE TO RELY ON THE PHRASE DERIVED FROM IN SECTION 80-IA (1) OF THE ACT IN RESPECT OF HIS SUBMISSION THAT THE INTENTION OF THE LEGISLATUR E WAS TO GIVE THE NARROWEST POSSIBLE CONSTRUCTION TO DEDUCTION ADMISS IBLE UNDER THIS SUB- SECTION. IT IS NOT NECESSARY FOR US TO DEAL WITH TH IS SUBMISSION IN VIEW OF THE FINDINGS RECORDED ABOVE. FOR THE AFOREMENTIONED REA SONS, THE APPEAL IS DISMISSED QUA THE ISSUE OF THE EXTENT OF DEDUCTION UNDER SECTION 80-IA OF THE ACT. 10. THE HONBLE SUPREME COURT HELD THAT THERE IS NO LIMITATION ON DEDUCTION ADMISSIBLE UNDER SECTION 80-IA OF THE ACT TO INCOME UNDER THE HEAD BUSINESS ONLY. HENCE THE VIEW EXP RESSED BY THE AO IN THE INSTANT CASE WAS NOT RIGHT AND ACCORDINGL Y, WE CONFIRM THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE. 11. WE SHALL NOW TAKE UP THE APPEAL FILED BY THE REVENUE FOR AY 2014-15. THE FIRST ISSUE RELATES TO THE QUANTUM OF DEDUCTION ALLOWABLE U/S 80IA OF THE ACT. THE ASSESSEE CLAIME D DEDUCTION OF RS.3,85,82,607/- U/S 80IA OF THE ACT. THE ASSESSEE HAD DECLARED INTEREST INCOME OF RS.2,24,64,911/- ALSO UNDER THE HEAD INCOME FROM BUSINESS AND ACCORDINGLY DECLARED INCOME OF RS .5,78,25,345/- UNDER THE HEAD INCOME FROM BUSINESS. THE ASSESSEE D ECLARED LOSS UNDER THE HEAD INCOME FROM CAPITAL GAINS AND THE SA ME WAS CARRIED FORWARD. THE INCOME DECLARED UNDER THE HEA D INCOME FROM OTHER SOURCES WAS CLAIMED AS EXEMPT. HENCE THE GRO SS TOTAL INCOME CAME TO BE COMPUTED AT RS.5,78,25,345/-. TH E AO TOOK THE ITA NOS.1096 & 1097/BANG/2019 M/S. ATRIA POWER CORPORATION PVT. LTD., BANGALORE PAGE 10 OF 11 VIEW THAT THE DEDUCTION U/S 80IA IS NOT ALLOWABLE O N THE INTEREST INCOME OF RS.2,24,64,911/-. ACCORDINGLY, HE REDUCE D THE DEDUCTION U/S 80IA TO THE EXTENT OF INTEREST INCOME. THE LD C IT(A) DELETED THE DISALLOWANCE AS DONE IN AY 2013-14. 12. WE HEARD THE PARTIES ON THIS ISSUE AND PER USED THE RECORD. THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT TH E ELIGIBLE AMOUNT OF DEDUCTION U/S 80IA WAS RS.3,85,82,607/-. EVEN, IF THE INTEREST INCOME IS REDUCED FROM BUSINESS INCOME AND SHOWN UN DER OTHER SOURCES, THE GROSS TOTAL INCOME WOULD REMAIN THE SA ME, I.E. RS.5,78,25,345/-. HENCE, AS PER THE DECISION RENDE RED BY HONBLE SUPREME COURT IN THE CASE OF RELIANCE ENERGY LTD (S UPRA), THE ASSESSEE WOULD BE ENTITLED FOR DEDUCTION OF RS.3,85 ,82,607/-. HENCE THE VIEW TAKEN BY THE AO WAS NOT RIGHT AND AC CORDINGLY, WE CONFIRM THE ORDER PASSED BY LD CIT(A) FOR THE DETAI LED REASONS DISCUSSED IN AY 2014-15 (SUPRA). 13. THE NEXT ISSUE CONTESTED BY THE REVENUE IN AY 2014-15 RELATES TO THE DISALLOWANCE MADE U/S 14A OF THE ACT . THE ASSESSEE DECLARED EXEMPT INCOME OF RS.3,32,140/- AND DID NOT DISALLOW ANYTHING U/S14A OF THE ACT. THE AO DISALLOWED A SU M OF RS.1,33,45,993/- U/S 14A. THE LD CIT(A) RESTRICTED THE DISALLOWANCE TO THE AMOUNT OF EXEMPT INCOME BY FOLL OWING THE DECISION RENDERED BY HONBLE KARNATAKA HIGH COURT I N THE CASE OF PRAGATHI KRISHNA GRAMEENA BANK (IT APPEAL NO.100001 & 100002 OF 2018) AND ALSO VARIOUS TRIBUNAL DECISIONS. THE REVENUE IS AGGRIEVED. 14. WE HEARD THE PARTIES AND PERUSED THE RECORD . WE NOTICE THAT THE LD CIT(A) HAS DECIDED THIS ISSUE FOLLOWING THE BINDING DECISION ITA NOS.1096 & 1097/BANG/2019 M/S. ATRIA POWER CORPORATION PVT. LTD., BANGALORE PAGE 11 OF 11 OF HONBLE JURISDICTIONAL KARNATAKA HIGH COURT. HE NCE WE DO NOT FIND ANY REASON TO INTERFERE WITH HIS DECISION REND ERED ON THIS ISSUE. 15. IN THE RESULT, BOTH THE APPEALS OF THE ASSE SSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH OCT, 2021 SD/- (GEORGE GEORGE K.) JUDICIAL MEMBER SD/- (B.R. BASKARAN) ACCOUNTANT MEMBER BANGALORE, DATED 12 TH OCT, 2021. VG/SPS COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.