M/s Elin Appliances Pvt. Ltd., Nalagarh V. DCIT, Circle , Parwanoo

ITA 1506/CHANDI/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 4086 (ITAT-CHANDIGARH)
• Duration Of Justice: 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 11-04-2018
• Assessment Year: 2011-2012
• Appeal Filed On: 30-10-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: YOGENDRA MITTAL
• Section: 80HHC; 80IB; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCHA, CHANDIGARH BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER AND DR. B.R.R. KUMAR, ACCOUNTANT MEMBER ITA NO.1505 & 1506/CHD/2017 ASSESSMENT YEAR: 2010-11 & 2011-12 M/S ELIN APPLIANCES PRIVATE LTD. VS. THE DCIT VILL- BELIKHOL, MANPURA CIRCLE, PARWANOO NALAGARH, HIMACHAL PRADESH PAN NO. AABCE3127E (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI. AMIT SHARMA SHRI. SUMIT KHARBANDA RESPONDENT BY : SHRI. YOGENDRA MITTAL DATE OF HEARING : 09/07/2018 DATE OF PRONOUNCEMENT : 07/08/2018 ORDER PER BENCH: BOTH THE ABOVE APPEALS HAVE BEEN FILED BY THE ASSES SEE AGAINST THE ORDER OF THE LD. CIT(A), FARIDABAD DT. 11/08/2017. 2. ASSESEE HAS RAISED THE FOLLOWING GROUNDS OF APPE AL IN ITA NO. 1505/CHD/2017: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A S WELL AS IN LAW THE LD. CIT(A) ERRED IN UPHOLDING THE DISALLOWING THE DEDUC TION UNDER SECTION 80IC AFTER SETTING OFF LOSSES OF ONE ELIGIBLE PRIORITY UNIT WI TH THE PROFIT OF ANOTHER PRIORITY UNIT BY VIRTUE OF WHICH THE APPELLANT IS DENIED FROM THE ELIGIBLE DEDUCTION OF RS. 7,40,409/- WHICH IS BAD IN LAW AND LIABLE TO BE SET ASIDE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A S WELL AS IN LAW THE LD. CIT(A) GROSSLY ERRED IN UPHOLDING THE ACTION OF LD. AO BASED HIS RELIANCE ON THE CASE OF CIT, SHIMLA VS. HIM TEKNOFORGE LTD. [2012] 26 TAXMANN.COM 129 (H.P.) WITHOUT APPRECIATING THE FACT THAT THE JUDGMENT WAS PRONOUNCED IN RESPECT OF ADJUDICATION OF DEDUCTION ENTITLEMENT UNDER SECTION 80HHC OF THE ACT WHICH HAS NO BEARING ON THE INTERPRETATION OF PROVISION OF SE CTION 80IC OF THE ACT. 2.1 ASSESEE HAS RAISED THE FOLLOWING GROUNDS OF APP EAL IN ITA NO. 1505/CHD/2017: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A S WELL AS IN LAW THE LD. CIT(A) ERRED IN UPHOLDING THE DISALLOWING THE DEDUC TION UNDER SECTION 80IC AFTER SETTING OFF LOSSES OF ONE ELIGIBLE PRIORITY UNIT WI TH THE PROFIT OF ANOTHER PRIORITY UNIT BY VIRTUE OF WHICH THE APPELLANT IS DENIED FROM THE ELIGIBLE DEDUCTION OF RS. 25,50,313/- WHICH IS BAD IN LAW AND LIABLE TO BE SE T ASIDE. 2 1.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A S WELL AS IN LAW THE LD. CIT(A) GROSSLY ERRED IN UPHOLDING THE ACTION OF LD. AO BASED HIS RELIANCE ON THE CASE OF CIT, SHIMLA VS. HIM TEKNOFORGE LTD. [2012] 26 TAXMANN.COM 129 (H.P.) WITHOUT APPRECIATING THE FACT THAT THE JUDGMENT WAS PRONOUNCED IN RESPECT OF ADJUDICATION OF DEDUCTION ENTITLEMENT UNDER SECTION 80HHC OF THE ACT WHICH HAS NO BEARING ON THE INTERPRETATION OF PROVISION OF SE CTION 80IC OF THE ACT. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY IS ENGAGED IN THE MANUFACTURING OF DOMESTIC HOME APPLIANCES AND ELECT RIC GOODS. THE ASSESSEE COMPANY WAS DOING MANUFACTURING ACTIVITIES FROM ITS UNIT (UNIT-1) SINCE 12 TH MAY 2004 AND HAS STARTED A NEW UNIT (UNIT-II) IN THE RE LEVANT F.Y. 2009-10 FOR MANUFACTURING OF ELECTRONIC AND ELECTRICAL ITEMS, L IGHT FITTING ETC. THESE UNITS ARE LOCATED AT VILLAGE BELIKHOL, MANPURA. TEHSIL NALAGA RH AND THE HEAD OFFICE OF THE COMPANY IS AT 4771, BHARAT RAM ROAD, 23, DARYA GANJ , NEW DELHI. 3.1. THE COMPANY WAS CLAIMING DEDUCTION UNDER SECTI ON 80IC WITH RESPECT TO ELIGIBLE PROFITS OF UNIT-1 SINCE A.Y. 2005-06 AND T HIS WAS THE SIXTH YEAR OF CLAIM OF DEDUCTION. ACCORDINGLY ASSESSEE COMPANY HAS CLAIMED DEDUCTION UNDER SECTION 80-IC TO THE TUNE OF 30% OF THE ELIGIBLE PR OFITS IN THE CURRENT YEAR. FURTHER, THE ASSESSEE COMPANY HAS COMMENCED ITS BUSINESS ACT IVITIES IN UNIT-II SINCE 12/03/2010 AND HAS CLAIMED A.Y. 2010-11 AS ITS INIT IAL ASSESSMENT YEAR FOR THE SAME. NO CLAIM OF DEDUCTION UNDER SECTION 80-IC HAS BEEN MADE FOR UNIT-II AS ASSESSEE COMPANY HAS INCURRED LOSSES IN THE SAME. 4. THE ASSESSING OFFICER HAS ALLOWED DEDUCTION TAKI NG INTO CONSIDERATION THE CONSOLIDATED PROFITS OF UNIT-I AND UNIT-II. THE ASS ESSING OFFICER HAS DEDUCTED THE LOSSES OF UNIT-II FROM THE PROFIT EARNED FROM UNIT- I AND ALLOWED THE NET PROFITS AS ELIGIBLE DEDUCTION UNDER SECTION 80IC. THE ASSESSIN G OFFICER WHILE DOING SO RELIED ON THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT, SHIMLA VS. HIM TECHNOFORGE LTD. THE ASSESSING OFFICER FURTHER RELI ED ON THE JUDGMENT OF THE APEX COURT IN THE CASE OF SYNCO INDUSTRIES LTD. 299 ITR 444. 5. AGGRIEVED THE ASSESSEE FILED APPEAL BEFORE THE L D. CIT(A) WHO HAS CONFIRMED THE ORDER OF THE ASSESSING OFFICER BASED ON THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT. 6. BEFORE US, THE LD. AR ARGUED THAT THE ASSESSEE W AS PRIMARILY ENGAGED IN THE BUSINESS OF MANUFACTURING / TRADING DOMESTIC HO ME APPLIANCES ITEMS AND ELECTRIC GOODS. THE ASSESSEE HAD SET UP ITS NEW IND EPENDENT MANUFACTURING UNITS LOCATED AT VILLAGE BELIKHOL, BADDI, HIMACHAL PRADESH AND CARRIED OUT ITS 3 MANUFACTURING / TRADING ACTIVITIES THEREON. IT IS F URTHER SUBMITTED THAT BEING THE UNITS WERE SETUP IN THE SPECIFIED AREA AS MENTIONED UNDER SECTION 80IC OF THE ACT, THEREFORE THE ASSESSEE CLAIMED THE ENTITLEMENT OF AREA BASED EXEMPTION AS MENTIONED IN THE PROVISION OF SECTION 80IC OF TH E ACT. THE ASSESSEE SETUP FIRST ELIGIBLE UNIT IN THE A.Y. 2005-06 (UNIT-I) AND ANOT HER ELIGIBLE UNIT IN THE A.Y. 2010- 11(UNIT-II). IT WAS ARGUED THAT THE ASSESSEE IS ELI GIBLE TO CLAIM DEDUCTION @30% OF THE PROFITS OF THE UNIT-I AND THE ASSESSING OFFICER ERRED HIMSELF IN SETTING OFF THE LOSSES OF UNIT-II IN ALLOWING THE DEDUCTION UNDER S ECTION 80-IC. REGARDING THE CLAIM OF DEDUCTION THE ASSESSEE HAS BASED ON THE CH ART MENTIONED AT PAGE NO. 3 & 4 OF THE PAPER BOOK, WHERE IN THE ASSESSEE HAS SHOWN DEDUCTION UNDER SECTION 80-IC BELOW THE COLUMN OF GROSS TOTAL INCOM E WHEREAS THE ASSESSING OFFICER HAS SHOWN THE DEDUCTION AT THE SAME COLUMN AFTER SETTING OF THE LOSS OF UNIT-II. 6.1 THE LD. AR FURTHER ARGUED THAT IN VIEW OF SECTI ON 80-IA(5) AS REFERRED IN SECTION 80IC(7), WHICH BEGIN WITH A NON-OBSTANTE CL AUSE, THE QUANTUM OF DEDUCTION IS TO BE COMPUTED AS IF THE ELIGIBLE UNDE RTAKING WAS THE ONLY SOURCE OF INCOME OF THE ASSESSEE DURING THE RELEVANT YEARS . IN OTHER WORDS, EACH ELIGIBLE UNDERTAKING OR UNIT IS TO BE TREATED SEPAR ATELY AND INDEPENDENTLY. IT IS ONLY THOSE UNDERTAKINGS, WHICH HAVE A PROFIT OR GAI N, WHICH WOULD BE CONSIDERED FOR COMPUTING THE DEDUCTION, NOT THE LOS S MAKING UNDERTAKINGS. THE PLAIN READING OF THE PROVISION SUGGESTS THAT THE LO SS OF ONE SUCH ELIGIBLE UNDERTAKING CANNOT BE SET OFF AGAINST THE PROFITS O F ANOTHER SUCH ELIGIBLE UNDERTAKING TO ARRIVE AT A COMPUTATION OF THE QUANT UM OF DEDUCTION THAT IS TO BE ALLOWED TO THE ASSESSEE UNDER THE SAID SECTIONS. THEREFORE, IT WAS ARGUED, IF THE JUDGMENT IN THE CASE OF IPCA LABORATORY LTD. HA S BEEN READ INTO THE SECTION 80IA(5), THEN SUCH PROVISION BECOME REDUNDANT AND H AS NO EVIDENT VALUE WHICH SERVE THE PURPOSE AS WAS INCORPORATED IN THE ACT. H E ARGUED THAT IN THE CASE OF HIM TECHNOFORGE (SUPRA), THE ASSESSING OFFICER HAD SET OFF PROFITS OF ELIGIBLE BUSINESS WITH LOSS OF NON - ELIGIBLE BUSINESS AND I N THE INSTANT CASE IT HAD EARNED THE PROFIT AS WELL AS LOSS IN UNITS WHICH ARE CONSI DERED AS ELIGIBLE UNITS. FURTHER HE RELIED ON THE RATIO LAID DOWN IN THE CASE OF SONAKO YO STEERING SYSTEM LTD. 321 ITR 463 (DEL) FOR THE PREPOSITION THAT DEDUCTION SHALL BE CALCULATED ONLY ON ELIGIBLE BUSINESS UNIT WITHOUT SETTING OF ANOTHER ELIGIBLE B USINESS. IT WAS ARGUED THAT THE CASE OF IPCA LABORATORIES (SUPRA) IS IN THE CONTEXT OF DEDUCTION UNDER SECTION 80HHC WHEREAS THE CASE OF THE ASSESSEE PERTAINS TO DEDUCTION UNDER SECTION 4 80IC. HE ALSO PLACED RELIANCE ON JUDGMENTS IN THE C ASE OF JINDAL ALUMINIUM LTD. VS. ASST. CIT, CIRCLE- 11(5), BANGALORE [2012] 26 T AXMANN.COM 317 (BANG.), SHRIRAM PROPERTIES (P.) LTD. VS. ASST. CIT, COMPANY CIRCLE-VI(2)[2013] 36 TAXMANN.COM 398 (CHENNAI-TRIB.), CIT VS. CANARA WOR KSHOP PVT. LTD. 161 ITR 320. 7. LD. DR SHRI Y. MITTAL, RELIED ON THE ORDERS OF T HE LOWER AUTHORITIES AND ARGUED THAT ALL THESE DEDUCTIONS ARE MENTIONED UNDE R CHAPTER VI-A AND THE SEQUENCE OF COMPUTATION OF INCOME AND DEDUCTION IS COMMON FOR ALL THE SECTIONS UNDER CHAPTER VI , BE IT IS FOR SECTION 80 HHC,80IA, 80IB AND 80IC. HE ARGUED THAT THE DEDUCTIONS COME AFTER DETERMINATION OF GROSS TOTAL INCOME AND WHILE DETERMINING THE GROSS TOTAL INCOME THE TOTAL PROFITS OF THE BUSINESS, BE IT THE PROFIT OF ONE UNIT OR PROFIT / LOSS OTHER UNIT S SHOULD BE TAKEN IN A CONSOLIDATED MANNER. HE ARGUED THAT THERE IS NO PROVISION IN THE SCHEME OF THINGS TO CLAIM DEDUCTION FROM THE GROSS TOTAL INCOME AND THEN CLAI M LOSSES WHICH ARE TO BE EITHER CARRIED FORWARD OR SET OFF. 8. WE HAVE HEARD THE ARGUMENTS OF BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED BEFORE US. WE FIND THE MOOT ISSUE R EVOLVES AROUND WHETHER WHILE CALCULATING THE GROSS TOTAL INCOME OF THE ASS ESSEE LOSS OF OTHER PRIORITY UNIT HAS TO BE TAKEN INTO CONSIDERATION OR NOT. IN THE C ASE OF HIM TECHNOFORGE LTD. (SUPRA) THE HONBLE COURT HAS CLEARLY HELD THAT O N PERUSAL OF THE BARE PROVISIONS OF THE ACT AND THE LAW CITED HEREINABOVE , IT IS CLEAR THAT WHILE CALCULATING DEDUCTIONS UNDER CHAPTER VI-A ONLY THE PROFITS DERIVED FROM PRIORITY UNITS ARE TO BE TAKEN INTO CONSIDERATION, SECTION 8 0A(2) SPECIFICALLY PROVIDES THAT THE AMOUNT OF DEDUCTION SHALL NOT IN ANY CASE EXCEE D THE GROSS TOTAL INCOME OF THE ASSESSEE. THERE CAN BE NO MANNER OF DOUBT THAT SECTION 80AB HAS OVERRIDING EFFECT AND WILL GOVERN THE OTHER PROVISI ONS OF CHAPTER VI-A. THIS ALSO CLEARLY INDICATES THAT ONLY THE INCOME DERIVED FROM A PRIORITY UNDERTAKING IS TO BE TAKEN INTO CONSIDERATION WHILE MAKING DEDUCTION. SECTION 80B(5) INDICATES THAT GROSS TOTAL INCOME MEANS THE TOTAL INCOME COMP UTED IN ACCORDANCE WITH THE PROVISIONS OF THIS ACT. THEREFORE, WE ARE OF TH E CONSIDERED VIEW THAT THE PHRASE 'GROSS TOTAL INCOME' WILL INCLUDE PROFITS AN D LOSSES FROM OTHER UNITS WHETHER THEY BE PRIORITY UNITS OR NON-PRIORITY UNIT S. 8.1 FURTHER, THE HONBLE HIGH COURT IS OF THE VI EW THAT BASED ON SECTION 80A(2) THE JUDGMENT RENDERED BY THE APEX COURT IN IPCA LABORATORY LTD. LAYS DOWN THE LAW THAT THE PROFITS OF THE NON-PRIORITY U NITS SHOULD BE FIRST SET OFF WHILE 5 CALCULATING THE INCOME OF THE PRIORITY UNIT. IN SYNCO INDUSTRIES LTD. 'S CASE (SUPRA) THE QUESTION BEFORE THE APEX COURT WAS WHETHER AN ASSES SEE COULD GET BENEFIT OF DEDUCTION WHEN THE GROSS TOTAL INCOME WAS NIL. I N VIEW OF THE PROVISIONS OF SECTION 80A(2) WHICH PROVIDES THAT THE DEDUCTION UN DER CHAPTER VI-A SHALL NOT IN ANY WAY EXCEED THE GROSS TOTAL INCOME OF THE ASS ESSEE, IT IS MORE THAN OBVIOUS THAT IF THE INCOME IS NIL THEN THE ASSESSEE IS NOT ENTITLED TO ANY BENEFIT OF THE DEDUCTIONS. HONBLE COURT HAS HELD THAT THEY WERE OF THE CONSID ERED VIEW THAT WHILE CALCULATING THE DEDUCTIONS UNDER SECTION 80 HH OF 8 0IA OF THE ACT, THE PROFITS OF EACH UNIT WILL HAVE TO BE CALCULATED SEPARATELY. HO WEVER, IN CASE IF BOTH OF THE UNITS ARE PRIORITY UNITS THEN IN VIEW OF LAW LAID D OWN IN IPCA LABORATORY LTD. AND INDUFLEX PRODUCTS (P.) LTD. (SUPRA) THE LOSS OF THE NON-PRIORITY UNIT WILL HAVE TO BE TAKEN INTO ACCOUNT WHILE CALCULATING THE DEDUCTIONS . 9. WE FIND THAT THE HONBLE HIGH COURT HAS TAKEN IN TO CONSIDERATION THE RATIO LAID DOWN IN THE CASE OF SYNCO INDUSTRIES LTD. WHER EIN THE APEX COURT HELD THAT FOR THE PURPOSE OF CALCULATING DEDUCTION UNDER SECT ION 80I(6) THE LOSS SUSTAINED IN ONE OF THE UNITS IS NOT BE TAKEN INTO ACCOUNT BE CAUSE SUB SECTION (6) CONTEMPLATES THAT ONLY PROFITS CAN BE TAKEN INTO AC COUNT S IF THEY WERE THE ONLY SOURCE OF INCOME. UNDER THAT CIRCUMSTANCES IT WAS CONSIDERED THAT WHILE CALCULATING DEDUCTIONS UNDER SECTION 80IA AND 80HH THE PROFITS OF THE EACH UNIT WILL HAVE TO BE CALCULATED SEPARATELY. WHILE HOLDIN G SO THE HONBLE HIGH COURT HAS WELL LAID DOWN THAT IF BOTH THE UNITS ARE PRIOR ITY UNITS THEN THE LAW LAID DOWN IN IPCA LABORATORIES AND INDUFLEX PRODUCTS PVT. LTD WILL OPERATE. THIS CLEARLY SHOWS THAT WHEN THE ISSUE OF DEDUCTION IS AMONG TWO ELIGIBLE UNITS ONE PROFIT YIELDING THE OTHER BEING LOSS MAKING THE RATIO LAID DOWN IN IPCA LABORATORIES LTD. IS APPLICABLE. THE PHRASES TOTAL INCOME AND GROSS TOTAL INCOME HAVE DIFFERENT MEANING AS PER THE INTENTION OF THE LEGISLATURE AND SCHEME OF THE TAXATION PROVISIONS. GROSS TOTAL INCOME HAS BEEN DEFINED TO MEAN THE TOTAL INC OME COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF THE INCOME TAX AC T 1961, THEREFORE IT WILL INCLUDE PROFITS AND LOSSES OF ALL UNITS OF THE ASSE SSEE, WHETHER THEY BE PRIORITY UNITS OR NON PRIORITY UNITS. IF THE GROSS TOTAL INC OME IS NIL THEN AS LAID DOWN IN SYNCO INDUSTRIES(SUPRA) THE ASSESSEE CANNOT GET ANY BENEFIT OF SUCH DEDUCTIONS. SECTION 80A(2) LEAVES NO MATTER OF DOUBT THAT THE A MOUNT OF DEDUCTION CANNOT 6 EXCEED THE GROSS TOTAL INCOME OF THE ASSESSEE. IN A NUTSHELL THE HONBLE COURT HAS LAID DOWN THAT A. THAT WHILE CALCULATING THE DEDUCTION UNDER CHAP TER VI-A ONLY THE LOSSES AND PROFITS DERIVED FROM THE PRIORITY UNITS CAN BE TAKEN INTO CONSIDERATION. B. WHILE CALCULATING THE GROSS TOTAL INCOME OF THE ASSESEE EVEN THE INCOME WHETHER PROFIT OR LOSS OF THE NON PRIORITY UNITS HA S TO BE TAKEN INTO CONSIDERATION. C. THAT THE DEDUCTIONS CANNOT EXCEED THE GROSS TOT AL INCOME AND OBVIOUSLY IF THE GROSS TOTAL INCOME IS NIL THEN THE ASSESSEE WOULD NOT BE ENTITLED TO THE BENEFIT OF DEDUCTIONS. IN THIS BACKGROUND THE PROVISIONS OF SECTION 80IA( 5) AND SECTION 80IC(7) ARE BEING VISITED WHICH READS AS UNDER (5) NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHE R PROVISION OF THIS ACT, THE PROFITS AND GAINS OF AN ELIGIBLE BUSINESS TO WHICH THE PROV ISIONS OF SUB-SECTION (1) APPLY SHALL, FOR THE PURPOSES OF DETERMINING THE QUANTUM OF DEDU CTION UNDER THAT SUB-SECTION FOR THE ASSESSMENT YEAR IMMEDIATELY SUCCEEDING THE INIT IAL 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 PREVIOU S 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 B E MADE. SECTION 80IC(7)READS AS UNDER: (7) THE PROVISIONS CONTAINED IN SUB-SECTION (5) AN D SUB-SECTIONS (7) TO (12) OF SECTION 80-IA SHALL, SO FAR AS MAY BE, APPLY TO THE ELIGIBLE UNDERTAKING OR ENTERPRISE UNDER THIS SECTION. 10. EVEN THOUGH SECTION 80IC HAS TO BE INTERPRETED IN THE LIGHT OF OBJECT OF GIVING INCENTIVES IT STILL HAS TO BE INTERPRETED AS PER THE LANGUAGE MENTIONED THEREON. AN INTERPRETATION WHICH LEADS TO AN UNWANT ED RESULT NOT CONTEMPLATED BY THE LEGISLATURE CANNOT BE GIVEN WHILE COMPUTING THE DEDUCTIONS. THE CONTENTION THAT PROFITS ONLY IN RESPECT OF ONE TYPE OF UNIT SHOULD BE CONSIDERED AND THE PROFITS OF THE ELIGIBLE UNIT COULD NOT BE N EGATIVATED OR SET OFF AGAINST THE LOSS FROM THE OTHER UNIT CANNOT BE ACCEPTED. THE LI BERAL INTERPRETATION HAS TO BE BASED ON THE WORDING OF THE SECTION EMPLOYED THEREO N. IF THE BENEFITS ARE NOT AVAILABLE UNDER ANY SECTION THE SAME CANNOT BE CONF ERRED. GROSS TOTAL INCOME MEANS TOTAL INCOME AS COMPUTED IN ACCORDANCE WITH T HE PROVISIONS OF THE INCOME TAX ACT,1961. SECTION 80AB CLEARLY MENTIONS THAT NOTWITHSTANDING 7 ANYTHING CONTAINED IN THAT SECTION, FOR THE PURPOSE OF COMPUTING THE DEDUCTION UNDER THAT SECTION, THE AMOUNT OF INCOME OF THAT NA TURE, AS COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF THIS ACT (BEFORE MAKING ANY DEDUCTION UNDER THIS CHAPTER) SHALL ALONE BE DEEMED TO BE THE AMOUN T OF INCOME OF THAT NATURE WHICH IS DERIVED OR RECEIVED BY THE ASSESSEE AND WH ICH IS INCLUDED IN HIS GROSS TOTAL INCOME. 11. SECTION 80AB MAKES IT CLEAR THAT THE COMPUTATIO N OF INCOME HAS TO BE IN ACCORDANCE WITH THE PROVISIONS OF THE ACT. IF THE I NCOME 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. HONBLE COURTS HAVE ENUNCIATED THAT FROM THE CHARGING PROVISION OF THE ACT, IT IS DISCERNIBL E THAT THE WORDS 'INCOME' OR 'PROFITS AND GAINS' SHOULD BE UNDERSTOOD AS INCLUDI NG LOSSES ALSO, SO THAT, IN ONE SENSE 'PROFITS AND GAINS' REPRESENT 'PLUS INCOME' W HEREAS LOSSES REPRESENT 'MINUS INCOME'. IN OTHER WORDS, LOSS IS NEGATIVE PROFIT. B OTH POSITIVE AND NEGATIVE PROFITS ARE OF REVENUE CHARACTER. BOTH MUST ENTER INTO COMP UTATION, WHEREVER IT BECOMES MATERIAL, IN THE SAME MODE OF THE TAXABLE I NCOME OF THE ASSESSEE.' 12. THUS KEEPING IN VIEW THE PROVISIONS OF SECTION 80AB, SIGNIFYING THE PROVISIONS PERTAINING TO THE DEDUCTION TO BE MADE W ITH REFERENCE TO THE INCOME INCLUDED IN THE GROSS TOTAL INCOME, SECTION 80IA(5 ) WHICH ELUCIDATES THAT NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PRO VISION OF THIS ACT, THE PROFITS AND GAINS OF AN ELIGIBLE BUSINESS TO WHICH THE PROV ISIONS OF SUB-SECTION(1) APPLY SHALL, FOR THE PURPOSES OF DETERMINING THE QUANTUM OF DEDUCTION UNDER THAT SUB- SECTION FOR THE ASSESSMENT YEAR IMMEDIATELY SUCCEED ING THE INITIAL ASSESSMENT YEAR OR ANY SUBSEQUENT ASSESSMENT YEAR, BE COMPUTED AS IF SUCH ELIGIBLE BUSINESS WERE THE ONLY SOURCE OF INCOME OF THE ASSE SSEE DURING THE PREVIOUS YEAR RELEVANT TO THE INITIAL ASSESSMENT YEAR AND TO EVERY SUBSEQUENT ASSESSMENT YEAR UP TO AN INCLUDING THE ASSESSMENT YEAR FOR WHI CH THE DETERMINATION IS TO BE MADE AND READ WITH SECTION 80IC(7) WHICH INDICATES THE ELIGIBLE DEDUCTIONS ARE ON PAR WITH SUB SECTION 5 OF SECTION 80IA MENTIONED ABOVE AND ALSO KEEPING IN VIEW THE FACT THAT BOTH THE UNITS OF THE ASSESSEE A RE ELIGIBLE UNDERTAKINGS, AND AFTER INTERPRETING WHAT CONSTITUTES GROSS TOTAL INC OME AND ELIGIBLE PROFITS IN VIEW OF THE VARIOUS JUDGMENTS QUOTED ABOVE AS REGARDS TO DETERMINATION OF GROSS TOTAL INCOME, WE HEREBY UPHOLD THE DECISION OF THE LD. CIT(A) CONSIDERING THE 8 SETTING OF THE NEGATIVE INCOME OF ONE PRIORITY UNIT WITH THE POSITIVE INCOME OF THE ANOTHER PRIORITY UNIT BEFORE COMPUTING THE DEDU CTION UNDER 80IC. 13. AS A RESULT BOTH THE APPEALS OF THE ASSESSEE AR E DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (DIVA SINGH) (DR. B.R.R. KUM AR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 07/08/2018 AG COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR