M/s Milestone Gears Private Limited, Parwanoo V. DCIT, Parwanoo

ITA 1674/CHANDI/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4117 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 19-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Question of law
• Section: 80HHC; 80IA; 80IC; 80HH; 145

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH B , CHANDIGARH , !' # $ % &' , BEFORE: SHRI SANJAY GARG, JUDICIAL MEMBER AND SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER ./ ITA NOS.1674 & 1675/CHD/2017 / ASSESSMENT YEARS : 2013-14 & 2014-15 MILESTONE GEARS PRIVATE LIMITED, 58, INDUSTRIAL AREA, SECTOR 1, PARWANOO. THE D .C.I.T., CIRCLE PARWANOO. ./PAN NO: AAACM9431E /APPELLANT /RESPONDENT /ASSESSEE BY : SHRI ANIL KHANNA, CA ! / REVENUE BY : SHRI MANJIT SINGH, SR.DR ' # $ /DATE OF HEARING : 05.03.2019 %&'( $ /DATE OF PRONOUNCEMENT: 13.03.2019 /ORDER PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER : BOTH THE ABOVE APPEALS FILED BY THE SAME ASSESSEE HAVE BEEN PREFERRED AGAINST SEPARATE ORDERS OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS), SHIMLA (HEREI NAFTER REFERRED TO AS CIT(APPEALS)) EACH DATED 30.10.201 7, PASSED U/S 250(6) OF THE INCOME TAX ACT, 1961 (IN SHORT T HE ACT) RELATING TO ASSESSMENT YEARS 2013-14 AND 2014-15. IT WAS COMMON GROUND THAT THE ISSUES INVOLVED IN AL L THE APPEALS WERE IDENTICAL, THEY WERE THEREFORE HEA RD TOGETHER AND ARE BEING DECIDED BY THIS CONSOLIDATED ORDER. FOR THE SAKE OF CONVENIENCE, WE SHALL BE DEALING WI TH THE 2 FACTS IN ITA NO.1674/CHD/2017 FOR ASSESSMENT YEAR 2 013- 14 FOR ADJUDICATION AND THE DECISION RENDERED THERE IN SHALL APPLY MUTATIS MUTANDIS TO THE OTHER APPEAL OF THE A SSESSEE IN ITA NO.1675/CHD/2017 ALSO. 2. IT WAS POINTED OUT THAT THE ISSUE INVOLVED IN BO TH THE APPEALS RELATED TO THE CALCULATION OF THE QUANTUM O F DEDUCTION U/S 80IC OF THE ACT WHETHER IT WAS TO BE CALCULATED TAKING EACH ELIGIBLE ENTITY SEPARATELY O R AFTER NETTING THE PROFITS/LOSSES OF ALL THE ELIGIBLE ENTI TIES. 3. BRIEF FACTS RELATING TO THE ISSUE ARE THAT THE A SSESSEE COMPANY HAD FIVE MANUFACTURING UNITS DURING THE YEA R, WHICH ARE NAMELY UNIT -1 AT PLOT NO. 58, SECTOR-1, PARWANOO, UNIT -III, UNIT -IV AT BAROTIWALA, UNIT-V AT PLOT N O. 22-24, SECTOR-1, INDL. AREA, PARWANOO AND UNIT-VII. THE DE TAILS OF YEAR OF COMMENCEMENT/SUBSTANTIAL EXPANSION AND THE DEDUCTION CLAIMED U/S 80IC WITH RESPECT TO THE ELIG IBLE UNITS IS TABULATED AS UNDER:- UNIT DATE OF SUBSTANTIAL EXPANSION/COMMENCEMENT OF COMMERCIAL PRODUCTION INCOME / (LOSS) FOR THE YEAR RS. 80 1C DEDUCTION CLAIMED BY THE ASSESSEE I PARWANO O SUBSTANTIAL EXPANSION 28.02.2005 3, 03,41,014 @ 30% RS.91,02,304 III BAROTIWALA COMMENCEMENT OF COMMERCIAL PRODUCTION ON 18.8.2004 AND FURTHER SUBSTANTIAL EXPANSION WAS DONE ON 29.3.2008 9,81,57,572 @ 30% RS. 2,94,47,272 IV COMMENCEMENT OF COMMERCIAL PRODUCTION ON 23.3.2010 (3,40,35,116) ELIGIBLE FOR 100%, BEING LOSS NO DEDUCTION WAS CLAIMED 3 V COMMENCEMENT OF COMMERCIAL PRODUCTION ON 23.3.2010 (1,36,26,342) ELIGIBLE FOR 100%, BEING LOSS NO DEDUCTION WAS CLAIMED VII COMMENCEMENT OF COMMERCIAL PRODUCTION ON 28.03.2012 1,56,86,643 ELIGIBLE FOR 100%, AFTER SETTING OFF B/F LOSSES OF THE UNIT TO THE TUNE OF RS.64,96,872, A DEDUCTION OF 91,89,771 WAS CLAIMED WITH REGARDS TO THE ASSESSEE'S CLAIM OF DEDUCTIO N U/S 80IC IN RESPECT OF UNIT-L .UNIT-ILL AND UNIT-VII, T HE A.O RELYING ON THE DECISION OF THE HON'BLE HIGH COURT OF HIMACHAL PRADESH IN THE CASE OF CIT SHIMLA VS M/S H IM TEKNOFORGE LTD (ITA 36,37,38 OF 2008) SET OFF TE LO SSES OF THE ELIGIBLE UNITS I.E. UNIT-IV & UNIT-V AGAINST THE EL IGIBLE PROFITS OF UNITS-I, UNIT-III & UNIT-VII BEFORE ALLO WING DEDUCTION U/S 80IC OF THE ACT. THE A.O. HAD RECOMP UTED THE DEDUCTION U/S 80IC OF THE ACT ON THE BASIS OF UNIT- WISE COMPUTATION FILED BY ASSESSEE WHICH IS REPRODUCED A S UNDER: PARTICULARS PARWANOO UNIT BAROTIWALA UNIT III BAROTIWALA UNIT IV PARWANOO UNIT V BAROTIWALA UNIT VII TOTAL NET UNIT WISE INCOME DECLARED BY THE ASSESSEE RS. 3,03,41,014/- RS.9,81,57,572/- (-) 3,40,35,116/- (-) 1,36,26,342/- RS. 1,56,86,643/- RS. 9,65,23,771/- BF LOSSES OF EARLIER YEAR NIL NIL (-)11,36,14,936/- (-)3,36,25,890/- (-)64,96 ,872/- NET INCOME AFTER SETTING OF THE LOSSES RS.3,03,41,014/- RS.9,81,57,572/- (-)14,76,50,052/- (-)4,72,52,232/- RS.91,89,771/- DEDUCTION U/S 80IC CLAIMED BY THE ASSESSEE RS.91,02,304/- (30%) RS.2,94,47,272/- (30%) NIL NIL RS.91,89,771/- RS.4,77,39,347/- DEDUCTION AS CALCULATED BY THE A.O. PARTICULARS PARWANOO UNIT BAROTIWALA UNIT III BARO TIWALA UNIT IV PARWANOO UNIT V BAROTIWALA UNIT VII TOTAL NET UNIT WISE INCOME DECLARED BY THE ASSESSEE RS. 3,03,41,014/- RS.9,81,57,572/- (-) 3,40,35,116/- (-) 1,36,26,342/- RS. 1,56,86,643/- RS. 9,65,23,771/- LOSSES OF - (-)4,76,61,458/- LOSSES OF THE LOSS ES OF THE NIL - 4 THE BAROTIWALA UNIT-IV AND PARWANOO UNIT V ARE SET OFF WITH THE PROFITS OF BAROTIWALA UNIT III (3,40,35,116/- 1,36,26,342/-) BAROTIWALA UNIT-IV SET OFF WITH THE UNIT III +3,40,35,116/- PARWANOO UNIT V SET OFF WITH THE UNIT III +1,36,26,342/- NET ELIGIBLE PROFIT RS.3,03,41,014/- RS.5,04,96,114/- NIL NIL RS.1,56,8 6,643/- RS.9,65,23,771/- BF LOSSES OF EARLIER YEAR NOT ALLOWED TO BE SET OFF (AS ASSESSEE HAD NOT CLAIMED THE LOSSES IN ITS INCOME TAX RETURN NIL NIL NIL NIL NIL NIL RECOMPUTE D DEDUCTION U/S 80IC RS.91,02,304/- 30% RS.1,51,48,834/- @ 30% NIL NIL RS.11,56,86,643/- @ 100% RS.3,99,37,781/- 4. THE LD.CIT(A) UPHELD THE ORDER OF THE A.O. AGGR IEVED BY THE SAME THE ASSESSEE HAS COME UP IN APPEAL BEFO RE US, RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. AS PER FACTS AND CIRCUMSTANCES OF THE CASE AND PROVISIONS OF LAW, THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN RESPECT OF THE ADJUSTMENT OF T HE LOSSES OF UNIT IV & UNIT V AGAINST THE PROFITS OF U NIT III FOR CONSIDERING THE DEDUCTION U/S 80IC. THE SAME BE CONSIDERED SEPARATELY FOR THE PURPOSES OF DEDUCTION U/S 80IC AS PER LAW. 2. AS PER FACTS AND CIRCUMSTANCES OF THE CASE AND PROVISIONS OF LAW, THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED REDUCING THE PROFITS OF UNIT VII RS . 1,56,86,643 WHICH IS ELIGIBLE FOR 100% DEDUCTION FROM PROFITS OF UNIT III. THE SAME BE CONSIDERED SEPARATEL Y FOR THE PURPOSES OF DEDUCTION U/S 80IC AS PER LAW. 3. AS PER FACTS AND CIRCUMSTANCES OF THE CASE AND PROVISIONS OF LAW, THE COMMISSIONER OF INCOME TAX (APPEALS) HAS RESTRICTING THE DEDUCTION TO RS.1,95, 145 U/S 80IC. THE CLAIM OF ASSESSEE AMOUNTING TO RS. 4,77,39,347 U/S 80IC BE ALLOWED. 4. THE ASSESSEE CRAVES PERMISSION TO ADD OR AMEND THE ABOVE GROUNDS AT THE TIME OF HEARING. 5. AT THE OUTSET, IT WAS POINTED OUT THAT THE ISSUE INVOLVED IN THE PRESENT APPEAL HAS ALREADY BEEN ADJ UDICATED 5 IN FAVOUR OF THE ASSESSEE BY THE I.T.A.T. IN ASSESS EES CASE ITSELF RELATING TO ASSESSMENT YEARS 2010-11 TO 2012 -13 VIDE THEIR ORDER IN ITA NOS.883 TO 885/CHD/2017 DATED 6.12.2018. COPY OF THE ORDER WAS PLACED BEFORE US. OUR ATTENTION WAS DRAWN TO THE FINDINGS OF THE I.T.A.T. AT PARAS 12 TO 22 OF THE ORDER AS UNDER: 12. WE HAVE HEARD THE CONTENTIONS OF BOTH THE PARTIES CAREFULLY AND HAVE EVEN CAREFULLY GONE THROUGH THE ORDERS OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF HIM TEKNOFORGE LTD. (SUPRA) WHICH HAVE BEEN HEAVILY RELIED UPON BY THE REVENUE IN SUPPORT OF THE ORDER OF THE LOWER AUTHORITIES ON THE PROPOSITION THAT THE PROFITS AND LOSSES OF ALL THE ELIGIBLE UNDERTAKINGS ARE TO BE NETTED AND ON THE BALANCE OF PROFITS THE DEDUCTION IS TO BE CALCULATED U/S 80IC OF THE ACT. 13. THE FACTS BEFORE THE HON'BLE JURISDICTIONAL HIGH COURT WERE THAT THE ASSESSEE WAS HAVING SEPARATE UNITS, SOME OF WHICH WERE ENTITLED TO BENEFIT IN TERMS OF SECTION 80HH AND 80IA OF THE ACT AND WHICH WERE REFERRED TO AS PRIORITY UNITS. I N ALL THE CASES NONE OF THE PRIORITY UNITS WERE RUNNING IN LOSSES AND THE REVENUE HAD CONTENDED THAT THE LOSSES OF THE NON PRIORITY UNITS HAD ALSO TO BE TAKEN INTO CONSIDERATION FOR WORKING OUT THE INCOME OF PRIORITY UNITS FOR THE PURPOSE OF CALCULATION OF DEDUCTION U/SS 80HH AND 80IA OF THE ACT. IT WAS THE CONTENTION OF THE REVENUE THAT THE INCOME WHETHER POSITIVE OR NEGATIVE OF ALL THE UNITS PRIORITY OR NON PRIORITY WERE TO BE CLUBBED TOGETHER FOR WORKING OUT GROSS TOTAL INCOME FOR THE PURPOSE OF GRANT OF TAX BENEFITS. THE CONTENTION OF THE ASSESSEE, ON THE OTHER HAND, WAS THAT THE DEDUCTION WAS TO BE COMPUTED ONLY ON THE PROFITS AND GAINS DERIVED FROM INDUSTRIAL UNDERTAKINGS TO WHICH THE BENEFIT WAS GRANTED AND WAS NOT RELATABLE TO THE GROSS TOTAL INCOME OF THE ASSESSEE BUT ONLY TO THE GROSS INCOME FROM THAT PARTICULAR INDUSTRIAL UNDERTAKING. ON GOING THROUGH THE ORDER OF THE HON'BLE HIGH COURT IN THE CASE OF HIM TEKNOFORGE LTD. (SUPRA), WE FIND THAT THE QUESTION OF LAW BEFORE TH E HON'BLE JURISDICTIONAL HIGH COURT WAS THAT WHETHER DEDUCTIONS U/S 80HH/80IA OF THE ACT WERE ALLOWABLE ON THE PROFITS OF EACH UNIT SEPARATELY. THE HON'BLE HIGH COURT AFTER CONSIDERING THE PROVISIONS OF THE ACT AND VARIOUS 6 JUDICIAL DECISIONS IN THIS REGARD, HELD THAT WHILE CALCULATING THE DEDUCTION UNDER CHAPTER VI-A, UNDER WHICH THE DEDUCTIONS WERE ALLOWED, ONLY THE PROFITS OF PRIORITY UNITS, MEANING THEREBY THE ELIGIBLE UNITS, WERE TO BE TAKEN INTO CONSIDERATION . 14. THE HONBLE HIGH COURT ANALYZED THE RELEVANT PROVISIONS OF CHAPTER VI A ,SPECIFICALLY REFERRING TO SECTION 80AB INCLUDED THEREIN AND WHICH DEALT WITH DEDUCTION TO BE MADE WITH REFERENCE TO INCOME INCLUDED IN THE GROSS TOTAL INCOME. THE SAME IS REPRODUCED HEREUNDER FOR CLARITY: 80AB. [DEDUCTIONS TO BE MADE WITH REFERENCE TO THE INCOME INCLUDED IN THE GROSS TOTAL INCOME. WHERE ANY DEDUCTION IS REQUIRED TO BE MADE OR ALLOWED UNDER ANY SECTION [][* * *] INCLUDED IN THIS CHAPTER UNDER THE HEADING CDEDUCTIONS IN RESPECT OF CERTAIN INCOMES IN RES PECT OF ANY INCOME OF THE NATURE SPECIFIED IN THAT SECTION WHICH IS INCLUDED IN THE GROSS TOTAL INCOME OF THE ASSESSEE, T HEN, NOTWITHSTANDING ANYTHING CONTAINED IN THAT SECTION, F OR THE PURPOSE OF COMPUTING THE DEDUCTION UNDER THAT SECTI ON, THE AMOUNT OF INCOME OF THAT NATURE AS COMPUTED IN ACCO RDANCE WITH THE PROVISIONS OF THIS ACT (BEFORE MAKING ANY D EDUCTION UNDER THIS CHAPTER) SHALL ALONE BE DEEMED TO BE THE AM OUNT OF INCOME OF THAT NATURE WHICH IS DERIVED OR RECEIVED BY THE ASSESSEE AND WHICH IS INCLUDED IN HIS GROSS TOTAL INCOM E.] 15. READING THE SAME, THE HON'BLE HIGH COURT HELD THAT THERE CAN BE NO MANNER OF DOUBT THAT ONLY INCOME FROM A PRIORITY UNDERTAKING IS TO BE TAKEN INTO CONSIDERATION WHILE MAKING THE DEDUCTION AND THE PROFITS OR LOSSES OF NON PRIORITY UNDERTAKINGS ARE NOT TO BE CONSIDERED. GOING FURTHER, THE HON'BLE HIGH COURT HELD THAT IF THERE WERE MORE THAN ONE PRIORITY UNDERTAKING, THE PROFITS AND LOSSES OF ALL THE PRIORITY UNDERTAKINGS HAD TO BE CLUBBED TOGETHER AND DEDUCTION WAS TO BE CALCULATED ON THE PROFITS REMAINING. WHILE LAYING DOWN THIS PROPOSITION THE HON'BLE HIGH COURT STATED THAT THOUGH THE HON'BLE APEX COURT IN THE CASE OF CIT(CIVIL) MADRAS VS. CANARA WORKSHOPS PVT. LTD. (1986) 61 ITR 120 HAS CLEARLY HELD THAT NO CLUBBING OF PROFITS AND LOSSES OF PRIORITY UNDERTAKING SHALL TO BE DONE FOR CALCULATING THE QUANTUM OF ELIGIBLE DEDUCTION, THE LATER DECISIONS OF THE HON'BLE APEX COURT IN IPCA LABORATORIES LTD. VS. DCIT (2004) 266 ITR 521, ITO VS. INDUFLEX PRODUCTS PVT. LTD. (2006) 280 ITR 1 AND THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF SYNCO INDUSTRIES LTD. VS. AO & ANOTHER (2008) 299 ITR 444, DILUTED THE SAID DECISION AND RELYING ON THE LATER DECISIONS OF THE HON'BLE APEX COURT, THE HON'BLE HIGH COURT HELD THAT THE PROFITS AND LOSSES OF THE PRIORITY UNITS WERE TO BE CLUBBED 7 AND THEREAFTER THE DEDUCTION CALCULATED. THE HON'BLE HIGH COURT FOUND THAT THE HON'BLE APEX COURT IN THE SAID CASES I.E. IPCA LABORATORIES LTD. (SUPRA) AND INDUFLEX PRODUCTS PVT. LTD. (SUPRA), WHILE DEALING WITH THE ISSUE OF DEDUCTION ALLOWABLE U/S 80HHC, HAD HELD THAT SECTION 80AB HAD A NOTWITHSTANDING CLAUSE AND THUS HAD A OVERRIDING EFFECT OVER ALL OTHER SECTIONS IN CHAPTE R VIA, WHICH INCLUDED SECTION 80HHC ALSO. THE HONBLE APEX COURT NOTED IN THE SAID DECISION THAT SECTION 80HHC DID NOT PROVIDE THAT ITS PROVISION WOULD PREVAIL OVER SECTION 80AB OR ANY PROVISIONS OF THE ACT. THUS THE HON'BLE APEX COURT HELD THAT THE SECTION 80HHC WOULD BE IGNORED BY 80AB AND, THEREFORE, AS PER SECTION 80AB OF THE ACT THE AMOUNT OF INCOME ELIGIBLE FOR DEDUCTION WOULD HAVE TO BE COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF THE ACT WHICH MEANT THAT THE PROFITS AND LOSSES OF UNITS WOULD HAVE TO BE SET OFF AGAINST EACH OTHER, SINCE THE SECTION PROVIDING FOR SET OFF OF LOSSES PRECEDED THE CHAPTER VI-A DEALING WITH DEDUCTION UNDER THE ACT. FOLLOWING THIS PROPOSITION LAID DOWN BY THE HON'BLE APEX COURT IN THE CASE OF IPCA LABORATORIES LTD. (SUPRA) THE HON'BLE HIGH COURT HELD THAT THE HON'BLE APEX COURT HAD CLEARLY LAID DOWN THE LAW IN THIS REGARD THAT SECTION 80AB WOULD PREVAIL OVER THE OTHER SECTIONS PROVIDED IN CHAPTER VI A OF THE ACT DEALING WITH THE DEDUCTION OF INCOMES ,AND SINCE SECTION 80AB PROVIDED FOR THE COMPUTATION OF INCOME ELIGIBLE FOR DEDUCTION IN ACCORDANCE WITH THE PROVISIONS OF THE ACT, THE PROFITS AND LOSSES OF ALL PRIORITY UNITS NEEDED TO BE SET OFF AND IN THE BALANCE INCOME ONLY DEDUCTION WAS TO BE CALCULATED. 16. THE POINT TO BE NOTED IS THAT THE HON'BLE HIGH COURT FOLLOWED THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF IPCA LABORATORIES LTD. (SUPRA) WHEREIN THE HON'BLE APEX COURT WAS SEIZED WITH THE ISSUE OF DEDUCTION U/S 80HHC OF THE ACT AND THE HON'BLE APEX COURT HAD HELD THAT SINCE SECTION 80AB OF THE ACT PROVIDED FOR A NOTWITHSTANDING CLAUSE AND THERE BEING NO SUCH CORRESPONDING CLAUSE PROVIDED FOR IN SECTION 80HHC THE PROVISION OF SECTION 80AB WOULD OVERRIDE THE PROVISIONS OF SECTION 80HHC OF THE ACT. THIS IS A VERY IMPORTANT OBSERVATION OF THE HON'BLE HIGH COURT AND IT IS FROM THIS THAT A DISTINCTION CAN BE DRAWN VIS--VIS DEDUCTION CLAIMED U/S 80IC OF THE ACT, WHICH IS THE FACT IN THE PRESENT CASE. FOR CLARITY THE RELEVANT PROVISIONS OF SECTION 80IA & 80IC OF THE ACT ARE BEING REPRODUCED HEREUNDER: 80-IA [(1) WHERE THE GROSS TOTAL INCOME OF AN ASSESSEE INCLUDES ANY PROFITS AND GAINS DERIVED BY AN UNDERTAKING OR AN ENTERPRISE FROM ANY BUSINESS 8 REFERRED TO IN SUB-SECTION (4) (SUCH BUSINESS BEING HEREINAFTER REFERRED TO AS THE ELIGIBLE BUSINESS), THERE SHALL, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THIS SECTION, BE ALLOWED, IN COMPUTIN G THE TOTAL INCOME OF THE ASSESSEE, A DEDUCTION OF AN AMOUNT EQUAL TO HUNDRED PER CENT OF PROFITS AND GAINS DERIVED FROM SUCH BUSINESS FOR TEN CONSECUTIVE ASSESSMENT YEARS.] (5) NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISION OF THIS ACT, THE PROFITS AND GAINS OF AN ELIGIBLE BUSINESS TO WHICH THE PROVISIONS OF 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. 80-IC [SPECIAL PROVISIONS IN RESPECT OF CERTAIN UNDERTAKINGS OR ENTERPRISES IN CERTAIN SPECIAL CATEGORY STATES (1) 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 SUB-SECTION (2), THERE SHALL, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF TH IS SECTION, BE ALLOWED, IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE, A DEDUCTION FROM SUCH PROFITS AND GAINS, AS SPECIFIED IN SUB-SECTION (3). 7) THE PROVISIONS CONTAINED IN SUB-SECTION (5) AND SUB -SECTIONS (7) TO (12) OF SECTION 80-IA SHALL, SO FAR AS MAY BE, APP LY TO THE ELIGIBLE UNDERTAKING OR ENTERPRISE UNDER THIS SECTION. 17. AS PER SECTION 80IC(7), THE PROVISIONS OF SECTION 80IA(5) HAVE BEEN MADE APPLICABLE TO THE UNDERTAKING OR ENTERPRISES ELIGIBLE FOR DEDUCTION U/S 80IC OF THE ACT. AND, SECTION 80IA(5) BEGINS WITH A NOTWITHSTANDING CLAUSE . THUS WHEN PROVISIONS OF SECTION 80IC ARE READ ALONGWITH THE PROVISIONS OF SECTION 80AB OF THE ACT, WE FIND THAT SECTION 80IC OF THE ACT CLEARLY PROVIDES THAT ITS PROVISIONS ARE TO PREVAIL OVER THE PROVISIONS OF SECTION 80AB OF THE ACT WHICH WAS ABSENT IN THE CASE OF SECTION 80HHC, AS NOTED BY THE HON'BLE APEX COURT IN THE CASE OF IPCA LABORATORIES LTD. (SUPRA). THEREFORE, THE PROPOSITION LAID DOWN BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE O F 9 HIM TEKNOFORGE LTD. (SUPRA) THAT THE PROFITS AND LOSSES OF THE PRIORITY UNITS ARE TO BE CLUBBED FOR CALCULATING ELIGIBLE DEDUCTION UNDER CHAPTER VI A HAVING BEEN BORROWED FROM THE LAW LAID DOWN BY THE HON'BLE APEX COURT IN THE CASE OF IPCA LABORATORIES LTD. (SUPRA), WHICH IS CLEARLY DISTINGUISHABLE FROM THE PRESENT CASE, AS POINTED OUT ABOVE, THE SAME WILL NOT APPLY TO DEDUCTION CLAIMED U/S 80IC OF THE ACT. AS STATED ABOVE, THE PROVISIONS OF SECTION 80IC WILL PREVAIL OVER SECTIO N 80AB OF THE ACT AND THE DEDUCTION WILL HAVE TO BE CALCULATED AS PROVIDED FOR IN SECTION 80IC(7) OF TH E ACT, AS PER WHICH FOR THE PURPOSE OF DETERMINING THE QUANTUM OF DEDUCTION THE ELIGIBLE UNDERTAKING IS TO BE TREATED AS THE ONLY SOURCE OF INCOME OF TH E ASSESSEE DURING THE PREVIOUS YEAR, THUS TREATING EACH ELIGIBLE UNDERTAKING OR ENTERPRISE AS A SEPARATE UNIT FOR THE PURPOSE OF CALCULATING DEDUCTION. 18. EVEN OTHERWISE AS CORRECTLY POINTED OUT BY THE LD.COUNSEL FOR THE ASSESSEE, WHILE THE DECISION IN THE CASE OF HIM TEKNOFORGE LTD. (SUPRA) WAS RENDERED IN THE CONTEXT OF SECTION 80IA, THE ASSESSEE IN THE PRESENT CASE HAS CLAIMED DEDUCTION U/S 80IC AND THE RELEVANT PROVISIONS OF TWO SECTIONS WHICH DEAL WITH THE CALCULATION OF QUANTUM OF DEDUCTION ARE DIFFERENTLY WORDED IN THE TWO SECTIONS HAVING AN IMPACT OF THE INTERPRETATION OF THE SAME. 19. SECTION 80IA(5) STATES THAT THE PROFITS AND GAINS OF ELIGIBLE BUSINESS SHALL BE COMPUTED AS I F SUCH ELIGIBLE BUSINESS WERE THE ONLY SOURCE OF INCOME OF A DURING PREVIOUS YEARS. THUS SECTION 80IA(5) APPLIES TO ELIGIBLE BUSINESS, THE MEANING FOR WHICH CAN BE GATHERED FROM SECTION 80IA(1) WHEREIN BUSINESS CARRIED OUT BY ELIGIBLE UNDERTAKING HAVE BEEN REFERRED TO AS ELIGIBLE BUSINESS. SECTION 80IC, ON THE OTHER HAND, HAS NO REFERENCE TO BUSINESS AND USES ONLY THE WORK UNDERTAKING OR ENTERPRISE. THIS DISTINCTION, IN OUR VIEW, IS VERY CRITICAL AND IMPORTANT. LITERALLY INTERPRETING THE APPLICABILITY OF THE PROVISIONS O F SECTION 80IA(5) IS BUSINESS SPECIFIC AND, THEREFORE, INCLUDES ALL ELIGIBLE UNDERTAKINGS CARRYING OUT ELIGIBLE BUSINESS. ON THE OTHER HAND, SECTION 80IC(7) STATES THAT THE PROVISIONS OF SECTION 80IA(5) WOULD APPLY TO ELIGIBLE UNDERTAKING OR ENTERPRISES MEANING THEREBY THAT THE WORD BUSINESS USED IN SECTION 80IA(5) IS TO BE SUBSTITUTED WITH ELIGIBLE UNDERTAKING. THEREFORE, FOR THE PURPOSE OF SECTION 80IC(7), WE AGREE WITH THE LD. COUNSEL FOR ASSESSEE, IT IS THE PROFITS OF EACH ELIGIBLE UNDERTAKING WHICH ARE TO BE TREATED AND TAKEN SEPARATELY AS BEING THE ONLY SOURCE OF 10 THE INCOME DURING THE IMPUGNED YEAR AND ALLOWED DEDUCTION THEREOF AS OPPOSED TO TREATING THE ELIGIBLE BUSINESS OF ALL ELIGIBLE UNDERTAKINGS U/S 80IA(5) OF THE ACT AS BEING THE ONLY SOURCE OF INCOME FOR THE IMPUGNED YEARS AS STIPULATED U/S 80IA(5) OF THE ACT. 20. THE FIRST AND PRIMARY RULE OF CONSTRUCTION IS THAT THE INTENTION OF THE LEGISLATURE MUST BE FOUND IN THE WORDS USED BY THE LEGISLATURE ITSELF. EVERY WORD OF A STATUTE HAS TO BE ASSUMED TO HAVE BEEN DELIBERATELY AND CONSCIOUSLY INCORPORATED THEREIN BY THE LEGISLATURE AND IF THE LANGUAGE OF A STATUTE IS CLEAR AND EXPLICIT, EFFECT MUST BE GIVEN TO EACH WORD. THE HONBLE APEX COURT HAS TIME AND AGAIN REINFORCED THIS RULE OF INTERPRETATION OF STATUTES IN ITS JUDGEMENTS, RIGHT FROM PADMASUNDARA RAO VS STATE OF TN 255 ITR 147(SC), MOHAMMAD VS CWT 224 ITR 672(SC) & PANDIAN CHEMICALS LTD. VS CIT 262 ITR 278(SC).IN VIEW OF THE SAME SINCE THE WORDS USED IN SECTION 80IC CATEGORICALLY STATE THAT THE PROVISIONS OF SUB SECTION 5 TO SECTION 80I A SHALL APPLY TO THE ELIGIBLE UNDERTAKING OR ENTERPRISE, THEY HAVE TO BE READ AS SUCH AND APPLIED TO EACH UNDERTAKING, MEANING THEREBY THAT THE PROFITS OF EACH ELIGIBLE UNDERTAKING HAS TO BE TREATED AS IF IT WERE THE ONLY SOURCE OF INCOME OF THE ASSESSEE. 21. FURTHER AS RIGHTLY POINTED OUT BY THE LD. COUNSEL FOR ASSESSEE THAT IF THE INTERPRETATION GIVEN IN THE CASE OF HIM TEKNOFORGE LTD. (SUPRA) IS APPLIED FOR THE PURPOSE OF SECTION 80IC, IT WOULD LEAD TO AN ANOMALOUS SITUATION CREATING A DIFFICULTY FOR CALCULATING THE QUANTUM OF DEDUCTION , SINCE AS RIGHTLY POINTED OUT BY THE LD. COUNSEL FOR ASSESSEE, THE SECTION PROVIDES FOR DIFFERENT RATES OF DEDUCTION OF PROFITS FOR DIFFERENT YEARS IN CASE OF SPECIFIC UNDERTAKINGS AND IF NETTING OF PROFITS AND LOSSES OF ALL ELIGIBLE UNDERTAKINGS ARE RESORTE D TO, AS LAID DOWN IN THE DECISION OF HIM TEKNOFORGE LTD. (SUPRA), IN A SITUATION WHERE THE DIFFERENT ELIGIBLE UNITS ARE ENTITLED TO DIFFERENT RATES OF DEDUCTION OF PROFITS, IT WOULD BE DIFFICULT TO DETERMINE THE RATE TO BE APPLIED TO THE REMAINING PROFITS SINCE THERE IS NO SECTION OR PROVISION IN T HE ENTIRE ACT DEALING WITH SUCH A SITUATION. WE THEREFORE, AGREE WITH THE LD. COUNSEL FOR ASSESSEE THAT THE DECISION IN THE CASE OF HIM TEKNOFORGE LTD. (SUPRA) HAVING BEEN RENDERED IN THE CONTEXT OF SECTION 80IA DOES NOT APPLY IN THE PRESENT CASE WHICH DEALS WITH DEDUCTION U/S 80IC OF THE ACT AND SINCE AS PER SECTION 80IC IT IS THE PROFIT ON EACH UNDERTAKING WHICH IS TO BE TREATED AS SEPARATELY, THE PROFITS AND LOSSES OF ALL THE ELIGI BLE UNDERTAKINGS ARE NOT TO BE NETTED FOR THE PURPOSE 11 OF CALCULATING DEDUCTION U/S 80IC AND ARE TO BE TAKEN ON A STAND ALONE BASIS. 22. IN VIEW OF THE ABOVE, WE DIRECT THE A.O. TO ALLOW DEDUCTION TO THE ASSESSEE U/S 80IC WITH RESPECT TO THE PROFITS EARNED BY THE ASSESSEE FROM THE ELIGIBLE UNDERTAKINGS IGNORING THE LOSSES FROM OTHER ELIGIBLE UNDERTAKINGS. GROUND OF APPEAL NO.1 RAISED BY THE ASSESSEE IS ALLOWED. 6. THE LD. DR THOUGH RELIED UPON THE ORDER OF THE LD.CIT(A), FAIRLY CONCEDED THAT THE ISSUE HAD BEEN DECIDED IN FAVOUR OF THE ASSESSEE IN THE PRECEDING YEARS. I N VIEW OF THE ABOVE, SINCE THE ISSUE STANDS DECIDED IN FAVOUR OF THE ASSESSEE IN THE PRECEDING YEARS BY THE I.T.A.T. VID E THEIR ORDER IN ITA NOS.883 TO 885/CHD/2017 DATED 6.12.201 8 AND NO DISTINGUISHING FACTS HAVING BEEN BROUGHT TO OUR NOTICE BY THE LD. DR FOR THE IMPUGNED YEARS, THE ISSUE IN THE PRESENT APPEAL STANDS SQUARELY COVERED BY THE AFORE STATED ORDER OF THE I.T.A.T. FOLLOWING THE SAME WE HOLD TH AT THE ASSESSEE IS ENTITLED TO DEDUCTION U/S 80IC OF THE A CT WITH RESPECT TO THE PROFITS EARNED BY IT FROM THE ELIGIB LE UNDERTAKINGS IGNORING THE LOSSES FROM THE OTHER ELI GIBLE UNDERTAKINGS. 7. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASS ESSEE ARE ALLOWED. SD/- SD/- # $ % &' (SANJAY GARG) (ANNAPURNA GUPTA) /JUDICIAL MEMBER '( /ACCOUNTANT MEMBER *# /DATED: 13 TH MARCH, 2019 * ' * 12 &) *+,+ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ' - / CIT 4. ' - ( )/ THE CIT(A) 5. +./ 0 , $0 , 123/4 / DR, ITAT, CHANDIGARH 6. /35# / GUARD FILE &) ' / BY ORDER, / ASSISTANT REGISTRAR