NSL Renewable Power Private Limited, Hyderabad V. Dy. Commissioner of Income Tax, Circle-16(1), Hyderabad

ITA 2146/Hyd/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 4930 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Assessment Year: 2010-2011
• Appeal Filed On: 15-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y V S T SAI
• Assessee Lawyers: AMAN BARASIA
• Keywords: Business income; Depreciation; Rectification of order; Revised return; Unabsorbed depreciation; Set aside
• Section: 143(3); 115JB; 80IB; 80IA; 154; 15

Judgement Text

ITA NO 2146 OF 2017 NSL RENEWABLE P OWER P LTD HYDERABAD PAGE 1 OF 14 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO.2146/HYD/2017 ASSESSMENT YEAR:2010-11 NSL RENEWABLE POWER PRIVATE LIMITED HYDERABAD PAN:AABCN6009L VS. DY. COMMISSIONER OF INCOME TAX, CIRCLE 16(1) HYDERABAD (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI AMAN BARASIA REVENUE BY: SRI Y.V.S.T. SAI, CIT-DR DATE OF HEARING: 16/05/2019 DATE OF PRONOUNCEMENT: 14/08/2019 ORDER PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y 2010-11 AGAIN ST THE ORDER OF THE CIT (A)-4, HYDERABAD, DATED 21.09. 2017 CONFIRMING THE ORDER PASSED BY THE AO DATED 14.03.2 016 U/S 154 OF THE I.T. ACT. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY WHICH IS ENGAGED IN THE BUSINESS OF RESEARCH, PRODU CTION, PROCESSING AND MARKETING OF AGRICULTURAL SOWING/PLA NTING SEEDS, TRADING IN PESTICIDES, GENERATION AND SALE OF POWER AND LETTING OUT OF IMMOVABLE PROPERTIES, FILED ITS RETURN OF INCOME FOR THE A.Y 2010-11 ON 30.09.2010 ADMITTING AN INCOME OF RS.23, 18,25,430 ITA NO 2146 OF 2017 NSL RENEWABLE P OWER P LTD HYDERABAD PAGE 2 OF 14 UNDER THE NORMAL PROVISIONS OF THE I.T. ACT AFTER C LAIMING DEDUCTION UNDER CHAPTER VIA OF THE ACT. BOOK PROFI T OF RS.114,72,88,000 WAS ADMITTED UNDER THE PROVISIONS OF SECTION 115JB OF THE ACT. SUBSEQUENTLY, THE ASSESSEE FILED REVISED RETURN OF INCOME ADMITTING TOTAL INCOME OF RS.67,31,11,740 UNDER THE NORMAL PROVISIONS OF THE ACT AFTER CLAIMING DEDUCTI ON UNDER CHAPTER VIA AND BOOK PROFIT OF RS. 114,72,88,000 U/ S 115JB OF THE ACT. THE RETURN WAS INITIALLY PROCESSED U/S 143 (1) OF THE ACT DETERMINING THE INCOME AT RS.66,70,26,276/-. THEREA FTER, THE ASSESSMENT WAS PICKED UP FOR SCRUTINY AND DURING TH E ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT, VARIO US INFORMATION WAS CALLED FOR AND THE ASSESSEE FURNISH ED THE SAME. THE AO DETERMINED THE TAXABLE INCOME AT RS.71,10,52 ,234/-. AGAINST THE ORDER OF THE ASSESSMENT, THE ASSESSEE P REFERRED AN APPEAL BEFORE THE CIT (A) AND CONSEQUENT TO THE ORD ER OF THE CIT (A), THE TAXABLE INCOME WAS DETERMINED AT RS.69,10, 97,234/- AND THE BOOK PROFIT U/S 115JB OF THE ACT AT RS.17,20,93 ,305/-. THE AO OBSERVED THAT A MISTAKE HAD CREPT IN THE ASSESSM ENT AS THERE WAS AN EXCESS CLAIM OF DEDUCTION U/S 80IA OF THE AC T OF RS.6,77,36,404. IN ORDER TO RECTIFY THIS MISTAKE, A NOTICE U/S 154 OF THE ACT DATED 9.3.2015 WAS ISSUED TO THE ASSESSE E AND AFTER CONSIDERING THE WRITTEN SUBMISSIONS OF THE ASSESSEE , THE AO HELD THAT THE TAX PAYABLE UNDER THE NORMAL PROVISIONS IS MORE THAN THE TAX PAYABLE UNDER THE PROVISIONS OF SECTION 115JB O F THE ACT. THEREFORE, HE DEBITED THE TAX PAYABLE IN THE NORMAL PROVISIONS AS TAXABLE INCOME AND BROUGHT THE EXCESS CLAIM OF DEDU CTION TO TAX. AGAINST THIS ORDER OF THE AO U/S 154, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A). THE CIT (A) HOWEVER, CON FIRMED THE ITA NO 2146 OF 2017 NSL RENEWABLE P OWER P LTD HYDERABAD PAGE 3 OF 14 ORDER OF THE AO AND THE ASSESSEE IS IN SECOND APPEA L BEFORE US BY RAISING THE FOLLOWING GROUNDS OF APPEAL: THE GROUNDS MENTIONED HEREIN BY THE APPELLANT ARE INDEPENDENT AND WITHOUT PREJUDICE TO ONE ANOTHER. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) - IV ['LD. CIT(A)'] ERRED IN CONFIRMING THE ACTION OF THE LD. DY. COMMISSIONER OF INCOMETAX, CIRCLE - 16(1) ('LD. AO' ) IN RECTIFYING UNDER SECTION 154 OF THE INCOME TAX ACT, 1961 ('THE ACT'), THE ORDER GIVING EFFECT TO THE COMMISSIONER OF INCOME- TAX (APPEALS) - V ORDER DATED 19 SEPTEMBER, 2014 WI THOUT APPRECIATING THAT THE ISSUE RECTIFIED UNDER THE GAR B OF SECTION 154 OF THE ACT WAS NOT A 'MISTAKE APPARENT FROM THE RECORD' AND THE ISSUE WAS DEBATABLE IN NATURE. THE APPELLANT PRAYS THAT THE RECTIFICATION ORDER PA SSED U/S. 154 OF THE ACT BY THE LD. AO, BE HELD AS BAD IN LAW AND LIABLE TO BE QUASHED. 2. WITHOUT PREJUDICE TO GROUND NO. 1, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A ) ERRED IN CONFIRMING THE ACTION OF LD. AO IN SETTING-OFF LOSS ES OF CERTAIN ELIGIBLE UNITS OF RS. 6,77,38,404/- AGAINST PROFITS OF OTHER ELIGIBLE UNITS FOR COMPUTING THE DEDUCTION UNDER SE CTION 80IA OF THE ACT. THE APPELLANT PRAYS THAT THE LD. AO BE DIRECTED TO ALLOW THE CLAIM OF DEDUCTION UNDER SECTION 80IA OF THE ACT TO THE PROFITS OF ELIGIBLE UNITS WITHOUT SETTING-OFF LOSSES OF OTH ER ELIGIBLE UNITS. 3. WITHOUT PREJUDICE TO GROUND NO. 1, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A ) ERRED IN CONCLUDING THAT DEDUCTION UNDER SECTION 80IA OF THE ACT SHOULD BE ALLOWED ONLY TO THE EXTENT OF BUSINESS IN COME AND NOT AGAINST THE GROSS TOTAL INCOME DESPITE THE LD. AO NOT DISPUTING THE SAME IN THE ORDER PASSED UNDER SECTIO N 154 OF THE ACT. THE APPELLANT THEREFORE PRAYS THAT THE ADVERSE REMA RKS PASSED BY THE LD. CIT(A) SHOULD BE DELETED. THAT THE APPELLANT RESERVES ITS RIGHT TO ADD, ALTER , AMEND, DELETE OR WITHDRAW ANY GROUND OF APPEAL EITHER BEFO RE OR AT THE TIME OF HEARING OF THIS APPEALS. ITA NO 2146 OF 2017 NSL RENEWABLE P OWER P LTD HYDERABAD PAGE 4 OF 14 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT IN THE RETURN OF INCOME FILED BY THE ASSESSEE, DEDUCT ION U/S 80IA OF THE ACT IN RESPECT OF THEIR POWER GENERATING UNIT A GGREGATING TO RS.21,04,47,956/- WAS CLAIMED AS IS EVIDENT FROM TH E TAX AUDIT REPORT AND FORM 10CCB FILED ALONG WITH THE RETURN O F INCOME. HE SUBMITTED THAT THERE WERE 8 UNITS ELIGIBLE FOR DEDU CTION U/S 80IA AND IN RESPECT OF TWO UNITS I.E. BHEEMA SAMUDRAM UN IT-I & II, THERE WAS A LOSS AND WITH REGARD TO KAPATGUDDA UNIT -VI(K) AND UNIT-V(T), UDUMELPET, THE INCOME WAS SET OFF AGAINS T THE LOSS RELATING TO BROUGHT FORWARD LOSSES OF EARLIER YEARS . IT IS SUBMITTED THAT ONLY UNITS 1 TO 4 AT JAGLUR HAD POSITIVE INCOM E WHICH HAD BEEN CLAIMED AS A DEDUCTION U/S 80IA OF THE ACT AND THAT THE AO DURING THE ASSESSMENT PROCEEDINGS HAS CONSIDERED TH E ISSUE AND ACCEPTED THE CLAIM OF DEDUCTION U/S 80IA OF THE ACT . HE SUBMITTED THAT VIDE THE SUBSEQUENT NOTICE U/S 154 OF THE ACT, THE AO HAS PROPOSED TO AMEND/REDUCE THE DEDUCTION CLAIMED U/S 80IA OF THE ACT TO THE TUNE OF RS.6,77,38,404/- AFTER ADJUSTING THE LOSS OF TWO UNITS OUT OF THE 4 ELIGIBLE UNITS. THE LEARNED COUN SEL SUBMITTED THAT THE ASSESSEE HAD 8 POWER GENERATING UNITS IN D IFFERENT LOCATIONS AND DURING THE YEAR, SIX UNITS EARNED PRO FITS AND TWO UNITS INCURRED LOSSES AND OUT OF THE SIX PROFIT GEN ERATING UNITS, TWO UNITS HAD BROUGHT FORWARD LOSSES OF EARLIER YEA RS WHICH WERE SET OFF AGAINST THE PROFITS OF RESPECTIVE UNITS FOR THE YEAR AND THERE IS NO PROFIT ELIGIBLE TO BE CLAIMED U/S 80IA OF THE ACT FOR THESE TWO UNITS. THE LOSS INCURRED BY THE OTHER TWO UNITS WER E CARRIED FORWARD TO THE NEXT YEARS AND THE ASSESSEE CLAIMED DEDUCTION U/S 80IA OF THE ACT IN RESPECT OF PROFIT GENERATING UNI TS FROM THE FOUR. HE SUBMITTED THAT THE AO, WITHOUT CONSIDERING THE A BOVE FACTS ADJUSTED THE LOSSES OF TWO UNITS AGAINST PROFIT GEN ERATED BY FOUR ITA NO 2146 OF 2017 NSL RENEWABLE P OWER P LTD HYDERABAD PAGE 5 OF 14 UNITS THEREBY REDUCING THE CLAIM OF DEDUCTION U/S 8 0IA OF THE ACT VIDE RECTIFICATION ORDER U/S 154 OF THE ACT DATED 1 4.03.2016. HE SUBMITTED THAT THE AOS POWER U/S 154 ARE RESTRICTE D TO RECTIFICATION OF APPARENT MISTAKES FROM HIS ORDER A ND WHERE THE ISSUE IS DEBATABLE, SUCH ORDER CANNOT NOT BE RECTIF IED U/S 154. IN SUPPORT OF THIS CONTENTION, HE PLACED RELIANCE UPON THE FOLLOWING DECISIONS: I) CIT VS. HERO CYCLES (P) LTD (1997) 228 ITR 463 ( S.C) II) ITO VS. VOLKAT BROTHERS AND OTHERS (SC) (1971) 82 ITR 50 (SC) III) CIT VS. RICHA & CO (2001) 252 ITR 40 (DEL.) IV) SATISH KUMAR AGARWAL VS. DCIT (2012) 20 TAXMANN .COM 172 (DEL.) V) CIT VS. RELIANCE INDUSTRIES LTD (2014) 228 TAXMA NN.COM 184 (BOM HC) VI) DCIT VS. STATE BANK OF HYDERABAD (ITA NO.1386/H YD/2015) VII) DCIT VS. ARUNACHALA LOGISTICS (P) LTD (ITA NO. 1722/HYD/2012) 4. FURTHER, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE CLAIM OF DEDUCTION U/S 80IA OF T HE ACT WAS ALLOWABLE IN RESPECT OF EACH ELIGIBLE UNIT WITHOUT SETTING OF LOSSES OF OTHER ELIGIBLE UNITS. HE SUBMITTED THAT U/S 80IA OF THE ACT, THE DEDUCTION HAS TO BE COMPUTED ON A STANDALONE BASIS AND THE LOSS FROM ONE ELIGIBLE UNIT CANNOT BE SET OFF AGAINST TH E PROFITS OF ANOTHER ELIGIBLE UNIT. IN SUPPORT OF THIS CONTENTIO N, HE PLACED RELIANCE UPON THE FOLLOWING CASE LAW: I) PUNIT CONSTRUCTION CO. VS. JCIT (2018) 92 TAXMAN N.COM 28 (MUM.TRIB). II) JINDAL ALUMINIUM LTD VS. ACIT (2012) 26N TAXMAN N.COM 317 (BANG.TRIB.) III) MEERA COTTON & SYNTHETIC MILLS (P) LTD VS. ACI T (2009) 29 SOT 177 (MUM.TRIB). IV) SRIRAM PROPERTIES (P) LTD VS. ACIT (2013) 36 TA XMANN.COM 398 (CHENNAI.TRIB). V) CIT VS. DEWAN KRAFT SYSTEMS (P) LTD (2008) 297 I TR 305 (DEL. HC) ITA NO 2146 OF 2017 NSL RENEWABLE P OWER P LTD HYDERABAD PAGE 6 OF 14 5. THEREFORE, HE PRAYED THAT THE AO HAS CORRECTLY A LLOWED THE CLAIM OF DEDUCTION U/S 80IA OF THE ACT IN THE A SSESSMENT ORDER PASSED U/S 143(3) OF THE ACT. 6. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT THE CIT (A)S OBSERVATION THAT THE D EDUCTION U/S 80IA IS ELIGIBLE ONLY TO THE EXTENT OF BUSINESS INC OME AND NOT AGAINST THE GROSS TOTAL INCOME, IS NOT CORRECT AND NOT SUSTAINABLE. HE, THEREFORE, PRAYED FOR DELETION OF THE REMARKS O F THE CIT (A). 7. THE LEARNED DR, ON THE OTHER HAND, SUBMITTED TH AT THE AO WHILE PASSING THE ASSESSMENT ORDER U/S 143(3 ) OF THE ACT, HAD NOT VERIFIED THE QUANTUM CLAIM OF THE ASSESSEE S DEDUCTION U/S 80IA OF THE ACT AND THAT HE ONLY NOTICED THE SA ME ONLY AFTER PASSING THE ASSESSMENT ORDER THAT THERE IS AN EXCES S CLAIM OF DEDUCTION. HE SUBMITTED THAT THERE IS A MISTAKE APP ARENT FROM THE RECORD WHICH CAN BE RECTIFIED U/S 154 OF THE AC T. HE SUBMITTED THAT THE AO IS NOT EXAMINING THE ELIGIBILITY OF THE ASSESSEE IN CLAIMING THE DEDUCTION U/S 80IA, BUT HE IS ONLY EXA MINING THE CORRECTNESS OF THE QUANTIFICATION OF THE CLAIM AND THEREFORE, IT IS NOT A DEBATABLE ISSUE BUT IS A MISTAKE APPARENT FRO M RECORD WHICH IS RECTIFIABLE U/S 154 OF THE ACT. FURTHER, H E PLACED RELIANCE UPON THE DECISION OF THE HON'BLE SUPREME COURT IN T HE CASE OF PLASTIBLENDS INDIA LTD VS. ADD. CIT (2017) 86 TAXMA NN.COM 137 (SC) WHEREIN THE HON'BLE SUPREME COURT HELD THAT WH ILE COMPUTING THE DEDUCTION U/S 80IA OF THE ACT, THE DE PRECIATION HAS TO BE REDUCED FOR COMPUTING THE PROFIT ELIGIBLE FOR DEDUCTION U/S 80IA OF THE ACT. APPLYING THE SAME RATIONALE, H E SUBMITTED ITA NO 2146 OF 2017 NSL RENEWABLE P OWER P LTD HYDERABAD PAGE 7 OF 14 THAT THE LOSS OF ELIGIBLE UNIT HAS TO BE SET OFF FR OM THE PROFITS OF ANOTHER ELIGIBLE UNITS. 8. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT THE ASSESSEE HAS CLAIMED DE DUCTION U/S 80IA OF THE ACT IN THE RETURN OF INCOME FILED ALONG WITH FORM 10CCB. THE AO HAS ACCEPTED AND ALLOWED THE CLAIM U/ S 80IA. IT IS ONLY SUBSEQUENT THERETO, THAT HE HAS ISSUED NOTI CE U/S 154 ON THE GROUND THAT THERE IS AN EXCESS CLAIM OF DEDUCTI ON U/S 80IA. THE ARGUMENT OF THE ASSESSEE THAT IT IS A DEBATABLE ISSUE AND THEREFORE, IT COULD NOT BE RECTIFIED U/S 154 OF THE ACT HAS TO BE EXAMINED FIRST. IT IS NOT MERE QUANTIFICATION BUT T HE METHOD OF QUANTIFICATION THAT HAS BEEN CONSIDERED U/S 154 OF THE ACT. IF THERE IS MISTAKE IN THE CALCULATION OF QUANTUM TO B E ALLOWED, IT IS A MISTAKE WHICH CAN BE RECTIFIED U/S 154 OF THE ACT . HOWEVER, IF THE ISSUE SOUGHT TO BE RECTIFIED, IS THE METHOD OF CALCULATION, THEN WE AGREE WITH THE CONTENTION OF THE ASSESSEE THAT I T IS A DEBATABLE ISSUE AND CANNOT BE RECTIFIED U/S 154 OF THE ACT. T HE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. HERO CYCLES (P ) LTD (SUPRA) HAS CLEARLY HELD THAT RECTIFICATION UNDER SECTION 154 CAN ONLY BE MADE WHEN GLARING MISTAKE OF FACT OR LAW HAS BEEN COMMIT TED BY THE OFFICER PASSING THE ORDER AND IT BECOMES APPARENT FROM THE RECORD. RECTIFICATION IS NOT POSSIBLE IF THE QUESTION IS DEBATABLE. MOREO VER, THE POINT WHICH IS NOT EXAMINED ON FACT OR IN LAW CANNOT BE DEALT WITH AS MISTAKE APPARENT ON THE RECORD. THE DISPUTE IN THE INSTANT CASE RAIS ED A MIXED QUESTION OF FACT AND LAW. HENCE, THE TRIBUNAL WAS IN ERROR IN U PHOLDING THE ASSESSING OFFICER'S ORDER ALLOWING THE ASSESSEE'S C LAIM FOR WEIGHTED DEDUCTION BY WAY OF RECTIFICATION ORDER UNDER SECTI ON 154. ITA NO 2146 OF 2017 NSL RENEWABLE P OWER P LTD HYDERABAD PAGE 8 OF 14 9. IN THE CASE OF T.S BALARAM, ITO VS. VOLKART BROT HERS (SUPRA), THE HON'BLE SUPREME COURT HAS HELD AS UNDE R: SECTION 17(1) OF 1922 ACT CAN APPLY TO A 'PERSON'. THE EXPRESSION 'PERSON' IS DEFINED IN SECTION 2(9) OF 1 922 ACT TO INCLUDE A HUF AND A LOCAL AUTHORITY. UNLESS A FIRM CAN BE CONSIDERED AS A 'PERSON', SECTION 17(1) OF THE 1922 ACT CANNOT GOVERN THE ASSESSMENT OF THE ASSESSEE-FIRM. IN THE 1961 ACT THE EXPRESSION 'PERSON' IS DEFINED DIFFERE NTLY. IT IS A MATTER FOR CONSIDERATION WHETHER THE DEFINITION C ONTAINED IN SECTION 2(31) OF THE 1961 ACT IS AN AMENDMENT OF THE LAW OR IS MERELY DECLARATORY OF THE LAW THAT WAS IN FOR CE EARLIER. TO PRONOUNCE UPON THIS QUESTION, IT MAY BE NECESSAR Y TO EXAMINE VARIOUS PROVISIONS IN THE ACT AS WELL AS IT S SCHEME. THUS, THE QUESTION WHETHER SECTION 17(1) WAS APPLIC ABLE TO THE CASE OF THE ASSESSEE-FIRM WAS NOT FREE FROM DOU BT. THEREFORE, THE ITO WAS NOT JUSTIFIED IN THINKING TH AT ON THAT QUESTION THERE COULD BE NO TWO OPINIONS. IT WAS NOT OPEN TO THE ITO TO GO INTO THE TRUE SCOPE OF THE RELEVANT P ROVISIONS OF THE ACT IN A PROCEEDING UNDER SECTION 154 OF THE 1961 ACT. A MISTAKE APPARENT ON THE RECORD MUST BE AN OB VIOUS AND PATENT MISTAKE AND NOT SOMETHING WHICH CAN BE ESTABLISHED BY A LONG DRAWN PROCESS OF REASONING ON POINTS ON WHICH THERE MAY CONCEIVABLY BE TWO OPINIONS. THUS, THE ITO WAS WHOLLY WRONG IN HOLDING THAT THER E WAS A MISTAKE APPARENT FROM THE RECORD OF THE ASSESSMENTS OF THE ASSESSEE-FIRM. THE REVENUE'S APPEAL WAS ACCORDINGLY DISMISSED. 10. AFTER CONSIDERING THE ABOVE DECISIONS, THE HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS. RICHA & CO (SUPRA) HAS HELD AS UNDER: THE ADJUSTMENT, WHICH WAS SOUGHT TO BE MADE BY THE ASSESSING OFFICER, WAS NOT ONE OF THOSE PRIMA FACIE ADJUSTMENTS, PERMISSIBLE WHILE EXERCISING POWER UNDER SECTION 143(1)( A ). LAW IS FAIRLY WELL SETTLED THAT SECTION 154 HAS NO APPLICATION WHERE DEBATABLE ISSUES ARE INVOLVED. WH ERE THE ERROR SOUGHT TO BE RECTIFIED IS FAR FROM SELF-EVIDENT, IT CEASES TO BE AN APPARENT ERROR. AN ERROR WHICH IS APPARENT ON THE FACE OF THE RECORD SHOULD BE ONE WHICH IS NOT AN ERROR WHICH DEPENDS FOR ITS DISCOVERY ON ELABORATE ARGUMENTS ON QUESTIONS OF FACT OR LAW. THE POWER EXERCISABLE UNDER SECTION 15 4 TO CORRECT ANY MISTAKE APPARENT FROM THE RECORD IS UNDOUBTEDLY NOT MORE T HAN THAT OF THE HIGH COURT TO ENTERTAIN A WRIT PETITION ON THE BASIS OF AN ERROR APPARENT ON THE FACE OF THE RECORD. THAT BEING THE POSITION, THE T RIBUNALS CONCLUSION THAT THE MATTER COULD BE TAKEN UP IN A REGULAR PROCEEDING AN D NOT UNDER SECTION 154 WAS IN ORDER. ACCORDINGLY, THIS APPEAL WAS NOT ENTERTAINED. ITA NO 2146 OF 2017 NSL RENEWABLE P OWER P LTD HYDERABAD PAGE 9 OF 14 11. FROM THE ABOVE JUDGEMENTS, IT IS CLEAR THAT ONL Y A MISTAKE WHICH IS GLARING AND APPARENT CAN BE RECTIF IED U/S 154 OF THE ACT. IN THE CASE BEFORE US, THE AO HAD SET OFF THE LOSS OF THE ELIGIBLE UNITS FROM THE PROFITS OF THE ELIGIBLE UNI TS TO CALCULATE THE DEDUCTION U/S 80IA OF THE ACT. WHETHER THE LOSS FRO M THE ELIGIBLE UNITS CANNOT BE SET OFF FROM THE PROFITS OF OTHER E LIGIBLE UNITS IS A DATABLE ISSUE AND THEREFORE, IT CANNOT BE RECTIFIED U/S 154 OF THE ACT. THEREFORE, WE ALLOW THE GROUND OF APPEAL OF TH E ASSESSEE. EVEN OTHERWISE, ON MERITS OF THE ISSUE WHICH IS RAI SED IN GROUND NO.2, WE FIND THAT THE ISSUE IS COVERED IN FAVOUR O F THE ASSESSEE BY VARIOUS DECISIONS WHICH ARE RELIED UPON BY THE LD C OUNSEL FOR THE ASSESSEE. SUB-SECTION 5 OF SECTION 80IA PROVIDES TH AT THE DEDUCTION SHOULD BE CALCULATED IN RESPECT OF AN ELI GIBLE UNIT ON A STANDALONE BASIS I.E. AS IF IT IS THE ONLY SOURCE O F INCOME TO THE ASSESSEE. THIS IS FOR THE REASON THAT AN ASSESSEE I S ELIGIBLE FOR DEDUCTION U/S 80IA FOR A PERIOD OF 10 YEARS AND THE FIRST OF THESE TEN YEARS CAN BE SELECTED BY THE ASSESSEE. 12. IN THE CASE OF CIT VS. DEWAN KRAFT SYSTEMS () L TD (2008) 297 ITR 305, THE HONBLE DELHI HIGH COURT HA S CLEARLY BROUGHT OUT THAT LOSS OF ELIGIBLE UNIT CANNOT BE SE T OFF AGAINST THE PROFITS OF ANOTHER ELIGIBLE UNIT. RELEVANT PARAGRAP HS OF THE HONBLE DELHI HIGH COURT DECISION ARE AS UNDER: 13. PERUSAL OF THE ABOVE PROVISION SHOWS THAT IT IS A DISTINCT AND SEPARATE DEEMING PROVISION WHICH LAYS DOWN THE SPECIAL METHOD OF COM PUTING THE PROFITS AND GAINS ENTITLED TO DEDUCTION UNDER SECTION 80-IA OF THE ACT. MOREOV ER, THIS PROVISION IS OF OVERRIDING NATURE PROVIDING SPECIFICALLY THAT DURING EACH OF T HE ASSESSMENT YEARS IN THE TAX HOLIDAY, PERIOD IN WHICH THE ASSESSEE IS ENTITLED TO DEDUCTI ON UNDER SECTION 80-IA OF THE ACT, THIS PROVISION WILL BE APPLIED AS IF THE INDUSTRIAL UNIT IS AN INDEPENDENT UNIT AND IS THE ONE AND ONLY SOURCE OF INCOME POSSESSED BY THE ASSESSEE . 14. IT IS CLEAR THAT WHILE COMPUTING DEDUCTION UNDER S ECTION 80-IA OF THE INCOME-TAX ACT, 1961, THE PROFITS AND GAINS OF KALAMB UNIT FOR THE PURPOSE OF DETERMINING THE QUANTUM OF DEDUCTION UNDER SECTION 80-IA(5) OF THE ACT IS T O BE COMPUTED IF SUCH ELIGIBLE BUSINESS OF THE SAID UNIT IS THE ONLY SOURCE OF INCOME OF TH E ASSESSEE. THE ASSESSING OFFICER MIXED THE PROFITS OF THE KALAMB UNIT WITH THE PROFITS OF UNITS AT DELHI AND NOIDA AND, THUS, HE ITA NO 2146 OF 2017 NSL RENEWABLE P OWER P LTD HYDERABAD PAGE 10 OF 14 ERRONEOUSLY RESTRICTED THE DEDUCTION TO THE EXTENT OF BUSINESS INCOME AND THIS WAS DONE BY HIM IN TOTAL DISREGARD OF THE PREVISIONS OF SUB- SECTION (7) OF SECTION 80-IA OF THE ACT AS MENTIONED ABOVE. 15. THUS, THE KALAMB UNIT BEING THE ONLY UNIT OF THE A SSESSEE ELIGIBLE FOR DEDUCTION UNDER SECTION 80-IA OF THE ACT IS TO BE TREATED AS AN IND EPENDENT UNIT AND THE SAME IS TO BE TREATED AS THE ONLY SOURCE OF INCOME FOR ASSESSEE F OR THE PURPOSE OF COMPUTING DEDUCTION UNDER SECTION 80-IA OF THE ACT. THE DEDUCTION CLAIM ED BY THE ASSESSEE UNDER SECTION 80-IA OF THE ACT, THUS, IS IN ACCORDANCE WITH THE SAID PR OVISIONS AND AS SUCH WE FIND THAT THERE IS NO INFIRMITY IN THE IMPUGNED ORDER PASSED BY THE IN COME-TAX APPELLATE TRIBUNAL. 13. IN THE CASE OF PUNIT CONSTRUCTION CO (SUPRA), T HE COORDINATE BENCH OF THE TRIBUNAL AT MUMBAI HAS CONS IDERED VARIOUS JUDICIAL PRECEDENTS INCLUDING THE DECISION OF THE HON APEX COURT IN THE CASE OF PLASTIBLENDS INDIA LTD VS. ADD . CIT WHICH WAS RELIED UPON BY THE LEARNED DR, AND HAS HELD AS UNDE R: 13. IN THIS CASE, THE ASSESSEE IS INTO TWO SEGMENT OF BUSINESS I.E. CONSTRUCTION BUSINESS WHICH IS NON ELIGIBLE AND POWER GENERATION BUSINESS WHICH IS ELIGIBLE BUSINESS U/S 80IA OF THE ACT. ADMITTEDLY, THE ASSES SEE HAS SET UP 5 WIND MILLS OUT OF WHICH TWO WIND MILLS ARE SET UP IN THE FINAN CIAL YEAR RELEVANT A.YS. 2005- 06 AND 2006-07 AND REMAINING 3 WIND MILLS HAVE BEEN SET UP DURING THE FINANCIAL YEAR RELEVANT TO A.Y. 2011-12. ALL 5 WIND MILLS ARE SITUATED AT DIFFERENT LOCATIONS AND COMMENCED PRODUCTION AT DIF FERENT POINT OF TIME. ALL 5 WIND MILLS ARE ELIGIBLE UNITS FOR DEDUCTION U/S 80I A OF THE ACT. THE ASSESSEE HAS DERIVED PROFIT FROM 2 WIND MILLS AND INCURRED LOSSE S FROM 3 WIND MILLS. THE ASSESSEE HAS CLAIMED DEDUCTION U/S 80IA IN RESPECT OF PROFIT OF 2 WIND MILLS WITHOUT SET OFF OF LOSSES OF 3 WIND MILLS, CONSIDER ING EACH WIND MILL AS A SEPARATE UNIT ELIGIBLE FOR DEDUCTION U/S 80IA OF TH E ACT. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THIS CASE, WE ARE OF THE CONSI DERED VIEW THAT THE ASSESSEE'S CLAIM OF DEDUCTION U/S 80IA IS IN ACCORD ANCE WITH THE PROVISIONS OF SECTION 80IA(5) OF THE ACT AND ALSO IN CONSONANCE W ITH THE DECISIONS OF ITAT, AHMEDABAD SPECIAL BENCH AND ITAT, BANGALORE DECISIO N. HENCE, WE DIRECT THE AO TO ALLOW DEDUCTION CLAIMED U/S 80IA OF THE INCOM E TAX ACT, 1961. 14. IN THE CASE OF JINDAL ALUMINIUM LTD (SUPRA), IN SIMILAR CIRCUMSTANCES IT WAS HELD AS UNDER: 13. COMING BACK TO THE FACTS OF OUR CASE WE OBSERVE TH AT THE GROSS TOTAL INCOME OF THE ASSESSEE IS AT RS. 8,03,26,598 LAKHS AFTER ADJUSTING THE LOSSES SUFFERED BY IT IN THE ELIGIBLE AS WELL AS PROFITS O F THE NON-ELIGIBLE UNITS. THERE ARE NO BROUGHT FORWARD LOSSES OR UNABSORBED DEPRECI ATION. THE CLAIM OF DEDUCTION UNDER SECTION 80-IA WAS IN RESPECT OF ELI GIBLE UNIT 4.14 MW WIND ENERGY DIVISION AT RS. 4,72,28,143 AND THE DEDUCTIO N U/S.80HHC OF THE ACT WAS CLAIMED IN RESPECT OF OTHER UNITS AT RS.15,51,440. EVEN IF BOTH THE DEDUCTIONS ARE ADDED THE SUM TOTAL IS OBVIOUSLY LESS THAN THE GROSS TOTAL INCOME. IN OUR CONSIDERED OPINION THE LEARNED COMMISSIONER OF INCO ME-TAX (APPEALS) HAS ITA NO 2146 OF 2017 NSL RENEWABLE P OWER P LTD HYDERABAD PAGE 11 OF 14 ERRED IN INTERPRETING THE RELEVANT PROVISION WHEN H E HELD THAT THE LOSSES SUFFERED BY THE ASSESSEE IN TWO ELIGIBLE UNITS BE R EDUCED FROM THE INCOME OF THE OTHER ELIGIBLE UNIT BEFORE GRANTING THE DEDUCTION U NDER SECTION 80-IA. SINCE THE FACTS OF THE CASE IN THE CASE OF SYNCO INDUSTRIES L TD. (SUPRA) LIE IN AN ALTOGETHER DIFFERENT COMPARTMENT, WE HOLD THAT THE RATIO OF TH AT CASE CANNOT BE CONSIDERED FOR APPLICATION TO THE ASSESSEE' S CASE. ACCORDINGL Y, THE IMPUGNED ORDER IS OVERTURNED AND THE ASSESSEE IS ALLOWED DEDUCTION UN DER SECTION 80-IA ON THE PROFIT DERIVED BY IT FROM ELIGIBLE UNIT 4.14 MW WIN D ENERGY UNIT AT RS.4,72,28,143. 14. WE FIND THAT THE CIT(A) IN THE PRESENT CASE HAS DI SREGARDED THE BINDING DECISION OF THE ITAT. THE BASIS ON WHICH THE CIT(A) REFUSED TO FOLLOW THE ORDER OF THE ITAT IN ASSESSEE'S OWN CASE FOR THE ASSESSME NT YEAR 2006-07 CANNOT BE SUSTAINED. IN THE CASE OF MEERA COTTON & SYNTHETIC MILLS (P) LTD. (SUPRA) THE BOMBAY BENCH OF THE ITAT AFTER CONSIDERING THE DECI SION OF THE HON'BLE SUPREME COURT IN THE CASE OF SYNCO INDUSTRIES LTD. (SUPRA) HAD CLEARLY HELD THAT THE STAGE AT WHICH SET OFF HAS TO BE DONE IS ONLY A FTER AGGREGATION OF INCOME UNDER ALL HEADS. THE CIT(A) DID NOT AGREE WITH THIS REASONING OF THE ITAT. THE FACTS OF THE PRESENT CASE ARE CLEARLY IDENTICAL TO THE FACTS, AS IT PREVAILED IN THE CASE OF MEERA COTTON & SYNTHETIC MILLS (P) LTD. (SU PRA) THE CIT(A) BEING AN AUTHORITY LOWER IN THE TIER OF AUTHORITIES UNDER TH E ACT TO THAT OF THE ITAT, IS BOUND TO FOLLOW THE DECISION OF THE ITAT. IN OUR VI EW, THE CIT(A) IN THE PRESENT CASE HAS FOR NO VALID REASON REFUSED TO FOLLOW THE DECISION OF THE HON'BLE ITAT. 15. FURTHER, IN THE CASE OF MEERA COTTON & SYNTHETI CS MILLS (P) LTD (SUPRA), THE COORDINATE BENCH OF THE TRIBUNAL HAS HELD AS UNDER: 9. SECTION 80A(1) PROVIDES THAT IN COMPUTING TOTAL IN COME OF THE ASSESSEE, THERE SHALL BE ALLOWED FROM THE GROSS TOTAL INCOME THE DEDUCTIONS SPECIFIED IN SECTIONS 80-C TO 80-U. SUB-SECTION (2) FURTHER PROV IDES THAT THE AGGREGATE AMOUNT OF DEDUCTIONS UNDER THIS CHAPTER SHALL NOT I N ANY CASE EXCEED THE GROSS TOTAL INCOME OF THE ASSESSEE. THE GROSS TOTAL INCOME HAS BEEN DEFINED UNDER SECTION 80B (5) TO MEAN 'THE TOTAL INCOME COM PUTED IN ACCORDANCE WITH THE PROVISIONS OF THIS ACT, BEFORE MAKING ANY DEDUC TION UNDER THIS CHAPTER.' IT THEREFORE FOLLOWS THAT THE PRIMARY STEP FOR CONSIDE RING THE GRANT OF DEDUCTIONS UNDER CHAPTER VI-A IS TO DETERMINE THE GROSS TOTAL INCOME, WHICH, IN TURN, IS COMPUTED BY AGGREGATING THE INCOME FROM ALL THE SOU RCES IN THIS YEAR AFTER ADJUSTING THE LOSSES OF THE CURRENT YEAR UNDER ANY HEAD. THE BROUGHT FORWARD LOSS OR UNABSORBED DEPRECIATION ETC., ARE ALSO REDU CED. THE RESULTANT FIGURE IS DETERMINED AS GROSS TOTAL INCOME. TO PUT IT SIMPLY GROSS TOTAL INCOME IS THE INCOME AVAILABLE AT THE DISPOSAL OF THE ASSESSEE IM MEDIATELY BEFORE ALLOWING DEDUCTIONS UNDER CHAPTER VI-A. IF THE GROSS TOTAL I NCOME IS SAY RS. 100 AND THE ASSESSEE IS ENTITLED TO DEDUCTION UNDER SECTION 80- IB AT RS. 150, THEN THE AMOUNT OF DEDUCTION UNDER SECTION 80-IB WILL BE RES TRICTED TO RS. 100 AS PER THE MANDATE OF SECTION 80A WHICH PROVIDES THAT THE DEDUCTIONS SHALL BE ALLOWED FROM THE GROSS TOTAL INCOME AND THE AGGREGA TE AMOUNT OF ALL THE DEDUCTIONS SHALL NOT IN ANY CASE EXCEED THE GROSS T OTAL INCOME OF THE ASSESSEE. ITA NO 2146 OF 2017 NSL RENEWABLE P OWER P LTD HYDERABAD PAGE 12 OF 14 IF HOWEVER THE AMOUNT OF ELIGIBLE RELIEF UNDER SECT ION 80-IB IS SAY RS. 90, THEN FULL AMOUNT WILL BE ELIGIBLE FOR DEDUCTION BECAUSE THE AMOUNT OF THE ELIGIBLE RELIEF DOES NOT EXCEED THE GROSS TOTAL INCOME. THER EFORE IT IS MANDATORY TO WORK OUT THE ELIGIBLE AMOUNT OF DEDUCTION UNDER VAR IOUS SECTIONS OF CHAPTER VI-A INDIVIDUALLY AND THEN SUCH AGGREGATE AMOUNT HA S TO BE RESTRICTED TO THE AMOUNT OF GROSS TOTAL INCOME AS COMPUTED UNDER SECT ION 80B(5), WHICH MEANS THE INCOME AVAILABLE AFTER ADJUSTING ALL THE BROUGH T FORWARD LOSSES AND UNABSORBED DEPRECIATION ETC. 16. IN THE CASE OF SRIRAM PROPERTIES (P) LTD (SUPRA ), THE COORDINATE BENCH AT CHENNAI HAS HELD AS UNDER: 1 9. WE ARE REMINDED OF THE CELEBRATED JUDGMENT RENDERE D BY THE HON'BLE SUPREME COURT IN THE CASE OF CIT V. CANARA WORKSHOP (P.) LTD. [1986] 27 TAXMAN 262/161 ITR 320 IN WHICH THE ASSESSEE WAS ENGAGED IN THE MANUFACTURE OF AUTOMOBILE SPARES. TH E PRODUCTS MANUFACTURED BY IT WERE COVERED BY THE LIST IN THE FIFTH SCHEDULE TO THE INCOME-TAX ACT. DURING THE RELEVANT PERIOD, THE ASS ESSEE COMMENCED ANOTHER ACTIVITY, THAT IS THE MANUFACTURE OF ALLOY STEELS, WHICH WAS ALSO AN INDUSTRY COVERED IN THE FIFTH SCHEDULE. THE ASSE SSEE SUSTAINED LOSS IN THE ALLOY STEEL INDUSTRY BUT PROFIT IN THE OTHER IN DUSTRY. IT CLAIMED DEDUCTION IN RESPECT OF THE PROFIT WITHOUT REDUCING THE LOSS FROM THE ALLOY STEEL INDUSTRY. THE ITO HELD THAT THE ASSESSEE WILL BE ENTITLED TO DEDUCTION UNDER SECTION 80E ON THE PROFITS FROM THE MANUFACTURE OF AUTOMOBILE PARTS ONLY AFTER SETTING OFF THE LOSS IN ALLOY STEEL MANUFACTURE. THE HIGH COURT DECIDED THE POINT IN ASSESSEE'S FAVO UR. THE REVENUE ASSAILED THE JUDGMENT OF THE HON'BLE HIGH COURT BEF ORE THE HON'BLE SUPREME COURT. WHILE AFFIRMING THE VIEW TAKEN BY TH E HON'BLE HIGH COURT, IT WAS HELD THAT IN COMPUTING THE PROFITS FO R THE PURPOSE OF DEDUCTION UNDER SECTION 80E, THE LOSS INCURRED BY T HE ASSESSEE IN THE MANUFACTURE OF ALLOY STEELS (A PRIORITY INDUSTRY) C OULD NOT BE SET OFF AGAINST THE PROFITS OF THE MANUFACTURE OF AUTOMOBIL E ANCILLARIES (ANOTHER PRIORITY INDUSTRY) AND HENCE THE ASSESSEE WAS ENTIT LED TO DEDUCTION AT THE SPECIFIED RATE ON THE ENTIRE PROFITS OF THE AUTOMOB ILE PARTS INDUSTRY INCLUDED IN THE TOTAL INCOME WITHOUT DEDUCTING THER E FROM THE LOSS IN THE ALLOY STEEL MANUFACTURE. FACTS INVOLVED IN THE INST ANT APPEAL ARE MUTATIS MUTANDIS SIMILAR. 20. THE HON'BLE ANDHRA PRADESH HIGH COURT IN THE CASE OF CIT V. VISAKHA INDUSTRIES LTD. [2001] 251 ITR 471/118 TAXMAN 777 HAS ALSO TAKEN THE SIMILAR VIEW BY HOLDING THAT TH E DEDUCTIONS CONTEMPLATED UNDER SECTION 80HH AND 80-I ARE TO BE ALLOWED WITH REFERENCE TO THE PROFITS OF THE PARTICULAR INDUSTRI AL UNDERTAKING AND NOT WITH REFERENCE TO THE TOTAL INCOME OF THE ASSESSEE AND THEREFORE LOSS IN AN OTHER UNIT CANNOT BE SET OFF AGAINST THE PROFITS OF ELIGIBLE UNIT. 21. IN THE INSTANT CASE, WE OBSERVE THAT GROSS TOTAL I NCOME OF THE ASSESSEE IS RS. 2,56,37,975/- AFTER ADJUSTING LOSSES SUFFERE D BY THE ASSESSEE IN THE ITA NO 2146 OF 2017 NSL RENEWABLE P OWER P LTD HYDERABAD PAGE 13 OF 14 OTHER TWO 'PROJECTS VIZ. 'SHREYAS' AND 'COIMBATORE' . THERE ARE NO BROUGHT FORWARD LOSSES OR UNABSORBED DEPRECIATION. THE CLAI M OF DEDUCTION U/S 80IB IN RESPECT OF THE TWO ELIGIBLE UNITS VIZ. 'SPA NDHANA' AND 'SAMRUDDHI' OF RS. 2,23,22,237/- IS OBVIOUSLY LESS THAN THE GRO SS TOTAL INCOME. IN OUR CONSIDERED OPINION, THE ASSESSING OFFICER AS WELL A S THE LD. CIT(A) ERRED IN INTERPRETING THE RELEVANT PROVISIONS WHEN THEY H ELD THAT THE LOSSES SUFFERED BY THE ASSESSEE FROM TWO PROJECTS, VIZ. 'S HREYAS' AND 'COIMBATORE' BE REDUCED FROM THE PROFITS OF THE OTH ER TWO UNITS VIZ. 'SPANDHANA' AND 'SAMRUDDHI' FOR GRANTING DEDUCTION U/S 80IB. ACCORDINGLY, THE IMPUGNED ORDERS OF THE LOWER AUTHO RITIES ARE SET ASIDE. THE ASSESSING OFFICER IS DIRECTED TO ALLOW DEDUCTIO N U/S 80IB ON THE PROFITS DERIVED BY THE ASSESSEE FROM TWO PROJECTS V IZ. 'SPANDHANA' AND 'SAMRUDDHI' OF RS. 2,23,22,237/-. THUS, THE GROUNDS OF APPEAL OF THE ASSESSEE ARE ALLOWED. 17. RESPECTFULLY FOLLOWING THE ABOVE DECISIONS, WE HOLD THAT THE LOSS OF THE ELIGIBLE UNITS CANNOT BE SET O FF AGAINST THE PROFITS OF OTHER ELIGIBLE UNITS. 18. AS REGARDS THE THIRD GROUND OF THE APPEAL AGAIN ST THE OBSERVATIONS OF THE CIT (A) THAT IT IS ONLY THE BUS INESS INCOME OF THE ELIGIBLE UNIT AND NOT THE GROSS TOTAL INCOME EL IGIBLE FOR DEDUCTION U/S 80IA OF THE ACT, WE FIND THAT THE CAS E LAW RELIED UPON BY THE ASSESSEE AND IN SUPPORT OF GROUND NO.2 ARE ALSO APPLICABLE TO THIS ISSUE. RESPECTFULLY FOLLOWING TH E SAME, WE DELETE THE FINDINGS OF THE CIT (A). 19. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH AUGUST, 2019. SD/- SD/- (S. RIFAUR RAHMAN) (P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 14 TH AUGUST, 2019. VINODAN/SPS ITA NO 2146 OF 2017 NSL RENEWABLE P OWER P LTD HYDERABAD PAGE 14 OF 14 COPY TO: 1 NSL RENEWABLE POWER PRIVATE LIMITED, 8-2-684/2/A NLS ICON, ROAD NO.12, BANJARA HILLS, HYDERABAD 500034 2 DY. CIT, CIRCLE 16(1) IT TOWERS, AC GUARD, HYDERA BAD 500004 3 CIT (A)-4 HYDERABAD 4 PR. CIT 4, HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER