M/s. Southern Offshore Solutions P. Ltd., CHENNAI V. ACIT, CHENNAI

ITA 354/CHNY/2012

• Counselvise Citation: 35421714 RSA 2012
• Duration Of Justice: 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 13-09-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 20-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR GARU B HASUGAM
• Assessee Lawyers: S SRIDHAR
• Keywords: Business income; Depreciation; Question of law; Unabsorbed depreciation
• Section: 143(3); 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B B ENCH C HENN AI BEFORE SHRI N.S.SAINI ACCOUNTANT MEMBER AND SHRI S.S.GODARA , JUDICIAL MEMBER .. ITA NO. 354 /MDS./ 20 12 ASSESSMENT YEAR: 200 7 - 08 M/S.SOUTHERN OFFSHORE SOLUTIONS P. LTD., FLAT NO.4, NO.71 ,DR.RANGA ROAD, MYLAPORE, CHENNAI 600 004. VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE VI(3), CHENNAI 600 034. PAN AAFCS 2781 J (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.SRIDHAR, ADVOCATE RESPONDENT BY : DR.GARU B HASUGAM D.R. DATE OF HEARING : 13 .0 9 .12 DATE OF PRONOUNCEMENT : 05 . 1 0.12 O R D E R PER S.S.GODARA JUDICIAL MEMBER : THIS ASSESSEE S APPEAL IS DIRECTED AGAINST THE ORDER DATED 29.1 1.2011 PASSED BY CIT(A) - V, COIMBATORE IN CASE ITA NO.500/09 - 10 FOR ASSESSMENT YEAR 2007 - 08. THE RELEVANT PROCEEDINGS ARE UNDER SECTION 143(3) OF INCOME TA X ACT, 1961, IN SHORT, THE ACT . ITA . 354 /MDS/ 12 2 2. BY DRAWING OUR ATTENTION TO THE GROUNDS OF APPEAL RAISED, THE A UTHORISED REPRESENTATIVE OF ASSESSEE BEFORE US HAS ASSAILED THE FINDINGS OF THE CIT(A) BY SUBMITT ING THAT THE ASSESSEE S CLAIM TO SET OFF THE BUSINESS LOSSES OF AN ELIGIBLE UNIT UNDER SECTION 10B OF THE ACT , AGAINST THE INCOMES FROM OTHER SOURCES HAS BEEN WRONGLY DENIED BY ASSESSING OFFICER AND CONFIRMED BY THE CIT(A). THE REVENUE ON THE OTHER HAND HAS CHOSEN TO DRAW SUPPORT FROM THE CIT(A) S ORDER. HENCE, WE FRAME THE FOLLOWING ISSUE FOR OUR ADJUDICATION. WHETHER THE CIT(A) HAS ERRED IN CONFIRMING THE DECISION OF THE ASSESSING OFFICER IN NOT ALLOWING THE ASSESSEE S SET OFF OF BUSINESS LOSS ES FROM UNIT UNDER SECTION 10B OF THE ACT AGAINST THE INCOME FROM OTHER SOURCES OR OTHER HEADS OF INCOME, AS ASSERTED BY THE ASSESSEE AND DENIED BY THE REVENUE. 3. BRIEF FACTS APROPOS OF THE ISSUE ARE THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF IT ENABLED SERVICES. REGARDING ASSESSMENT YEAR 2007 - 08, IT FILED ITS RETURN OF INCOME ON 31.10.2010 DECLARING LOSS OF ` 2,55,38,201/ - . WE ALSO FIND FROM THE ASSESSMENT ORDER DATED 29.12.2009 THAT THE ASSESSEE ITA . 354 /MDS/ 12 3 HAD SHOWN THE FOLLOWING RECEIPTS REGARDING THE IMPUGNED ASSESSMENT YEAR. RECEIPTS ` IT ENABLED SERVICES 2,90,31,345/ - INTEREST INCOME 13,54,906/ - DIFFERENCE IN EXCHANGE 8,74,972/ - RENT RECEIVED 32,25,614/ - AMENITIES RECEIVED 3,96,594/ - CLOSING WIP 6,10 ,022/ - MISC. INCOME. 67,389/ - SIMILARLY, THE EXPENSES INCURRED AND CLAIMED READ AS UNDER: - EXPENSES ` ADMINISTRATIVE AND OTHER EXPENSES 1,94,36,479 / - FINANCIAL CHARGES 2,03,23,148 / - DEPRECIATION 2,13,39,417 / - IN THE LIGHT THEREOF, THE ASSESSEE S PLEA WAS THAT THOUGH IT IS AN ASSESSEE AV A I LING 10B DEDUCTION UNDER THE ACT , BUT SINCE THERE WAS LOSS (SUPRA) IN THE IMPUGNED ASSESSMENT YEAR, THEREFORE , IT PRAYED FOR SETTING OFF OF THE SAME AGAINST THE INCOMES FROM OTHER HEADS AS SHOWN IN THE RECEIPTS(SUPRA). THE ASSESSING OFFICER ITA . 354 /MDS/ 12 4 WAS NOT CONVINCED WITH ASSESSEE S PLEA. T HEREFORE, HE DISALLOWED THE ASSESSEE S PLEA. 4. IN APPEAL AS WELL, WE FIND THAT THE CIT(A) HAS CONFIRMED THE FINDINGS ON THE ISSUE OF ALLOWABILITY OF SETTING OFF OF LOSS OF SEC.10B UNIT FROM THE INCOME UNDER OTHER HEADS BY HOLDING HEREIN BELOW: - 3.1. IN SUM AND SUBSTANCE THE GROUNDS OF APPEAL, AND WRITTEN SUBMISSIONS AND THE ARG UMENTS TAKEN ON BEHALF OF THE APPELLANT HAD DIRECTED AGAINST THE ACTION OF THE ASSESSING OFFICER IN NOT ALLOWING THE SET OFF OF BUSINESS ELIGIBLE UNDER SECTION 10B AGAINST THE INCOMES FROM OTHER SOURCES VIZ., RENTAL INCOME, CAPITAL GAINS ON SALE OF FLATS E TC. THE ARGUMENTS OF THE APPELLANT ARE THAT SINCE THERE IS LOSS FROM THE BUSINESS ELIGIBLE UNDER SECTION 10B OF THE ACT, THE APPELLANT COMPANY FOR THE YEAR UNDER CONSIDERATION BE TREATED AS A NORMAL COMPANY DISREGARDING THE STATUS UNDER SECTION 10B (THAT HAS BEEN ENJOYED ALL ALONG) AND THE LOSS SHOULD BE ALLOWED TO BE SET OFF AGAINST THE INCOME FROM OTHER SOURCES. THESE SUBMISSIONS AND ARGUMENTS OF THE APPELLANT ARE NOT TENABLE AND ARE OPPOSED TO THE PROVISIONS OF THE INCOME TAX ACT AS WHEN LOS UNDER ANY OTHER HEAD OF INCOME IS NOT ELIGIBLE FOR SET OFF AGAINST INCOME OF A BUSINESS ELIGIBLE FOR DEDUCTION UNDER SECTION 10B, ON THE SAME PRINCIPLE THE CLAIM OF THE APPELLANT FOR SET OFF OF LOSS INCURRED IN UNIT ELIGIBLE FOR DEDUCTION UNDER SECTION 10B AGAINST INCOME FROM NORMAL COMPUTATION IS NOT TENABLE. 3.2. INCOME - TAX IS A TAX ON THE TOTAL INCOME ORDER DURING THE PREVIOUS YEAR, AS DETERMINED UNDER THE PROVISIONS OF INCOME TAX ACT, 1961. THE INCOME OR COULD BE FROM DIFFERENT SOURCES AND MAY BE TAXABLE UND ER DIFFERENT HEADS OF INCOME. AN ASSESSEE MAY HAVE INCOME UNDER ONE HAD FOR SOURCE OR MIGHT HAVE INCURRED A LOSS UNDER ANOTHER HEAD OR A DIFFERENT ITA . 354 /MDS/ 12 5 SOURCE. SECTION 70 OF THE ACT DEALS WITH SET OFF OF LOSS FROM ONE SOURCE AGAINST INCOME FROM ANOTHER SOURCE UNDER THE SAME HEAD OF INCOME. SECTION 71 OF THE ACT, ON THE OTHER HAND, DEALS WITH SET OFF OF LOSS FROM ONE HEAD AGAINST ANOTHER HEAD. THE PROVISIONS OF SECTION 70 AND 71 RELATING TO SET OFF OF LOSS FROM ONE HAD AGAINST INCOME FROM ANOTHER CONTEMPLATE L OSS FROM A SOURCE, THE INCOME FROM WHICH IS LIABLE TO TAX. IF THE INCOME FROM A SOURCE IS ALTOGETHER EXEMPT FROM TAX, LOSS FROM THAT SOURCE CANNOT BE SET OFF AGAINST TAXABLE INCOME FROM A DIFFERENT SOURCE OR INCOME UNDER A DIFFERENT HEAD. SINCE THE INCOM E IS NOT TAXABLE, THE LOSS INCURRED ALSO CANNOT BE SET OFF AGAINST INCOME FROM OTHER HEADS OF INCOME. RELIANCE IS PLACED ON THE DECISIONS OF; 1. COMMISSIONER OF INCOME TAX V. S.S.THIAGARAJAN [129 ITR 115(MAD) ] 2. COMMIS SIONER OF INCOME TAX V. HARPRASAD & CO (P) LTGD. [99 ITR 118(SC) ] IN VIEW OF THE ABOVE SAID DISCUSSIONS, I UPHOLD THE DECISION OF THE ASSESSING OFFICER IN NOT ALLOWING THE SET OFF OF LOSS FROM BUSINESS ELIGIBLE UNDER SECTION 10B OF THE ACT AGAINST THE INCOME FROM OTHER SOURCES OR OTHER HEADS OF INCOME. ALL THE GROUNDS OF APPEAL, TAKEN BY THE APPELLANT, ARE THEREFORE DISMISSED. IN THE RESULT, THE APPEAL IS DISMISSED. THEREFORE, THE ASSESSEE IS AGGRIEVED. 5. THE A.R HAS REITERAT ED GROUNDS OF APPEAL AS PLEADED AND VEHEMENTLY SUBMIT TED THAT THE ASSESSEE S CLAIM OF SET OFF (SUPRA) HAS BEEN WRONGLY DECLINED BY THE LOWER AUTHORITIES. HE HAS ALSO DRA WN OUR ATTENTION TO SEC.10B(8 ) OF THE ACT WHEREIN IT HAS B EEN STIPULATED THAT THE C ONCERNED ASSESSEE MAY APPLY TO A.O. THAT THE PROVISIONS OF THE SAID SECTION BE NOT MADE APPLICABLE TO HIM IN ANY OF THE RELEVANT ASSESSMENT YEAR . IN SUCH CASE, HE WOULD NOT ITA . 354 /MDS/ 12 6 BE GOVERNED BY SE C.10B AS THE CASE AND WOULD TH E N BE DEALT UNDER THE NORMAL PROVISIONS OF THE ACT. SIMILARLY, HE HAS ALSO CITED CASE LAW OF HON BLE BOMBAY HIGH COURT IN INCOME TAX APPEA L NO.3465 OF 2010 IN THE CASE CIT VS. M/S.GALAXY SURFACTANTS LTD. DATED 7 TH FEBRUARY, 2012 TO RAISE A CONTENTION THAT THE LOSS OF A UNIT UNDE R SECTION 10B CAN BE ALLOWED TO BE SET OFF UNDER THE RELEVANT PROVISIONS OF THE ACT I.E. SECTIONS 70 & 71. IN THE LIGHT THEREOF, HE PRAYED FOR ACCEPTANCE OF THE APPEAL. 6. THE D.R. REPRESENTING REVENUE HAS STRONGLY DRAWN SUPPORT FROM THE CIT(A) S ORDER AS WELL AS THE FINDINGS CONTAINED THEREIN AND PRAYED FOR UPHOLDING THE SAME. 7. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH PARTIES AT LENGTH AND ALSO GONE THROUGH THE RELEVANT FINDINGS AS WELL AS CASE LAWS CITED. IT TRANSPIRES THAT THE ASSESSEE IS AN EXPORT ORIENT ED UNIT (EOU) UNDER SECTION 10B OF THE ACT, WHICH HAS NOT BEEN CONTROVERTED BY THE REVENUE. THE ONLY GRIEVANCE OF THE ASSESSEE IN THE INSTANT APPEAL IS THAT IT IS ENTITLED FOR SETTING OFF ITS LOSS FROM SEC.10B UNIT AGAINST THE INCOMES FROM THE OTHER SOUR CES I.E. RECEIPTS UNDER VARIOUS HEADS REPRODUCED ABOVE. THE REVENUE STAND IS THAT THE SAME CANNOT BE SET OFF AS IT IS SECTION ITA . 354 /MDS/ 12 7 10B UNIT, WHICH IS ALL TOGETHER A SEPARATE ENTITY. WE ARE UNABLE TO CONCUR WITH THE REVENUE S STAND. THOUGH IT IS A FACT THAT A N EOU IS ENTITLED FOR DEDUCTION UNDER SECTION 10B OF THE ACT SUBJECT TO VARIOUS CONDITIONS ENSHRINED IN THE PROVISIONS ITSELF, BUT AT THE SAME TIME, SEC.10B(8) OF THE ACT GRANTS AN OPTION TO ASSESSEE TO DECIDE WHETHER OR NOT TO OPT OUT OF THE SCHEME OF DEDUCTION IN THE RELEVANT ASSESSMENT YEAR. FURTHER, THE SETTLED LAW IS ALSO REITERATED HERE THAT IF AN ASSESSEE OPTS OUT OF THE DEDUCTION SCHEME UNDER SE CTION 10B( 8 ), THE NORMAL PROVISIONS OF THE ACT THEREOF WOULD COME INTO OPERATION AND THE CONCERNED ASSESSEE S INCOME HAS TO BE COMPUTED AND TAXED ACCORDINGLY. IN THE INSTANT CASE, WE FIND THAT THERE IS NO DISPUTE THAT THE ASSESSEE S 10B UNIT HAS SUFFERED LOSS OF ` 2,55,38,201/ - UNDER THE HEAD BUSINESS INCOME . SIMILARLY, UNDER OTHER VARIOUS HEADS, IT HAS DECLARED RECEIPTS AS IN COMES AS REPRODUCED(SUPRA) . IN SUCH A CASE, IN OUR OPINION, SECTION 70 & SECTION 71, MORE PARTICULARLY SEC.71 PROVIDING INTRA HEAD SETTING OFF IS APPLICABLE . WE ALSO FIND THAT THE HON BLE BOMBAY HIGH COURT IN M/S.GALAXY SURFAC T ANTS LTD.(SUPRA) HAS ALSO HELD AS UNDER: - ITA . 354 /MDS/ 12 8 5. AT THE OUTSET, WHILE DEALING WITH THE SUBMISSION WHICH HAS BEEN URGED ON BEHALF OF THE REVENUE, IT MUST BE NOTED THAT SECTION 10B WHEN IT WAS ORIGINALLY INTRODUCED BY THE FINANCE ACT,1988, WITH EFFECT FROM 1 APRIL 1989, PROVIDED FOR AN EXEMPTION OF THE PROFITS AND GAINS DERIVED BY THE ASSESSEE FROM A HUNDRED PERCENT EXPORT ORIENTED UNDERTAKING. THE EARLIER PROVISION SPECIFICALLY STIPULATED THAT PROFITS AND GAINS DERIVED BY AN ASSESSEE FROM A HUNDRED PERCENT EX PORT ORIENTED UNDERTAKING TO WHICH THE SECTION APPLIES SHALL NOT BE INCLUDED IN THE TOTAL INCOME OF THE ASSESSEE. SECTION 10A AS AT PRESENT STANDS, CAME TO BE SUBSTITUTED BY THE FINANCE ACT, 2000 WITH EFFECT FROM 1 APRIL 2001. THE SECTION AS IT NOW STANDS, IS NOT A PROVISION FOR EXEMPTION, BUT A PROVISION WHICH ENABLES AN ASSESSEE TO CLAIM A DEDUCTION. AS IT NOW STANDS, THE SECTION CONTEMPLATES A DEDUCTION OF SUCH PROFITS AND GAINS AS ARE DERIVED BY A HUNDRED PER CENT EXPORT ORIENTED UNDERTAKING FROM THE EX PORT OF ARTICLES AND THINGS OR COMPUTER SOFTWARE FOR A PERIOD OF TEN CONSECUTIVE ASSESSMENT YEARS BEGINNING WITH THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE UNDERTAKING BEGINS TO MANUFACTURE OR PRODUCE SUCH ARTICLES OR THINGS OR COMPUTER SOFTWARE, AS THE CASE MAY BE. THE DEDUCTION HAS TO BE ALLOWED FROM THE TOTAL INCOME OF THE ASSESSEE. IN HINDUSTAN LEVER LTD. VS. DEPUTY COMMISSIONER OF INCOME TAX ,2 A DIVISION BENCH OF THIS COURT CONSIDERED THE PROVISIONS OF SECTION 10B, WHILE CONSIDERING A PETITION CHALLENGING THE ACTION OF THE ASSESSING OFFICER IN PURPORT TO REOPEN THE ASSESSMENT UNDER SECTION 148. THE DIVISION BENCH NOTED THAT UPON THE SUBSTITUTION OF THE PROVISION BY THE FINANCE ACT, 2000, SECTION 10B WAS NO LONGER A PROVISION FOR EXEM PTION, BUT A PROVISION FOR DEDUCTION. THE DIVISION BENCH OBSERVED AS FOLLOWS: VBC 7 ITXA3465.10 - 7.2 PLAINLY, SECTION 10B AS IT STANDS IS NOT A PROVISION IN THE NATURE OF AN EXEMPTION BUT PROVIDES FOR A DEDUCTION. SECTION 10B WAS SUBSTITUTED BY THE FINANC E ACT OF 2000 WITH EFFECT FROM APRIL 1,2001. PRIOR TO THE SUBSTITUTION OF THE PROVISION, THE EARLIER PROVISION STIPULATED THAT ANY PROFITS AND GAINS DERIVED BY AN ASSESSEE FROM A 100 PER CENT EXPORT ORIENTED UNDERTAKING, TO WHICH THE SECTION ITA . 354 /MDS/ 12 9 APPLIES SHALL NOT BE INCLUDED IN THE TOTAL INCOME OF THE ASSESSEE . THE PROVISION, THEREFORE, AS IT EARLIER STOOD WAS IN THE NATURE OF AN EXEMPTION. AFTER THE SUBSTITUTION OF SECTION 10B BY THE FINANCE ACT OF 2000, THE PROVISION AS IT NOW STANDS PROVIDES FOR A DEDUCTIO N OF SUCH PROFITS AND GAINS AS ARE DERIVED BY A 100 PER CENT EXPORT ORIENTED UNDERTAKING FROM THE EXPORT OF ARTICLES OR THINGS OR COMPUTER SOFTWARE FOR TEN CONSECUTIVE ASSESSMENT YEARS BEGINNING WITH THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHI CH THE UNDERTAKING BEGINS TO MANUFACTURE OR PRODUCE. CONSEQUENTLY, IT IS EVIDENT THAT THE BASIS ON WHICH THE ASSESSMENT HAS SOUGHT TO BE REOPENED IS BELIED BY A PLAIN READING OF THE PROVISION. THE ASSESSING OFFICER WAS PLAINLY IN ERROR IN PROCEEDING ON TH E BASIS THAT BECAUSE THE INCOME IS EXEMPTED, THE LOSS WAS NOT ALLOWABLE. ALL THE FOUR UNITS OF THE ASSESSEE WERE ELIGIBLE UNDER SECTION 10B. THREE UNITS HAD RETURNED A PROFIT DURING THE COURSE OF THE ASSESSMENT YEAR, WHILE THE CRAB STICK UNIT HAD RETURNED A LOSS. THE ASSESSEE WAS ENTITLED TO A DEDUCTION IN RESPECT OF THE PROFITS OF THE THREE ELIGIBLE UNITS WHILE THE LOSS SUSTAINED BY THE FOURTH UNIT COULD BE SET OFF AGAINST THE NORMAL BUSINESS INCOME. IN THESE CIRCUMSTANCES, THE BASIS ON WHICH THE ASSESSMEN T IS SOUGHT TO BE REOPENED IS CONTRARY TO THE PLAIN LANGUAGE OF SECTION 10B. THIS DECISION OF THE DIVISION BENCH HAS BEEN FOLLOWED BY ANOTHER DIVISION BENCH OF THIS COURT IN THE CASE OF COMMISSIONER OF VBC 8 ITXA 3465.10.7.2. INCOME TAX - II VS. PATNI COMP UTERS SYSTEMS LTD . 3 . 6. QUITE APART FROM THE FACT THAT THE ISSUE STANDS COVERED AGAINST THE REVENUE BY THE VIEW TAKEN BY THE DIVISION BENCHES IN THE AFORESAID TWO CASES, EVEN AS A MATTER OF FIRST PRINCIPLE, WE FIND NO JUSTIFICATION IN THE SUBMISSION WHICH HAS BEEN URGED ON BEHALF OF THE REVENUE. SECTION 70 PROVIDES FOR A SETTING OFF OF A LOSS FROM ONE SOURCE FALLING UNDER ANY HEAD OF INCOME (OTHER THAN CAPITAL GAINS) AGAINST INCOME FROM ANY OTHER SOURCE UNDER THE SAME HEAD. SECTION 71 PROVIDES FOR THE SETT ING OFF OF A LOSS SUSTAINED WITH REFERENCE TO ONE HEAD OF INCOME AGAINST INCOME FROM ANOTHER HEAD (SAVE AND EXCEPT FOR CAPITAL GAINS). ITA . 354 /MDS/ 12 10 UNDER SECTION 72, A PROVISION HAS BEEN MADE FOR CARRY FORWARD AND SETTING OFF OF A LOSS SUSTAINED AGAINST THE HEAD OF PRO FITS AND GAINS OF BUSINESS OR PROFESSION. UNDER SECTION 72, WHERE A LOSS WHICH HAS BEEN SUSTAINED UNDER THE HEAD OF PROFITS AND GAINS OF BUSINESS OR PROFESSION CANNOT BE SET OFF AGAINST INCOME UNDER ANY HEAD OF INCOME UNDER SECTION 71 SO MUCH OF THE LOSS A S HAS NOT BEEN SET OFF OR THE ENTIRE LOSS WHERE THERE IS NO INCOME UNDER ANY OTHER HEAD CAN BE CARRIED FORWARD IN THE MANNER WHICH IS INDICATED IN THE PROVISION. SECTION 72 WHICH PROVIDES FOR A CARRY FORWARD OF A BUSINESS LOSS COMES INTO OPERATION ONLY WHE N THE PROVISIONS OF SECTIONS 70 AND 71, AS THE CASE MAY BE, ARE EXHAUSTED. THERE IS NO PROVISION IN SECTION 10B BY WHICH A PROHIBITION HAS BEEN INTRODUCED BY THE LEGISLATURE IN SETTING OFF OF A LOSS WHICH IS SUSTAINED FROM ONE SOURCE FALLING UNDER THE HEAD OF PROFITS AND GAINS OF BUSINESS AGAINST INCOME FROM ANY OTHER SOURCE UNDER THE SAME HEAD. ON THE OTHER HAND, THERE IS INTRINSIC MATERIAL IN SECTION 10B TO INDICATE THAT SUCH A PROHIBITION WAS NOT WITHIN THE CONTEMPLATION OF THE LEGISLATURE. SUBSECTION(7) OF SECTION 10B PROVIDES THAT THE PROVISIONS OF SUBSECTION(8) AND SUBSECTION(10) OF SECTION 80IASHALL, SO FAR AS MAY BE, APPLY IN RELATION TO THE UNDERTAKING REFERRED TO IN THE SECTION AS THEY APPLY FOR THE PURPOSES OF AN UNDERTAKING REFERRED TO IN SECTION 80IA. SECTION 80IA CONTAINS A SPECIFIC PROVISION IN SUBSECTION(5) TO THE FOLLOWING EFFECT : (5) NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISION OF THIS ACT, THE PROFITS AND GAINS OF AN ELIGIBLE BUSINESS TO WHICH THE PROVISIONS OF SUBSECTION(1 )APPLY SHALL, FOR THE PURPOSES OF DETERMINING THE QUANTUM OF DEDUCTION UNDER THAT SUBSECTION FOR THE ASSESSMENT YEAR IMMEDIATELY SUCCEEDING THE INITIAL ASSESSMENT YEAR OR ANY SUBSEQUENT ASSESSMENT YEAR, BE COMPUTED AS IF SUCH ELIGIBLE BUSINESS WERE THE ONL Y 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. ITA . 354 /MDS/ 12 11 A SIMILAR PROVISION CORRESPONDI NG TO SUBSECTION(5) OF SECTION 80IA IS TO BE FOUND IN SUBSECTION(6) OF SECTION 80I.UNDER SUBSECTION (5) OF SECTION 80IA WHICH BEGINS WITH OVERRIDING NONOBTANTE PROVISIONS, PROFITS AND GAINS OF AN ELIGIBLE BUSINESS TO WHICH SUBSECTION(1) APPLIES ARE FOR THE PURPOSES OF DETERMINING THE QUANTUM OF DEDUCTION TO 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. A PROVISI ON AKIN TO SUBSECTION(5) OF SECTION 80IA OR FOR THAT MATTER AKIN TO SUBSECTION(6) OF SECTION 80I HAS NOT BEEN INTRODUCED BY THE LEGISLATURE WHEN IT ENACTED SECTION 10B. THE FACT THAT UNABSORBED DEPRECIATION CAN BE CARRIED FORWARD TO A SUBSEQUENT YEAR DOES NOT MILITATE AGAINST THE ENTITLEMENT OF THE ASSESSEE TO SET OFF A LOSS WHICH IS SUSTAINED BY AN ELIGIBLE UNIT AGAINST THE INCOME ARISING FROM OTHER UNITS UNDER THE SAME HEAD OF PROFITS AND GAINS OF BUSINESS OR PROFESSION. THE LEGISLATURE NOT HAVING INTRODU CED A STATUTORY PROHIBITION, THERE IS NO REASON TO DEPRIVE THE ASSESSEE OF THE NORMAL ENTITLEMENT WHICH WOULD FLOW OUT OF THE PROVISIONS OF SECTION 70. 7. IN THIS VIEW OF THE MATTER, FOR THE REASONS WHICH WE HAVE ALREADY INDICATED EARLIER, WE FOLLOW THE E ARLIER DECISION OF A DIVISION BENCH OF THIS COURT ON THIS ASPECT. CONSEQUENTLY, NO SUBSTANTIAL QUESTION OF LAW WOULD ARISE IN THE APPEAL. THE APPEAL IS ACCORDINGLY DISMISSED. TAKING CUE FROM THE SAME & IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE INSTA NT CASE, WE DEEM IT APPROPRIATE THAT SINCE THE ASSESSING OFFICER HAS NOT CONSIDERED THE ABOVE SAID LEGAL POSITION WHILST FINALIZING THE ASSESSME NT ORDER AND THE CIT(A) HAS ONLY DEALT WITH THE LEGAL ASPECT OF THE MATTER, THE ISSUE ITA . 354 /MDS/ 12 12 IN HAND IS REMITTED BACK T O THE FILE OF ASSESSING OFFICER WHO SHALL PASS A FRESH ORDER CONSIDERING ASSESSEE S PLEA OF SET OFF(SUPRA) IN THE LIGHT OF OUR ABOVE OBSERVATION IN ACCORDANCE WITH LAW AFTER AFFORDING ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE. 8 . IN THE RESULT, APP EAL OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER P RONOUNCED ON FRIDAY THE 5 TH OCTOBER, 2012 AT CHENNAI SD/ - SD/ - (N.S.SAINI) ( S.S.GODARA ) ACCOUNTNT MEMBER JUDICIAL MEMBER CHENNAI, DATED 5 TH OCTOBER , 2012 . K S SUNDARAM COPY TO: ASSESSEE / AO / CIT (A) / CIT / D.R. / GUARD FILE ITA . 354 /MDS/ 12 13 ITA . 354 /MDS/ 12 14