ACIT 21(2), MUMBAI V. MARUDHAR FASHIONS, MUMBAI

ITA 6967/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 0686 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2012-2013
• Appeal Filed On: 08-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D G PANSARI
• Keywords: Business income
• Section: 80IA; 32

Judgement Text

1 MARUDHAR FASHIONS IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D, MUMBAI BEFORE SHRI G MANJUNATHA (ACCOUNTANT MEMBER) AND SHRI RAVISH SOOD (JUDICIAL MEMBER) ITA NO.6967/MUM/2017 - AY 2012-13 ITA NO.6968/MUM/2017 - AY 2013-14 ITA NO.6969/MUM/2017 - AY 2014-15 ACIT-21(2), MUMBAI VS M/S MARUDHAR FASHIONS 8, CAMA INDUSTRIAL ESTATE SUN MILL COMPOUND, LOWER PAREL (W) MUMBAI400 013 PAN : AAAFM3463F APPELLANT RESPONDEDNT APPELLANT BY SHRI D.G. PANSARI RESPONDENT BY SHRI VIMAL PUNMIYA DATE OF HEARING 26-02-2019 DATE OF PRONOUNCEMENT 27-03-2019 O R D E R PER G MANJUNATHA, AM : THESE THREE APPEALS FILED BY THE REVENUE ARE DIRECT ED AGAINST COMMON ORDER OF THE CIT(A)-33, MUMBAI DATED 13-09-2017 FOR THE ASSESSMENT YEARS, 2012-13, 2013-14 & 2014-15. SINCE FACTS ARE IDENTI CAL AND ISSUES ARE COMMON, 2 MARUDHAR FASHIONS FOR THE SAKE OF CONVENIENCE, THESE APPEALS WERE HEA RD TOGETHER AND ARE DISPOSED OF BY THIS CONSOLIDATED ORDER. 2. THE REVENUE HAS RAISED MORE OR LESS COMMON GROUN DS OF APPEAL FOR ALL ASSESSMENT YEARS. THEREFORE, FOR THE SAKE OF BREVI TY, GROUNDS OF APPEAL TAKEN FOR AY 2012-13 IN ITA NO.6967/MUM/2017 ARE REPRODUC ED HEREUNDER:- 1. 'WHETHER ON THE FACTS AND CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LD.CIT(A) IS JUSTIFIED IN HOLDING THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S.80IA OF THE INCOME-TAX ACT, 1961 TO THE TUNE OF RS.1,42, 02,495/- AS AGAINST THE COMPUTATION OF THE SAME AT RS.71,31,266/- BY THE AS SESSING OFFICER?' 2. 'WHETHER ON THE FACTS AND CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD.CIT(A) IS JUSTIFIED IN HOLDING THAT THE EACH OF THE WIND MILLS CONSTITUTE A SEPARATE UNDERTAKING FOR THE PURPOSES OF DEDUCTION U/S.80IA?' 3. 'WHETHER ON THE FACTS AND CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD.CIT(A) IS JUSTIFIED IN NOT REDUCING THE PROFITS OF WTG 1,2,3 & 4 WITH THE LOSS OF WTG 5 FOR PURPOSES OF COMPUTING DEDUCTION U/S.80IA? .' 4. 'WHETHER ON THE FACTS AND CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LD.CIT(A) IS JUSTIFIED IN SPLITTING UP OF UNITS AND CONSIDERING THEM AS SEPARATE UNDERTAKINGS FOR THE PURPOSE OF COMPUTATION OF DEDU CTION U/S.80IA OF THE INCOME- TAX ACT, 1961 IGNORING THE FACT THAT ALL THE FIVE U NITS ARE INTO THE SAME ACTIVITY OF GENERATION OF WIND POWER AND THUS CONSTITUTE ONE SI NGLE 'INDUSTRIAL UNDERTAKING' OR AN ENTERPRISES. 3. THE BRIEF FACTS OF THE CASE EXTRACTED FROM ITA N O.6967/MUM/2017 ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF HAND TUFTED WOOLLEN CARPETS AND ALSO INVOLVED IN THE BUSINESS O F GENERATION OF POWER THROUGH WIND TURBINE GENERATOR. THE ASSESSEE HAS F ILED ITS RETURN OF INCOME FOR AY 2012-13 ON 20-09-2012 DECLARING TOTAL INCOME AT RS.2,06,51,300. THE ASSESSEE HAS CLAIMED THE BENEFIT OF DEDUCTION U/S 8 0IA OF THE I.T. ACT, 1961 IN RESPECT OF PROFIT DERIVED FROM POWER GENERATION BUS INESS. THE ASSESSEE, WHILE ARRIVING AT THE AMOUNT OF DEDUCTION U/S 80IA, CLAIM ED DEDUCTION TOWARDS PROFIT 3 MARUDHAR FASHIONS OF ELIGIBLE UNITS WITHOUT SETTING OFF OF LOSS OF OT HER ELIGIBLE UNITS. THE CASE HAS BEEN SELECTED FOR SCRUTINY AND ASSESSMENT HAS BEEN COMPLETED U/S 1`43(3) OF THE INCOME-TAX ACT, 1961 ON 31-03-2015, WHERE THE A O HAS RE-COMPUTED PROFIT ELIGIBLE FOR DEDUCTION U/S 80IA IN RESPECT OF POWER GENERATION BUSINESS BY SETTING OFF OF LOSS OF OTHER ELIGIBLE UNITS. 4. AGGRIEVED BY THE ASSESSMENT ORDER, ASSESSEE PREF ERRED APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), ASSESSEE SUBMITTED THAT AS PER THE PROVISIONS OF SUB SECTION (5) OF SECTION 80IA, DEDUCTION HAS TO B E ALLOWED UNIT-WISE WITHOUT CONSIDERING PROFIT / LOSS OF OTHER ELIGIBLE UNITS, BUT THE AO HAS RE-COMPUTED THE AMOUNT OF DEDUCTION BY SETTING OFF OF LOSS INCURRED BY OTHER ELIGIBLE UNITS. THE LD.CIT(A), AFTER CONSIDERING SUBMISSIONS OF THE ASS ESSEE HELD THAT DEDUCTION PROVIDED U/S 80IA SHALL BE ALLOWED TO EACH UNIT WIT HOUT CONSIDERING PROFIT OR LOSS OF OTHER ELIGIBLE UNITS. THE LD.CIT(A) FURTHE R OBSERVED THAT IF BOTH SUB SECTIONS OF SECTION 80IA ARE READ TOGETHER, IT IS V ERY CLEAR THAT ONCE OTHER CONDITIONS OF SECTION 80IA ARE FULFILLED, THE PROFI T IS TO BE COMPUTED UNDERTAKING-WISE AND NOT FOR BUSINESS AS A WHOLE. SINCE THE AO HAS NOT DOUBTED THE ELIGIBILITY OF DEDUCTION WITH RESPECT T O DIFFERENT WINDMILLS, HE FOUND THAT FOR THE PURPOSE OF DETERMINING THE QUANT UM OF DEDUCTION U/S 80IA FOR EACH UNDERTAKING, THE COMPUTATION HAS TO BE MAD E AS IF SUCH ELIGIBLE BUSINESS WERE THE ONLY SOURCE OF INCOME TO THE ASSE SSEE DURING THE PREVIOUS 4 MARUDHAR FASHIONS YEAR RELEVANT TO THE INITIAL ASSESSMENT YEAR AND TO EVERY SUBSEQUENT ASSESSMENT YEAR UPTO AND INCLUDING THE ASSESSNMENT YEAR FOR WHICH THE DETERMINATION HAS TO BE MADE. THE RELEVANT OBSERVA TIONS OF THE LD.CIT(A) ARE AS UNDER:- 19. I HAVE CAREFULLY CONSIDERED THE ABOVE SUBMISSI ONS OF THE APPELLANT AND THE IMPUGNED ASSESSMENT ORDER ON THIS ISSUE, MY OBS ERVATIONS ARE AS UNDER- 19.1 DURING THE APPELLATE PROCEEDINGS, THE APPELLAT E HAS SUBMITTED THE DETAILS REGARDING SET UP, LOCATION AND THE DATE OF COMMENCEMENT OF EACH WIND MILL WITH RESPECT TO DEDUCTION UNDER SECTION 8 0 IA AS UNDER- WINDMI LL NO. YEAR OF SET UP LOCATION COMMENCEMENT OF DEDUCTION (INITIAL ASSESSMENT YEAR) PROFIT 1. F.Y. 06-07 DHULE A.Y. 11-12 61,84,940/ 2. F.Y. 06-07 SANGLI A.Y. 11-12 73,54,507/ 3. F.Y. 09-10 JODHPUR A.Y. 12-13 6,63,047/- 4. F.Y. 09-10 BHIYAN A.Y. 15-16 65,667/- 5. F.Y. 09-10 AKAL A.Y.15-16 (-) 1,36,896/- 19.2 IN THE ASSESSMENT ORDER, THE AO WAS OF THE VIE W THAT THE PROFITS FROM THREE WIND MILLS WTG 1, WTG 2 AND WTG 3 SHOULD BE S ET OFF AGAINST THE LOSSES OF WIND MILLS WTG 4 AND WTG 5 AND THE NET IN COME SHOULD BE ALLOWED TO BE CLAIMED U/S 80IA OF THE ACT FOR THE Y EAR UNDER CONSIDERATION. IN THIS REGARD, I FIND THAT PROVISIONS OF SUB SEC. (1) AND (5) OF SEC.80IA ARE RELEVANT HERE. THESE SUB-SECTIONS READ AS UNDER: AS PER SUBSECTION (1) OF SECTION 80-IA, WHERE THE GROSS TOTAL INCOME OF THE ASSESSEE INCLUDES ANY PROFIT OR GAINS DERIVED BY AN UNDERTAKING OR AN ENTERPRISE FROM ANY BUSINESS REFERRED TO IN SUB-SEC TION (4), A DEDUCTION OF 100% OF PROFIT AND GAINS OF SUCH BUSINESS WILL BE A LLOWED TO THE ASSESSEE AS A DEDUCTION FOR A PERIOD OF 10 CONSECUTIVE ASSESSMENT YEARS. AS PER SUBSECTION (5) OF SECTION 80IA: 'NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PR OVISION OF THIS ACT, THE PROFITS AND GAINS OF AN ELIGIBLE BUSINESS TO WH ICH THE PROVISIONS OF SUB-SECTION (1) APPLY SHALL, FOR THE PURPOSES OF DE TERMINING THE QUANTUM OF DEDUCTION UNDER THAT SUB-SECTION FOR THE ASSESSM ENT YEAR IMMEDIATELY SUCCEEDING THE INITIAL ASSESSMENT YEAR OR ANY SUBSEQUENT ASSESSMENT YEAR, BE COMPUTED AS IF SUCH ELIGIBLE BU SINESS WERE THE ONLY SOURCE OF INCOME OF THE ASSESSEE DURING THE PREVIOUS YEAR RELEVANT TO THE INITIAL ASSESSMENT YEAR AND TO EVERY SUBSEQU ENT ASSESSMENT YEAR UP TO AND INCLUDING THE ASSESSMENT YEAR FOR WHICH T HE DETERMINATION IS TO BE MADE. 19.3 IF BOTH SUB-SECTIONS OF SECTION 80LA ARE READ TOGETHER, IT IS CLEAR THAT, ONCE OTHER CONDITIONS OF SECTION 80IA ARE FULFILLED , THE PROFITS ARE TO BE COMPUTED UNDERTAKING-WISE AND NOT FOR BUSINESS AS A WHOLE. SINCE THE AO HAS NOT DOUBTED THE ELIGIBILITY OF DEDUCTION U/S 80 IA WITH RESPECT TO DIFFERENT 5 MARUDHAR FASHIONS WIND MILLS, IT IS FOUND THAT FOR THE PURPOSE OF DET ERMINING THE QUANTUM OF DEDUCTION U/S 80IA FOR EACH UNDERTAKING, THE COMPUT ATION IS TO BE MADE AS IF SUCH ELIGIBLE BUSINESS WERE THE ONLY SOURCE OF INCO ME OF THE ASSESSEE DURING THE PREVIOUS YEAR RELEVANT TO THE INITIAL ASSESSMEN T YEAR AND TO EVERY SUBSEQUENT ASSESSMENT AND INCLUDING THE ASSESSMENT YEAR FOR WHICH THE DETERMINATION IS TO BE MADE. IN THE INSTANT CASE, F OR WTG 1, WTG 2 AND WTG 3, THE INITIAL ASSESSMENT YEARS FOR THE PURPOSE OF DEDUCTION U/S 80IA ARE A.Y.S 2011-12. 2011-12 AND A.Y. 2012-13 RESPECTIVELY. THE RE ARE POSITIVE PROFIT FOR ALL THE THREE WIND MILLS IN THESE YEARS. FOR WTG 4 AND WTG 5, THE APPELLANT HAS CHOSEN INITIAL ASSESSMENT YEARS BEING A.Y. 2013 -14 AND A.Y. 2015-16 RESPECTIVELY, SINCE THE PROVISIONS OF IT. ACT GIVE AN OPPORTUNITY TO THE ASSESSEE TO SELECT ANY TEN CONSECUTIVE YEARS OUT OF 15 YEARS FOR AVAILING THE BENEFITS OF DEDUCTION U/S 80IA. AVAILING THIS OPPORTUNITY, THE APPELLANT HAS SELECT ED F.Y.S RELEVANT TO A.Y. 2013-14 AND A.Y. 2015-16 AS INITIAL ASSESSMENT YEAR FOR THE WIND MILLS WTG4 AND WTG5 RESPECTIVELY. NO DOUBT, ONCE INITIAL ASSESSMENT YEAR IS SELECTED, THE BENEFITS HAVE TO BE AVAILED FOR TEN C ONSECUTIVE YEARS IRRESPECTIVE OF WHETHER THERE IS A PROFIT OR LOSS F ROM SUCH UNDERTAKING. 19.4 IN VIEW OF THE ABOVE FACTS, IN MY CONSIDERED O PINION, ONCE THE APPELLANT HAS NOT AVAILED BENEFIT OF SEC. 80IA FOR WTG 4 AND WTG 5 FOR THE YEAR UNDER CONSIDERATION, AS THE INITIAL ASSESSMENT YEARS FOR THESE WIND MILLS START IN SUBSEQUENT YEARS, THERE REMAINS NO QUESTION OF CLUB BING THE PROFITS (OR LOSS) OF WTG 4 AND WTG 5 WITH THE PROFITS OF WTG 1, WTG 2 AND WTG 3. IN THIS REGARD, THE RELIANCE OF THE LD. AR ON VARIOUS JUDIC IAL PRONOUNCEMENTS, AS PER WRITTEN SUBMISSIONS ARE IN ORDER. HENCE, THE AO IS DIRECTED TO EXCLUDE THE PROFIT/ LOSS OF WTG 4 AND WTG 5 FOR THE PURPOSE OF COMPUTATION OF DEDUCTION U/S 80IA OF THE ACT FOR THE YEAR UNDER CONSIDERATIO N. THUS, THE GROUND OF APPEAL NO. 1 IS ALLOWED. 5. AGGRIEVED BY THE ORDER OF CIT(A), THE REVENUE IS IN APPEALS BEFORE US. 6. THE LD.DR SUBMITTED THAT THE LD.CIT(A) HAS ERRED IN HOLDING THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 80IA OF THE INCOME-TAX ACT, 1961 TO EACH OF THE WINDMILL SEPARATELY AS THE ONLY BUSINESS OF THE ASSESSEE WITHOUT APPRECIATING THE FACT THAT THE DEDUCTION PROVIDED U /S 80IA OF THE ACT HAS TO BE GIVEN FOR BUSINESS, AS A WHOLE. THE LD.DR FURTHER SUBMITTED THAT THE LD.CIT(A) WAS NOT JUSTIFIED IN SPLITTING UP OF UNITS AND CONS IDERING THEM AS SEPARATE UNDERTAKINGS FOR THE PURPOSE OF COMPUTATION OF DEDU CTION U/S 80IA OF THE ACT 6 MARUDHAR FASHIONS IGNORING THE FACT THAT ALL THE FIVE UNITS WERE INTO THE SAME ACTIVITY OF GENERATION OF WIND POWER AND THIS CONSTITUTE ONE SI NGLE INDUSTRIAL UNDERTAKING OR AN ENTERPRISE. 7. THE LD.AR FOR THE ASSESSEE, ON THE OTHER HAND, S TRONGLY SUPPORTING THE ORDER OF THE LD.CIT(A) SUBMITTED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF ITAT, MUMBAI BENCH C IN THE CASE OF PUNIT CONSTRUCTION CO VS JCIT IN ITA NOS 6337 AND 6980 (M UM) OF 2014 ORDER DATED FEBRUARY 21, 2018 WHERE UNDER IDENTICAL SET OF FACT S, THE CO-ORDINATE BENCH OF TRIBUNAL HELD THAT IN TERMS OF PROVISIONS OF SUB SE CTION (5) OF SECTION 80IA, DEDUCTION HAS TO BE GIVEN UNIT-WISE WITHOUT CONSIDE RING PROFIT OR LOSS OF OTHER ELIGIBLE UNITS. THE LD.CIT(A), AFTER CONSIDERING R ELEVANT PROVISIONS OF THE ACT, HAS RIGHTLY DIRECTED THE AO TO ALLOW THE BENEFIT OF DEDUCTION UNIT-WISE WITHOUT SETTING OFF OF LOSS / PROFIT OF OTHER ELIGIBLE UNIT S. THEREFORE, THERE IS NO REASON TO INTERFERE WITH THE ORDER OF THE LD.CIT(A). 8. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES B ELOW. THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT THE ASSESSEE IS ELIGIB LE FOR DEDUCTION U/S 80IA IN RESPECT OF FIVE WINDMILLS. THE ONLY DISPUTE IS WIT H REGARD TO WHETHER EACH WINDMILL CONSTITUTE A SEPARATE UNDERTAKING AND THE PROFIT OR LOSS OF THAT UNDERTAKING ALONE WILL BE CONSIDERED FOR THE PURPOS E OF DEDUCTION U/S 80IA OR 7 MARUDHAR FASHIONS THE SUM OF PROFIT OR LOSS OF ALL FIVE UNDERTAKINGS TOGETHER IS ELIGIBLE FOR DEDUCTION U/S 80IA. THE CO-ORDINATE BENCH OF ITAT, MUMBAI BENCH C IN THE CASE OF PUNIT CONSTRUCTION CO VS JCIT (SUPRA) HAS C ONSIDERED AN IDENTICAL ISSUE IN LIGHT OF NUMBER OF WINDMILLS AND AFTER CONSIDERI NG RELEVANT PROVISIONS OF THE ACT, INCLUDING SUB SECTION (5) OF SECTION 80IA, HEL D THAT DEDUCTION HAS TO BE GIVEN UNIT-WISE WITHOUT CONSIDERING PROFIT OR LOSS OF OTHER ELIGIBLE UNITS. THE RELEVANT OBSERVATIONS OF THE TRIBUNAL ARE AS UNDER: - 10. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MA TERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. W E HAVE ALSO CAREFULLY CONSIDERED PROVISIONS OF SECTION 80IA AND CASE LAWS RELIED UPON BY BOTH PARTIES. THE FACTS WITH REGARD TO ELIGIBILITY FOR C LAIMING DEDUCTION UNDER SECTION 80IA HAS NOT BEEN DISPUTED BY THE LOWER AUT HORITIES. THE LOWER AUTHORITIES HAD ADMITTED THAT THE ASSESSEE IS ELIGI BLE FOR CLAIMING DEDUCTION UNDER SECTION 80IA IN RESPECT OF POWER GENERATION B USINESS THOUGH SETTING OFF OF WINDMILLS. THE ONLY DISPUTE IS WITH REGARD TO CO MPUTATION OF QUANTUM OF DEDUCTION. WHETHER THE PROFITS AND GAINS OF THE ELI GIBLE BUSINESS AS PER THE WORDS OF SECTION 80IA(5) HAVE TO BE CONSIDERED UNIT -WISE OR AS A TOTAL ELIGIBLE BUSINESS COMPRISING OF PROFITS OF ALL UNITS. THE PR OVISIONS OF SECTION 80IA(5) PROVIDED MECHANISM FOR DETERMINATION OF QUANTUM OF DEDUCTION FROM ELIGIBLE BUSINESS AND AS PER WHICH THE ELIGIBLE BUSINESS SHA LL BE CONSIDERED AS IF THE ONLY SOURCE OF INCOME OF THE ASSESSEE DURING THE IN ITIAL YEAR AND EVERY SUBSEQUENT AYS. THEREFORE, ONE HAS TO SEE WHAT ELIG IBLE BUSINESS IS WHETHER IT IS THE TOTAL BUSINESS AS A WHOLE OR EACH UNIT OR UN DERTAKING. NO DOUBT THE PROVISION OF SECTION 80IA SPEAKS ABOUT PROFIT AND G AINS FROM INDUSTRIAL UNDERTAKINGS I T A NO . 63 37 & 6 9 80 / M U M/ 2 0 1 4 OR ENTERPRISES ENGAGED IN INFRASTRUCTURE DEVELOPMENT, ETC. SUB-SECTION (5) SPEAKS ABOUT ELIGIBLE BUSINESS. NOW THE CONTROVERSY TO BE RESOLVED IS WHE THER THE POWER GENERATION SEGMENT OF THE ASSESSEE IS AN ELIGIBLE BUSINESS OR EACH WINDMILL IS A SEPARATE UNIT ELIGIBLE FOR DEDUCTION WITHOUT CONSIDERING PRO FIT OR LOSS OF OTHER WINDMILL. THE ASSESSEE CLAIMS THAT EACH WINDMILL SHALL BE CON SIDERED AS AN ELIGIBLE UNIT FOR THE PURPOSE OF DETERMINATION OF DEDUCTION. THE ASSESSEE ALSO CITED CERTAIN JUDICIAL PRECEDENTS IN SUPPORT OF ITS ARGUMENTS. 11. TO UNDERSTAND THE ELIGIBILITY FOR DEDUCTION UND ER SECTION 80IA OF THE ACT, THE QUESTIONS THAT NEED TO BE ADDRESSES ARE WHETHER THE GROSS TOTAL INCOME OF THE ASSESSEE IS POSITIVE, WHETHER THE ASSESSEE HAS AN ELIGIBLE BUSINESS AND 8 MARUDHAR FASHIONS WHETHER DIFFERENT UNITS IN SUCH ELIGIBLE BUSINESS A RE TO BE TAKEN AS ONE ELIGIBLE BUSINESS. TO ASCERTAIN GROSS TOTAL INCOME, THE FIRS T STEP WOULD BE TO COMPUTE INCOME UNDER EACH HEAD OF INCOME SEPARATELY. IN THI S CASE ADMITTEDLY, THE ASSESSEE DOES NOT HAVE ANY OTHER HEAD OF INCOME EXC EPT INCOME FROM BUSINESS OR PROFESSION. THE ASSESSEE HAVE ONLY TWO SEGMENT O F BUSINESS INCOME I.E. CONSTRUCTION BUSINESS AND POWER GENERATION BUSINESS . ADMITTEDLY, CONSTRUCTION BUSINESS IS NOT ELIGIBLE BUSINESS FOR CLAIMING DEDU CTION UNDER SECTION 80IA, THEREFORE, THERE IS CONTROVERSY ABOUT CONSOLIDATION OF PROFIT FROM CONSTRUCTION BUSINESS ACTIVITY. THE ASSESSEE IS HAVING POWER GEN ERATION SEGMENT THROUGH WINDMILLS. THE ASSESSEE HAS SET UP FIVE WINDMILLS. ALL THE FIVE UNITS ARE PART OF POWER GENERATION SEGMENT. NOW THE QUESTION IS WHETH ER DEDUCTION PROVIDED UNDER SECTION 80IA SHALL BE GIVEN ON PROFITS AND GA INS DERIVED FROM POWER SEGMENT BUSINESS AS THE ONLY ELIGIBLE BUSINESS OR P ROFITS AND GAINS DERIVED FROM EACH WINDMILLS AS AN ELIGIBLE BUSINESS WITHOUT CONSIDERING PROFIT OR LOSS OF OTHER WINDMILLS. THERE IS NO DISPUTE WITH REGARD TO DEDUCTION TO BE GIVEN UNDER CHAPTER VIA AGAINST GROSS TOTAL INCOME COMPUT ED FROM ALL SOURCE OF INCOME. EVEN VARIOUS DECISIONS OF THE HON'BLE SUPRE ME COURT, INCLUDING IN THE CASE OF CIT VS. LIBERTY INDIA I T A NO . 63 37 & 6 9 80 / M U M/ 2 01 4 (SUPRA) HAVE CLEARLY HELD THAT SPECIAL DEDUCTION UN DER CHAPTER VIA HAS TO BE COMPUTED ON THE GROSS TOTAL INCOME AND SUCH GROSS T OTAL INCOME HAS TO BE COMPUTED SEGMENT WISE BUSINESS AFTER ALLOWING ALL T HE DEDUCTION ALLOWABLE UNDER SECTION 32 TO 43D. THE HON'BLE BOMBAY HIGH CO URT IN THE CASE OF PLASTIBLENDS INDIA LTD. VS. ACIT (2009) 185 TAXMAN 187 AFTER CONSIDERING THE RATIO OF HON'BLE SUPREME COURT IN THE CASE OF LIBER TY INDIA (SUPRA) HELD THAT THERE HAS TO BE PROFIT IN THE ELIGIBLE BUSINESS AND SUCH ELIGIBLE BUSINESS CAN BE ANY OF THE BUSINESS AS REFERRED TO IN SUB- SECTION 3(II) TO 11(A) OF SECTION 80IA OF THE ACT. 12. IN THIS CASE, ADMITTEDLY THE ASSESSEE IS HAVING TWO SEGMENT OF BUSINESS I.E. ONE IS POWER GENERATION THROUGH FIVE WINDMILLS WHIC H IS ELIGIBLE BUSINESS AND ANOTHER IS CONSTRUCTION SEGMENT. THE ASSESSEE HAS G ENERATED PROFIT FROM TWO WINDMILLS AND INCURRED LOSSES FROM THREE WINDMILLS. THE ASSESSEE ALSO DERIVED PROFIT FROM CONSTRUCTION BUSINESS. THE GROSS TOTAL INCOME COMPUTED FROM TWO SEGMENT OF BUSINESS IS POSITIVE. IF YOU CONSIDER EA CH SEGMENT OF BUSINESS STAND ALONE, THEN THERE IS A LOSS FROM THE POWER GENERATI ON SEGMENT, IF PROFIT OR LOSSES OF ALL FIVE WINDMILLS ARE CONSOLIDATED. THE ASSESSEE HAS CONSIDERED EACH WIND MILL AS A SEPARATE UNIT ELIGIBLE FOR DEDUCTION UNDER SECTION 80IA, WITHOUT CONSIDERING PROFIT OR LOSS OF OTHER WINDMILLS AND A CCORDINGLY CLAIMED DEDUCTION TOWARDS PROFIT GENERATED FROM TWO WINDMIL LS. IF ONE CONSIDERED POWER GENERATION BUSINESS AS ONE ELIGIBLE BUSINESS, CERTAINLY THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80IA, AS F ROM POWER GENERATION BUSINESS THE ASSESSEE HAS INCURRED LOSSES. IF YOU S TRICTLY APPLY THE PROVISIONS OF SECTION 80IA(5), THE WORDS USED THEREIN ARE CLEARLY STATES THAT EACH ELIGIBLE BUSINESS SHALL BE CONSIDERED AS THE ONLY SOURCE OF INCOME OF THE ASSESSEE FOR THE PURPOSE OF DETERMINATION OF DEDUCTION. IF, ONE GOES BY THE WORDS USED IN SUB SECTION (5), OF SECTION 80IA, THEN THERE IS LOG IC IN THE UNIT WISE DEDUCTION CLAIMED BY THE ASSESSEE, FOR THE REASON THAT DEDUCT IONS UNDER CHAPTER VIA IS A 9 MARUDHAR FASHIONS INCENTIVE BASED DEDUCTION I T A NO . 63 37 & 6 9 80 / M U M/ 2 01 4 AND PERIOD SPECIFIC. THE PROVISIONS PROVIDES FOR DEDUCT ION OF PROFITS AND GAINS OF ELIGIBLE BUSINESS FOR A CERTAIN PERIOD STARTING FRO M THE PERIOD OF INITIAL CLAIM. TO UNDERSTAND THE ISSUE IN A BETTER MANNER, LET US TAKE AN EXAMPLE. THE ASSESSEE IS IN TO THE BUSINESS OF MANUFACTURING PRO DUCTS FROM DIFFERENT UNITS LOCATED AT DIFFERENT PLACES. MEANTIME, THE GOVT. HA S ANNOUNCED INCENTIVES FOR SETTING UP UNITS IN SOME PLACES AND WITHIN SUCH PER IOD. THE ASSESSEE HAS SET UP ONE ELIGIBLE UNIT AND STARTS CLAIMING DEDUCTION UND ER THAT PROVISION. NEXT YEAR, THE ASSESSEE HAS SET UP ONE MORE ELIGIBLE UNIT AT D IFFERENT PLACE AND STARTS CLAIMING DEDUCTION FROM THAT YEAR AND SO ON. NOW BO TH UNITS ARE ELIGIBLE UNITS. THE PERIOD OF DEDUCTION SPECIFIED UNDER THE ACT IS 10 YEARS FOR ELIGIBLE UNITS. UNIT ONE IS CLAIMING DEDUCTION FROM INITIAL ASSESSM ENT YEAR AND IT MAY END UP IN SOME PERIOD. UNIT TWO IS CLAIMING DEDUCTION FROM NEXT YEAR AND IT MAY END UP IN DIFFERENT YEAR. IF ONE TAKES INITIAL ASSESSME NT YEAR FROM WHICH UNIT ONE CLAIMS DEDUCTION FOR TEN YEARS, THE ASSESSEE MAY LO OSE BENEFIT OF DEDUCTION FOR ONE YEAR FOR UNIT TWO, BECAUSE IT HAS COMMENCED DED UCTION FROM NEXT YEAR. IF YOU TAKE INITIAL YEAR OF CLAIM FROM THE DATE ON WHI CH UNIT TWO STARTS CLAIMING DEDUCTION, THEN THE ASSESSEE MAY GET THE BENEFIT FO R MORE THAN 10 YEARS FOR UNIT ONE, IF YOU CONSIDER BOTH UNITS AS ONE ELIGIBLE BUS INESS AND PROFIT OR LOSS OF BOTH UNITS IS CONSOLIDATED. THIS MAY NOT BE THE TRU E INTENTION OF THE LEGISLATURE AND FOR THAT REASON THE LEGISLATURE CONSCIOUSLY USE D THE WORD UNDERTAKING OR UNIT SO AS TO GIVE A DEDUCTION TOWARDS ELIGIBLE UNI TS, IN A SITUATION WHERE, THE ASSESSEE IS HAVING MORE THAN ONE UNITS IN DIFFERENT LOCATIONS, OUT OF WHICH ONE UNIT MAY BE AN ELIGIBLE UNIT AND ANOTHER UNIT MAY N OT BE ELIGIBLE UNIT AND ALSO ONE UNIT MAY GET DEDUCTION FOR DIFFERENT PERIOD AND ANOTHER UNIT MAY GET DEDUCTION FOR DIFFERENT PERIOD. THIS IS WHY THE COU RTS AND TRIBUNALS HAS CONSISTENTLY HELD THAT DEDUCTION PROVIDED U/S 80IA HAS TO BE GIVEN UNIT WISE WITHOUT CONSIDERING PROFIT OR LOSS OF OTHER UNITS. THIS LEGAL PROPOSITION IS STRENGTHENED BY THE DECISION OF ITAT, AHMADABAD, SP ECIAL BENCH IN THE CASE OF CIT VS. GOLDMINE SHARES AND FINANCE PVT. LTD . 9. A SIMILAR ISSUE HAS BEEN CONSIDERED BY HONBLE D ELHI HIGH COURT IN THE CASE OF CIT VS DEWAN KRAFT SYSTEM PVT LTD (2007) 16 0 TAXMAN 343 (DEL), WHERE THE HONBLE DELHI HIGH COURT, AFTER CONSIDERING REL EVANT PROVISIONS OF THE ACT, HELD THAT FOR THE PURPOSE OF DEDUCTION U/S 80IA, EA CH UNIT SHALL BE TREATED AS INDEPENDENT UNIT AND SAME HAS TO BE TREATED AS ONLY SOURCE OF INCOME OF THE ASSESSEE FOR THE PURPOSE OF COMPUTING DEDUCTION U/S 80IA OF THE ACT. THE RELEVANT FINDINGS OF THE HONBLE COURT ARE AS UNDER :- 10 MARUDHAR FASHIONS SECTION 80-IA(7) SHOWS THAT IT IS A DISTINCT AND S EPARATE DEEMING PROVISION WHICH LAYS DOWN THE SPECIAL METHOD OF COM PUTING [HE PROFITS AND GAINS ENTITLED TO DEDUCTION UNDER SECTI ON 80-IA. MOREOVER, THIS PROVISION IS OF OVERRIDING NATURE PROVIDING SP ECIFICALLY THAT DURING EACH OF THE ASSESSMENT YEARS IN THE TAX HOLI DAY, PERIOD IN WHICH THE ASSESSEE IS ENTITLED TO DEDUCTION UNDER S ECTION 80-IA, THIS PROVISION WILL BE APPLIED AS IF THE INDUSTRIAL UNIT IS AN INDEPENDENT UNIT AND IS THE ONE AND ONLY SOURCE OF INCOME POSSE SSED BY THE ASSESSEE. [PARA 13 J IF IS DEAR THAT WHILE COMPUTING DEDUCTION UNDER SEC TION 80-IA, THE PROFITS AND GAINS OF KALAMB UNIT FOR THE PURPOSE OF DETERMINING THE QUANTUM OF DEDUCTION UNDER SECTION 80-IA(5) WERE TO BE COMPUTED AS IF SUCH ELIGIBLE BUSINESS OF THE SAID UNIT WAS THE ONLY SOURCE OF INCOME OF THE ASSESSEE. THE ASSESSING OFFICER MIXED (HE PR OFITS OF THE KALAMB UNIT WITH THE PROFITS OF UNITS AT DELHI AND NOIDA A ND, THUS, HE ERRONEOUSLY RESTRICTED THE DEDUCTION TO THE EXTENT OF BUSINESS INCOME AND THAT WAS DONE BY HIM IN TOTAL DISREGARD OF THE PROVISIONS OF SUB- SECTION (7) OF SECTION 80-IA. [PARA 14J THUS, THE KALAMH UNIT, BEING THE ONLY UNIT OF THE A SSESSEE ELIGIBLE FOR DEDUCTION UNDER SECTION 80-IA, WAS TO BE TREATED AS AN INDEPENDENT UNIT AND THE SAME WAS TO BE TREATED AS THE ONLY SOU RCE OF INCOME FOR THE ASSESSEE FOR THE PURPOSE OF COMPUTING DEDUCTION UNDER SECTION 80- IA. THE DEDUCTION CLAIMED BY THE ASSESSEE UNDER SEC TION 80-IA, THUS, WAS IN ACCORDANCE WITH SAID PROVISIONS AND AS SUCH THERE WAS NO 10. IN THIS VIEW OF THE MATTER AND BEING CONSISTENT WITH THE VIEW TAKEN BY THE CO-ORDINATE BENCH, WHICH IS FURTHER SUPPORTED B Y THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OFCIT VS DEWAN KRAFT S YSTEMS PVT LTD (SUPRA), WE ARE OF THE CONSIDERED VIEW THAT THE LD.CIT(A) WAS R IGHT IN ALLOWING THE BENEFIT OF DEDUCTION U/S 80IA IN RESPECT OF EACH UNIT WITHO UT SETTING OFF OF LOSS INCURRED BY OTHER ELIGIBLE UNITS. HENCE, WE ARE INCLINED TO UPHOLD THE FINDINGS OF LD.CIT(A) AND DISMISS APPEAL FILED BY THE REVENUE. ITAS NO.6968 & 6969/MUM/2017 11 MARUDHAR FASHIONS 11. THE FACTS AND ISSUE INVOLVED IN THESE TWO APPEA LS ARE IDENTICAL TO THE FACTS AND ISSUE WE HAVE ALREADY CONSIDERED IN ITA N O.6967/MUM/2017 FOR AY 2012-13. THE REASONS GIVEN THEREIN BY US IN THE PR ECEDING PARAGRAPHS SHALL MUTATIS MUTANDIS APPLY TO THIS APPEAL ALSO. THEREF ORE, FOR THE DETAILED REASONS RECORDED IN THE PRECEDING PARAGRAPH, WE ARE OF THE CONSIDERED VIEW THAT THERE IS NO ERROR IN THE FINDINGS RECORDED BY THE CIT(A) IN DIRECTING AO TO ALLOW DEDUCTION U/S 80IA, UNIT-WISE WITHOUT SETTING OFF O F LOSS OF OTHER UNITS. HENCE, WE ARE INCLINED TO UPHOLD THE ORDER OF LD.CIT(A) AN D DISMISS APPEALS FILED BY THE REVENUE. 12. IN THE RESULT, ALL THE APPEALS FILED BY THE REV ENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 -03-2019 . SD/- SD/- (RAVISH SOOD) (G MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 27 TH MARCH, 2019 PK/- COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI