M/s LK Power Corporation Limited , Bangalore V. Income Tax Officer Ward 4(1)(1), Bangalore

ITA 790/BANG/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7606 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 06-04-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR P V PRADEEP KUMAR
• Assessee Lawyers: S SUKUMAR; G GANESH
• Keywords: Business income; Revision of order; Depreciation; Unabsorbed depreciation
• Section: 143(3); 72(1); 37; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, B ENGALURU BEFORE S HRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER I TA NO. 790 / BANG/2 0 1 7 (ASSESSMENT YEAR: 2012 - 13 ) M/S.L.K.POWER CORPORATION LTD. BREWERY HOUSE , KANAKAPURA ROAD, 7 TH MILE, BENGALURU - 560 062. PAN: AAAC C 4951 G VS. APPELLANT INCOME - TAX OFFICER, WARD 4(1)(1), BENGALURU. RESPONDENT APPELLANT BY : S/SHRI S.SUKUMAR, CA & G.GANESH, ADVOCATE. RESPONDENT BY : DR. P.V.PRADEEP KUMAR, ADDL.CIT(DR) DATE OF HEARING : 26/04/2018 DATE OF PRONOUNCEMENT : 20 /07/2018 O R D E R PER I NTURI RAMA RAO, AM : THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF THE LEARNED COMM ISSIONER OF INCOME - TAX - 4 , [CIT], B ENGALURU , DATED 31/01/2017 FOR THE ASSESSMENT YEAR 201 2 - 13 . 2. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL: ITA NO . 790 /BANG/20 17 PAGE 2 OF 10 ITA NO . 790 /BANG/20 17 PAGE 3 OF 10 3. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY DULY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT , 1956. IT IS ENGAGED IN THE BUSINESS OF POWER GENERATION AND DISTRIBUTION. THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2012 - 13 WAS FILED ON 29/01/2012 DECLARING NIL INCOME. AGAINST THE SAID RETURN OF INCOME, THE ASSESSMENT WAS COMPLETED BY THE AO VI DE ORDER DATED 24/02/2015 PASSED U/S 143(3) OF THE INCOME - TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT' FOR SHORT] ACCEPTING THE RETURNED INCOME. 4 . SUBSEQUENTLY, THE LD. PRINCIPAL CIT, ON VERIFICATION OF RECORDS, FOUND THAT DEDUCTION UNDER THE PROV ISIONS OF SUB - SECTION (4) OF SECTION 80 - IA WAS ALLOWED BY THE AO WITHOUT SET OFF OF BROUGHT FORWARD LOSSES AMOUNTING TO RS.51,26,078/ - PERTAINING TO ASSESSMENT YEARS 2009 - 10 TO 2011 - 12 AND ELECTRICITY CHARGES COLLECTED WERE NOT REMITTED TO THE GOVERNMENT A CCOUNT WITHIN DUE DATE FOR FILING RETURN OF INCOME. THEREFORE, THE LD.CIT WAS OF THE OPINION THAT THE ORDER OF ASSESSMENT IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. HENCE, SHOW CAUSE NOTICE DATED 29/06/2016 WAS ISSUED U/S 263 PROPOSING TO REVISE THE ASSESSMENT ORDER. IN RESPONSE TO SHOW CAUSE, THE ASSESSEE HAD SUBMITTED EXPLANATIONS TREATING THAT LOSS OF EARLIER ASSESSMENT YEARS VIZ. 2009 - 10 TO 2011 - 12 CANNOT BE SET OFF AGAINST PROFITS OF THE YEAR UNDER CONSIDERATION FOR THE PURPOSE OF CALCULATING AMOUNT OF DEDUCTION U/S 80 - IA OF THE ACT. RELIANCE IN THIS REGARD WAS PLACED ON THE DECISION OF THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. ANIL H LAD (2014) 102 DTR (KAR) 24 1 AND HON BLE MADRAS HIGH COURT S DECISION IN THE C ASE OF VELAYUDHA SWAMY SINNING MILLS (P) LTD. VS. ACIT (2012) 340 ITR 477(MAD). RELIANCE WAS ALSO ITA NO . 790 /BANG/20 17 PAGE 4 OF 10 PLACED ON THE DECISION OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF (I) SHEVIE EXPORTS VS. JCIT (2013) 156 TTJ 525 (MUMBAI), (II) JIVRAJ TEA AND INDUSTRIES LTD. VS. ACIT (2014) 161 TTJ 523 (AHMEDABAD) AND (III) ADVIK HITECH (P) LTD. VS. ADDL.CIT (2015) 67 SOT 158(URO)(PUNE) . AS REGARDS ELECTRICITY TAX COLLECTED FROM CUSTOMERS OF RS.9,51,275/ - IT WAS CONTENDED THAT THE SAME WERE PAID TO GOVERNMENT BEFORE DUE DATE FOR FILING OF RETURN OF INCOME AND THEREFORE, ALLOWABLE. THE SAID CONTENTION OF THE ASSESSEE WAS REJECTED BY THE LD.CIT HOLDING AS UNDER: 5.1. CIT VS ANIL H LAD (2014) 102 DTR (KAR) 0241 - IN THIS CASE, A WINDMILL HAD BEEN INSTALLED IN THE ASSESSMENT YEAR 2006 - 07. THE ASSESSEE CLAIMED DEPRECIATION ALLOWANCE IN THE SAME ASSESSMENT YEAR. THEREFORE, THERE WAS NO PROFIT TO CLAIM FURTHER DEDUCTION UNDER SECTION 80IA. IN THE FOLLOWING ASSESSMENT YEAR, AGAIN THE ASSESSEE COULD NOT MAKE OUT A CLAIM FOR DEDUCTION UNDER SECTION 801A AS THERE WAS A BUSINESS LOSS. THE DEPRECIATION AND THE BUSINESS LOSS FOR THE TWO YEARS WERE SET OFF BY THE ASSESSEE AGAINST THE PROFIT GENERATED FROM OTHER BUSINESS CARRIED ON BY THE ASSESSEE. IN OTHER WORDS, THERE WAS NO UNABSORBED DEPRECIATION AND LOSS AVAILABLE IN EARLIER YEARS TO BE SET OFF AGAINST THE PROFIT OF THE IMPUGNED ASSESSMENT YEAR 2008 09. SUBSEQUENTLY, THE ASSESSEE DERIVED PROFIT IN AN 2008 - 09 AND IT CLAIMED THE ENTIRE AMOUNT AS DEDUCTION UNDER SECTION 801A. HOWEVER, THE ASSESSING OFFICER HELD THAT, THOUGH THE UNABSORBED DEPRECIATION AND LOSS FOR THE ASSESSMENT YEARS 2006 - 07 AND 2007 - 08 HAD ALREADY BEEN SET OFF AGAINST THE PROFITS OF OTHER BUSINESS OF THE ASSESSEE FOR THOSE ASSESSMENT YEARS AND NO AMOUN T WAS AVAILABLE, THE SAID LOSSES NEEDED TO BE NOTIONALLY CARRIED FORWARD AND SET OFF AGAINST THE BUSINESS INCOME OF THE ASSESSEE IN THE IMPUGNED ASSESSMENT YEAR FOR THE PURPOSES OF SEC. 801A. 5.2. VELAYUDHA SWAMY SPINNING MILLS (P) LTD VS. ACIT(2012 ) 340 ITR 0477(MAD). - IN THIS CASE, THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR 2005 - 06 ADMITTING A TOTAL INCOME OF RS. 1,36,36,470 IN NORMAL COMPUTATION AND TOTAL INCOME OF RS. 2,95,73,840 AS BOOK PROFIT UNDER SECTION 115JB. I N THE COURSE OF SCRUTINY ASSESSMENT, THE ASSESSING OFFICER DISALLOWED THE CLAIM OF DEDUCTION MADE BY THE ASSESSEE UNDER SECTION 80IA AMOUNTING TO RS.1,70,76,945 ON THE GROUND THAT THE ELIGIBLE INCOME OF THE UNIT FOR THE IMPUGNED ASSESSMENT YEAR IS A NEGATI VE FIGURE. THE NEGATIVE FIGURE WAS WORKED OUT BY THE ASSESSING AUTHORITY BY NOTIONALLY SETTING OFF THE DEPRECIATION AND LOSS OF THE EARLIER ASSESSMENT YEARS WHICH HAD ALREADY BEEN SET OFF AGAINST THE INCOME ARISING FROM OTHER BUSINESS CARRIED ON BY THE ASS ESSEE FOR THOSE YEARS. ITA NO . 790 /BANG/20 17 PAGE 5 OF 10 5.3. IN THE TRIBUNAL DECISIONS RELIED UPON BY THE ASSESSEE IN THE CASES OF SHEVIE EXPORTS V JCIT (2013) 156 TIJ 0525 (MUMBAI TRIBUNAL, MYRA] TEA AND INDUSTRIES LTD. V ACIT (2014) 161 TTJ 0523 (AHMEDABAD TRIBUNAL) AND ADVIK HITECH (P) LTD. V ADDL. CIT (2015) 67 SOT 0158 (URO) PUT. 5E TRIBUNAL, I FIND THAT THEY DEAL WITH EXACTLY THE SAME ISSUE AS DEALT WITH IN THE AFORESAID COURT DECISIONS. 5.4. IN ALL THE AFORESAID CASES, THE 'ASSESSING OFFICER NOTIONALLY CARRIED FORWARD THE LO SSES OF THE YEARS PRIOR TO THE INITIAL ASSESSMENT YEARS, WHICH HAD ALREADY BEEN SET OFF EARLIER AGAINST THE PROFITS OF NON - ELIGIBLE UNITS, FOR THE PURPOSE OF COMPUTATION OF DEDUCTION UNDER SECTION 80IA FOR THE IMPUGNED ASSESSMENT YEAR. IT WAS IN THIS CONTE XT THAT THE COURTS/ TRIBUNALS HELD THAT THE NOTIONAL LOSSES CANNOT BE ADJUSTED AGAINST THE PROFIT OF THE INITIAL ASSESSMENT YEAR. 6. IN VIEW OF THE FACTS EXAMINED ABOVE, IT IS SEEN THAT THE FACTS OF THE ASSESSEE'S ARE CLEARLY DISTINGUISHABLE FROM THE AFOREMENTIONED CASES. 6.1 IN ALL THE RELIED UPON CASES, THE ISSUE INVOLVED WAS WHETHER THE EXERCISE OF NOTIONALLY CARRIED FORWARD AND SET OFF OF DEPRECIATION AND BUSINESS LOSS OF THE ELIGIBLE BUSINESS RELATING TO THE EARLIER ASSESSMENT YEARS WAS CA LLED FOR WHEN THE DEPRECIATION AND LOSS OF THOSE ASSESSMENT YEARS HAD ALREADY BEEN ALLOWED TO BE SET OFF AGAINST OTHER INCOME OF THOSE ASSESSMENT YEARS. TO MAKE THE MATTER MORE CLEAR, IT IS TO BE STATED THAT IN THE PRESENT CASE THE ISSUE INVOLVED IS NOT T HE SET OFF OF NOTIONAL LOSSES PERTAINING TO EARLIER YEARS AGAINST THE PROFITS OF THE RELEVANT ASSESSMENT YEARS FOR DEDUCTION UNDER SECTION 80IA BUT ACTUAL UNABSORBED LOSSES OF EARLIER YEARS. 6.2 IN FACT, THE JUDGEMENT OF THE JURISDICTIONAL HIGH COUR T CITED SUPRA HELPS THE REVENUE'S CASE. PLACING RELIANCE ON THE DECISION OF THE HON'BLE MADRAS HIGH COURT CITED ABOVE, THE HON'BLE KARNATAKA HIGH COURT HELD THAT ONLY LOSSES OF THE YEARS BEGINNING FROM INITIAL ASSESSMENT YEAR ALONE ARE TO BE BROUGHT FORWAR D AND NO LOSSES OF EARLIER YEARS WHICH WERE ALREADY SET OFF AGAINST THE INCOME OF THE ASSESSEE CAN BE ADJUSTED FOR DEDUCTION UNDER SECTION 80IA. FURTHER, THE COURT HELD THAT THE REVENUE CANNOT BE ALLOWED TO LOOK BACKWARD AND FIND OUT IF THERE IS ANY LOSS O F EARLIER YEARS AND BRING FORWARD NOTIONALLY EVEN THOUGH THE SAME WAS SPT OFF AGAINST OTHER INCOME OF THE ASSESSEE. IT WAS CATEGORICALLY LAID DOWN THAT ONCE THE SET OFF OF LOSSES HAS TAKEN PLACE IN AN EARLIER YEAR AGAINST THE OTHER INCOME OF THE ASSESSEE, THE REVENUE CANNOT REWORK THE SET OFF AMOUNT AND BRING IT NOTIONALLY. AT NO STAGE THE JURISDICTIONAL HIGH COURT DELIBERATED ON THE ISSUE OF SET OFF OF UNABSORBED LOSSES BROUGHT FORWARD FROM EARLIER YEARS IN THE INITIAL ASSESSMENT ITA NO . 790 /BANG/20 17 PAGE 6 OF 10 YEAR, WHICH IS THE CASE UN DER CONSIDERATION. THE COURT, THEREFORE, DID NOT BAR SETTING OFF OF LOSSES, NOT ABSORBED IN EARLIER YEARS, FROM PROFIT OF THE INITIAL ASSESSMENT YEAR BEFORE COMPUTING DEDUCTION UNDER SECTION 80IA. IT IS REITERATED THAT THE HON'BLE COURT OBSERVED IN THE CON TEXT OF NOTIONAL LOSS (AND NOT ACTUAL UNABSORBED LOSS) THAT THE SAME CANNOT BE FURTHER SET OFF AGAINST THE BUSINESS PROFIT OF THE IMPUGNED YEAR. HENCE, THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT DOES NOT HELP THE CASE OF THE ASSESSEE. 7. NOW LET US EX AMINE THE RELEVANT PROVISIONS OF THE ACT DEALING WITH DEDUCTION UNDER SECTION 80IA: (I) SEC. 80IA(1) READS AS FOLLOWS : '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 (4), THERE SHALL, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THIS SECTION, BE ALLOWED, IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE, A DEDUCTION OF AN AMOUNT EQUAL TO 100 % OF THE PROFITS AND GAINS DERIVED FROM SUCH BUSINESS FOR 10 CONSECUTIVE YEARS'. (II) SEC. 80AB UNDER CHAPTER VIA LAYS DOWN THAT : 'WHERE ANY DEDUCTION IS REQUIRED TO BE MADE OR ALLOWED UNDER ANY SECTION INCLUDED IN THIS CHAPTER UNDER THE HEADING 'C - DEDUCTIONS IN RESPECT O F CERTAIN INCOMES' IN RESPECT OF ANY INCOME OF THE NATURE SPECIFIED IN THE SECTION WHICH IS INCLUDED IN THE GROSS TOTAL INCOME OF THE ASSESSEE, THEN, NOTWITHSTANDING ANYTHING CONTAINED IN THAT SECTION, FOR THE PURPOSE OF COMPUTING THE DEDUCTION UNDER THAT SECTION, THE AMOUNT OF INCOME OF THAT NATURE AS COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF THIS ACT (BEFORE MAKING ANY DEDUCTION UNDER THIS CHAPTER) SHALL ALONE BE DEEMED TO BE THE AMOUNT OF INCOME OF THAT NATURE WHICH IS DERIVED OR RECEIVED BY THE ASSE SSEE AND WHICH IS INCLUDED IN HIS GROSS TOTAL INCOME' (III) SECTION 72 OF THE INCOME TAX ACT DEALS WITH CARRY FORWARD AND SET OFF OF BUSINESS LOSSES. SECTION 72(1) READS AS UNDER : 'WHERE FOR ANY ASSESSMENT YEAR, THE NET RESULT OF THE COMPUTATI ON UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION' IS A LOSS TO THE ASSESSEE NOT BEING A LOSS SUSTAINED IN A SPECULATION BUSINESS AND SUCH LOSS CANNOT BE OR IS NOT WHOLLY SET OFF AGAINST THE INCOME UNDER ANY HEAD OF INCOME IN ACCORDANCE WITH T HE PROVISIONS OF SECTION 71, SO MUCH OF THE LOSS AS HAS NOT BEEN SO SET OFF OR WHERE HE HAS NO INCOME UNDER ANY OTHER HEAD, THE WHOLE LOSS SHALL, SUBJECT TO THE OTHER ITA NO . 790 /BANG/20 17 PAGE 7 OF 10 PROVISIONS OF THIS CHAPTER, BE CARRIED FORWARD TO THE FOLLOWING ASSESSMENT YEAR AND (I) IT SHALL BE SET BE SET OFF AGAINST THE PROFITS AND GAINS OF ANY BUSINESS OR PROFESSION CARRIED ON BY HIM FOR THAT ASSESSMENT YEAR (II) IF THE LOSS CANNOT BE WHOLLY SO SET OFF, THE AMOUNT OF LOSS NOT SO SET OFF SHALL BE CARRIED FORWARD TO THE FOLLOWING ASST YEAR AND SO ON'. 8. A MERE READING OF THE ABOVE PROVISIONS MAKE IT CLEAR THAT ANY INCOME OF THE NATURE SPECIFIED IN SEC. 801A WHICH IS INCLUDED IN THE GROSS TOTAL INCOME OF THE ASSESSEE FOR THE PURPOSE OF COMPUTING THE DEDUCTION UND ER THAT SECTION, THE AMOUNT OF INCOME AS COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF THIS ACT SHALL ALONE BE DEEMED TO BE THE AMOUNT OF INCOME OF THAT NATURE WHICH IS INCLUDED IN THE GROSS TOTAL INCOME. SEC. 80AB DEFINES 'GROSS TOTAL INCOME' WHICH MEANS THE TOTAL INCOME HAS TO BE COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF THE ACT BEFORE MAKING DEDUCTION UNDER THIS CHAPTER. HEADING 'C' DEALS WITH DEDUCTIONS IN RESPECT OF CERTAIN INCOMES WHICH CONSIST OF 80H TO 80FF AND WHICH IS THE RELEVANT HEADING FOR COMPUTING DEDUCTION UNDER SECTION 80IA. IN OTHER WORDS, THE SCHEME OF GROSS TOTAL INCOME CONCEPTUALISED IN THE INCOME TAX ACT IN THE LIGHT OF SECTION 80AB AND SECTION 72 IS RELEVANT WHILE CONSIDERING THE DEDUCTION UNDER SECTION 80IA. HENCE, SECTION 80IA HA S TO BE READ WITH SECTION 80AB AND SECTION 72 FOR A HARMONIOUS INTERPRETATION OF THE ACT TO COMPUTE THE DEDUCTION UNDER SECTION 80IA. ACCORDINGLY, WHERE THE EARLIER DEPRECIATION AND LOSSES HAVE NOT BEEN SET OFF, THOSE LOSSES AND DEPRECIATION WILL GO TO RED UCE THE GROSS TOTAL INCOME OF AN ASSESSEE WITHIN THE MEANING OF SECTION 80AB, BEFORE WORKING OUT THE DEDUCTION UNDER SECTION 80IA. 9. AS REGARDS ELECTRICITY CHARGES, IT IS SEEN FROM RECORDS THAT THE ASSESSING OFFICER HAS NOT VERIFIED THE DETAILS OF PA YMENT TOWARDS ELECTRICITY CHARGES ALLOWING THE SAME AS DEDUCTION FOR THE YEAR UNDER CONSIDERATION. 10. IN VIEW OF THE ELABORATE DISCUSSION MADE ABOVE, I HOLD THAT THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO TH E INTERESTS OF THE REVENUE IN RESPECT OF COMPUTATION OF DEDUCTION UNDER SECTION 80IA WITHOUT SET OFF OF LOSSES OF EARLIER YEARS. FURTHER, THE ELECTRICITY CHARGES HAVE BEEN ALLOWED UNDER SECTION 37 OF THE INCOME TAX ACT WITHOUT CAUSING PROPER VERIFICATION. HENCE, IN EXERCISE OF POWERS CONFERRED ON ME UNDER SECTION 263 OF THE INCOME TAX ACT, I SET ASIDE THE ORDER OF THE ASSESSING OFFICER TO ALLOW DEDUCTION UNDER SECTION 80IA(4) AFTER SETTING OFF OF THE BROUGHT FORWARD LOSSES OF RS. 51,26,078 PERTAINING TO ASS ESSMENT YEARS 2009 - 10 TO 2011 - ITA NO . 790 /BANG/20 17 PAGE 8 OF 10 12 AND ALSO TO EXAMINE THE CLAIM OF ELECTRICITY CHARGES AND FRAME THE ASSESSMENT IN ACCORDANCE WITH THE LAW. THUS, THE LD.CIT EXERCISED THE POWER VESTED WITH HIM U/S 263 OF THE ACT AND SET ASIDE THE ASSESSMENT ORDER TO ALLOW DEDUCTION U/S 80 - IA OF THE ACT AFTER SET OFF OF BROUGHT FORWARD LOSS OF THE EARLIER YEARS AND TO EXAMINE THE CLAIM FOR DEDUCTION OF ELECTRICITY CHARGES COLLECTED FROM CUSTOMERS , WHETHER THE ASSESSEE HAS PAID THE ELECTRICITY CHARGES WITHIN DUE DATE OF FILI NG OF RETURN OF INCOME. 5. BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 5.1 LEARNED COUNSEL FOR THE ASSESSEE ARGUED THAT FOR THE PURPOSE OF CALCULATION OF AMOUNT OF DEDUCTION U/S 80 - IA, BROUGHT FORWARD LOSS CANNOT BE SET OFF IN VIEW OF T HE PROVISIONS OF SUB - SECTION (5) OF SECTION 80 - IA WHICH CLEARLY STATES THAT FOR THE PURPOSE OF DETERMINING QUANTUM OF DEDUCTION FOR THE ASSESSMENT YEAR IMMEDIATELY SUCCEEDING ASSESSMENT YEAR OR ANY SUBSEQUENT YEAR THE PROFITS AND GAINS OF ELIGIBLE BUSINESS BE COMPUTED AS IF ELIGIBLE BUSINESS IS ONLY SOURCE OF INCOME OF THE ASSESSEE DURING THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR AND EVERY SUBSEQUENT YEAR UP TO AND INCLUDING ASSESSMENT YEAR IN WHICH DETERMINATION IS TO BE MADE. LEARNED COUNSEL FOR THE ASSESSEE RELIED ON THE DECISION OF THE DECISION OF THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE ANIL H LAD (SUPRA) AND THE DECISION S OF THE HON BLE MADRAS HIGH COURT IN THE CASE OF VELAYUDHA SWAMY SINNING MILLS (P) LTD. (SUPRA) AND THE PRINCIPAL CIT VS . GRT HOTELS & RESORTS PVT. LTD. (392 ITR 440). IT IS FURTHER SUBMITTED THAT THE ISSUE IN REVISION ARE TAX NEUTRAL AND THERE IS NO PREJUDICE TO THE INTERESTS OF THE REVENUE WARRANTING REVISION OF THE ASSESSMENT ORDER. THE POWER OF REVISION CANNOT BE EXER CISED U/S 263 IN CASE WHERE TAX NEUTRAL. AS REGARDS ELECTRICITY CHARGES FROM THE CUSTOMERS, IT IS SUBMITTED THAT DEDUCTION WAS ALLOWED IN THE CONSEQUENTIAL ORDER PASSED U/S 263. 5.2 ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED T HAT DEDUCTION UNDER CHAPTER VIA SHOULD BE ALLOWED ON THE NET INCOME INCLUDED IN THE GROSS TOTAL INCOME AND ITA NO . 790 /BANG/20 17 PAGE 9 OF 10 NOT ON GROSS INCOME IN VIEW OF THE DECISION S OF THE HON BLE SUPREME COURT IN THE CASE OF MOTILAL PESTICIDES (I) (P) LTD. VS. CIT (243 ITR 26)(SC) AN D SYNCO INDUSTRIES LTD. VS. AO, INCOME - TAX (299 ITR 444 )(SC) ; THE DECISION OF THE HON BLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. R.P.G.TELECOMS (292 ITR 355) AND TATA ELXSI LTD. VS. ACIT (55 TAXMANN.COM 179(KAR). 6. WE HEARD RIVAL SUBMISSIONS AN D PERUSED THE MATERIAL ON RECORD. THE ONLY ISSUE INVOLVED IN THE PRESENT APPEAL IS WHETHER THE LD.CIT HAD VALIDLY EXERCISED HIS POWER IN LAW IN ASSUMING JURISDICTION U/S 263 TO REVISE THE ASSESSMENT ORDER AS THE AO HAD ALLOWED DEDUCTION U/S 80 - IA OF THE A CT WITHOUT SETTING OFF OF BROUGHT FORWARD LOSS OF EARLIER ASSESSMENT YEARS. WE ARE UNABLE TO DISCERN FROM THE ORDER OF ASSESSMENT THAT THE AO HAD EXAMINED THE ISSUE OF SET OFF OF BROUGHT FORWARD EARLIER YEARS NOR THE ASSESSEE COULD SHOW THAT THE ISSUE WAS EXAMINED BY THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THUS IT IS CLEAR CASE OF NO ENQUIRY ON THIS ISSUE BY THE AO. FURTHERMORE, IT IS TRITE LAW THAT DEDUCTION CHAPTER VIA HAS TO BE ALLOWED WITH REFERENCE TO THE AMOUNT OF GROSS INCOME INCLUDED IN THE GROSS TOTAL INCOME. NEEDLESS TO SAY THAT THE GROSS TOTAL INCOME IS ARRIVED AT AFTER SET OFF OF BROUGHT FORWARD LOSS OF EARLIER YEARS. THE CONTENTION THAT PROFITS AND LOSS OF IMMEDIATE SUCCEEDING YEAR OF INITIAL ASSESSMENT YEAR IS REQUIRED TO BE COMPUTED , AS IF THE PROFITS OF INDUSTRIAL UNDERTAKING IS THE ONLY SOURCE OF INCOME OF THE ASSESSEE AS PROVIDED UNDER SUB - SECTION (5) OF SECTION 80 - IA, DOES NOT COME TO RESCUE OF THE APPELLANT AS IT ONLY PRESCRIBES THE MANNER IN WHICH THE QUANTUM OF DEDUCT ION HAS TO BE WORKED OUT IN THE IMMEDIATE SUCCEEDING YEAR OF INITIAL ASSESSMENT YEAR. FURTHER ON PLAIN READING OF THE PROVISIONS OF SECTION 80 - IB DEFINES THE EXPRESSION GROSS TOTAL INCOME TO MEAN TOTAL INCOME COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF THE ACT BEFORE MAKING ANY DEDUCTION UNDER CHAPTER VIA OF THE ACT. AS STATED BY US SUPRA, GROSS TOTAL INCOME SHALL BE ARRIVED AT AFTER SET OFF OF BROUGHT FORWARD LOSS ONLY. THERE IS NO MERIT IN THE CONTENTIONS MADE ON BEHALF OF THE ASSESSEE. THEREFORE , THE LD. CIT HAD CLEARLY ENUNCIATED AS TO ITA NO . 790 /BANG/20 17 PAGE 10 OF 10 HOW THE DECISIONS OF THE MADRAS HIGH COURT ARE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. IN THE CIRCUMSTANCES, WE HOLD THAT THE LD. CIT HAD VALIDLY EXERCISED THE POWER OF REVISION U/S 263 AND THE GROUNDS OF APPEAL FILED BY THE ASSESSEE ARE DISMISSED. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH JULY, 2018 SD/ - SD/ - (SUNIL KUMAR YADAV) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE : BENGALURU. D A T E D : 20 / 07 /201 8 SRINIVASULU, SPS COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A) 4 CIT 5 DR, ITA T, BANGALORE. 6 GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY INCOME - TAX APPELLATE TRIBUNAL BANGALORE