us 80IB
jaykumar
(Querist) 24 May 2010
This query is : Resolved
if business in loss at that time can i claim deduction u/s 80IB and witch is losses can i carry foreword losses
A V Vishal
(Expert) 24 May 2010
IN THE ITAT CHENNAI BENCH ‘C’ (THIRD MEMBER)
Income-tax Officer (OSD), Company Circle VI(3), Chennai
v.
Sicgil India (P.) Ltd.
M.K. CHATURVEDI, VICE PRESIDENT (AS A THIRD MEMBER)
U.B.S. BEDI, JUDICIAL MEMBER
AND SHAMIM YAHYA, ACCOUNTANT MEMBER
IT APPEAL NOS. 1058 (MAD.) OF 2007
[ASSESSMENT YEAR 2002-03]
MARCH 26, 2009
Section 80-IB of the Income-tax Act, 1961 - Deductions - Profits and gains from industrial undertakings other than infrastructure development undertakings - Assessment year 2002-03 - Assessee-company claimed deduction under section 80-IB in respect of one of its units from profits of business - Such deduction was claimed before set-off of carry forward losses of immediate previous assessment year - Assessing Officer, however, allowed deduction after setting-off such losses - Whether in view of decision of Special Bench in case of Asstt. CIT v. Goldmine Shares & Finance (P.) Ltd. [2008] 113 ITD 209 (Ahd.), Assessing Officer was justified in allowing deduction under section 80-IB after setting-off of loss of previous assessment year - Held, yes
FACTS
The assessee-company claimed deduction under section 80-IB in respect of one of its units from the profits of business. This amount was claimed before set-off of carry forward losses of immediate previous assessment year. The Assessing Officer, however, allowed the deduction after setting-off the losses. The assessee claimed that the earlier losses-in-question were fully set-off against other business income of the assessee in the previous assessment year. The Commissioner (Appeals) directed the Assessing Officer to carry out necessary verification with regard to the claim of the assessee and if loss was found to have been fully set-off in the previous assessment year allow, to the claim of the assessee. On appeal, while the Judicial Member of the Tribunal set aside the order of the Commissioner (Appeals) and restored the order of the Assessing Officer, the Accountant Member remitted the matter back to the file of the Assessing Officer for reconsideration. As there was difference of opinion between the Members of the Tribunal, matter was referred to the Third Member.
HELD [PER THIRD MEMBER]
The issue stands covered by the order of the Special Bench of the Tribunal in the case of Asstt. CIT v. Goldmine Shares & Finance (P.) Ltd. [2008] 113 ITD 209 (Ahd.), wherein the Special Bench had held that in view of the specific provision of section 80-IA(5) profit from eligible business for the purpose of determination of quantum of deduction under section 80-IA has to be computed after deduction of notional brought forward losses and depreciation of eligible business, even though they have been allowed to be set-off against other income in the earlier years. [Para 5]
No doubt, it is well within the power of the Tribunal to set aside the order of the Commissioner (Appeals) for fresh adjudication in accordance with the provisions of law. Such an order can be made when the Tribunal, after considering the evidence and material on record, comes to the conclusion that the order under appeal is erroneous or is based on insufficient material or that some fresh evidence has to be considered or there has been a failure of natural justice prejudicing the appellant. Adverting to the facts of the instant case, none of these conditions was present requiring restoration of the matter to the file of the Assessing Officer. The issue was squarely covered by the decision of the Special Bench. Therefore, restoring the issue to the file of the Assessing Officer was not justified. The view taken by the Judicial Member was to be agreed with. [Para 7]
CASE REVIEW
Asstt. CIT v. Goldmine Shares & Finance (P.) Ltd. [2008] 113 ITD 209 (Ahd.) (SB) (para 5) followed.
CASES REFERRED TO
Kedarnath Jute Mfg. Co. Ltd. v. CIT [1971] 82 ITR 363 (SC), CIT v. Raj Motors [2006] 284 ITR 489 (All.), CIT v. Orient Motor Car Co. (P.) Ltd. [1980] 124 ITR 74 (All.), Alembic Chemical Works Ltd. v. Dy. CIT [2004] 266 ITR 47/[2003] 133 Taxman 833 (Guj.), CIT v. Seshasayee Industries Ltd. [2000] 242 ITR 691 (Mad.) and Asstt. CIT v. Goldmine Shares & Finance (P.) Ltd. [2008] 113 ITD 209 (Ahd.) (SB).
Vineet
(Expert) 26 May 2010
In view of section 80IB(13) rws 80IA(5), the profit and gain of eligible business for purpose of determining deduction u/s 80IB shall be computed as if it is the only source of income of the assessee. So the profits eligible for deduction are not to be adjusted against any other loss and can be claimed as deduction while the other loss can be carried forward.
If there is loss in eligiblle business, though the same can be adjusted against other incomes in relevant assessment year, such loss shall be notionally adjusted against eligible profit of succeeding years to determine the quantum of deduction as held in above cited case by Mr Vishal.
