The Income Tax Appellate Tribunal (ITAT), Surat Bench presided by Dr. Arjun Lal Saini, Accountant Member has held that deduction under section 80IA (iv) computed with respect to each unit independently, without clubbing loss of another unit.
The assessee, M/s Gujarat JHM Hotels Ltd. is engaged in the business of hotel and also have power generation windmills. During the reassessment, the Assessing officer observed that the assessee has nine windmills out of which in six windmills, the assessee has shown a profit of Rs. 2.369 crores, however, in the remaining three windmills, the assessee company had incurred losses of Rs. 5.953 crores. Thus, the overall effect in the eligible business loss of Rs. 3.58 crore.
As the assessee has not earned any income from the eligible business, therefore, not eligible for deduction under Section 80IA of the Act. The CIT (A) allowed the appeal and the aggrieved revenue filed an appeal before ITAT.
The appellant submitted that the assessee maintained a consolidated figure of power generation unit and no separate and independent books of account were maintained by the assessee for each and every windmill, hence, the profit/loss of each windmill cannot be ascertained from the incomplete record, therefore, deduction under Section 80IA of Rs. 1.068 crores were disallowed.
The counsel for the assessee submitted that there is no restriction that two undertakings manufacturing the same type of product will be considered as one undertaking. The deduction under Section 80IA (iv) of the Act is to be computed with respect to each unit independently, taking into consideration the profit of each unit only without clubbing the loss of another unit.
The Tribunal observed that separate accounts are maintained for each windmill undertaking. Thus, the deduction is to be computed with respect to each unit independently taking into consideration the profit of each unit without clubbing loss of others.
By relying on the decision in Rangamma Steels & Melleables the Tribunal has allowed the appeal and held that “the assessee is eligible to claim a deduction of profit of each undertaking from different period. Thus, each undertaking has to be considered as a separate undertaking and cannot be clubbed in order to compute the deduction under Section 80IA of the Act. In view of the aforesaid factual and legal discussion, we affirm the order of CIT(A)”.
Mr. J.K. Chandnani and Mr. Hiren Vepari appeared on behalf of behalf of the revenue and the assessee respectively.
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