Milestone Gears Private Limited Vs ACIT (ITAT Chandigarh)
For the purpose of calculating deduction u/s 80IC, profit of each undertaking should be treated separately and losses from other eligible undertaking should be ignored. Profit and losses of all the eligible undertaking couldn’t be netted off.
Facts –-
Assessee is engaged in the manufacturing of automotive gears and have 5 manufacturing units. Unit I, III, IV and V are eligible for deduction u/s 80IC. Assessee had claimed deduction u/s 80IC in respect of profits earned in Unit-I and Unit-III ignoring the losses of Unit-IV and Unit-V.
AO contended that the assessee was entitled only to the net profits of the eligible undertakings for the purpose of calculating quantum of deduction available u/s 80IC and accordingly netted the same and allowed the deduction thereafter.
However, assessee contended that deduction was to be computed only on the profits and gains derived from the industrial undertaking to which the benefit was granted and was not relatable to the gross total income.
Held –
The words used in section 80IC categorically state that the provisions of sub section 5 to section 80IA shall apply to the eligible undertaking or enterprise, they have to be read as such and applied to each undertaking, meaning thereby that the profits of each eligible undertaking has to be treated as if it were the only source of income of the assessee.
FULL TEXT OF THE ITAT JUDGEMENT
All the three appeals filed by the same assessee have been preferred against the consolidated order passed by the Ld. Commissioner of Income Tax(Appeals), Shim la (hereinafter referred to as ‘CI T(Appeals)’) dated 30.3.2017 relating to assessment years 2010-11, 2011-12 and 2012-13.
It was common ground that the issues involved in all the appeals were identical, they were therefore heard together and are being decided by this consolidated order. For the sake of convenience we shall be taking up the appeal of the assessee in ITA No.883/Chd/2017 for assessment year 2010-11 for adjudication and the decision rendered therein shall apply mutatis mutandis to the rest of the appeals also.
ITA No.883/Chd/2017 (A.Y. 2010-11):
2. Brief background relating to the case is that the assessee company is engaged in the manufacturing of automotive gears and has five manufacturing units, namely;
