Sysmex India Private Limited Vs DCIT (ITAT Mumbai)
In a significant ruling for taxpayers claiming deductions under Section 80-IC of the Income Tax Act, 1961, the Income Tax Appellate Tribunal (ITAT) Mumbai Bench has affirmed that such deductions must be computed solely on the profits of the eligible unit, explicitly prohibiting the set-off of losses from non-eligible units. The decision came in the appeal filed by Sysmex India Private Limited against an order passed by the National Faceless Appeal Centre (NFAC), Delhi, pertaining to Assessment Year 2017-18.
The core of the dispute revolved around two primary issues: the method of allocating common expenses between the eligible and non-eligible business units, and the computation of the Section 80-IC deduction itself, specifically concerning the adjustment of losses from non-eligible units against the profits of the eligible unit.
Consistency in Expense Allocation Upheld
Sysmex India Private Limited had consistently followed a policy for allocating revenue, specific expenses, and common expenses between its eligible undertaking (Baddi Unit, qualifying for 80-IC deduction) and non-eligible undertakings. For common expenses, the company applied a sales ratio for allocation, a method it argued was recognized, accepted by appellate authorities, and consistently followed and accepted by the Income Tax Department in past assessment years.
