Ita/778/2009 Of The Commissioner Of Income Tax v. M/S Karnataka Power Corporation Ltd

IN THB HIGH COURT OF KARNATAKA AT BENGALURU DATBD THIS THE 19[th]DAY OF JANUARY 2015 PRESENT THER HON’BLE MR. JUSTICE N.KUMARAN 1 THER HON’BLE MR. JUSTICE B.VBEBRAPP I.T.A. NO.778/2009 BETWEEN: 1.|The Commissioner | Of Income-tax, C.R.Building, Queens Road, Bangalore. oD The Addl. Commissioner Of Income-tax, Range-11, C.R.Building, Queens Road, Bangalore. ...APPELLANTS (By Sri.K.V.Arvind, Adv.) AND :. M/s.Karnataka PowerCorporation Ltd.,No.82, Shakti Bhavan, -9O-. Race Course Road, Bangalore — 560 OO1. ...RESPONDENT (By Sri.A.Shankar, Adv.) . . . . This I.T.A. is filed under Section ZJO0OA of thIncome Tax Act, 1961, arising out of order dated10.07.2009 passed in ITA No.294/BNG/2009, for the)Assessment Year 2000-2006, praying to: 3$6formulate the substantial questions of lawstated therein,stated therein, 3$$6Allow the appeal and set-aside the orderpassed by the Income Tax Appellate Tribunal,Bangalore in I.T.A. No.294/BNG/2009, dated10.07.2009, confirm the order of the AppellateCommissioner confirming the order passed bythe Additional Commissioner of Income Tax,Range-11, Bangalore in the interest of justice.passed by the Income Tax Appellate Tribunal,Bangalore in I.T.A. No.294/BNG/2009, dated10.07.2009, confirm the order of the AppellateCommissioner confirming the order passed bythe Additional Commissioner of Income Tax,Range-11, Bangalore in the interest of justice. This I.T.A. coming on_ forhearing,this day,N.Kumar J., delivered the following: JUDGMENT The Revenue has preferred this appeal against the order of the Tribunal holding that the deduction under section SOIA of the Income-tax Act, 1961 (for short,hereinafter referred to as the Act’) is to be computedundertakingwise, i.e., in the manner in which theassessee has claimed deduction. 2. The assessee — company is engaged in powergeneration. The assessee was having seven units inwhich power was being generated. Out of the sevenunits, the assessee has shown loss in two units. In oneof the units, there is profit for the current year, but afteradjusting brought forward loss, the resultant figure isthe loss. Therefore, in respect of these three units, theassessee has not claimed deduction under Section SOIA|oft the Act. The assessee claimed deduction under/section SOIA on the four units and computed thededuction on the basis of the profits of the four unitswithout setting off the loss of the three units. The - 4 _| following chart shows the manner in which the assessee has claimed deduction under Section SOIA as under: — Profit for the year 2515228379 Less: 80IA profit/loss relating to new projects 3. The assessing authority held that as theassessee is only in the business of power generation, theprofit and loss as obtained from all its seven units haveto be considered and only the net/total has to beconsidered as eligible deduction. The assessee’s|computation of eligible deduction of Rs.204,71,50,/92/-.by considering only four units is therefore, held to beerroneous. Aggrieved by the said order the assesseepreferred an appeal to the Commissioner of Income-Tax - 4 _| following chart shows the manner in which the assessee has claimed deduction under Section SOIA as under: — Profit for the year 2515228379 Less: 80IA profit/loss relating to new projects 3. The assessing authority held that as theassessee is only in the business of power generation, theprofit and loss as obtained from all its seven units haveto be considered and only the net/total has to beconsidered as eligible deduction. The assessee’s|computation of eligible deduction of Rs.204,71,50,/92/-.by considering only four units is therefore, held to beerroneous. Aggrieved by the said order the assesseepreferred an appeal to the Commissioner of Income-Tax (Appeals). The said order of the assessing authority was_upheld. Hence, the assessee preferred an appeal to theTribunal. The Tribunal after referring to the judgmentof the Apex Court, in the|Synco Industries Co. casereported in299 ITR 444and also the judgments of thespecial Bench of Ahmedabad, held that the deductionunder Section 8OIA of the Act is to be computedundertaking-wise. In case, there is a loss in anundertaking, then it will not be set off against the profitof another undertaking though loss for this undertakingwill be adjusted against the profit in subsequent year incase the deduction is claimed under Section SOIJA inrespect of that unit. Therefore, it was held that thededuction is to be computed in the manner as claimedby the assessee. However the matter was remitted backto the assessing authority to ascertain the profit of eachundertaking and to allow deduction under Section 8O0IAof the Act after considering those units, in which there is profit after adjustment of brought forward loss of that unit. Aggrieved by the said order, Revenue is in appeal. | 4. The appeal was admitted to consider thefollowing substantial question of law: Whether the Tribunal was justified in holdingthat in granting deduction under Section SOIAof the Act, it is only the income of the loss|making|unitsshouldbe.takenintoconsideration and not all the units of the|assessee, some of which were making|profits? 5. This Court had an occasion to consider the saidsubstantial question of law in I.T.A. No. 308/2009 inthe case of.Komarla Feeds and Foods Put. Ltd., Vs.CommissionerofIncome-taxdecidedOT]16[th]January, 2015,where this Court has answered the saidsubstantial question of law in favour of the assesseeand against the revenue. Following the said judgment a a and also the judgment of the Apex Court whichreference is made out above, the substantial question oflaw in this case is answered in favour of the assessee|and against the revenue. Accordingly, appeal is|dismissed Sd/-| JUDGE| Sd/-. JUDGE| SPS