COMMISSIONER OF INCOME TAX Vs. MADHU SILK TEXTILES

JUDGEMENT

(1.) AT the instance of the Revenue, the following questions of law have been referred to by the Tribunal, Ahmedabad Bench 'B', for asst. yr. 1989 -90 for the opinion of this Court by drawing a statement of case under s. 256(1) of the IT Act, 1961 :

(2.) THE brief facts giving rise to the present reference are that the assessee being an industrial undertaking claimed deduction under ss. 80HHA and 80 -I of the Act besides deduction under s. 32AB. The assessee was running two industrial undertakings as Unit I and Unit II and separate books of accounts in respect of two units were maintained. In respect of unit No. 1, the assessee declared gross income of Rs. 8,55,755 and in respect of Unit II, the assessee declared loss amounting to Rs. 1,47,292. The dispute regarding computation of deduction under ss. 80HHA and 80 -I related to Unit I. While granting deduction under these sections in respect of Unit I, the AO deducted the business loss of Unit II and made further deduction under s. 32AB at Rs. 1,33,169. The resultant amount came to Rs. 5,85,296 and thereon the AO allowed deductions under ss. 80HHA and 80 -I at Rs. 2,84,118 on the ground that both the units are integral parts of the same undertaking and deductions under ss. 80HHA and 80 -I have to be allowed after allowance of deduction under s. 32AB.

(3.) BEING aggrieved by the said order of the ITO, the assessee preferred an appeal before the CIT(A) who agreed with the assessee that the deductions under both sections are to be allowed from the gross total income of Unit I before the adjustment of loss of Unit II and before deduction under s. 32AB.