COMMISSIONER OF INCOME TAX Vs. HIM TEKNOFORGE LTD.

JUDGEMENT

(1.) THESE three appeals are being decided by one judgment since the following common question of law arises in these appeals: -

(2.) IT is not necessary to give the facts of each case. Briefly, stated dispute is that all the assesses herein are having separate units. Some of the units were entitled to tax benefits in terms of Sections 80 -HH and 80IA of the Income Tax Act. For the sake of convenience, the units entitled to these benefits are being referred to as priority units. These units were either export orientated or set up in backward industrial area. The assessee at the same time was also running some non - priority units i.e. units which had no connection with the benefits granted under Sections 80HH and 80IA. In all cases the non -priority units were running in losses and the submission made on behalf of the Revenue is that the losses of the non - priority units have also to be taken into consideration while working out the income of the priority units and then the tax benefits under Sections 80HH and 80IA have to be calculated. The Assessing Authority in all these cases held that the income whether positive (profit) or negative (loss) of all the units i.e. priority and non -priority were to be clubbed together for working out the gross total income for purposes of grant of tax incentives/benefits. The Commissioner Income Tax held that the deduction is referable only to the profits and gains derived from the industrial undertaking to which Sections 80HH and 80IA is applicable and is not referable to the gross total income of the assessee but only to the gross income from that particular industrial undertaking alone. The Income Tax Appellate Tribunal dismissed the appeal of the Revenue and held as follows: -

(3.) BEFORE dealing with the issue it would be pertinent to make reference to certain provisions of the Income Tax Act. First of all reference may be made to Sections 80A(1) and 80A(2), 80AB, 80B(5) of the Income Tax Act (hereinafter referred to as the Act), which read as follows: -