INCOME TAX ACT, 1961

Section 80-IA(5)

Deduction under section 80-IA - Computation of eligible profit - Scope for carry forward and set-off of loss incurred prior to initial assessment year -

Assessee claimed deduction under section 80-IA. AO held that assessee was required to carry forward loss of eligible unit incurred by it before initial assessment year for set-off against profit of subsequent year of such eligible unit if any. Accordingly, there was no profit for the year under consideration in respect of such eligible unit and, therefore, no question of claiming deduction under section 80-IA. Further assessee had not allocated interest cost incurred by it against profit of eligible unit.Held: Looking forward to a period of ten years from initial assessment is contemplated. It does not allow revenue to look backward and find out if there is any loss of earlier years and bring forward notionally even though same was set off against other income of assessee. Accordingly, loss in the year earlier to initial assessment year having already absorbed against profit of other business could not be notionally brought forward and set-off against profits of eligible business, as no such mandate is provided in section 80-IA(5). Further, assessee's own fund exceeded the amount invested in the eligible unit. Therefore, it could be presumed that assessee had invested own fund in the eligible unit. Accoridingly, there could not be any question of allocation of interest cost incurred by assessee in respect of other non-eligible units to eligible unit.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2012-13

INCOME TAX ACT, 1961

Section 14A

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