Law:

Section:

Section 80-IA of the Income-tax Act, 1961 - Deductions - Profits and gains from industrial undertakings other than infrastructure development undertakings - Assessment years 1997-98 and 1998-99 - Assessee was carrying on its business in units situated at Kalamb which was notified backward area and assessee was entitled to deduction under section 80-IA during assessment years in question in respect of said unit - Other unit of assessee was situated at Delhi and benefit under section 80-IA was not available to said unit - Assessee filed return showing profits from Kalamb unit and losses from Delhi unit and claimed deduction under section 80-IA of certain amount being 100 per cent profit derived from Kalamb unit - Assessing Officer adjusted loss of Delhi unit against profit of Kalamb unit and restricted deduction to said amount - Whether in view of section 80-IA(7), Kalamb unit, being only unit of assessee eligible for deduction under section 80-IA, was to be treated as an independent unit and same had to be treated as only source of income for assessee for purpose of computing deduction under section 80-IA and, therefore, Assessing Officer was not justified in restricting deduction - Held, yes FACTS The assessee, a private limited company, was engaged in business of fabrication and supply of equipments and technical items. The assessee carried out said business in units situated at Kalamb (HP), Delhi and NOIDA. The profit derived from the Kalamb unit was eligible for deduction under section 80-IA in the years under consideration as it was a notified backward area, whereas such benefit was not available to the other units of the assessee situated in Delhi and NOIDA. In the return of income, the assessee declared a gross total income of Rs. 21,91,102 which comprised of profit from Kalamb unit amounting to Rs. 20,92,221, interest and other income amounting to Rs. 10,10,149 and loss from units in Delhi at Rs. 9,11,270. From this gross total income, the assessee claimed a deduction of Rs. 20,92,221 under section 80-IA being 100 per cent profit derived from Kalamb unit and, accordingly, total income of Rs. 98,880 was shown in its return. On appeal, the Commissioner…

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