M/S T vs. MOTOR COMPANY LTD

T.C.A.No.448 of 2019 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 29.09.2020 CORAM THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAM and THE HONOURABLE MRS.JUSTICE V.BHAVANI SUBBAROYAN Tax Case Appeal No.448 of 2019 M/s.TVS Motor Company Ltd., Jayalakshmi Estate, No.29 (Old No.8), Haddows Road, Chennai-600 006. PAN: AAACS7032B .. Appellant -vs- The Assistant Commissioner of Income Tax, Company Circle III(2), Chennai-600 034. .. Respondent Appeal under Section 260A of the Income-tax Act, 1961, against the order dated 27.04.2016 made in I.T.A.No.1782/Mds/2012 on the file of the Income Tax Appellate Tribunal 'D' Bench, Chennai for the assessment year 2008-09. For Appellant : Mr.R.Vijayaraghavan, for M/s.Subbaraya Aiyar, Padmanabhan & Ramamani 1/29 http://www.judis.nic.in T.C.A.No.448 of 2019 For Respondent : Mr.M.Swaminathan, Senior Standing Counsel assisted by Ms.V.Pushpa, Junior Standing Counsel ****** JUDGMENT (Delivered by T.S.Sivagnanam, J.) This appeal by the appellant/assessee filed under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as “the Act'”) is directed against the order dated 27.04.2016, passed by the Income Tax Appellate Tribunal 'D' Bench, Chennai (for brevity “the Tribunal”) in I.T.A.No.1782/Mds/2012 for the assessment year 2008-09. 2.The appeal was admitted on 12.07.2019, on the following substantial questions of law:- “i. Whether, on the facts and circumstances of the case and in law, the Tribunal was right in law in holding that the losses of 80IC unit cannot be set off against the profit of the other non 80IC units? 2/29 http://www.judis.nic.in T.C.A.No.448 of 2019 ii. Whether the Tribunal ought to have appreciated that loss of any line of business activity should be set off against the profit of the other lines of business/source of income under Sections 70 and 71 of the Income Tax Act, 1961? and iii. Whether the Tribunal was right in ignoring the provisions of Section 80B(5), which defines the gross total income as total income in accordance with the provisions of the Act before making any deduction under Chapter VIA?” 3.The assessee is carrying on business in the manufacture and sale of two and three wheelers. For the assessment year under consideration (AY 2008-09), the Assessing Officer computed the total income at Rs.91,46,18,434/- and the total loss returned as per their revised return was Rs.59,82,66,374/-. The assessee would state that they had incurred loss of Rs.32,78,84,171/- from their Himachal Pradesh Unit, which was entitled to deduction under Section 80-IC of the Act and the same was set off by the assessee against the income from non 80-IC unit. The Assessing Officer while completing the assessment under Section 143(3) of the Act, vide 3/29 http://www.judis.nic.in T.C.A.No.448 of 2019 order dated 28.12.2011, disallowed the set off of loss of Section 80-IC unit against the profit of the non 80-IC unit, holding that eligible income or loss derived by the Himachal Pradesh Unit cannot be eligible or set off with any other unit. Further, the Assessing Officer held that the income or loss of the Himachal Pradesh Unit is to be treated as if it is the only source of income to the assessee, which means that the income or loss of this unit cannot be clubbed with the income or loss from any other source under the same head. The Assessing Officer, therefore, held that the set off / or clubbing of the loss derived is not allowable as per Section 70(1) of the Act and hence, the loss of the Himachal Pradesh Unit is carried forward and be allowed to set off against the income of the said unit in the subsequent years. 4.The assessee preferred appeal before the Commissioner of Income Tax (Appeals)-III, Chennai (for brevity “the CIT(A)”). The assessee contended that the income of the Himachal Pradesh Unit is not an exempt income, it is only entitled for deduction under Section 80-IC of the Act subject to the conditions contained in the respective Sections under Chapter VI-A. The assessee further contended that the same is includible in 4/29 http://www.judis.nic.in T.C.A.No.448 of 2019 the total income and they are subject to the provisions of the Act for considering all incomes under different heads and different sources for aggregation including whenever necessary to adjust losses under different sources and under different heads as laid down in Sections 70 to 80 of the Act. Therefore, the assessee contended that from the gross total income thus arrived, deduction under Chapter VI-A is to be allowed. Reliance was placed on the decision in the case of CIT vs. Patiala Flour Mills Co. P. Ltd. [(1978) 115 ITR 640 (SC)]. Reliance was also placed on the note on clauses of Finance Act (No.2), 1980. The CIT(A) by order dated 29.06.2012, allowed the appeal in respect of the said issue. The finding rendered by the CIT(A) in paragraphs 10.2 and 10.2.1 is as follows:- “10.2. I have carefully considered the facts of the case and the submission of the ld. AR. I have also gone through the decisions and Circular relied on by the AO and ld. AR. The appellant has set off the loss of its 80-IC unit located at Himachal Pradesh against the profits of taxable units at Mysore and Hosur. The AO has referred to Section 80-IC(7) read with Section 80-IA(5) and has stated that the eligible income or loss of the Himachal unit cannot be set off against the profit of any other unit u/s 70(1) of the Act. He stated that 5/29 http://www.judis.nic.in T.C.A.No.448 of 2019 the loss of the unit ought to be carried forward for set off against future income of the same unit. The ld. AR, on the other hand, argued that both income or loss of the eligible business as are includible in the gross total income from which deduction under Chapter VI-A are to be allowed. It is incumbent to include the loss of the eligible business with the income of other sources and other heads of income. I have considered the rival contentions. Benefit of deduction under Chapter VI-A can be given to the assessee if the claim is in accordance with law and not otherwise. The decisions of Hon'ble Supreme Court in Synco Industries Ltd. vs. AO & Another (299 ITR 444), A.M.Moosa vs. CIT (294 ITR 1) and CIT Vs. Shirke Construction Equipment Ltd. (291 ITR) are directly on the subject issue. The Hon'ble Supreme Court in the case of Synco Industries Ltd (supra) has clearly held that gross total income should include both profit and loss of different units and if the result is nil, assessee is not entitled to special deduction. It held that eligibility for relief under Chapter VI-A can be considered only if the assessee has positive gross total income. Where the relief exceeds the gross total income, which is computed after set ff of pass losses and unabsorbed depreciation, it will be limited to an available gross total income. This is the law which is accepted in a 6/29 http://www.judis.nic.in T.C.A.No.448 of 2019 number of cases, because of the requirements made clear under Sections 80A, 80AB and 80B(5). The Ho'ble Supreme Court found that the law as pronounced by the various High Courts had taken the view that incentive profits have to be reckoned only from the gross total income and that no deduction is possible under Chapter VI-A if the gross total income is nil or negative. The Hon'ble Supreme Court in the case of Shrike Construction Equipment Ltd (supra) has also taken a similar view and held that in determining business profit for deduction u/s 80-HHC, the unabsorbed business loss of earlier years u/s 72 should be set off. The Hon'ble Supreme Court in A.M.Moosa (supra) has held that profit in sec 80- HHC(1) and (3) of the Act means positive profit and 'profit from such exports' has to be profits from export of self manufactures goods plus profits from export of trading goods. Deduction can be permitted only if there is positive profit in export of both self manufactured goods as well as trading goods. If there is loss in either of the two then that loss has to be taken into account for the purpose of computing the profits. Section 80-AB has been given an overriding effect over all other Sections in Chapter VI-A and sec 80-HHC would be governed by sec 80-AB. The ratio is fully applicable to cases covered under various sections in Chapter VI-A under the 7/29 http://www.judis.nic.in T.C.A.No.448 of 2019 heading “C – deductions in respect of certain incomes”. The income of various sources under the same head as well as under other heads are to be aggregated and the clubbing provisions contained in sections 60 to 64 and provisions for set off and carry forward of losses contained in sections 70 to 80 are to be applied to determine the gross total income. Deduction under Chapter VI-A can be allowed only from such gross total income. According to the AO, the loss has to be deferred to the subsequent year though there is income for set off in the current year. Such a view is not in accordance with the provisions of Chapter VI-A which is clear from the decisions referred above. The assessee is required to set off the loss against the income available in view of the provisions of sec.70 of the Act. Losses in respect of any source of income under any head of income, other than under the head capital gains, would be entitled to be set off against income from any other sources under the same head. The claim to set off the loss cannot be deferred to subsequent years as held by the Hon'ble Gujarat High Court in the case of CIT v. Milling Trading Co. P. Ltd., 211 ITR 690 (Guj.). Hence, the appellant has rightly set off the loss of the 80-IC unit against the income of other units. No deduction u/s.80-IC was also claimed as the “gross total income” was negative. 8/29 http://www.judis.nic.in T.C.A.No.448 of 2019 10.2.1. The issue can be viewed from another angle. The provisions of Section 80-IC provide for deduction in respect of certain undertakings or enterprises in certain special category states such as Himachal Pradesh, Uttaranchal, Sikkim and North Eastern states. The benefit available under the section is not in the nature of any exemption. In the instant case, the profits and gains derived by the Himachal unit is not exempt under Chapter III but are eligible for deduction under Chapter VI-A. Therefore, the profit or loss of the above undertaking, as the case may be, is to be taken into account for the purpose of computing gross total income of the assessee in view of sub- Section (1) of sec. 80-IC. The appellant is eligible for set off of loss of the Himachal unit against profits of other units as per sec 70(1) of the Act. Otherwise, the gross total income of the appellant cannot be computed. However, the appellant was not eligible for any deduction because there was loss in the Himachal unit. The appellant has also not claimed any such deduction. The above fact, however, does not postulate that the loss of Himachal unit cannot be taken into u/s 80-IC in the subsequent years is to be computed after adjusting the losses of this unit as envisaged in sec. 80-IC(7) read with sec.80- IA(5) of the Act, which treats the eligible business as the only source of the assessee. Reference may be made to the Circular 9/29 http://www.judis.nic.in T.C.A.No.448 of 2019 No.281, dated 22.09.1980 (131 ITR St 23) which explained the object of reintroduction of section 80-I by the Finance (No.2) Act, 1980 where similar provisions are enshrined. The relevant part is reproduced for ready reference and clarity: “Deduction in respect of profits and gains from industrial undertakings, etc., established after a certain date – New Section 80-I ......... 9.4. .......... (3) In computing the quantum of “tax holiday” profits in all cases, taxable income derived from the new industrial units, etc., will be determined as if such unit were an independent unit owned by an assessee who does not have any other source of income. In the result, the losses, depreciation and investment allowance of earlier years in respect of the new industrial undertaking, ship or approval hotel will be taken into account in determining the quantum of deduction admissible under the new section 80-I even though they may actually have been set off against the profits of the assessee from other sources.....” In view of the above factual and legal positions, I am of the considered opinion that the claim of the appellant for set 10/29 http://www.judis.nic.in T.C.A.No.448 of 2019 off of the loss of Himachal unit against the profit of other units is in accordance with law and hence the ground is allowed. However, the AO is directed to carry forward and set off the losses of the unit from the profit of the unit in subsequent year(s).” 5.The Revenue, being aggrieved by the aforementioned order, filed appeal before the Tribunal and the grounds raised by the Revenue on this issue are as hereunder:- “6.2. The CIT(A) failed to appreciate that in the case of Shrike Construction, the Supreme Court dealt with set off of unabsorbed business losses of the earlier year against profits from exports and hence not applicable to the facts of the case. 6.3. The CIT(A) ought to have appreciated that in the case of Synco Industries Ltd., it is held that Gross Total income is required to be computed in manner provided under the Act, which presupposes that Gross Total Income shall be arrived at after adjusting losses of other division against profits derived from an individual undertaking eligible for deduction u/s 80HHC and 80IC. In the instant case, the assessee had 11/29 http://www.judis.nic.in T.C.A.No.448 of 2019 incurred losses in the units entitled for deduction u/s 80IC and hence the above decision is not applicable. 6.4. The CIT(A) erred in relying on the Supreme Court's decision in the case of A.M.Moosa, wherein it was held that dedn. u/s 80HHC can be permitted only if there is a positive profit in the export of both self- manufactured goods as well as trading goods. If there is a loss in either of the two, then the loss has to be taken into a/c for the purpose of computing the profits. It is submitted that the above decision is rendered in the context of deduction u/s 80HHC and does not apply to the facts of the case.” 6.The Tribunal referred to the contention raised by the assessee before the CIT(A) by relying upon the decision of the jurisdictional Tribunal in the case of Mohan Breweries and Distilleries Ltd. vs. ACIT [(2009) 311 ITR (AT) 346] and other decisions to support their contention that the set off loss of 80-IC unit should be allowed against the income of other units. The Revenue relied upon the decision of the High Court of Delhi in the case of CIT vs. KEI Industries Ltd. [(2015) 373 ITR 0574 (Delhi)]. It appears that the only argument of the Revenue before the 12/29 http://www.judis.nic.in T.C.A.No.448 of 2019 Tribunal was based on the said decision and it is recorded by the Tribunal that the Revenue stated that based on the said decision, the finding of the CIT(A) should be reversed. The order passed by the Tribunal on the above submissions on either side and on the grounds, which were raised before us, is as follows:- “33.We have heard both sides, perused the materials on record and gone through the orders of authorities below. With regard to set off of losses of 80IC unit against the profit of other units, we find that the Hon'ble Delhi High Court in the case of CIT v. KEI Industries Ltd. (supra) has held as under:- “Loss suffered by the assessee in a unit entitled to exemption under section 10B of the Income-tax Act, 1961 cannot be set off against income from any other unit not eligible for such exemption.” 34.Respectfully following the ration laid down in the above decision of the Hon'ble Delhi High Court, we set aside the order passed by the ld. CIT(A) on this issue and restore that of the Assessing Officer. Accordingly, the ground raised by the Revenue is allowed.” 13/29 http://www.judis.nic.in T.C.A.No.448 of 2019 7.On a plain reading of the above paragraphs, in our respectful view, does not establish as to how the Tribunal was of the view that the decision in KEI Industries Ltd. (supra) would apply to the assessee's case. The Tribunal was required to record a finding as to why in its opinion, that the order of the CIT(A) calls for interference. In the absence of any such finding, the order is deemed to be termed as a “non speaking order”. 8.It is the endeavour of Mr.M.Swaminathan, learned Senior Standing Counsel appearing for the Revenue to vehemently and vociferously support the impugned order as most of the submissions have not been recorded by the Tribunal, but appears to be reasons which are now sought to be substituted to support the ultimate conclusion of the Tribunal in allowing the Revenue's appeal. The cardinal principle is that the order passed by a quasi judicial authority or a Tribunal should stand or fall by the reasons assigned therein and fresh reasons cannot be supplanted at a later point of time when there is a challenge to such order. The only exception which comes to our mind is when legal issue arise for consideration where constitutional validity of provision is challenged etc., especially the order 14/29 http://www.judis.nic.in T.C.A.No.448 of 2019 passed by the Tribunal can never be purely a question of law because the law has to be applied to the facts of the case especially when the Tribunal is the last fact finding authority in the hierarchy of authorities provided by the Income Tax Department. Therefore, we have no hesitation to hold that the impugned order is devoid of reasons. 9.Before us Mr.R.Vijayaraghavan, learned counsel for the assessee after taking us through the facts of the case, referred to the relevant provisions in Chapter VI-A of the Act more particularly, Sections 80A(2), 80-IC, 80B(5) and 80AB of the Act. The learned counsel also referred to Sections, 70, 71 and 72 of the Act. It is submitted that Chapter VI-A deals with 'deductions to be made in computing total income'. Sub-Section (1) of Section 80A states that in computing the total income of an assessee, there shall be allowed from his gross total income, in accordance with and subject to the provisions of Chapter VI-A, the deductions specified in Sections 80C to 80U. Sub-Section (2) of Section 80A states that the aggregate amount of the deductions under Chapter VI-A shall not, in any case, exceed the gross total income of the assessee. It is submitted that Section 80-IC is a special 15/29 http://www.judis.nic.in T.C.A.No.448 of 2019 provision in respect of certain undertakings or enterprises in certain special category States. Sub-Section (1) of Section 80-IC states that where the gross total income of an assessee includes any profits and gains derived by an undertaking or an enterprise from any business referred to in sub-Section (2), there shall be in accordance with and subject to the provisions of Section 80-IC, be allowed, in computing the total income of the assessee, a deduction from such profits and gains, as specified in sub-Section (3). Therefore, it is submitted that the first requirement is to determine the gross total income of the assessee, which includes any profits and gains derived by an undertaking or an enterprise from any business referred to in sub- Section (2). Therefore, it is submitted that while computing the gross total income, the income of an assessee has to be taken into consideration and in terms of the scheme of Section 80-IC and other provisions, loss of an 80-IC unit can be set off against the profit of a non 80-IC unit. In support of such contention, the learned counsel referred to the decision of the Hon'ble Supreme Court in SIDCO Industries Ltd. vs. Assessing Officer & Anr. [(2008) 229 ITR 0444]. The appellant/assessee in the said case had earned profits from two divisions during the assessment years in question 16/29 http://www.judis.nic.in T.C.A.No.448 of 2019 and therefore, losses suffered by the oil division in earlier years could not have been adjusted against the profits of the two divisions while considering the question of grant of deductions under Section 80-I of the Act, cannot be accepted. This plea raised by the appellant/assessee was considered by the Hon'ble Supreme Court and decided in favour of the assessee with the following reasoning:- “7.Section 80A, as originally inserted by the Finance Act, 1965 with effect from 1.4.1969 dealt with a different topic altogether viz., deductions in respect of life insurance premia, annuities, contributions and provident fund etc. The present Section came on the statute book by way of substitution of Chapter VI A by the Finance (No. 2) Act, 1967, w.e.f. 1.4.1968. This Section has witnessed several consequential amendments from time to time by way of insertions, substitutions or omissions. Sub-Section (1) of Sections 80A lays down that while computing the total income of an assessee, deductions specified in Sections 80C to 80U shall be allowed from his gross total income. This Section has introduced a new concept of 'gross total income' as distinguished from the 'total income' i.e., the 17/29 http://www.judis.nic.in T.C.A.No.448 of 2019 net or taxable income. Clause (5) of Section 80B defines the expression 'gross total income' to mean the total income computed in accordance with the provisions of the Act before making any deductions under Chapter VI- A of the Act. It follows, therefore, that deductions under Chapter VI-A can be given only if the gross total income is positive and not negative. 8. .......... 9. .......... 10. ......... In Commissioner of Income-Tax, Bombay City-III, Bombay v. Mercantile Bank Ltd. (1988) 169 ITR 44 after examining the scheme envisaged by Sub-Section 1 of Section 80A, Sub-Section 2 of Section 80A and Sub- Section 5 of Section 80B the Calcutta High Court has held that the gross total income defined by Section 80B(5) is the total income computed under the provisions of the Act, but before making any deductions under Chapter VI-A and if the total income computed under the Act before making the deductions under Chapter VI-A is found to be a positive figure, can the deductions permissible under Chapter VI-A be given........... 18/29 http://www.judis.nic.in T.C.A.No.448 of 2019 12. The contention that under Section 80-I (6) the profits derived from one industrial undertaking cannot be set off against loss suffered from another and the profit is required to be computed as if profit making industrial undertaking was the only source of income, has no merits. Section 80-I (1) lays down that where the gross total income of the assessee includes any profits derived from the priority undertaking/unit/division, then in computing the total income of the assessee, a deduction from such profits of an amount equal to 20% has to be made. Section 80-I (1) lays down the broad parameters indicating circumstances under which an assessee would be entitled to claim deduction. On the other hand Section 80-I (6) deals with determination of the quantum of deduction. Section 80-I (6) lays down the manner in which the quantum of deduction has to be worked out. After such computation of the quantum of deduction, one has to go back to Section 80- (1) which categorically states that where the gross total income includes any profits and gains derived from an industrial undertaking to which Section 80-I applies then there shall be a deduction from such profits and gains of an amount equal to 20%. The words "includes 19/29 http://www.judis.nic.in T.C.A.No.448 of 2019 any profits'' used by the legislature in Section 80-I(1) are very important which indicate that the gross total income of an assessee shall include profits from a priority undertaking. While computing the quantum of deduction under Section 80-I(6) the Assessing Officer, no doubt, has to treat the profits derived from an industrial undertaking as the only source of income in order to arrive at the deduction under Chapter VI-A. However, this Court finds that the non-obstante clause appearing in Section 80-I(6) of the Act, is applicable only to the quantum of deduction, whereas, the gross total income under Section 80B(5) which is also referred to in Section 80I(1) is required to be computed in the manner provided under the Act which presupposes that the gross total income shall be arrived at after adjusting the losses of the other division against the profits derived from an industrial undertaking. If the interpretation as suggested by the appellant is accepted it would almost render the provisions of Section 80A(2) of the Act nugatory and therefore the interpretation canvassed on behalf of the appellant cannot be accepted. It is true that under Section 80-I(6) for the purpose of calculating the deduction, the loss sustained 20/29 http://www.judis.nic.in T.C.A.No.448 of 2019 in one of the units, cannot be taken into account because Sub-Section 6 contemplates that only the profits shall be taken into account as if it was the only source of income. However, Section 80A(2) and Section 80B (5) are declaratory in nature. They apply to all the Sections falling in Chapter VI-A. They impose a ceiling on the total amount of deduction and therefore the non- obstante clause in Section 80-I(6) cannot restrict the operation of Sections 80A(2) and 80B(5) which operate in different spheres. As observed earlier Section 80-I(6) deals with actual computation of deduction whereas Section 80- I(1) deals with the treatment to be given to such deductions in order to arrive at the total income of the assessee and therefore while interpreting Section 80- I(1), which also refers to gross total income one has to read the expression 'gross total income' as defined in Section 80B(5). Therefore, this Court is of the opinion that the High Court was justified in holding that the loss from the oil division was required to be adjusted before determining the gross total income and as the gross total income was 'Nil' the assessee was not entitled to claim deduction under Chapter VI-A which includes Section 80-I also.” 21/29 http://www.judis.nic.in T.C.A.No.448 of 2019 10.Based on the above judgment, it is argued that the gross total income of the assessee has first got to be determined after adjusting losses of earlier years, unabsorbed depreciation, etc., and if the gross total income of the assessee is 'Nil', the assessee would not be entitled to deduction under Chapter VI-A. It is further argued that the non obstante clause in Section 80-I(6) cannot restrict the operation of Section 80A(2) and 80B(5) which operate in different spheres and therefore, loss from one unit of the assessee can be adjusted before determining the gross total income. 11.Reference was also made to the decision of the High Court of Delhi in KEI Industries Ltd. (supra) and after referring to paragraphs 6, 9, 10, 12 and 14 of the judgment, it was submitted that the said decision could not have been applied to the facts of the case, primarily for the reason that the said decision pertains to whether an assessee who enjoys the tax holiday under Section 10A should not enjoy any other tax concession and the decision was wholly inapplicable to the facts of the assessee's case and the Tribunal erred in referring to the said decision and the assessee did not have an opportunity before the Tribunal to argue with regard to inapplicability of 22/29 http://www.judis.nic.in T.C.A.No.448 of 2019 the decision in KEI Industries Ltd. (supra), as the Tribunal had straight away accepted the submissions of the Revenue in that regard. Further, the learned counsel relied upon the decision of the Hon'ble Supreme Court in the case of CIT vs. Yokogawa India Ltd., [(2017) 391 ITR 0274 (SC)] and relied upon paragraphs 15 and 16 of the judgment, which read as follows:- “15.Sub-section 4 of Section 10A which provides for pro rata exemption, necessarily involving deduction of the profits arising out of domestic sales, is one instance of deduction provided by the amendment. Profits of an eligible unit pertaining to domestic sales would have to enter into the computation under the head “profits and gains from business” in Chapter IV and denied the benefit of deduction. The provisions of Sub-section 6 of Section 10A, as amended by the Finance Act of 2003, granting the benefit of adjustment of losses and unabsorbed depreciation etc. commencing from the year 2001-02 on completion of the period of tax holiday also virtually works as a deduction which has to be worked out at a future point of time, namely, after the expiry of period of tax holiday. The absence of any reference to deduction under Section 10A in Chapter VI of the Act can be understand by 23/29 http://www.judis.nic.in T.C.A.No.448 of 2019 acknowledging that any such reference or mention would have been a repetition of what has already been provided in Section 10A. The provisions of Sections 80HHC and 80HHE of the Act providing for somewhat similar deductions would be wholly irrelevant and redundant if deductions under Section 10A were to be made at the stage of operation of Chapter VI of the Act. The retention of the said provisions of the Act i.e. Section 80HHC and 80HHE, despite the amendment of Section 10A, in our view, indicates that some additional benefits to eligible Section 10A units, not contemplated by Sections 80HHC and 80HHE, was intended by the legislature. Such a benefit can only be understood by a legislative mandate to understand that the stages for working out the deductions under Section 10A and 80HHC and 80HHE are substantially different. This is the next aspect of the case which we would now like to turn to. 16.From a reading of the relevant provisions of Section 10A it is more than clear to us that the deductions contemplated therein is qua the eligible undertaking of an assessee standing on its own and without reference to the other eligible or non-eligible units or undertakings of the assessee. The benefit of deduction is given by the Act to the individual undertaking and resultantly flows to the assessee. This is also more than clear from the contemporaneous Circular No. 794 24/29 http://www.judis.nic.in T.C.A.No.448 of 2019 dated 9.8.2000 which states in paragraph 15.6 that, “The export turnover and the total turnover for the purposes of sections 10A and 10B shall be of the undertaking located in specified zones or 100% Export Oriented Undertakings, as the case may be, and this shall not have any material relationship with the other business of the assessee outside these zones or units for the purposes of this provision.” 12.With the above submissions, the learned counsel for the assessee submitted that the order passed by the Tribunal dated 27.04.2016, is wholly erroneous. 13.Per contra Mr.M.Swaminathan, learned Senior Standing Counsel sought to sustain the order passed by the Tribunal. As mentioned by us earlier, the attempt of Mr.M.Swaminathan, learned Senior Standing Counsel is to add material to the order of the Tribunal which is conspicuously absent in the impugned order. Nevertheless, we have heard Mr.M.Swaminathan at great length. 25/29 http://www.judis.nic.in T.C.A.No.448 of 2019 14.It is submitted by Mr.M.Swaminathan, learned Senior Standing Counsel that the decision in KEI Industries Ltd. (supra) was rightly relied on by the Tribunal while allowing the appeal filed by the Revenue, as the conditions contained in Section 80-IC and that of Section 10B are pari materia and the legal principle has been rightly applied by the Tribunal to say that the loss suffered by the assessee in an unit is entitled to exemption under Section 10B of the Act cannot be set off against the income from any other unit not eligible for such exemption. 15.In our understanding, the submission of Mr.M.Swaminathan, learned Senior Standing Counsel is to substitute Section 10B with Section 80-IC in the decision of KEI Industries Ltd. (supra) to arrive at a conclusion. The question would be, can it be done especially, when the Tribunal has not assigned any reasons as to how it came to the conclusion that the decision in KEI Industries Ltd (supra) would squarely apply to the assessee's case and above all, why the finding returned by the CIT(A) was erroneous. One more factor which is relevant to point out is the decision rendered by the Hon'ble Supreme Court in the case of Yokogawa India 26/29 http://www.judis.nic.in T.C.A.No.448 of 2019 Ltd. (supra), which was rendered by the Hon'ble Supreme Court much after the impugned decision by the Tribunal. Further, it has been argued before us by the assessee that Section 10B occurs in Chapter 3 of the Act, which deals with income not to be included in the total income and when income is not to be included in the total income, loss should also be excluded from the total income and cannot be set off against the income from other unit. Further, it is argued that even in the case of Section 10A, the provision was converted into a provision granting deduction and not exemption of income and in several cases, it has been held that profit from Section 10A unit can be set off against the loss of other units. 16.The learned counsel for the assessee has also relied upon the decision in the case of Mohan Breweries and Distilleries Ltd. (supra) and the decision of the Hon'ble Supreme Court in the case of Rajapalayam Mills Ltd. vs. CIT [(1978) 115 ITR 777 (SC)], wherein the issue was that loss of unit entitled to deduction under Chapter VI-A, which has been set off against such income in the respective year, cannot be notionally carried forward. Thus, in the light of the elaborate submissions made before us and 27/29 http://www.judis.nic.in T.C.A.No.448 of 2019 also noting that the Tribunal did not assign any reason as to why it was satisfied that the order of the CIT(A) is erroneous, we deem it appropriate to set aside the order passed by the Tribunal and remand the matter for fresh consideration in accordance with law. 17.In the result, this tax case appeal is allowed, the order passed by the Tribunal dated 27.04.2016, is set aside and the matter is remanded to the Tribunal for fresh consideration. Liberty is granted to the assessee and the Revenue to place all contentions both factually and legally for the consideration of the Tribunal, which shall decide the issue by passing a reasoned order. In the above judgment, we have referred to some of the decisions relied on by the learned counsel on either side to indicate to the Tribunal that the legal position needs to be examined qua the facts of the assessee's case. For the above reasons, the substantial questions of law are left open. No costs. (T.S.S., J.) (V.B.S., J.) 29.09.2020 Index : Yes/No Speaking/Non-Speaking Order abr 28/29 http://www.judis.nic.in T.C.A.No.448 of 2019 T.S.Sivagnanam, J. and V.Bhavani Subbaroyan, J. (abr) To The Income Tax Appellate Tribunal 'D' Bench, Chennai. T.C.A.No.448 of 2019 29.09.2020 29/29 http://www.judis.nic.in