Section 80AB of the Income Tax Act
The decision most relied on for Section 80AB is Synco Industries Ltd. v. Assessing Officer (IT) & Another (299 ITR 444), cited in 82 of the 76 judgments on BharatTax that turn on this section.
Leading authorities on Section 80AB
When computing deductions under Chapter VI-A, such as Section 80IA, losses from other business undertakings must be set off against the profits of the eligible undertaking before calculating the deduction. No deduction under Section 80IA is permissible if the overall 'Profits & Gains of Business or Profession' results in a loss.
Profits of an eligible undertaking cannot be adjusted against losses from other undertakings when calculating deductions under sections like 80-IA, 80IB, or 80IC. The overriding provisions of these sections require that deductions are calculated based on the profits of the eligible unit itself, without set-off.
Gross total income must be computed by setting off losses, including brought-forward losses and unabsorbed depreciation, before any deductions under Chapter VI-A can be considered. Deductions under Chapter VI-A are only available if the resulting gross total income is positive.
Each industrial undertaking must be considered independently when calculating deductions under Section 80-I of the Income-tax Act, 1961, even if the assessee has multiple units and incurs losses in one unit while making profits in another.
Where an assessee makes a suo-moto disallowance under section 14A read with rule 8D, any further disallowance by the Assessing Officer on the same grounds is not sustainable without recording specific satisfaction regarding the assessee's claim.
When computing deductions under Section 80HHC, profits from the export of self-manufactured goods and trading goods cannot be considered separately if there is a loss in one, and the deduction is admissible if the overall business income is positive after set-off.
