S.80-IC Deduction Must Be Computed Solely on Eligible Unit’s Profit, ITAT Bars Set-Off of...

The Income Tax Appellate Tribunal (ITAT) has clarified the method for computing the tax deduction under Section 80-IC of the Income Tax Act. This section provides a tax holiday for certain undertakings in specified states. The tribunal ruled that the deduction must be calculated based solely on the profits of the eligible industrial unit. It held that losses from any other non-eligible business or unit of the same assessee cannot be set off against the profits of the eligible unit before calculating the 80-IC deduction. The ITAT emphasized that the purpose of the section is to incentivize industrial activity in specific regions by providing a deduction on the profits generated by that specific activity. Allowing the set-off of other losses would dilute this incentive. This ruling ensures that the tax benefit is correctly applied only to the profits of the business for which the incentive was intended.