Both these appeals are filed by assessee. They are directed against consolidated order of CIT(A) dt. 3rd Nov., 2003 in respect of asst. yrs. 2000-01 and 2002-03. only grievance of assessee in present appeals is regarding reduction of depreciation and expenses incurred for repair and maintenance of Wind Electric Generators (WEG) from eligible profit for purpose of deduction under s. 80-IA. assessee is earning income from electricity generated from WEG and claimed deduction under s. 80-IA on such income without deducting any expenditure therefrom contending that these W EGs were primarily installed for demonstration and demonstrative activity being in nature of business promotion was activity relating to sale of WEG and expenses incurred thereon should be treated to be expenses relating to sale of WEG and it cannot be related to electricity generation activity. According to assessee no expenditure whatsoever was incurred for purpose of generation of electricity as activity of generation of electricity was only incidental to demonstrative activity. It was contended that demonstration of WEG was necessary and it was done for promotion of sales to make customers aware regarding product. assessee is not maintaining separate accounts with regard to these two activities i.e., sale of WEG and sale of electricity generated through WEG. AO did not accept such submission of assessee that no expenditure whatsoever was incurred with regard to activity of generation of electricity. Therefore for purpose of calculating eligible profit for deduction under s. 80-IA he reduced depreciation of WEG from where assessee has generated electricity and also repair and maintenance expenses on estimate basis and granted deduction under s. 80-IA on such reduced profit. learned CIT(A) has sustained stand of AO and has dismissed appeal of assessee for both years. assessee is aggrieved, hence in appeal. submissions made before AO and CIT(A) were reiterated before us. main ground on which such action of AO has been agitated by learned counsel of assessee can be summarized as below: That appellant falls within parameters of sub-s. (1) to s. 80-IA, in that gross total income includes profits and gains derived from any business of industrial undertaking as defined in sub-s. (4) therein. That in terms of cl. (iv) of sub-s. (4) of s. 80-IA, appellant has set up in India, for generation of power, industrial undertaking which has started generating power from 1st April, 1996, which is within limits of specified period of 1st April, 1993 to 31st March, 2003. Each of these 11 WEGs (13 in later year) constitutes undertaking within meaning of said provision. That in terms of stipulations contained in s. 80AB, deduction has been claimed in respect of income of priority industry which is included in gross total income by taking priority income on stand-alone basis. That s. 80-IA envisages deduction for income derived from business of industrial undertaking. income from sale of electricity is clearly and unmistakably related to industrial undertaking generating electricity and so, is eligible for exemption which has partially been allowed by AO himself. That expenditure on account of repair & maintenance and depreciation is not relatable to 11 industrial undertakings (13 in later year), inasmuch as, both expenses are incurred wholly, necessarily, and exclusively for purpose of demonstration and sales promotion of each assessee. That industrial undertaking is part and parcel of business of appellant, inasmuch as, it is bound by relationships of interconnection, interdependence, and interlacing of funds and managerial control with main business of production and assembly of WEGs. That principle of law is, that expenditure exclusively relatable to priority undertaking is required to be deducted against income of priority undertaking. Supreme Court, and later on, Rajasthan High Court have said that dilution of priority profits is not permissible through intermingling of expenses relating to non-priority sector (reference was made to case of CIT vs. Canara Workshops (P) Ltd. (1986) 58 CTR (SC) 108: (1986) 161 ITR 320 (SC), CIT vs. Sharda Gum & Chemicals (2007) 209 CTR (Raj) 143: (2007) 288 ITR 116 (Raj). That where in case of integrated business, expenses are incurred which relate to different businesses, then, expenses need not be identified against exempt income for allocation. It will suffice if entirety of expenditure is set off against taxable income. On same principle, expenditure on repair and maintenance and depreciation would have to be allocated to relevant business, i.e., demonstration of WEGs in scheme of their sales. That onus was on AO to establish that entirety of depreciation on 11 WEGs (13 in later year) pertained wholly and exclusively to business of power generation. This, AO has completely failed to discharge. That depreciation which has been deducted from power generation income does not pertain to it at all. Such is directly and incontrovertible referable to WEGs erected and retained for demonstration purposes only. That WEGs operate and generate electricity entirely out of wind power which is entirely due to nature s bounty. That involves no visible or invisible expenditure at all, and in that situation, act of AO in loading on to this activity, expenditure on repair and maintenance and depreciation, was totally fallacious and entirely uncalled for. That expenses on account of repair and maintenance and depreciation w e r e most unambiguously and unequivocally relatable to aspect of demonstration for purposes of sales promotion, and were, therefore, allocable against income from that head. After so doing, it was not permissible to return back to P&L a/c to allocate same against income for priority sector, for tax laws do not contemplate double deduction for same expenditure, as held in case of Escorts Ltd. vs. Union of India (1992) 108 CTR (SC) 275: (1993) 199 ITR 43 (SC). That were business is one, and diverse activities are pursued, if expenditure is incurred wholly and exclusively for purpose of business, then irrespective of fact that income from one or more part of activities is not liable to income-tax, entire expenditure incurred by assessee in connection with business has to be allowed under s. 37 of Act. In this case, after so doing, with regard to activity of demonstration of WEGs, Revenue cannot contend for deduction of such expenses against priority income. [Reference was made to case of CIT vs. C. Parakh & Co. (India) Ltd. (1956) 29 ITR 661 (SC)]. Other examples are dividend and agricultural incomes out of mixed businesses. That even if income from some activity was not taxable, expenditure incurred in conjoint business is deductible against income from other activities. [Reference was made to case of Punjab State Co- operative Supply & Marketing Federation Ltd. vs. CIT (1980) 18 CTR (P&H) 71: (1981) 128 ITR 189 (P&H) and CIT vs. Indian Bank Ltd. (1965) 56 ITR 77 (SC)]. That AO wrongly assumed that under s. 80-IA(5), claim could not be entertained. purpose of this provision has been misinterpreted by AO. provision in effect provides that for purpose of determining quantum of tax holiday profits under s. 80-IA, taxable income of eligible business of industrial undertaking is to be ascertained as if such undertaking were independent unit owned by assessee concerned, and assessee had no other source of income. That was for relating to priority income, unabsorbed losses, unabsorbed depreciation etc., pertaining to that industry. Where in case there were no such adjustments pending set-off, section would have no application. (Please refer pp. 112-114 of paper book). AO wrongly interpreted term profit . Though such has to be interpreted in commercial terms as excess of receipts over expenditure, yet, where there are no receipts and only expenditure that is case of absolute loss. And for converse situation, where there is only receipt and no expenditure, it is case of absolute profits. Such situations are not ruled out by any of provisions of IT Act. AO s interpretation of profit is, therefore, misconceived and anomalous. That AO wrongly read explanatory note to Finance Act (No. 2) of 1980 with regard to insertion of s. 80-AB. explanatory note only goes to support contentions of appellant insofar as deductions are required to be calculated with reference to net income. Where there is no expenditure, gross income becomes net income. situation of this type has not been barred by said explanatory note. AO has proceeded entirely on conjectures. AO has also misread Supreme Court s decision in case of Cambay Electric Supply Industrial Co. Ltd. vs. CIT (1978) 1978 CTR (SC) 50: (1978) 113 ITR 84 (SC). second criteria listed therein necessitates identification of total income which represents profits and gains attributable to specified industry. In subject case, income from power is derived from specified industry, so whatever conditionality was envisaged in case relied upon, is fully and completely satisfied in facts of instant case. In fact, requirement spelt by case of Distributors (Baroda) (P) Ltd. vs. Union of India (1985) 47 CTR (SC) 349: (1985) 155 ITR 120 (SC) of income being derived from priority industry is also fully and completely satisfied in subject case. That computation as made by appellant is in terms of s. 80-AB. It is case where blades of WEGs are made to rotate by wind currents, for which no payment is required to be made to anyone. It is for free for as long as wind cares to blow in sufficient strength so as to be able to rotate blades, task is accomplished. For fact that net income is required to be computed in terms of mandate under s. 80-AB, no expenditure can be conjured and fictionally sought to be set off against gross income only because s. 80-AB generally speaks of net income. gross becomes net income by virtue of outflow on running expenses being nil It is not permissible to drag in expenses pertaining to other lines of business, only to be able to say that there is net remaining after set-off of such expenses against priority income. decision in case of Motilal Pesticides (India) (P) Ltd. vs. CIT (2000) 160 CTR (SC) 389: (2000) 243 ITR 26 (SC) has to be read in context of facts as they stood therein, and ratio stated in terms of those facts cannot be extended or interpolated to another fact situation dissimilar to that case. That AO erroneously read contradiction in argument that income from priority industry was incidental to main activity. Such is not relevant criteria for purpose of determination of priority income and allowance of priority relief. AO has needlessly confused issue on this point. point. That AO failed in his duty to identify expenses relatable to priority industry, and committed double-fault by attributing expenses incurred on non-priority undertaking on to that of priority undertaking. Sub-s. (4) of s. 80-IA does not envisage condition of income arising from main activity or incidental activity for providing priority deduction. So long as power is generated, irrespective of stature or status of activity, incentive is required to be granted to assessee. That despite statute being clear on subject, AO has tried to befuddle issue by reading into facts, case laws which have no application to facts of case. AO has simply tried to interpret provisions in manner so as to take away benefit which statute otherwise entitles assessee to ratio of decision in case of CWT vs. Vasavi Pratap Chand (2002) 172 CTR (Del) 190: (2002) 255 ITR 517 (Del) is relied upon in this regard. That AO has merely picked and chosen from various stray provisions of statute rather than reading statute as whole, in order to understand harmonious implication of provisions. That AO has tried to interpret provisions of law in disregard to object and purport of exemption as visualized under statute. That CIT(A) read dichotomy in diverse activities of business where there was none. CIT(A) failed to appreciate that there is no classification under s. 80-IA as main income or incidental income. CIT(A) ought to have appreciated that so long as income inures from priority undertaking, assessee s right to claim deduction under s. 80-IA could not be interfered with at all. That CIT(A) failed to appreciate that the, entire expenditure on repair and maintenance and depreciation was attributable to manufacturing activity of WEGs, and no part of it was even obliquely relatable to generation of electricity. That CIT(A) failed to appreciate that it was nobody s case that there is difference between income and profits. In case of appellant, on account of peculiar nature of activity, wind power had resulted in generation of electric power without incurring of any expenditure, and here, there was case where income itself was profit. In such fact situation, to apply ratio of cases answered under totally different and distinct compendia of circumstances is erroneous and uncalled for. That CIT(A) failed to appreciate that assessee s case all along has been that in subject case, income itself is profit, insofar as, both income and profits are required to be related to priority industry and in case where there is only income and no expenditure, income itself becomes profit. That authorities below completely failed to appreciate that objective of setting up these 11 WEGs (13 in next year) was for purpose of increasing awareness as to this novel technology, and thus to give possible boost to its sales. Naturally, all expenses relatable thereto, qualified for set-off against business of selling of these WEGs. Such has not been repudiated by either of authorities. That authorities below failed to reckon that charges for electricity generation were received net of expenses and whatever expenses there be were o n account of purchaser of electricity, viz., Tamil Nadu State Electricity Board. On basis of above submissions it was pleaded by learned Authorised Representative that relief sought for should be granted to assessee. On other hand, it was submitted by learned Departmental Representative that claim of assessee is contradictory. He contended that according to provisions of s. 80-IA deduction is eligible to undertaking or enterprise from any business referred to in sub-s. (4). He contended that if assessee claims that generation of electricity was not its business then assessee is not entitled at all to claim deduction under s. 80-IA as according to submissions of assessee generation of electricity was only incidental and WEG were installed for demonstration to promote sale of WEG. He contended that it has been submitted by learned Authorised Representative that production of electricity was ancillary and thus keeping in view that submission assessee should not be held to be eligible for deduction under s. 80-IA as claimed by it as according to requirement of s. 80-IA eligible income must arise from business carried on in respect of specified activities. He further submitted that according to s. 80-IA(5) income of business in respect of which such deduction is claimed should be computed as if said business was only source of income of assessee during previous year relevant to initial assessment year and to every subsequent assessment year up to and including assessment year for which determination is to be made. Thus he pleaded that according to that section income from business on which such deduction is claimed was to be computed on stand alone basis and thus stand of AO that depreciation and other expenses are to be reduced is in accordance with law. He objected to alternative submission of learned Authorised Representative that AO should have at least allocated proportionately depreciation to two business activities to compute eligible profit. He contended when actual figure is available then there was no question of proportionate allocation. He contended that reliance by assessee on decision in case of Rajasthan State Warehousing Corpn. vs. CIT (2000) 159 CTR (SC) 132: (2000) 2 4 2 ITR 450 (SC), is misplaced as facts in said case and that of assessee s case are distinguishable. He contended that in that case assessee was carrying on one individual business in various ventures but in present case assessee has identifiable receipts with respect to generation of electricity on which deduction under s. 80-IA had been claimed and depreciation and repair and maintenance expenses are specifically attributable to such receipts. Thus he pleaded that it is not case where entire depreciation and repair and maintenance expenses could be held as unidentifiable. He further relied on decision of Hon ble Supreme Court in case of Waterfall Estates Ltd. vs. CIT (1996) 132 CTR (SC) 495: (1996) 219 ITR 563 ( S C ) to contend that AO was right in allocating repair and maintenance ( S C ) to contend that AO was right in allocating repair and maintenance expenses and depreciation relating to WEGs from which assessee had earned income from generation of electricity and thus AO was right in reducing depreciation and repair and maintenance expenses. He further referred to decision of Hon ble Supreme Court in case of ITO vs. Ch. Atchaiah (1996) 130 CTR (SC) 404: (1996) 218 ITR 239 (SC) to contend that under s. 4 of IT Act AO has got no option except to assess only right person irrespective of consequences. He contended that as it is contention of assessee that WEG used for purpose of generation of electricity were relating to business activity of sales of WEG assessee should not be held to be eligible for any deduction under s. 80-IA as according to provision of s. 80-IA no such deduction can be allowed if assessee is not engaged in business of such activity. He contended that it is within power of Tribunal to hold that assessee is not eligible for deduction under s. 80-IA as per decision of Delhi High Court decision in case of Indian Management Advisors & Leasing (P) Ltd. vs. CIT (2007) 289 ITR 179 (Del). Thus he pleaded that assessee should not be held to be entitled for deduction under s. 80-IA at first place and if it is held that assessee is entitled for deduction under s. 80-IA then order of AO and CIT(A) should be confirmed. In rejoinder learned Authorised Representative reiterated submissions made. He contended that assessee cannot be made worse off by accepting contention of learned Departmental Representative that it is not eligible at all for deduction under s. 80-IA as appellant in present case is assessee. We have, carefully considered rival submissions in light of material placed before us. AO himself has held that assessee is entitled for deduction under s. 80-IA as it is earning income from generation of electricity which is one of eligible activity of business to be entitled for deduction under s. 80-IA. Under s. 80-IA such deduction is not eligible unless undertaking s or enterprise s gross total income consists of profits and gains derived from any business referred to in sub-s. (4). Thus if such profits and gains are not earned from business, undertaking/enterprise will not be entitled for deduction under s. 80-IA. It is claim of assessee that generation of electricity was only incidental to main activity of selling WEG. If such contention is accepted than assessee will not at all be entitled for deduction under s. 80-IA as in that case income from generation of electricity is not earned by assessee from business of eligible specified activity. However, it is not even case of AO that assessee is not engaged in business of generation of electricity as he himself has allowed deduction under s. 80-IA of Act. At same time contention of assessee that generation of electricity is only incidental to activity of selling WEG has also to be rejected for reason that assessee is not entitled to get two benefits from such position as same will not be in accordance with provisions of law. In other words, assessee cannot blow hot and cold in one breath by contending on one hand that it is eligible for deduction under s. 80- IA as it is engaged in business of generation of electricity and on other hand that depreciation relating to WEG from where electricity is generated were installed only for purpose of demonstration related to activity of sale of WEG. In this manner assessee only tries to get benefit of higher deduction under s. 80-IA and such course is not available to assessee particularly in view of sub-s. (5) of s. 80-IA. It will be relevant to reproduce relevant portion of s. 80-IA: "80-IA. (1) Where gross total income of assessee includes any profits and gains derived by undertaking or enterprise from any business referred to in sub-s. (4) (such business being hereinafter referred to as eligible business), there shall, in accordance with and subject to provisions of this section, be allowed, in computing total income of assessee, deduction of amount equal to hundred per cent of profits and gains derived from such business for ten consecutive assessment years. ** ** ** (4) This section applies to ** ** ** (5) Notwithstanding anything contained in any other provision of this Act, profits and gains of eligible business to which provisions of sub-s. (1) apply shall, for purposes of determining quantum of deduction under that sub-section for assessment year immediately succeeding initial assessment year or any subsequent assessment year, be computed as if such eligible business were only source of income of assessee during previous year relevant to initial assessment year and to every subsequent assessment year up to and including assessment year for which determination is to be made." It is clear from language of s. 80-IA(l) that assessee will be entitled for deduction only if profit and gains are derived from any business referred to in sub-s. (4). It has already been pointed out that activity carried on by assessee of generation of electricity was business carried on by it. There is no material on record to suggest that generation and supply of electricity was not business activity of assessee. It is also not case of AO that it was not business activity of assessee. Thus argument of learned Departmental Representative that assessee is not entitled for deduction under s. 80-IA at all is not acceptable and rejected. However, his argument that according to sub-s. (5) profit has to be counted on stand alone basis is dealt with as under. According to sub-s. (5), notwithstanding anything contained in any other provisions of Act, profits and gains of eligible business to which provisions of sub-s. (1) applies shall, for purpose of determining quantum of deduction under that sub-section for any eligible year of deduction to be computed as if such eligible business were only source of income of assessee during previous year relevant to assessment year. According to mandate of this sub-section it has to be considered that business of generation of electricity was only source of income for purpose of computing deduction under this section. In this view of situation, out of gross receipts received by assessee from generation of electricity, permissible deduction and expenses have to be reduced for purpose of determining quantum of deduction. In other words, generation of electricity has to be considered to be only source of income of assessee and expenses relating thereto and permissible deductions relating thereto have to be reduced relating thereto and permissible deductions relating thereto have to be reduced to arrive at quantum of profit on which such deduction will be eligible. Depreciation has been claimed by assessee on WEGs in its books of account but according to case of assessee that depreciation does not pertain to business of generation of electricity as these WEGs were installed for purpose of demonstration to promote business activity of sales of WEG. We find no force in such submissions as moment, from which assessee started selling electricity, installation of WEGs were no more for purpose of business activity of selling WEGs as assessee intended to earn profit from sale of electricity as its business activity which makes entitle assessee to claim deduction under s. 80-IA It is also for that reason contention of assessee that at least there should be proportionate allocation of depreciation and expenses has to be rejected. WEGs from which assessee has earned income from generation of electricity cannot be said to be for purpose of demonstration for promotion of sale of WEGs as demonstration became ancillary object at point of time when assessee started selling electricity. Assessee has earned substantial receipts from generation of electricity. All receipts cannot be considered to be net gain of assessee as depreciation relating thereto has necessarily to be held pertaining to activity of generation of electricity. repair and maintenance also has to be held to be exclusively for purpose of generation of electricity. Thus keeping in view mandate of ss. 80-IA(1), (4) and (5), we are of opinion that action of AO in reducing depreciation and repair and maintenance expenses out of gross receipts of sale of electricity to arrive at eligible profit was quite in order and has rightly been upheld by CIT(A). Now coming to case law relied upon by learned Authorised Representative in Canara Workshops (P) Ltd. s case (supra). ratio of this decision is not applicable to facts of present case as in said case it was held that profit of one priority industry cannot be diminished because of loss suffered by some other industry. In present case it is only claim of assessee that depreciation pertains to business activity of sale of WEGs. This contention of assessee has been turned down on ground that moment assessee started selling electricity, depreciation also became relating to WEGs from where such electricity was generated. When generation of electricity became business activity of assessee depreciation solely relating to those WEG s from where electricity has been generated has to be reduced while computing eligible profit for purpose of deduction under s. 80-IA. Rather case supports case of revenue as it has been held that each industry must be considered on its working only when adjudging its title under s. 80E. In other words Hon ble Supreme Court has held that while computing deduction under s. 80E (later on replaced by s. 80-I) each industry must be considered on its own working. Thus no strength can be drawn by assessee from this case to contend that depreciation and repair and maintenance expenses cannot be reduced for arriving at eligible profit for purpose of computing deduction under s. 80-IA. Escorts Ltd. s case (supra). This case has been relied upon by learned Authorised Representative for contention that it was not permissible to AO to return back to profit and loss account to allocate same against income from priority sector as tax laws do not contemplate double deduction for same expenditure. Reliance on this case is also misplaced as there is no question of double deduction. assessee is maintaining composite account with regard to above-mentioned two business activities. It is only assertion of assessee that depreciation pertains to activity of sale of WEGs as WEGs from where electricity has been generated were installed only for purpose of demonstration. This contention has already been dealt with in above part of this order and it is held that installed WEGs were only for purpose of generation and distribution of electricity. Therefore, contention of assessee that depreciation is allowable on business activity of selling WEGs is not acceptable and thus it is not case where double deduction is allowed or allowable. CIT vs. C. Parakh & Co. (India) Ltd (1956) 29 ITR 661 (SC), Punjab State Co-operative Supply & Marketing Federation Ltd. vs. CIT (1980) 18 CTR (P&H) 71: (1981) 128 ITR 189 (P&H) and Indian Bank Ltd s case (supra). These cases are relied upon by assessee to contend that where business is one and diverse activities are pursued and expenditure incurred wholly and exclusively for purpose of business then irrespective of fact that income from one or more part of activities is not liable to income-tax, entire expenditure more part of activities is not liable to income-tax, entire expenditure incurred by assessee in connection with business has to be allowed under s. 37 of Act. This case is also not applicable to facts of present case as it is case where profits have to be computed under provisions of s. 80-IA for purpose of grant of deduction under that section and s. 80-IA(5) specifically mandates that profits and gains of eligible business to which sub-s. (1) of s. 80-IA applies, for purpose of determining quantum of deduction, income will be computed as if such eligible businesses were only source of income of assessee. Thus general proposition of law laid down in above-mentioned cases cannot be made applicable to present case. Vasavi Pratap Chand s case (supra). This case has been relied upon to contend that AO cannot interpret provision in manner so as to take away benefit which statute otherwise entitles assessee to. No strength can be drawn by assessee from this case to plead its case as benefit sought for by assessee has not been provided by statute as it is claimed. So this decision is also not applicable. Thus case law and contentions raised by learned Authorised Representative do not support case of assessee. We may mention here that while arriving at conclusion that depreciation and repair and maintenance expenses have to be reduced for purpose of computing eligible profit for purpose of deduction under s. 80-IA, we have taken into consideration all contentions and case laws discussed during course of hearing though for sake of brevity they have not been discussed in this order. In this view of matter, order of learned CIT(A) for both years are confirmed and appeals filed by assessee are dismissed. *** VESTAS RRB INDIA LTD. v. ADDITIONAL COMMISSIONER OF INCOME TAX