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2016 (9) TMI 1497 - ITAT CHENNAIDisallowance of deduction u/s.80-IA - initial assessment year in section 80-IA(5) would only mean the year of commencement and not the year of claim ? - Unabsorbed depreciation - HELD THAT:- This issue is squarely covered by the order of the jurisdictional High court in the case of Velayudhaswamy Spinning Mills (P) Ltd vs. ACIT [2010 (3) TMI 860 - MADRAS HIGH COURT] There is no dispute that during the year, there is a profit. Therefore, the assessee claimed deduction under section 80-IA and the Revenue has no authority to notionally bring forward the unabsorbed depreciation and loss of the earlier year which has been already set off as against the current year profit from the unit. Initial assessment year cannot be the year in which the undertaking commenced its operations and in this case, the initial assessment year is the assessment year in which assessee has chosen to claim deduction under section 80-IA. Hence, the provisions of section 80-IA(5) treating undertaking as a separate sole source of income cannot be applied to a year prior to the year in which the assessee opted to claim relief under section 80-IA for the first time. Depreciation and carry forward loss relief to the unit which claims deduction under section 80-IA, cannot be notionally carried forward and set off against the income from the year in which the assessee started claiming deduction under section 80-IA - Decided in favour of the assessee Writing off trade advance as revenue expenditure in terms of Section 37 - HELD THAT:- Amount paid by the assessee to M/s. Cibi International for the purpose of establishing and maintaining infrastructure facilities for manufacture of knitted garments and if M/s. Cibi International maintains the said facility exclusively for the benefit of assessee, the assessee cannot claim the same as refund. On the other hand, if the M/s.Cibi International failed to maintain the said facility, for the exclusive benefit of assessee for a period of 10 years than the assessee has a right to claim the same as refund. The same was examined by the Tribunal on earlier occasion for assessment year 2010-11 and it was allowed as deduction in the hands of assessee u/s.37 - we are not in a position to take contrary view as a judicial discipline requires consistency in its proceedings.- Decided in favour of the assessee Deduction towards cost of building construction on leasehold land as a revenue expenditure - D.R contended that the assessee constructed the building in the leased land and it is not the case of renovation of the leased building or improvement of the leased building - HELD THAT:- AO has to see that the expenditure incurred on construction of any super structure on the leasehold land resulted in savings of any revenue expenditure in the form of monthly rent at the subsequent stage in future or not. Since there is no finding by the lower authorities regarding savings of the future revenue expenditure by the assessee so as to say it is a Revenue expenditure. As such, we are not in a position to appreciate the facts of the case. Accordingly, we remit the issue to the file of AO to decide the issue afresh Penalty imposed u/s.271(1)(c) - assessee structured the whole transaction with respect to intangible assets and wrong claim of depreciation with the motive to reduce the tax liability. Against this, the Revenue is in appeal before us - CIT-A deleted penalty - HELD THAT:- It is preposterous to decide the issue of penalty levied u/s.271(1)(c) at this stage, since certain issue relating to addition of deletion by the CIT(A) are remitted by us to the file of AO for fresh consideration for the assessment year under consideration. Hence, at this stage, the assessment order on the basis of which penalty has been levied, still the subject matter of litigation, which is not . Hence, in our opinion, the AO is at liberty to initiate the penalty proceedings only after giving effect to the Tribunal order by him in the issue of quantum addition. Accordingly, we vacate the penalty order at this stage. As such we dismiss this appeal of Revenue as infructuous.
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