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2017 (1) TMI 1049 - ITAT HYDERABADClaim of deduction u/s 80IA(5) denied - selection of initial or first assessment year - Held that:- The assessee who is eligible to claim deduction under S.80IA has been given an option to choose initial/first year from which it may desire to claim the deduction for ten consecutive years out of the slab of 15 or 20 years as prescribed under the above sub-section. The term 'initial assessment year' has been held to mean the first year opted to by the assessee for claiming deduction under S.80IA of the Act. Thus, it is clear that the initial assessment year is not the year of operation or commencement of business, as interpreted by the Assessing Officer, but it is the first year in which the assessee has opted to claim the deduction under S.80IA. In view of this clarification of the Board, which clinches the issue in favour of the assessee, and is binding on the Revenue authorities, we accept the contentions of the assessee in this behalf, and direct the Assessing Officer to allow the claim of the assessee, after verifying the records as to the initial assessment year in which the assessee for the first time has claimed the deduction under S.80IA and consider the income of the assessee from the eligible unit from that year alone on a stand alone basis. Assessee's grounds on this issue are accordingly allowed . See M/s Hyderabad Chemical Products Pvt. Ltd., Vs. ACIT [2016 (7) TMI 253 - ITAT HYDERABAD ] Disallowance u/s 14A - assessee is aggrieved because CIT(A) has sustained the disallowance u/r 8D(2)(iii) - whether the investment which has not generated income should also be considered to calculate the quantum of disallowance or the whole investment as per balance sheet should be applied to disallowance as per rule 8D? - Held that:- In applying the formula prescribed under rule 8D(2)(iii) of the Rules, the AO has included all investments, whether it yielded any tax free income or not. It is only the investments which yield tax free income that has to be considered for applying the formula prescribed under rule 8D(2)(iii). Considering this view, we direct the AO to consider only the investments, which yielded the exempt income in the formula under rule 8D(2)(iii) and accordingly, disallow the expenses relating to exempt income.
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