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2012 (8) TMI 589 - AT - Income TaxDenial of deduction u/s 80-IA - Held that:- As it is only during the assessment year under consideration, i.e. 2007-08 that the assessee company exercised the option of claiming deduction under section 80-IA and, therefore, losses suffered in the earlier years cannot be considered by wrongly interpreting section 80-IA(5) as application of section 80-IA(5) is canvassed to be applicable only after the option is exercised by the assessee in terms whereof losses of the period prior to the exercise of option are not liable to be set off while computing deduction under section 80-IA. As decided in Velayudhaswamy Spinning Mills P. Ltd. & Others Versus ACIT (2010 (3) TMI 860 - MADRAS HIGH COURT) holding that as per Sub-section (5) of Section 80IA, profits are to be computed as if such eligible business is the only source of income of the assessee. When the assessee exercises the option, only the losses of the years beginning from the initial A.Y. are to be brought forward and not the losses of the earlier years which have been already set off against the income of the assessee - there is no question of setting off notionally carried forward loss against the profits of the units and the assessee is entitled to claim deduction under section 80-IA on the current assessment year on the current year profit - in favour of the assessee
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