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2015 (10) TMI 1600 - AT - Income TaxDisallowance of deduction claimed u/s 80IA - reducing the eligible profit by the amount of losses and depreciation pertaining to earlier year already been set off against the profit of non-eligible unit - Held that:- Since the assessee has exercised the option of choosing the asst. yr. 2008-09 as initial assessment year as per sub-section (2) of S. 80-IA, only the losses of the years starting from that initial assessment year alone are to be brought forward as stipulated in S. 80-IA(5). Loss prior to the initial assessment year which has already been set off cannot be brought forward and adjusted in the initial assessment year as chosen by the assessee. It is only when the loss has been incurred in any year beginning from the initial assessment year, that the assessee has to adjust such loss in the subsequent assessment years and the profits have to be computed as if the eligible business is the only source of income and the deduction u/s. 80-IA is to be determined accordingly. This is the true import of section 80-IA(5). Therefore the losses of assessment year prior to the A.Y. 2008-09 which has already been set off against income of non-eligible unit could not be notionally carried forward in accordance with section 80IA for setting off against the income of eligible unit for the assessment years 2008-09 & 2009-10 under consideration. Thus we do not find any merit in the action of the lower authorities for allowing the claim of deduction u/s 80IA by reducing the eligible profit by the amount of losses and depreciation pertaining to earlier year which has already been set off against the profit of non-eligible unit. As we have already decided the issue on merit in the A.Y. 2009-10, following the same reasoning, we do not find any merit in the action of ld. CIT u/s 263 for directing the A.O. in the A.Y. 2008-09 to allow deduction u/s 80IA of the Act after reducing the loss and depreciation of earlier year which have already been set off against the profit of non-eligible unit. - Decided in favour of assessee.
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