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2020 (7) TMI 525 - AT - Income TaxDeduction u/s.80IA(4) - losses arising in eligible business, if any, prior to exercise of option towards ‘initial assessment year’ to be artificially carried forward and notionally adjusted from the profits arising from eligible business in the ‘initial assessment year’ - whether the assessee is entitled in law for claim of deduction of income arising from eligible business during the year under s. 80IA(1) r.w.s. 80IA(4) without making adjustments towards losses arising in the earlier assessment years prior to exercise of option of ‘initial assessment year’ with reference to the eligible business? - HELD THAT:- The manner of determination of quantum of deduction as provided under s.80IA(5) has since been clarified by the CBDT Circular No.1 of 2016 dated 15.02.2016 and is devoid of controversy any more. Having regard to the wide ranging controversies, the CBDT circular has given categorical interpretation on exercise of option of choosing ‘initial assessment year’ referred to sub-section (5) of Section 80IA of the Act in favour of the assessee. CBDT has also clarified that embargo placed under s.80IA(5) of the Act for quantification of deduction of profits and gains of an eligible business would apply from the assessment years immediately succeeding ‘initial assessment years’ only. Having regard to express elucidation by CBDT, the CIT(A), in our view, has rightly decided the issue of manner of computation of quantum of deduction under s.80IA(5) in favour of the assessee. The assessee while determining the eligible profit, is not required to notionally reduce losses arising from eligible business in the earlier years already set off against other business of assessee in terms of Sections 70, 71 & 72 of the Act prior to exercise of option of ‘initial assessment year’. The losses arising in ‘eligible business’, if any, subsequent to earmarking of ‘initial assessment year’ shall however continue to be governed by embargo placed in Section 80IA(5) of the Act. - Decided in favour of assessee.
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