2015 (5) TMI 1049 - AT - Income Tax

Deduction under sec.80IA - Held that - The business undertaking of the assessee is wind mill power generation/hosiery goods etc. and it has claimed the benefit of deduction under Section 80IA of the Income Tax Act for the assessment year in question and for the subsequent years as well. Having exercised its option and its losses have been set off already against other income of the business enterprise the assessee in this appeal falls within the parameters of Section 80IA of the Income Tax Act. There appears to be no distinction on facts in relation to the decision reported in Velayudhaswamy Spinning Mills case (2010 (3) TMI 860 - Madras High Court). - Decided in favour of the assessee

Summary

Issues:
1. Granting of deduction under sec.80IA of the Income-tax Act, 1961.

Analysis:
The judgment by the Appellate Tribunal ITAT Chennai dealt with the issue of granting deduction under sec.80IA of the Income-tax Act, 1961. The appellant, who is an exporter of home textiles products and generates electricity from windmills, filed a return of income for the assessment year 2011-12, claiming a deduction under sec.80IA. The Assessing Officer disallowed the deduction, leading to an appeal by the appellant before the Commissioner of Income-tax (Appeals). The appellant relied on the judgment of the Madras High Court in the case of Velayudhaswamy Spinning Mills Pvt. Ltd., arguing that the depreciation already absorbed from other sources of income cannot be readjusted when calculating profits from eligible business. The Commissioner of Income-tax (Appeals) allowed the claim of the appellant based on the aforementioned judgment and suggested that if the Supreme Court reverses the decision in the future, the Assessing Officer may take remedial action accordingly. The Revenue, aggrieved by this decision, appealed before the Appellate Tribunal ITAT Chennai.

The Appellate Tribunal, after hearing the arguments, found that the issue was squarely covered in favor of the appellant by the judgment of the Jurisdictional High Court in the case of Velayudhaswamy Spinning Mills Pvt. Ltd. The Tribunal noted that the Revenue failed to present any judgment contrary to the Madras High Court's decision. Additionally, the Tribunal referenced a previous decision in the appellant's own case for the assessment year 2010-11, where a similar view was taken. Consequently, the Tribunal dismissed the ground taken by the Revenue and upheld the decision of the Commissioner of Income-tax (Appeals), thereby dismissing the appeal of the Revenue.

In conclusion, the judgment emphasized the importance of adhering to the legal precedents set by higher courts and jurisdictional authorities when determining matters related to deductions under the Income-tax Act, 1961. The decision highlighted the significance of consistency in interpreting and applying legal principles to ensure fair and just outcomes in tax matters.