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2018 (2) TMI 1703 - AT - Income TaxDeduction u/s 80 IA(5) - eligibility criteria - profit from eligible busniss - Held that:- In this case, the assessee is into two segment of business i.e. construction business which is non eligible and power generation business which is eligible business u/s 80IA of the Act. Admittedly, the assessee has set up 5 wind mills out of which two wind mills are set up in the financial year relevant A.Ys. 2005-06 and 2006-07 and remaining 3 wind mills have been set up during the financial year relevant to A.Y. 2011-12. All 5 wind mills are situated at different locations and commenced production at different point of time. All 5 wind mills are eligible units for deduction u/s 80IA. The assessee has derived profit from 2 wind mills and incurred losses from 3 wind mills. The assessee has claimed deduction u/s 80IA in respect of profit of 2 wind mills without set off of losses of 3 wind mills, considering each wind mill as a separate unit eligible for deduction u/s 80IA of the Act. We are of the considered view that the assessee’s claim of deduction u/s 80IA is in accordance with the provisions of section 80IA(5). Hence, we direct the AO to allow deduction claimed u/s 80IA. - Decided in favour of assessee Allowability of depreciation on wind mill against income from construction business - Held that:- Income from each source of business shall be computed separately after allowing all expenses including depreciation, for the purpose of determination of total income from business or profession, unabsorbed depreciation of other source of business can be set off against income of another source of business within the same financial year. Even otherwise, depreciation loss of one source can be set off against profit of other source within the same head of income. Therefore, we are of the considered view that the AO was erred in disallowing the depreciation of wind mills against income from construction business. - Decided in favour of assessee Addition towards provision for outstanding expenses - Held that:- Admittedly, the project on which the liability relates is completed and revenue from the project has been recognized, accordingly the assessee needs to provide all related expenses in respect of the project. Further, the said liability cannot be considered as contingent liability as the liability has been ascertained and crystallized, the moment the competent authority passed order for payment of ULC charges. The writ petition filed before the Hon’ble High Court of Bombay is not relevant to decide whether the said liability is ascertained liability or contingent in nature and what is relevant is the order of the competent authority which is demanding ULC charges. If the assessee gets favourable order from the Hon’ble High Court of Bombay, and liability is no longer payable then the said provision can be reversed and liable to tax u/s 41(1) in the year in which such reversal has been made. Therefore, we are of the considered view that the AO was erred in disallowing the outstanding expenses in respect of ULC charges. The CIT(A) without appreciating the facts simply upheld the findings of the AO.- Decided in favour of assessee
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