TMI Blog2011 (1) TMI 173X X X X Extracts X X X X X X X X Extracts X X X X ..... reason, why he is taking particular view, makes the assessment order erroneous and prejudicial to the interest of the revenue - The opinion that there is no merit in the arguments of the assessee’s counsel against observation made by CIT in his order u/s 263 - The appeals of the assessees are dismissed - ITA No.352/Hyd/2005, ITA No.1479/Hyd/2008, ITA No.40 & 41/Hyd/2006, ITA No.42, 43 & 44/Hyd/2006 - - - Dated:- 21-1-2011 - SHRI G.C. GUPTA, SHRI CHANDRA POOJARI, JJ. Appellant by : Shri A.V. Raghuram Respondent by : Shri K.V.N. Charya O R D E R Per Chandra Poojari, Accountant Member: 2. The first two appeals in ITA Nos.352/H/2005 1479/H/2008 preferred by the assessee are directed against different orders passed by the CIT(A)-II III, Hyderabad u/s 250 read with 143(3) of the IT Act and pertains to the assessment years 2002-03 2005-06. 3. There are other five appeals out of this the first two appeals in ITA Nos.40 41 by one assessee other 3 appeals in ITA No. 42 to 44/H/2006 are by another assessee which are directed against the different orders passed by the CIT-Hyderabad u/s 263 of the IT Act and pertains to the assessment years 2001- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions u/s 263 of the Act in these assessment years i.e. 2001-02, 2002-03 2003-04 and set aside the order of the assessing officer with a direction to the assessing officer to work out the correct amount of depreciation and business losses of the earlier years relating to the undertakings to which the provisions of section 80IA(7) apply and to carry forward the same and set off against the income of the undertaking in the current year treating the undertaking as if they are only business of the assessee for the purpose of computing the deduction u/s 80IA. Regarding the quantification of the expenses of the undertaking, it was directed to the assessing officer that he/she shall verify the correctness of the claim in this regard. In particular, he/she should allocate the expenses not particularly relatable to the existing alone in the rational manner to the new undertaking for determination of income of the undertaking. Against this the assessee is in appeal before us. 6. According to learned authorized representative, the notionally brought forward unabsorbed business losses or depreciation of eligible business unit need not be set off against the income earned by the unit for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ionally brought back while working out deduction u/s 80IA for the current year. 12. He relied on the judgement of Rajasthan High Court in the case of CIT Vs. Merwer Oil and General Mills Ltd. (271 ITR 33) and submitted that on similar facts the Hon ble High Court did not uphold the set off of past losses already absorbed in the purported interpretation of analogous provisions. He submitted that in the case of M.Pallonji Co. (P) Ltd. Vs. Jt.CIT (6 SOT 287) (MUM) notional adjustment is not called for and not contemplated in the claim of deduction provided in section 80IA and therefore the assessee s claim had to be allowed on the basis of profit of the windmill project, unfettered by any notional amount of unabsorbed depreciation pertaining to the preceding assessment year. 13. Further, he submitted that the amount allowed in earlier years for depreciation on wind mills and was set off against the business income u/s 70 of the Act. That section 80IA does not have that past losses have to be brought forward to curtail the benefit. According to the learned AR the deduction u/s 80IA being a beneficial provision intended for the encouragement of the industries has to be constru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd and set off against the eligible business profit computing u/s 80IA. 14. The learned departmental representative submitted that as per the provisions of section 80IA (5), the income of any eligible business unit shall be computed as if it is only source of income of the assessee during the previous year relevant to the initial assessment years and to very subsequent assessment years upto including assessment years for which the said benefit is to be computed. According to departmental representative the income of the unit eligible for deduction u/s 80IA only is to be computed before granting deduction u/s 80IA as if that it is only source of income. She relied the order of the Tribunal Special Bench in the case of ACIT Vs. Goldmine Shares Finance (P) Ltd. (113 ITD 209) (Ahed. S.B) wherein it was held that: The second aspect of the matter is that the fiction is created for all the years eligible for the deduction i.e. the initial year (the first year of the deduction) and shall subsequent and succeeding years. It is not only for a particular year as evident from the language used in section 80IA(5), it is for initial assessment year and every subsequent assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (P) Ltd. Vs. ACIT (38 DTR 57) (Mds. ) (HC). Further, judgement of High Court though not of the jurisdictional High Court, prevails over an order of the Special Bench even though it is from the jurisdictional Bench of the Tribunal, however, where the judgement of the non jurisdictional High Court, though the only judgement on the point, has been rendered without having been informed about certain statutory provisions that are directly relevant, it is not to be followed. In our opinion, judgement of Special Bench in the case of Gold Mine Shares Finance (P) Ltd. (113 ITD 209) (SB) (Ahemadabad) squarely applicable to the facts of the present case and applying the ratio laid down by this order of the Special Bench of this Tribunal, we inclined to decide the issue against the assessee relating to allowability of deduction u/s 80IA that in terms of provisions of u/s 80IA(5) of the IT Act, the profit from the eligible business for the purpose of determination of the quantum of deduction u/s 80IA of the Act has to be computed after deduction of the notional brought forward losses and depreciation of eligible business even though they have been allowed set off against other income in earl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atisfy the requirement of being erroneous. An order passed by the assessing officer without application of his mind is said to be an erroneous order. In the facts of the present case, we find that the assessing officer has not applied his mind to the provisions of section 80IA(5). No additional facts were necessary before the assessing officer to come to the conclusion that deduction u/s 80IA is wrongly computed. The assessing officer not examined the facts before him. The order passed by the assessing officer is very cryptic. There is no discussion or methodology of computation of deduction u/s 80IA. It cannot be said that the assessing officer is aware of any of the Tribunal orders on the issues involved. The order of the assessing officer is erroneous for want of proper enquiry. He has not recorded reasons for accepting the return of the assessee as submitted by it on the impugned issue. The assessing officer without making any enquiry accepted the claim of the assessee without recording any reasons at all. The assessment order is silent about the issue raised by the CIT. He has not examined the merit of the claim of the assessee. We cannot say that hehas taken one of the permis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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