TMI Blog2010 (1) TMI 836X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee by setting up a fully independent and identifiable industrial undertaking. - following the decision in the case of DCM Sriram Consolidated Limited (2008 -TMI - 31714 - DELHI HIGH COURT) decided against the Revenue and in favour of the Assessee. Expenditure claimed by the assessee on replacement of machinery as revenue expenditure u/s 37 of the Income Tax Act - decision in favour of the Revenue and against the assessee.[Sri Mangayarkarasi Mills Private Limited (2009 - TMI - 34189 - SUPREME COURT )] - ITA No. 1125/Mds/2009 , ITA No. 1126/Mds/2009, ITA No. 1127/Mds/2009 - - - Dated:- 8-1-2010 - Abraham P. George, Vijay Pal Rao, JJ. T. Banusekar for the Appellant Shaji P. Jacob for the Respondent ORDER Vijay Pal Rao: These appeals by the Revenue in case of different assessees are directed against three different orders dated 2.4.2009, 1.4.2009 and 1.4.2009 of Commissioner of Income Tax (Appeals) for the assessment year 2006-07. Since the issues involved in these three appeals are identical, the same are clubbed together for hearing and disposed of by this composite order. 2. The Revenue has raised various grounds in these appeals. However, the followin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notionally carried forward and taken into consideration for computing the deduction u/s 80IA. The Assessing Officer has rejected the contention of the assessee and disallowed the claim of deduction u/s 80IA by following the decision of the Ahmedabad Special Bench of this Tribunal in the case of ACIT vs. Goldmine Shares and Finance P. Ltd, (2008) 302 ITR (AT) 208 (Ahmedabad)(SB) as well as the decision of Mumbai Benches of this Tribunal in the case of Additional CIT vs. Ashok Alco Chem Ltd. (2005) 96 ITD 160 (Mum). He has also relied upon the decision of this Tribunal in the case of Prasad Productions P. Ltd. vs. DCIT (2006) 280 ITR (AT) 79 (Chennai). 3.2 On appeal, the learned Commissioner of Income Tax (Appeals) decided the issue in favour of the assessee by following the decision of this Tribunal in the case of Mohan Breweries and Distilleries Ltd. vs. ACIT (2008) 114 TTJ (Chennai) 532. 3.3 Before us, the learned Departmental Representative has submitted that the Ahmedabad Special Bench of this Tribunal in the case of ACIT vs. Goldmine Shares and Finance P. Ltd. (2008) 302 ITR (AT) 208 (Ahmedabad)(SB) has decided this issue in favour of the Revenue and against the assessee. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 96 ITD 160 (Mum). The learned Departmental Representative has strongly supported the order of Assessing Officer. 3.4 On the other hand, the learned A.R. of the assessee has submitted that the issue has been considered and decided by this Tribunal in case of ACIT vs. M/s Sri Velayuthasamy Spinning Mills Private Ltd. and Ors. in I.T.A. Nos.1961, 1958 and 1960/Mds/2008 vide order dated 4.9.2009 and submitted that this Tribunal, while deciding the above mentioned cases considered the decision of Ahmedabad Special Bench in the case of ACIT vs. Goldmine Shares and Finance P. Ltd. supra and by following the decision in the case of Mohan Breweries and Distilleries Ltd. vs. ACIT supra. 3.5 We have considered the rival contentions and relevant material on record. It is undisputed that there are different decisions of this Tribunal by different Benches on this issue. In the case of ACIT vs. Goldmine Shares and Finance P. Ltd. cited supra, the Ahmedabad Special Bench of this Tribunal has decided this issue in favour of the Revenue and against the assessee. This Tribunal in the case of ACIT vs. M/s Sudan Spinning Mills Ltd. and Ors. has again considered and decided this issue in para Nos. 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... termination of the quantum of deduction under section 80-IA 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 earlier years." In coming to the aforesaid conclusion, the Special Bench had expounded as under:- "In view of the specific provisions of section 80-IA(5) of the Income-tax Act, 1961, the profits from the eligible business for the purpose of determination of the quantum of deduction under section 80-IA of the Act have to be computed after deduction of the notional brought forward losses and depreciation of the eligible business even though they have been set off against other income in earlier years. The only harmonious construction of section 80-IA(5), consistent with the object of allowing deduction only to profits and gains of the eligible business, would be that: (a) the deduction under that section would be computed with reference to profits of the eligible unit, unaffected by losses suffered in other units; (b) loss suffered by the eligible unit would not be set off against profits of other units/other business/other inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the orders of the lower authorities and as such, we confirm the same by rejecting this ground of appeal of the assessee." 3.7 We further note that this Tribunal in the case of Prasad Productions P. Ltd. vs. DCIT (2006) 280 ITR (AT) 79 (Chennai), has considered and decided the issue in para No.10 as under:- "On a careful consideration of facts and circumstances of the case we are of the view that the issue is not debatable in nature. Because of non obstante clause contained in section 80-I(6) the provisions will have overriding effect over the provisions of the Act. Section 80-I(6) does enact a legal fiction providing that the profits and gains of new industrial undertaking shall be computed as if the new industrial undertaking were the only business of the assessee from the date of its established and the past years depreciation and losses are to be set off against the income of the assessee from the undertaking. Therefore, the new industrial undertaking is retrospectively quarantined or isolated from the other income producing activity for determining the profits and gains for the purpose of eligibility under section 80-I. Hence, the order passed by the Assessing Officer givin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eated as the sole and separate source of income and any unabsorbed depreciation prior to the block period of ten years chosen as tax holidays by the assessee cannot be notionally carried forward and set off against the income from the assessment years falling in the block period of ten years tax holiday." 3.9 The Mumbai Benches of this Tribunal in the case of Additional CIT vs. Ashok Alco Chem Ltd. (2005) 96 ITD 160 (Mum) has held in para No.9 as under:- "9. From the above discussion, it is clear that the decision in the case of Patiala Flour Mills Co. (P.) Ltd. (supra) has wrong been applied by the Learned CIT(A) to the provisions of section 80-IA(7). The language of section 80-IA(7) is clear, according to which, taxable income of eligible business of the industrial undertaking is to be ascertained as if such undertaking were an independent unit owned by the assessee and the assessee had no other source of income. It is only consequential that the unabsorbed losses, unabsorbed depreciation, etc., relating to eligible business are to be taken into account in determining the quantum of deduction under section 80-IA, even though these may have actually been set off against the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght forward unabsorbed depreciation of the earlier years from the profits of the current years. However, the decision in the case of Chettinad Cement Corporation Limited, Chennai vs. ACIT (supra) relied upon by the learned Departmental Representative is not applicable in the facts of the present case as in the said case this Tribunal has held that in the absence of separate undertaking for generation of power, the assessee cannot claim deduction; whereas in the case in hand it is not disputed by the Department and particularly by the Assessing Officer that the windmill installed by the assessee is not a separate undertaking. The dispute is only whether the earlier years unabsorbed depreciation will be notionally carried forward and deducted from the profits of the year under consideration. We further note that in the subsequent decision of this Tribunal in the case of M/s Chemplast Sanmar Limited, Chennai vs. ACIT in I.T.A. No.2225/Mds/2006 dated 4.11.2008, this Tribunal has considered the CBDT Board's Circular C.No.178/28/2001 dated 3rd October, 2001. In another decision of this Tribunal in the case of the CIT vs. M/s Tanfac Industries Limited, Chennai reported in I.T.A. No.2800/M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usiness" which prefixes generation of power in Clause (iv) of the Explanation to Section 115JA is not limited to one which is prosecuted only by engaging with an outside third party. The meaning of the word "business" as defined in Section 2(b) of the Act includes any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture. The definition of "business" which is inclusive clearly brings within its ambit the activity undertaken by the assessee which is captive generation of power for its own purposes. The approach of the Commissioner of Income Tax (Appeals) and consequently the Tribunal, both in law and on facts cannot be faulted with. We are of the opinion that the Assessing Officer clearly erred in holding that since the main business of the assessee is of manufacture of sale of urea it could not be said to be in the business of generation of power in terms of Explanation (iv) to Section 115JA of the Income-tax Act, 1961. 12. In view of the above discussion and following the decisions of this Tribunal in the case of Mohan Breweries and Distilleries Limited vs. Assistant Commissioner of Income Tax (supra) and the decision of the H ..... X X X X Extracts X X X X X X X X Extracts X X X X
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