TMI Blog2012 (8) TMI 589X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee - there is no question of setting off notionally carried forward loss against the profits of the units and the assessee is entitled to claim deduction under section 80-IA on the current assessment year on the current year profit - in favour of the assessee - ITA No. 478/PN/11 - - - Dated:- 26-6-2012 - SHRI SHAILENDRA KUMAR YADAV, AND SHRI G.S. PANNU, JJ. Appellant by: Shri Mahendra Mehta Respondent by: Shri S C Shivgunde ORDER PER G.S. PANNU, A.M.: This appeal by the assessee is directed against the order of the Commissioner of Income-tax (Appeals)-I, Pune dated 29.10.2010 which, in turn, has arisen from the order dated 30.03.2009 passed by the Assessing Officer under section 143(3) of the Income-tax Act, 1961, (in short the Act), pertaining to the assessment year 2007-08. 2. In this appeal, the only issue raised by the assessee relates to the denial of deduction under section 80-IA of the Act amounting to Rs 10,66,354/- 2 which was claimed by the assessee with respect to the profits from the Windmill. 3. In brief, the facts giving rise to the dispute are that the assessee claimed a deduction of Rs 10,66,354/- with respect to profits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment year for the purposes of section 80IA(5) of the Act whereas the assessee has exercised the option to avail deduction under section 80-IA in the instant assessment year, and such assessment year alone is to be understood as the initial assessment year for the purposes of section 80-IA(5) of the Act. Accordingly, losses incurred by the unit prior to the said assessment year cannot be deducted while computing the eligible deduction as per section 80- IA(5) of the Act in the instant assessment year. The learned Representative further submitted that an identical issue has been considered by the Pune Bench of the Tribunal in the case of Serum International Ltd. Pune v. Addl. CIT in ITA Nos 290 to 292/PN/10 for assessment years 2004-05 to 2006-07 vide order dated 28.9.2011 in favour of the assessee s stand. 6. Though the learned Departmental Representative, appearing for the Revenue, has not controverted the factual matrix that a similar controversy was subject-matter of consideration by the Tribunal in the case of Serum International Ltd. Pune (supra), yet according to the learned Departmental Representative having regard to the decision of the Special Bench of the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5) of the Act has been decided in favour of the assessee by the Pune Bench of the Tribunal in the case of Poonawalla Stud and Agro Farm Pvt. Ltd. Vs. ACIT (Supra). In that case after discussing the issue in detail, the Tribunal has come to the conclusion that the initial A.Y for the purpose of claiming deduction u/s. 80IA was the first year in which the assessee claimed the deduction u/s. 80IA (1) after exercising his option as per the provisions of 80IA (2) of the Act. It was held that the Ld CIT(A) has erred in holding that the initial A.Y for the purposes of Section 80IA(2) r.w.s. 80IA (5) was the year in which the assessee started generating electricity from the wind mill activity. We also find that the issue raised in Ground No. 2 regarding the eligibility of the assessee to claim deduction u/s. 80IA undiminished by unabsorbed losses and depreciation also set off in earlier years against the other income, is fully covered by the decision of Hon ble Madras High Court in the case of Velayudhaswamy Spinning Mills (P) Ltd Vs. ACIT (Supra) holding that as per Sub-section (5) of Section 80IA, profits are to be computed as if such eligible business is the only source of income of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lmost similar facts, hold that when the assessee exercising the option, only the losses of the year beginning from the initial A.Y. are to be brought forward and not the losses of earlier year which have been already set off against the other income of the assessee. The revenue cannot notionally bring forward any loss of earlier years which has already been set off against any other income of the assessee and set off the same against the current income of the eligible business. We thus set aside the orders of the authorities below and direct the A.O to allow the claimed deduction u/s. 80IA without bringing the notionally brought forward any loss or depreciation of earlier years which has already been set off against other income of the assessee. The decision of Pune Bench of the Tribunal in the case of Prima Paper Engineering P.Ltd. Vs. ITO (Supra) cited by the Ld. DR is also not helpful to the revenue since firstly the decision of the Hon ble Madras High Court in the case of Velayudhaswamy Spinning Mills (P) Ltd. Vs. ACIT (Supra) on the issue was not cited before the Bench and secondly the ld. AR fairly agreed that the issue raised was covered against the assessee by the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Hon ble Madras High Court in the case of Velayudhaswamy Spinning Mills (P) Ltd. and other of Special Bench of the Tribunal in the case of Goldmine Shares 7 Finance (P) Ltd (supra) which was in favour of the Revenue. The Tribunal in its decision has explained the reasons which prevailed upon it to follow the judgment of the Hon ble Madras High Court in the case of Velayudhaswamy Spinning Mills (P) Ltd. (supra) in preference to the contra view expressed by the Special Bench of the Tribunal in the case of Goldmine Shares Finance (P) Ltd. (supra). In so far as the plea of the learned Departmental Representative that the judgment of the non-jurisdictional High Court is not binding on the Tribunal is concerned, the same, in our view, is not a proposition to be examined in absolute terms. No doubt the decision of a non-jurisdictional High Court would not have a binding precedent on the Tribunal acting in a place other than the jurisdiction of such High Court, so however, it is an equally respected practice that an authority like an Income-tax Appellate Tribunal acting anywhere in the country has to respect the law laid down by any High Court on an issue settled, so long there is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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