TMI Blog2013 (5) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... made for the first time from assessment year 2008-09, has not been disputed. Claim of deduction u/s 80IA was based on possible legal view which has been allowed by the AO, therefore, it cannot be held erroneous. Merely because the AO in the subsequent assessment year has followed Special Bench decision of ACIT v/s Goldmine Shares [2008 (4) TMI 405 - ITAT AHMEDABAD] which admittedly was rendered with regard to the claim of deduction starting from the assessment year 1996-97 wherein there was no concept of assessee choosing his option of initial assessment year in view of the provisions prior to the amendment, it cannot be held that the assessee's claim of initial assessment year being assessment year 2008-09 and its claim for deduction allowed by the AO under section 80IA is erroneous in law. In favour of assessee. Disallowance of foreign travel expenses has been made on fixed percentage of 4% of the expenses despite that the AO has noted that the desired details / documentary evidences were not submitted - Held that:- Such a view taken by the AO cannot be disturbed without any difference in the facts and circumstances of the case. Thus, no merits in the impugned order passed un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the year 2006 which has commenced its operation on 29th September 2006 and in the first year of its operation i.e., for the assessment year 2007-08, the assessee had shown a loss of Rs. 3,52,47,398, on account of depreciation and interest and this loss was set-off against export business income of non-eligible units in the assessment year 2007-08 itself. In assessment year 2008-09, the profit of Rs. 7,16,904, has been claimed as deduction under section 80IA without setting off the loss. It was further observed that while completing the assessment in assessee's case for assessment year 2009-10, the claim of deduction under section 80IA at Rs. 19,65,160, has been disallowed by the Assessing Officer on the ground that as per the provisions of section 80 IA, deduction is to be allowed after adjustment of carried forward losses from the wind mill division and this finding of the Assessing Officer was duly supported by the Special Bench decision of Ahmedabad Bench of the Tribunal in ACIT v/s Goldmine Shares And Finance Pvt. Ltd. [2008] 302 ITR (AT) 208 (SB) (Ahd.). The said finding of the Assessing Officer will also be applicable for assessment year 2008-09 also as the profit of Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer about the nature of disallowability of such expenses. Regarding the amount receivable, it was submitted that the same was already credited to the revenue account in Profit Loss Account, hence, there is no question of taking any adverse view. 5. The learned Commissioner, however, with regard to the two aspects i.e., the claim of deduction under section 80IA and foreign traveling expenses, set aside the assessment and directed the Assessing Officer to re- examine both the issues after observing and holding as under:- "7. On careful consideration of submission made by the Ld. AR., I do not find any merit therein with regard to both the issues in hand. In respect the deduction u/s 801A, the A.O. has not appreciated the provision of Sec 801A(5) of the Act in proper prospective. The Hon'ble Special Bench has deliberated at length in the case referred above and categorically held that the eligible business has to be considered on stand alone basis. Accordingly, profit of the eligible limit is to be determined after deduction of notional brought forward loses and deprecation of eligible unit even though they were set off in the earlier years. The assessee has not been able to p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .). Regarding foreign travel expenses, he submitted that in earlier years also, on similar facts, disallowance of 4% was made based on the ratio of export sales. Moreover, all the necessary details were filed before the Assessing Officer. Thus, the view taken by the Assessing Officer cannot be held to be erroneous. He submitted that the impugned order canceling the assessment on the aforesaid two issues is erroneous both in law and on facts. 7. On the other hand, the learned Departmental Representative relying heavily upon the order of the learned Commissioner submitted that the Tribunal, Hyderabad Bench, in Hyderabad Chemical Supplies Ltd. v/s ACIT, [2011] 137 TTJ 732 (Hyd.) has upheld the revision order under section 263 on similar grounds. He drew our attention to the relevant facts and findings given by the Tribunal. Further, reliance was also placed on the decision of Pidilite Industries v/s DCIT, [2011] 46 SOT 263 (Mum.) (URO) and drew our specific attention to Paras-4, 5 and 6 of the order wherein the Tribunal has considered the Special Bench decision in Goldmine Shares And Finance Pvt. Ltd. (supra) and also the decision of the Hon'ble Madras High Court in Velayudha Swamy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other provision of this Act, the profits and gains of an eligible business to which the provisions of sub-section (1) apply shall, for the purposes of determining the quantum of deduction under that sub-section for the assessment year immediately succeeding the initial assessment year or any subsequent assessment year, be computed as if such eligible business were the only source of income of the assessee during the previous year relevant to the initial assessment year and to every subsequent assessment year up to and including the assessment year for which the determination is to be made." 10. From a plain reading of the above, it can be gathered that it is a non- obstante clause which overrides the other provisions of the Act and it is for the purpose of determining the quantum of deduction under section 80IA, for the assessment year immediately succeeding the initial assessment year or any subsequent assessment year to be computed as if the eligible business is the only source of income. Thus, the fiction created is that the eligible business is the only source of income and the deduction would be allowed from the initial assessment year or any subsequent assessment year. It n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al assessment year alone are to be brought forward and no losses of earlier years which were already set off against the income of the assessee. Looking forward to a period of ten years from the initial assessment is contemplated. It does not allow the Revenue to look backward and find out if there is any loss of earlier years and bring forward notionally even though the same were set off against other income of the assessee and the set off against the current income of the eligible business. Once the set off is taken place in earlier year against the other income of the assessee, the Revenue cannot rework the set off amount and bring it notionally. Fiction created in sub- section does not contemplates to bring set off amount notionally. Fiction is created only for the limited purpose and the same cannot be extended beyond the purpose for which it is created. 14. In the present cases, there is no dispute that losses incurred by the assessee were already set off and adjusted against the profits of the earlier years. During the relevant assessment year, the assessee exercised the option under s. 80-IA(2). In Tax Case Nos. 909 of 2009 as well as 940 of 2009, the assessment year was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e current year and, therefore, recomputation of income for the purpose of computing permissible deduction under s. 80-I for the new industrial undertaking was not required in the present case. Accordingly, this appeal fails and is hereby dismissed with no order as to costs." From reading of the above, the Rajasthan High Court held that it is not at all required that losses or other deductions which have already been set off against the income of the previous year should be reopened again for computation of current income under s. 80-I for the purpose of computing admissible deductions thereunder. We also agree with the same. We see no reason to take a different view." 12. This judgment has been further followed by the same High Court in CIT v/s Emerald Jewel Industry (P) Ltd. [2011] 53 DTR 262 (Mad.). From the above, ratio of the High Court, it is amply clear that sub-section (5) of section 80IA will come into operation only from the initial assessment year or any subsequent assessment year. The option of choosing the initial assessment year is wholly upon the assessee in the post amendment period i.e., after 1st April 2000 by virtue of section 80IA(2). 13. Now coming to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 80IA. Thus, this decision also will not help the case of the Department. In assessee's case, as specifically stated in the foregoing paragraphs, the assessee's claim for initial assessment year i.e., assessment year 2008-09 and its claim for deduction under section 80IA made for the first time from assessment year 2008-09, has not been disputed. Thus, the aforesaid judgment relied upon by the learned Departmental Representative will not be applicable to the facts of the present case. 15. Moreover, the claim of deduction under section 80IA was based on possible legal view which has been allowed by the Assessing Officer, therefore, it cannot be held that the same is erroneous in so far as it is prejudicial to the interests of the Revenue. Merely because the Assessing Officer in the subsequent assessment year has followed Special Bench decision which admittedly was rendered with regard to the claim of deduction starting from the assessment year 1996-97 wherein there was no concept of assessee choosing his option of initial assessment year in view of the provisions prior to the amendment, it cannot be held that the assessee's claim of initial assessment year being assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X
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