9911796707
TMI Blog2013 (5) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... he said return of income, the assessee had filed audit report in Form-10CCB for claiming deduction under section 80IA with regard to wind mill undertaking. In the said report, the assessee had mentioned that the date of commencement and operation of the undertaking was 29th September 2006, and the initial assessment year from which the deduction has been claimed is assessment year 2008-09. The deduction under section 80IA was claimed at Rs. 7,16,904. Such a return of income was subjected to scrutiny under section 143(3) and the assessment was completed at an income of Rs. 3,80,34,580, vide order dated the December 2010, after making disallowance under the head "Foreign Travel Expenses" for a sum of Rs. 1,31,075, disallowance under section 14A at Rs. 59,896 and excess payment of embroidery charges of Rs. 63,070. The deduction claimed under section 80IA as per audit report for a sum of Rs. 7,60,904 was allowed. 3. Thereafter a show cause notice under section 263 was issued by the learned Commissioner of Income-tax on 3rd November 2011 on the ground that the assessment order is erroneous inasmuch as it is prejudicial to the interests of the Revenue mainly on three grounds; firstly, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer is a possible view under the law and, therefore, in view of the various case laws wherein it has been upheld that where the Assessing Officer has taken one possible view, then the assessment cannot be held as erroneous inasmuch as it is prejudicial to the interest of Revenue under section 263. Further, after the amendment in section 80IA by the Finance Act, 1999, an assessee has an option for selecting the year of claiming relief under section 80IA and the assessee has chosen assessment year 2008-09 as the initial assessment year, therefore, there is no question of setting-off notionally carried forward unabsorbed depreciation or loss against the profits of the eligible business unit. The Special Bench decision will not be applicable as the same pertains to the assessment year prior to the amendment. With regard to foreign travel expenses, it was submitted that all the details of foreign traveling expenses and ratio of claim of such expenses with that of export sales were duly produced before the Assessing Officer and also for the earlier years for comparison. Based on the earlier years' parameter, the Assessing Officer has disallowed 4%. Thus, a view has been ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntention, he relied upon the judgment of Hon'ble Madras High Court in Velayudhaswamy Spinning Mills Pvt. Ltd. v/s ACIT, [2012] 340 ITR 477 (Mad.) and CIT v/s Emerala Jewel Industry Pvt. Ltd., [2011] 53 DTR 262 (Mad.). Regarding Special Bench decision of the Tribunal in Goldmine Shares And Finance Pvt. Ltd. (supra), the learned Counsel submitted that this decision will not be applicable, as the same was relevant for the provisions applicable in the assessment years 1996-97 and 1997-98, which was prior to the amendment brought in the statute by the Finance Act, 1999. He further submitted that the assessee's claim for deduction under section 80IA and Assessing Officer's decision to allow such a claim was based on various decisions in favour of the assessee at that time and if the same has been allowed by taking one possible view, the same cannot be held to be erroneous and prejudicial to the interests of the Revenue within the meaning of section 263. In support of this contention, he relied upon the judgment of Hon'ble Supreme Court in Malabar Industries Co. Ltd. v/s CIT, [2000] 243 ITR 83 (SC), Grasim Industries Ltd. v/s CIT, [2010] 321 ITR 92 (Bom.) and Ranka Jewellers v/s ACIT [201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Special Bench decision of the Tribunal, Ahmedabad Bench in Goldmine Shares And Finance Pvt. Ltd. (supra) does not support such a claim. 9. Section 80IA, which has been substituted w.e.f. 1st April 2000, provides that where the gross total income of an assessee includes any profits and gains derived by an undertaking from any eligible business referred to in sub-section 4, there shall, in accordance with and subject to the provisions of this section, be allowed in computing the total income, the deduction of an amount equal to 100% of the profits and gains derived from such business for 10 consecutive years. Substituted sub-section (2) of section 80IA, provides that an option is given to the assessee for claiming any 10 consecutive assessment year out of 15 years beginning from the year in which the undertaking or the enterprise develops and begin to operate. The 15 years is the outer limit within which the assessee can choose the period of claiming the deduction. Sub-section (5) is a non-obstante clause which deals with the quantum of deduction for an eligible business. The relevant provisions of sub-section (5) of section 80IA, reads as under:- "(5) Notwithstanding anything co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned. This is the true import of section 80IA(5). 11. In the decision of Goldmine Shares and Finance Pvt. Ltd. (supra), decided by the Special Bench of the Tribunal, the claim of deduction by the assessee had started from assessment year 1996-97 onwards and the assessee had claimed deduction under section 80IA starting from the first year itself i.e., assessment year 1996-97. Thus, the Special Bench was dealing with the operation of section 80IA(5) where the assessee had first claimed the deduction in the assessment year 1996-97 and for subsequent assessment years. This aspect of the matter has been very well elaborated by the Madras High Court in Velayudhaswamy Spinning Mills Pvt. Ltd. (supra) after considering the Special Bench decision of the Tribunal in Goldmine Shares And Finance Pvt. Ltd. (supra) and relevant provisions of the Act i.e., pre amendment and post amendment have come to the same conclusion:- "From reading of the above, it is clear that the eligible business were the only source of income, during the previous year relevant to initial assessment year and every subsequent assessment years. When the assessee exercises the option, the only losses of the years beginnin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly arise and on the finding of fact noticed by the CIT(A), which has not been disturbed by the Tribunal and challenged before us, there was no error much less any error apparent on the face of the record which could be rectified. That question would have been germane only if there would have been carry forward of unabsorbed depreciation and unabsorbed development rebate or any other unabsorbed losses of the previous year arising out of the priority industry and whether it was required to be set off against the income of the current year. 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. In view thereof, we are of the opinion that the Tribunal has not erred in holding that there was no rectification possible under s. 80-I in the present case, albeit, for reasons somewhat different from those which prevailed with the Tribunal. There being no carry forward of allowable deductions under the head depreciation or development rebate which needed to be absorbed against the inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance with the law. However, this is not the case in the instant case because the loss pertained to prior to initial assessment year which have been set-off against the profits of non-eligible units. The beginning of the initial assessment year as adopted by the assessee is assessment year 2008-09 only and, therefore, the loss of assessment year 2007-08 cannot be notionally carried forward within the meaning of section 80IA(5). Thus, the reliance placed by the learned Departmental Representative on the decision of Pidilite Industries (supra), will not be applicable in the present case. 14. The other decision heavily relied upon by the learned Departmental Representative in Hyderabad Chemical Supplies Ltd. (supra) will also not apply to the facts of the present case, as in that case, the wind mill started its operation on 31st March 1999 and the first year of operation was assessment year 1999-2000. Thus, in the assessment year 1999-2000, the definition of "initial assessment year" was already there in the Act and there was no provision through which the assessee could have chosen its initial assessment year. This provision was brought in statute w.e.f. 1st April 2000, by virtue of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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