TMI Blog2015 (1) TMI 830X X X X Extracts X X X X X X X X Extracts X X X X ..... ur of the assessee. - Tax Case (Appeal) Nos.408, 409 of 2012, 17, 533, 534, 535, 593, 594, 965,of 2013, 108, 121, 197, 221, 264, 265, 207, 308, 699 to 713, 748, 868, 923, 1000 and 1015 of 2014, T.C.(A)No.408 of 2012: - - - Dated:- 12-1-2015 - R. Sudhakar And R. Karuppiah,JJ. For the Appellant : Mr. T. R. Senthil Kumar For the Respondent : Mr. R. Senniappan JUDGMENT (Delivered by R. Sudhakar,J.) In all the above Tax Case (Appeals), the issue raised by the Revenue is identical. Hence, all the above appeals are taken up together and common order is passed. 2. The common facts, which are not in dispute, in all the above Tax Case (Appeals) are that the assessees, who are eligible business undertaking, are engaged in the business of generation of power. They claimed deduction in respect of profits derived from the wind mill operation (WTG) under Section 80IA of the Income Tax Act falling under Chapter VIA of the Income Tax Act. The Assessing Officer disallowed the assessees' claim under Section 80IA of the Income Tax Act primarily on the ground that carried forward loss of earlier years should be set off before computing the profit for the current year. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st the income of the previous year, it should not be reopened again for the purpose of computation of current year income under Section 80I or 80IA of the Income Tax Act and the assessee should not be denied the admissible deduction under Section 80IA of the Income Tax Act. 8. For better understanding of the decision, we extract the relevant portion of the decision of this Court as such: From a reading of the above, it is clear that the benefit is given to the profits and gains derived from the business of the hotel or the business of repairs to ocean-going vessels or other powered craft. The deduction is allowed to the extent of 20 per cent. from the profits and gains of the assessee. Sub-section (5) gives deduction for the period of seven assessment years immediately succeeding the initial assessment year. Sub-section (6) deals with computing the deduction under sub-section (1) and it starts with non obstante clause and also it is a deeming provision. The fiction created by the undertaking was the only source of income during the previous year initially and subsequent assessment years. Sub-section (6) was the subject-matter before this court in the above-mentioned unreport ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich is included in the gross total income. Section 80AB defines gross total income which means the total income has to be computed in accordance with the Act before making deduction under this Chapter. Heading B deals with deductions in respect of certain payments which consists of sections 80C to 80GGC. Heading C deals with deductions in respect of certain incomes , which consists of sections 80H to 80TT. The last heading D deals with other deductions which consists of sections 80U to 80V. Heading C is relevant for considering the issue in these appeals. The relevant provisions that are to be considered are sections 80-I, 80-IA and 80-IB. In the case of Liberty India v. CIT [2009] 317 ITR 218 (SC) ; [2009] 225 CTR (SC) 233 ; [2009] 28 DTR (SC) 73, the apex court considered the scope of sections 80-I, 80-IA and also section 80-IB of the Act, wherein, it has been held that Chapter VI-A provides for incentives in the form of tax deductions essentially belong to the category of profit-linked incentives . Therefore, when section 80-IA/80-IB refers to profits derived from eligible business, it is not the ownership of that business which attracts the incentives. Further, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operating and maintaining the infrastructure facility on or after the 1st April, 1995. (5) Notwithstanding anything contained in any 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. From a reading of sub-section (1), it is clear that it provides that where the gross total income of an assessee includes any profits and gains derived by an undertaking or an enterprise from any business referred to in subsection (4), i.e., referred to as the eligible business, there shall, in accordance with and subject to the provisions of the section, be allowed, in computing the total income of the assessee, a deduction of an amount equal to 100 per cent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Revenue cannot rework the set off amount and bring it notionally. A fiction created in sub-section does not contemplates to bring set off amount notionally. The fiction is created only for the limited purpose and the same cannot be extended beyond the purpose for which it is created. 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 section 80-IA(2). In Tax Case Nos. 909 of 2009 as well as 940 of 2009, the assessment year was 2005-06 and in Tax Case No. 918 of 2008 the assessment year was 2004-05. During the relevant period, there were no unabsorbed depreciation or loss of the eligible undertakings and the same were already absorbed in the earlier years. There is a positive profit during the year. The unreported judgment of this court cited supra considered the scope of sub-section (6) of section 80-I, which is the corresponding provision of sub-section (5) of section 80-IA. Both are similarly worded and, therefore, we agree entirely with the Division Bench judgment of this court cited supra. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r should be reopened again for computation of current income under section 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. The standing counsel appearing for the Revenue is unable to bring to our notice any relevant material or any compelling reason or any contra judgment of other courts to take a different view. He only relied heavily on the Memorandum explaining the provisions in the Finance (No. 2) Bill, 1980, [1980] 123 ITR (St.) 154 to support this case and the same reads as follows : Clause 30(iii). In computing the quantum of 'tax holiday' profits in all cases, taxable income derived from the new industrial units, etc., will be determined as if such units were an independent unit owned by a taxpayer who does not have any other source of income. In the result, the losses, depreciation and investment allowance of earlier years in respect of the new industrial undertaking, ship or approved hotel will be taken into account in determining the quantum of deduction admissible under the new section 80-I even though they may have been set off against the profits of the taxpayer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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