TMI Blog2015 (2) TMI 936X X X X Extracts X X X X X X X X Extracts X X X X ..... gainst consolidated order of the Commissioner of Income-tax (Appeals)-II Pune dated 25-10-2010 which, in turn, has arisen from orders dated 31-12-2008 and 24-11-2009 passed by the Assessing Officer, under section 143(3) of the Income-tax Act, 1961 (in short the Act), pertaining to the assessment years 2006-07 and 2007-08 respectively. 2. Since in both the appeals, the issue raised by the assessee is common, we may refer to the appeal for A.Y. 2006-07 to appreciate the facts and controversy in question. 3. Although, the assessee has raised multiple Grounds of Appeal but essentially the grievance is with regard to the deduction claimed u/s 80-IA of the Act amounting to ₹ 25,62,413/- on the profits derived from the business of windmill. 4. The assessee is an individual engaged in the business of power generation, construction and earthmoving. For the A.Y. 2006- 07, assessee filed a return of income declaring total income of ₹ 7,44,078/- which, inter alia, included a claim for deduction u/s 80-IA of the Act amounting to ₹ 25,62,413/- in relation to the profits earned from the activity of power generation in the windmill. The undertaking of the assessee gener ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the activity of windmill have to be reduced from the current year s profits of the windmill activity in order to compute the amount eligible for deduction u/s 80-IA of the Act, having regard to the provisions of section 80-IA(5) of the Act. Pertinently, it is not disputed that the losses of A.Y. 2002-03 and 2003-04 from windmill activity are otherwise lying absorbed against assessable incomes in the past years. As per the Revenue, section 80-IA(5) of the Act requires that the profits of the eligible units i.e. windmill are to be computed for the purposes of determining the quantum of deduction u/s 80-IA(1) of the Act, in a manner as if such eligible business was the only source of income of the assessee during the previous year relevant to the initial assessment year and to every subsequent assessment year thereof. As per the Revenue, initial assessment year in this case was 2002-03 being the year of set-up of the windmill. Therefore, the past losses starting from the A.Y. 2002-03 have to be set-off against the profits of this year in order to arrive at the deduction computable u/s 80-IA(1) of the Act for the year under consideration. On the other hand, the plea of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed depreciation for the A.Y. 2003-04 to the impugned A.Y. 2004-05 and denied the claim for deduction made by the assessee u/s. 80IA in respect of the profit earned by it in A.Y. 2004-05. The Ld. A.R. submitted that sub-section (2) of Section 80IA provides an option to the assessee to choose 10 consecutive A.Ys. out of 15 years for claiming the deduction. He submitted that the term initial year in sub-section (5) of 80IA is not defined and is used in contradiction to the words beginning from the year used in sub-section (2). He submitted that the assessee chose A.Y. 2004-05 as initial A.Y being the first year in which it claimed deduction u/s. 80IA and therefore, losses/depreciation beginning from A.Y. 2004-05 alone could only be brought forward and set off. Depreciation of the preceding A.Y. 2002-03 could not have been notionally brought forward and set off against profit for the A.Y. 2004- 05. The Ld. A.R. placed heavy reliance on the decision of Hon ble Madras High Court in the case of Velayudhaswamy Spinning Mills (P) Ltd Vs. ACIT (Supra). He submitted that the decision of Hon ble Madras High Court will prevail upon the decision of the Special Bench of the Tribunal in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Hyderabad Bench of the Tribunal in the case of Hyderabad Chemical Supplies Ltd. Vs. ACIT (Supra) has also decided an identical decision in favour of the Revenue following the decision of Special Bench of the Tribunal in the case of ACIT Vs. Goldman Shares Finance (P) Ltd. (Supra). He submitted that the Hyderabad Bench of the Tribunal while deciding the issue has also discussed the decision of Hon ble Madras High Court in the case of Velayudhaswamy Spinning Mills (P) Ltd Vs. ACIT (Supra). The Ld. D.R. submitted that even in the case of Liberty India Vs. CIT (Supra), the Hon ble Supreme Court has been pleased to explain the intention of Parliament and scope of deduction u/s. 80IA and 80IB of the Act. The Hon ble Supreme Court has been pleased to hold that such profits are to be computed as if such eligible business is the only source of income of the assessee. The devices adopted to reduce or inflate the profit of eligible business has got to be rejected in view of the overriding provisions of Sub-section (5) of Section 80IA of the Act. 13. Having been considered the above submissions, we find that the issue raised in Ground No. 1 as to what would be the init ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal Bombay High Court in the case of Commissioner of Central Excise Vs. Valson Dyeing, Bleaching and Printing Works (Supra) wherein the Hon ble Bombay High Court has been pleased to hold in a case of excise matter that Tribunal is bound by the decision of High Court , even of a different State, so long as there is no contrary decision of any other High Court. The Hon ble Bombay High Court has been pleased to hold further that the Tribunal had no option but to follow the judgment of the Madras High Court. An authority like an Income Tax Tribunal acting anywhere in the country has to respect the law laid down by the High Court, though of a different State, so long as there is no contrary decision of any other High Court on that question. We thus respectfully following the ratio laid down by the Hon ble jurisdictional High Court in the case of Commissioner of Central Excise Vs. Vakson Dyeing, Bleaching and Printing Works (Supra) hold that the Tribunal is bound by the decision of the Hon ble Madras High Court on an identical issue in the case of Velayudhaswamy Spinning Mills (P) Ltd Vs. ACIT (Supra). We thus respectfully following the decision taken by the Hon ble Madras High Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal in the case of Goldmine Shares and Finance (P) Ltd. (supra) which was to the contrary. In this context, the Tribunal came to the conclusion that when the assessee exercised option identifying ten consecutive years as contained in sub-section (2) of section 80-IA of the Act, only the losses of the year beginning from such initial assessment year are to be brought forward and set-off while applying the provisions of section 80-IA(5) of the Act and not the losses of earlier years which otherwise were set-off against other income of the assessee. 8. At the time of hearing, the learned DR has not brought to our notice any decision of a High Court contrary to that of the Hon ble Madras High Court in the case of Velaydhaswamy Spinning Mills (P) Ltd. (supra) on the issue in question. Therefore, we find that the controversy before us is no longer res integra and is in fact covered in favour of the assessee by the decision of Pune Bench of the Tribunal in the case of Serum International Ld. (supra) which has been decided following the decision of the Hon ble Madras High Court in the case of Velaydhaswamy Spinning Mills (P) Ltd. (supra). 9. Before parting we may also refer to ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
