TMI Blog2015 (2) TMI 1028X X X X Extracts X X X X X X X X Extracts X X X X ..... ears, which have already been set-off against the other income of the assessee. Accordingly, we hold that the assessee is entitled to claim of deduction under section 80-IA(5) of the Act. - Decided against revenue. - ITA No.2227/PN/2013 - - - Dated:- 31-10-2014 - SHRI G.S. PANNU AND MS. SUSHMA CHOWLA, JJ. For the Appellant : Mr. P. S. Naik For the Respondent : Mr. (Dr.) Prayag Jha ORDER Ms. Sushma Chowla (Judicial Member).- This appeal filed by the Revenue is against the order of the Commissioner of Income-tax (Appeals)-III, Pune dated October 9, 2013 relating to the assessment year 2008-09 against order passed under section 143(3) of the Income-tax Act, 1961 (in short the Act ). 2. The Revenue has raised the following grounds of appeal : 1. The order of the Commissioner of Income-tax (Appeals) is contrary to law and to the facts and circumstances of the case. 2. Whether, on the facts and circumstances and in law, the learned Commissioner of Income-tax (Appeals) is correct in allowing the deduction under section 80-IA of the Act, as claimed by the assessee ignoring the provisions of section 80-IA(5) of the Act, instead of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. The assessee had claimed deduction under section 80-IA of the Act at ₹ 14,63,932 as per the details tabulated at page 7 of the assessment order. The Assessing Officer noted that the assessee had taken some wrong figures and further there was a totalling error and the deduction under section 80-IA of the Act was reworked at ₹ 14,68,892. The next point raised by the Assessing Officer was that while computing the claim of deduction under section 80-IA of the Act, the notional carry forward of loss on account of unabsorbed depreciation had to be considered in view of the provisions of section 80-IA(5) of the Act. The assessee had tabulated the details of unabsorbed depreciation which was furnished in the computation of income accompanying the return of income. The Assessing Officer was of the view that the income of the two business carried on by the assessee should have been computed separately treating both the units as individual unit and thereafter any deduction under section 80-IA of the Act, was to be allowed if there were any profits and gains of the eligible unit. Considering the power generation unit as a separate unit, the notional loss of the assessee-compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear for the purpose of computing the deduction in respect of income from the eligible business. The Commissioner of Income-tax (Appeals) relied upon various decisions of the Tribunal and also the ratio laid down by the hon'ble Supreme Court in the case of Liberty India v. CIT [2009] 317 ITR 218 (SC) and observed that the apex court had held that the eligible profits were to be computed as if the eligible business was the only source of income of the assessee. Thereafter reference was made to on the ratio laid down by the Pune Bench of the Tribunal in the case of Serum International Ltd. v. ITO which, in turn, had followed the decision of the hon'ble Madras High Court in the case of Velayudhaswamy Spinning Mills P. Ltd. v. Asst. CIT [2012] 340 ITR 477 (Mad) and held that where the assessee exercises the option, only the losses of the years beginning from the initial assessment year are to be brought forward and not the losses of the earlier year, which have been already set-off against the other income of the assessee. However, the Commissioner of Income-tax (Appeals) placed reliance on the ratio laid down by the Mumbai Bench of the Tribunal in the case of Pidilite Industrie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has submitted that the Pune Bench of the Tribunal in the case of Serum Interna tional Ltd. v. Addl. CIT Range 6, Pune in I. T. A. Nos. 290 to 292/PN/ 2010 for the assessment years 2004-05 to 2006-07 vide order dated September 28, 2011 has considered an identical controversy and after following the decision of the hon'ble Madras High Court in the case of Velayudhaswamy Spinning Mills P. Ltd. v. Asst. CIT [2012] 340 ITR 477 (Mad) decided the issue in favour of the assessee. Following discussion in the order of the Tribunal is relevant in this regard : '11. The issue raised before the Bench is as to whether in view of the provisions of section 80-IA(5) of the Income-tax Act 1961, the profit from the eligible business for the purpose of deduction under section 80-IA of the Act has to be computed after deduction of the notional brought forward losses and depreciation of eligible business even though they have been allowed set off against other non-eligible business income in earlier years. The submission of the learned authorised representative remained that on the windmills set up in the previous year relevant to the assessment year 2002-03, the asses se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thorised representative pointed out that the decision of the hon'ble Madras High Court in the case of Velayudhaswamy Spinning Mills P. Ltd. v. Asst. CIT [2012] 340 ITR 477 (Mad) was not cited before the Pune Bench in the case of Prima Paper Engg (P) Ltd. v. ITO. The learned authorised representative has also cited the decision of the Pune Bench of the Tribunal in the case of Asst. CIT v. Aurang abad Holiday Resorts P. Ltd. [2008] 305 ITR (AT) 294 (Pune) holding that even a decision of non-jurisdictional High Court is a binding precedent for the Tribunal until a contrary decision is given by any other competent High Court. Similar view has been expressed by the hon'ble Bombay High Court in the case of CCE v. Valson Dyeing, Bleaching and Printing Works. 12. The contention of the learned Departmental representative on the other hand remained that deduction under sections 80-I and 80-IA covered, inter alia, industrial undertakings. The power generation units found a specific mention for the first time with effect from April 1, 1993. In all the years from April 1, 1981 to March 31, 2000 in both under sections 80-I and 80-IA, the term initial assessment year was def ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment year for the purposes of section 80-IA(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. v. Asst. CIT. In that case after discussing the issue in detail, the Tribunal has come to the conclusion that the initial assessment year for the purpose of claiming deduction under section 80-IA was the first year in which the assessee claimed the deduction under section 80-IA(1) after exercising his option as per the provisions of section 80-IA(2) of the Act. It was held that the learned Commissioner of Income-tax (Appeals) has erred in holding that the initial assessment year for the purposes of section 80-IA(2) read with section 80-IA(5) was the year in which the assessee started generating electricity from the windmill activity. We also find that the issue raised in ground No. 2 regarding the eligibility of the assessee to claim deduction under section 80-IA undiminished by unabsorbed losses and depreciation also set off in earlier years against the other income, is fully covered by the decision of the hon'ble Madras High Court in the case of Velayudhaswamy Spinning Mills P. Ltd. v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on'ble Madras High Court on an iden tical issue in the case of Velayudhaswamy Spinning Mills P. Ltd. v. Asst. CIT [2012] 340 ITR 477 (Mad). We thus respectfully following the decision taken by the hon'ble Madras High Court in that case on an identical issue under almost similar facts, hold that when the assessee exercising the option, only the losses of the year beginning from the initial assessment year 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 Assessing Officer to allow the claimed deduction under section 80-IA 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 the Pune Bench of the Tribunal in the case of Prima Paper Engineering P. Ltd. v. ITO cited by the learned Departmental r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ental representative 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 Velayudhas wamy Spinning Mills P. Ltd. v. Asst. CIT [2012] 340 ITR 477 (Mad) 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 Ltd. which has been decided following the decision of the hon'ble Madras High Court in the case of Velayud haswamy Spinning Mills P. Ltd. v. Asst. CIT [2012] 340 ITR 477 (Mad). 10. The facts and circumstances of the present case are identical to the facts before the Tribunal in the case of Shri Sangram Patil v. ITO. The assessee during the year under consideration had claimed deduction under section 80-IA(5) of the Act. The Assessing Officer had tabulated the notional losses from year to year at page 9 of the assessment order. However, the said losses were being adjusted against the other income arising to the assessee from time to time. Where the losses have already been adjusted against assessable income in the preceding ye ..... X X X X Extracts X X X X X X X X Extracts X X X X
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