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TMI Blog2011 (1) TMI 1375X X X X Extracts X X X X X X X X Extracts X X X X ..... ndustrial undertaking which are already absorbed against other income need not be notionally brought forward against the profit of the current year while allowing the deduction under s. 80-IA. The assessees also raised ground in ITA Nos. 40 to 44/Hyd/2006 that the CIT(A) erred in cancelling the assessment when the original assessment was completed under s. 143(3) of the Act and all the relevant informations at the point of s. 80-IA are furnished before the AO. As such, it is not open to the CIT to invoke the provisions of s. 263 of the IT Act. 4. The assessee herein is a company which is carrying on its business in the manufacture and trading of agro-chemicals, generation, distribution and sale of power. In the asst. yrs. 2002-03 and 2005-06, assessment was framed under s. 143(3) of the Act wherein the claim of the assessee under s. 80-IA was denied on the reason that in view of the specific provisions of s. 80-IA(5) the profit from the eligible business for the purpose of determination of the quantum of deduction under s. 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 allo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee company had losses for the asst. yrs. 1999-2000 and 2000-01 on this unit. It has shown a turnover of Rs. 12,85,783 towards this windmill and claimed expenses at Rs. 1,18,483 and arrived the figure of Rs. 11,67,300. The assessee set off the brought forward losses against the income of this windmill as per the provisions of s. 80-IA(5). 8. Further, he submitted that the real intention behind sub-s. (5) s. 80-IA is to ensure that the industrial undertaking which is eligible for deduction has to be treated as separate industrial undertaking for initial assessment year and subsequent assessment year to arrive at right quantum of profits that are eligible for deduction i.e., that there is no overlapping of any other income of the undertaking or other undertakings and even if there is any reorganization of that unit subsequent to the claim, the profits of the undertaking should be arrived treating it as a separate unit. Sec. 80-IA(5) has to be read with s. 80-IA(8), (9) and (10). The other provisions which give detailed instructions as to the manner of computation no where suggest any adjustment for past losses already absorbed. 9. He submitted that s. 80-IA(5) has to be read ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s shall be when the earlier years' losses already absorbed by the income from the other unit of the assessee company. Finally, he drew our attention to the following judgments : 1.CIT v. Mewar Oil & General Mills Ltd. (supra) wherein it was held : "That the question of rectification would have been germane only if there had 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. In view of the finding that there was no carry forward of allowable deduction under the head depreciation or development rebate which needed to be absorbed against the income of the current asst. yr. 1984-85, recomputation of income for the purpose of computing permissible deduction under s. 80-I for the new industrial undertaking was not required. There was no error apparent on the face of the record which could be rectified." 2.Mohan Breweries & Distilleries Ltd. v. Asstt. CIT (2008) 114 TTJ (Chennai) 532 : (2008) 3 DTR (Chennai)(Trib) 477 : (2009) 116 ITD 241 (Chennai) wherein it was held that : "Assessee hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is for initial assessment year and every subsequent assessment year upto and including the assessment year for which the determination is to be made. There was no merit in the contention of the assessee that the fiction was for that year alone or that the concept of initial year was dispensed with in the new provision in view of s. 80-IA(1) of the old provision and s. 80-IA(2)(iv) (b) sub-ss. (5), (6) and (7). Instead of defining the concepts separately by cl. (b) to sub-s. (12) of the pre-amended s. 80-IA, the sub-s. (2) itself has contained the provisions of the Explanation by providing the period of deduction and the year from which it is to start. Even otherwise the plain reading of the work 'initial year' means the year in which the manufacture or production or other activity begins." 15. We have heard both the parties and perused the materials available on record. In our opinion, the issue relating to computation of s. 80-IA deduction that it has to be computed after deduction of the notional brought forward losses and depreciation of business even though they have been allowed set off against other income in earlier years has been dealt by the Special Bench in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g invoking of provisions under s. 263, the argument of the assessee's counsel is that the assessments for the asst. yrs. 2001-02, 2002-03 and 2003-04 have been completed under s. 143(3) of the IT Act and the assessees have furnished all the information as required for the purpose of assessment and the CIT cannot invoke the provision under s. 263 for the purpose of making roving enquiry and the order of the AO is not erroneous as he has followed one possible view on the issue. We have carefully gone through the argument of the assessee's counsel and also perused the material on record. In our opinion, prejudicial to the interest of Revenue appearing s. 263 is conjunction with the expression 'erroneous' and that every loss of revenue as a consequence of an order of the AO cannot prejudice to the interest of Revenue. In case, where the AO adopts one of the courses permissible in law where two views are plausible the CIT cannot exercise his power under s. 263 to defer with the AO even if there has been a loss of revenue. On the other hand, when the AO takes a view which is patently unsustainable, the CIT can exercise his powers where the loss of revenue results as a consequence of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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