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The Commissioner of Income Tax, Coimbatore Versus M/s Best Corporation Ltd.

2016 (4) TMI 221 - MADRAS HIGH COURT

Entitled to deduction under Section 80IA - Held that:- It is abundantly clear from Sub-Section (2) that an assessee who is eligible to claim deduction u/s 80IA has the option to choose the initial/first year from which it may desire the claim of deduction for ten consecutive years, out of a slab of fifteen (or twenty) years, as prescribed under that Sub-Section. It is hereby clarified that once such initial assessment year has been opted for by the assessee, he shall be entitled to claim deducti .....

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ntinuity. - The Assessing Officers are, therefore, directed to allow deduction u/s 801A in accordance with this clarification and after being satisfied that all the prescribed conditions applicable in a particular case are duly satisfied. - TCA. No. 167 of 2016, CMP. No. 2523 of 2016 - Dated:- 23-3-2016 - V. Ramasubramanian And M. Duraiswamy, JJ. For the Appellant : Mr. T R Senthilkumar JUDGMENT The Revenue has come up with the above appeal raising the following substantial questions of law .....

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ding appeal before the Supreme Court in SLP.Civil No.1136 of 2011 ? (2) Whether under the facts and circumstances of the case, the Income Tax Appellate Tribunal was correct in holding that the initial assessment year in Section 80IA(5) would only mean the year of claim of deduction under Section 80IA and not the year of commencement of eligible business ? and (3) Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee has the option to choos .....

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es has issued Circular No.1/ 2016 dated 15.2.2016. It will be useful to extract the circular in entirety, which is as follows : "Circular No. 1 /2016 Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes North Block, New Delhi, the 15th February, 2016 Subject: Clarification of the term 'initial assessment year' in Section 80IA(5) of the Income Tax Act, 1961 Section 801A of the Income-tax Act, 1961 ('Act'), as substituted by Finance Act, .....

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from the year in which the undertaking commences operation, begins development or starts providing services etc. as stipulated therein. Sub-Section (5) of Section 801A further provides as under : "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 succeedin .....

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ent year'. It has been represented that some Assessing Officers are interpreting the term 'initial assessment year' as the year in which the eligible business/manufacturing activity had commenced and are considering such first year of commencement/operation etc. itself as the first year for granting deduction, ignoring the clear mandate provided under Sub-Section (2) which allows a choice to the assessee for deciding the year from which it desires to claim deduction out of the applic .....

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