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TMI Blog2016 (5) TMI 256X X X X Extracts X X X X X X X X Extracts X X X X ..... red losses for the assessment years 2004-05 to 2006-07. These losses were set off by the assessee-company against the income derived from the business of cable jointing, etc., which does not qualify for deduction under section 80-IA of the Act. The assessee also earned and declared income from the business of wind power project for the assessment years 2007-08 to 2012-13. Referring to the provisions of section 80-IA(5) of the Act, the Assessing Officer observed that the brought forward losses of the eligible business need not to be set off against the income from the eligible business even though if they were set off against the non-eligible business in the respective years. The Assessing Officer further noted that after setting off of the losses for the assessment years 2004-05 to 2006-07 against the income for the assessment years 2007-08 to 2012-13, there were still brought forward losses of Rs. 390.36 lakhs, which were to be set off against the income from the windmill projects. This exercise renders the income from the eligible business at nil and, therefore, exemption claimed by the assessee at Rs. 95,00,547 was not allowable. 3. Before the learned Commissioner of Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of the Assessing Officer submitting that by not considering the year of start of manufacturing as the initial year, the assessee gets an undue benefit in the form of claiming excess deduction under section 80-IA of the Act at its own option. 7. The learned counsel for the assessee submitted before us that similar issue was involved in the earlier assessment year, i.e., the assessment year 2010-11, whereby the Commissioner of Income-tax (Appeals) had deleted the addition so made by the Assessing Officer, against which the Department preferred an appeal before the Income-tax Appellate Tribunal and the Income-tax Appellate Tribunal, Chandigarh Bench, in ITA No. 1062/ Chd/2014 (Deputy CIT v. Yamuna Power and Infrastructure Ltd. ITA No. 1062/Chd/2014, dated February 10, 2016) has decided the issue in favour of the assessee. His contention was that since the Commissioner of Income- tax (Appeals) has also relied on his order for the assessment year 2010-11, the claim of the assessee in this year may also be allowed. Further a Circular of CBDT No. 1 of 2016, dated February 15, 2016 ([2016] 382 ITR (St.) 16 ), was also brought to our notice by the learned counsel for the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the enterprise begins operating and maintaining the infrastructure facility. Under section 80-IB and also under section 80-IC, section 80-ID and section 80-IE, the first year in which the production is started is taken as initial previous year whereas after the amendment in the provisions of section 80-IA with effect from April 1, 2000, the initial assessment year is at the option of the assessee. It may be the first year of the commencement of activity or a subsequent year as selected by the assessee for the purpose of claiming deduction under section 80-IA of the Act. In the appellant's case, the first year of commencement of activity was the assessment year 2004-05 but as section 80-IA(2) permits the appellant has opted the assessment year 2008-09 as the initial assessment year for availing of deduction for 10 consecutive assessment years starting from the assessment year 2008-09. 4.11 Now, coming to the computation of deduction, the applicable section is 80-IA(5) which provides deduction for the assessment year immediately succeeding the initial assessment year or any subsequent assessment year on the profits and gains from the eligible business as if such eligible busi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld, from a reading of sub- section (1) section 80-IA, 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 sub-section (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. of the profits and gains derived from such business for ten consecutive assessment years. Deduction is given to eligible business and the same is defined in sub- section(4). Sub-section (2) provides option to the assessee to choose 10 consecutive assessment years out of 15 years. Option has to be exercised. If it is not exercised, the assessee will not be getting the benefit. Fifteen years is outer limit and the same is beginning from the year in which the undertaking or the enterprise develops and begins to operate any infrastructure activity, etc. Sub-section (5) deals with quantum of deduction for an eligible business. The words 'initial assessment year' are used in sub-section (5) and the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and depreciation which is already set off against the income of the assessee from other source and compute the profit under section 80-IA. Therefore, the approach of the Tribunal is in accordance with law. The assessing authority and the Commissioner committed a serious error in setting off the profit earned by the assessee under section 80-IA against the losses and depreciation of the eligible business which is already set off from other source before such a claim is put forth. Thus, there is no error committed by the Tribunal in setting aside the order passed by the assessing authority as well as the lower appellate authority. The substantial question of law is answered in favour of the assessee and against the Revenue.' 10. This view has also been upheld by the Mumbai Bench of the Tribunal in the case of Shevie Exports (supra), whereby all the judgments relied on by the assessee as well as the Revenue have been considered and the Bench has given findings at paragraphs 9 to 12, which reads as under : '9. Section 80-IA, which has been substituted with effect from April 1, 2000, provides that where the gross total income of an assessee includes any profits and gains der ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he definition of 'initial assessment year' has been specifically taken away. Now, when the assessee exercises the option of choosing the initial assessment year as culled out in sub-section (2) of section 80-IA from which it chooses its 10 years of deduction out of 15 years, then only the losses of the years starting from the initial assessment year alone are to be brought forward as stipulated in section 80-IA(5). The loss prior to the initial assessment year which has already been set off cannot be brought forward and adjusted into the period of ten years from the initial assessment year as contemplated or chosen by the assessee. It is only when the loss have been incurred from the initial assessment year, then the assessee has to adjust loss in the subsequent assessment years and it has to be computed as if eligible business is the only source of income and then only deduction under section 80-IA can be determined. This is the true import of section 80-IA(5). 11. In the decision of Asst. CIT v. Goldmine Shares and Finance Pvt. Ltd. [2008] 302 ITR (AT) 208 (Ahd) [SB], decided by the Special Bench of the Tribunal, the claim of deduction by the assessee had started from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss 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 the case of CIT v. Mewar Oil and General Mills Ltd. (No. 1) [2004] 271 ITR 311 (Raj) ; [2004] 186 CTR (Raj) 141, the Rajasthan High Court also considered the scope of section 80-I and held as follows (page 314) : "Having considered the rival contentions which follow on the line noticed above, we are of the opinion that on finding the fact that there was no carry forward losses of 1983-84, which could be set off against the income of the current assessment year 1984-85, the recomputation of income from the new industrial undertaking by setting off the carry forward of unabsorbed depreciation or depreciation allowance from previous year did not simply arise and on the finding of fact noticed by the Commissioner of Income-tax (Appeals), which has not been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has also been relied on by the Mumbai Bench of the Tribunal and in the background that no judgment of the hon'ble jurisdictional High Court has been cited before us, we hold that choosing of the initial assessment year for claiming deduction under section 80-IA of the Act in a block of ten years out of fifteen years is with the assessee, i.e., it is the option of the assessee to choose the initial assessment year for claiming deduction under section 80-IA of the Act. Further, the loss claimed by the assessee in respect of eligible business is to be set off against the income of the assessee from other ineligible business as in respect of the assessment years and there is no need to notion ally carry forward these losses up to the initial assessment year and write off the same out of the profits of eligible business. 12. The appeal of the Revenue in ITA No. 1062/Chd/2014 is dismissed." 9. In view of the above, since no distinguishing facts were brought to our notice, respectfully following the order of the co-ordinate Bench, we dismiss the grounds of appeal raised by the Revenue. 10. In the result, the appeal of the Revenue is dismissed. Order pronounced in the open court o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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