TMI Blog2016 (5) TMI 320X X X X Extracts X X X X X X X X Extracts X X X X ..... s appeal filed by the assessee is directed against the order of CIT(A), Visakhapatnam dated 15.11.2013 and it pertains to the assessment year 2009-10. 2. The brief facts of the case are that the assessee is a company which is engaged in the business of aqua culture, export of frozen shrimp and also engaged in the activity of generation of wind power. The assessee has filed its return of income for the assessment year 2009-10 on 26.9.2009 declaring a total income of ₹ 12,73,89,990/-. The case has been selected for scrutiny under CASS. Accordingly, notice u/s 143(2) 142(1) of the Income Tax Act, 1961 (hereinafter called as 'the Act') were issued. In response to notice, the authorized representative of the assessee appeared from time to time and furnished the books of accounts and other relevant information called for. During the course of assessment proceedings, the A.O. noticed that the assessee has claimed deduction u/s 80IA of the Act, towards profits from the activity of generation of power. The A.O. further noticed that that the assessee has commenced the generation of power from the financial year 2004-05, but the deduction u/s 80IA of the Act has been claime ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years. 4. Aggrieved by the assessment order, the assessee preferred an appeal before the CIT(A). Before the CIT(A), the assessee reiterated the submissions made before the A.O. The assessee further submitted that sub section (2) of section 80IA of the Act makes it clear that the deductions specified in sub section (1) of section 80IA of the Act, may at the option of the assessee be claimed for any 10 consecutive assessment years out of 15 years, beginning from the year in which the undertaking or the enterprise commenced its eligible business. The assessee further submitted that it is the option of the assessee to claim from the beginning of the assessment year or subsequent assessment year. However, the claim should be restricted to 10 consecutive assessment years within the block of 15 years allowed under the sub section (2) of the Act. The assessee further submitted that the A.O. has interpreted the initial assessment year referred in sub section (2) of section 80IA of the Act, by holding that the initial assessment year would mean the year in which the eligible business was commenced. The assessee further stated that the Hon ble Madras High Court in the case of Velayudhaswa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year. Therefore, the deduction claimed by the assessee from the assessment year 2009-10 is in accordance with law and also supported by the judgement of Hon ble Madras High Court in the case of Velayudhaswamy Spinning Mills Pvt. Ltd. Vs. ACIT (2012) 340 ITR 477. The A.R. further submitted that the CBDT has recently issued a circular, clarifying the initial assessment year provided in section 80IA of the Act and as per the circular issued by the CBDT vide circular no.1 of 2016 dated 15.2.2016, initial assessment year would mean the first year opted for by the assessee for claiming deduction u/s 80IA of the Act. The A.R. further submitted that the Hon ble High Court of Madras, in the case of CIT Vs. GRT Jewellers India Pvt. Ltd., in TCA No.176 of 2016 has considered the circular issued by the CBDT and after considering the circular, held that the initial assessment year would mean the year in which the assessee has first claimed deduction u/s 80IA of the Act. The Ld. D.R. on the other hand, strongly supported the order of CIT(A). 7. We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. The A.O. d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urce of income of the assessee during the previous year relevant to the initial assessment year. The A.O. by taking a clue from sub section (5) of section 80IA of the Act, was of the opinion that the assessment year would mean the year in which the assessee begins its eligible business. Admittedly, the Act does not define initial assessment year u/s 80IA of the Act. The A.O. referred sub section (5) of section 80IA of the Act and held that because of non obstante clause used in section 80IA(5) of the Act, strict interpretation should be given to the words used in the section to mean and understood as if the words are intended to be used. Accordingly, the words as if such eligible business were the only source of income of the assessee could lead to an interpretation of the initial assessment year to meaning the year in which the eligible business was commenced, otherwise, the fiction created in sub section (5) section 80IA of the Act become redundant. Accordingly, the A.O. after relied upon the special bench decision of ITAT Ahmedabad, in the case of Gold Mine Shares Finance Pvt. Ltd. (2008) 113 ITD 209 (supra) held that the initial assessment year would mean the year of commence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar upto and including the assessment year for which the determination is to be made. 10. Sub section (1) of sec. 80IA, provides for deduction of profits gains of eligible business. Sub section (2) provides for period of deduction. Similarly, sub section (5) provides for method of computation of eligible profits for deduction u/s 80IA of the Act. A plain reading of sub section (2) and the words used in the section makes it clear, that the deduction is available at the option of the assessee for any 10 consecutive assessment years out of 15 years, beginning from the year in which the undertaking begins its operation. From this, it is abundantly clear that the claim is at the option of the assessee, but it should be within 15 years from the date of commencement of its eligible business. Sub section (5) provides for determination of quantum of deduction for the assessment year immediately succeeding the initial assessment year or in subsequent assessment year. As per sub section (5), the profits of eligible business shall be computed as if such eligible business were the only source of income of the assessee during the relevant assessment year and to every subsequent assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ofits and gains derived by an undertaking or an enterprise from any business referred to in sub-s (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 assesses, 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-s. (4). sub-s. (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, 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-s. (5) deals with quantum of deduction for an eligible business. The words initial assessment year are used in sub-s. (5) and the same is not defined under the provisions. It is to be noted that initial assessment year employed in sub-s. (5) is different from the words beginning from the year referred to in sub-s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nst the profit of other business cannot be notionally brought forward and set off against the profits of the eligible business as no such mandate is provided in s 80-IA(5) -CIT Vs TTK Pharma Ltd [Tax Case (Appeal) No.298 of 2004, dt 23rd Dec., 2009] followed; CIT vs Mewar Oil General Mills Ltd (2004) 186 CTR (Raj) 141 (2004) 271 ITR 311 (Raj) concurred with, Mohan Breweries Distilleries Ltd vs Asstt CIT (2008) 114 TTJ (Chennai) 532 (2008) 3 DTR (Chennai)(Trib) 477 affirmed All the authorities below had given a categorical finding that the first year is 2004-05. The issue also reached finality. The Revenue has accepted the finding given by the CIT(A) and therefore, the same cannot be raised in the assessee s appeal before the Tribunal. It is a question of fact. It is not a perverse order. There is no error or illegality in the order of the Tribunal warranting interference. The order of the Tribunal is in conformity with law. 12. The A.R. relied upon Hon ble Madras High Court decision, in the case of CIT Vs. GRT Jewellers India Pvt. Ltd. in TCA No.176 of 2016 and submitted that the Hon ble Madras High Court, after taking note of circular issued by CBDT, circular no.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 applicable slab of fifteen (or twenty) years. The matter has been examined by the Board. 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 The 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 deduction u/s 801A for ten consecutive years beginning from the year in respect of which he has exercised such option subject to the fulfillment of conditions prescribed in the section. Hence, the term 'initial assessment year' would mean the first year opted for by the assessee for claiming deduction u/s 801A. However, the total number of years for claiming deduction should not transgress the prescribed slab of fifteen or twenty ..... X X X X Extracts X X X X X X X X Extracts X X X X
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