TMI Blog2016 (7) TMI 253X X X X Extracts X X X X X X X X Extracts X X X X ..... that the initial assessment year is not the year of operation or commencement of business, as interpreted by the Assessing Officer, but it is the first year in which the assessee has opted to claim the deduction under S.80IA. In view of this clarification of the Board, which clinches the issue in favour of the assessee, and is binding on the Revenue authorities, we accept the contentions of the assessee in this behalf, and direct the Assessing Officer to allow the claim of the assessee, after verifying the records as to the initial assessment year in which the assessee for the first time has claimed the deduction under S.80IA of the Act, and consider the income of the assessee from the eligible unit from that year alone on a stand alone ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of income on 28.9.2008 for the assessment year 2008-09 admitting an income of ₹ 15,60,711. Dur1ing the assessment proceedings under S.143(3) of the Act, the assessing officer observed that the assessee has made a claim of deduction under S.80IA of the Act for the three wind mill units set up by the assessee. He observed that the assessee has commissioned its first windmill unit on 31.3.1999(Phase I), the second unit in March, 2005(phase II) and the third unit in December, 2006 (Phase III) in Maharashtra. He observed that the assessee has claimed the deduction under S.80IA of the Act for all the three units during the relevant assessment years. On verification of records, the Assessing Officer noticed that the Units 1 and 2 are havin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that in view of the said circular of the Board, the claim of the assessee under S.80IA needs reconsideration. He also placed reliance upon the judgment of the Hon'ble Madras High Court in the case of Velayudhaswamy Spinning Mills Pvt. Ltd. V/s. ACIT (340 ITR 477), wherein it has been clearly held that only the loses of the year beginning from the initial assessment year opted to by the assessee shall be set off and no losses of earlier years which are already set off against the income of the assessee shall be considered for disallowance under S.80IA (5). 6. Learned counsel for the assessee has also drawn our attention to the provisions of S.80IA(5) and submitted that since income of the eligible unit was to be computed on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear or any subsequent assessment year, be computed as if such eligible business were the only source of income of the assessee during the previous year relevant to the initial assessment year and to every subsequent assessment year up to and including the assessment year for which the determination is to be made. (6) From a literal reading of the above provision, it is seen that the profits and gains from the business of the assessee shall be computed on a stand alone basis from the initial assessment year or any subsequent assessment year. The initial assessment year has been understood by the Assessing Officer to be the year of commencement of operation of the unit by the assessee, whereas the CBDT vide circular dated 15.2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment year up to and including the assessment year for which the determination is to be made . In the above sub-section, which prescribes the manner of determining the quantum of deduction, a reference has been made to the term initial assessment 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 applicable slab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s/DRs be suitably instructed. From a reading of the above circular, it is clear that the assessee who is eligible to claim deduction under S.80IA has been given an option to choose initial/first year from which it may desire to claim the deduction for ten consecutive years out of the slab of 15 or 20 years as prescribed under the above sub-section. The term initial assessment year has been held to mean the first year opted to by the assessee for claiming deduction under S.80IA of the Act. Thus, it is clear that the initial assessment year is not the year of operation or commencement of business, as interpreted by the Assessing Officer, but it is the first year in which the assessee has opted to claim the deduction under S.80IA. In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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