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M/s. Hyderabad Chemical Products Pvt. Ltd. Versus Asstt. Commissioner of Income-tax Circle 2 (2) , Hyderabad

2016 (7) TMI 253 - ITAT HYDERABAD

Deduction under S.80IA in respect of its windmill units denied - initial assessment year - Held that:- From a reading of the circular dated 15.2.2016, 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 .....

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see 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 basis. - ITA No.1033/Hyd/2015 - Dated:- 10-6-2016 - SMT. P.MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER For The Appellant : Shr .....

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years. Assessee has also raised a ground, being ground of appeal No.6, against disallowance of weighted deduction made by the Assessing Officer under S.35(2AA) of the Act, even though the payments were made for approved research institution to carry on an approved research activity. At the time of hearing, the learned counsel for the assessee submitted that the assessee does not wish to press ground of appeal No.6 with regard to disallowance of deduction claimed under S.35(2AA) of the Act. Accor .....

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ed 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, t .....

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de of computation made by the assessee is not in accordance with the provisions of the Act. He also observed that similar issue had arisen in assessee s own case in earlier years, wherein the deduction under S.80IA was allowed after set off of the earlier years unabsorbed losses. Duly following the same and also the Special Bench decision of the Tribunal in the case of ACIT V/s. Gold mine Shares and Finance (P) Ltd. (302 ITR (AT) 208 (Ahd)(SB)), he disallowed the claim of deduction under S.80IA .....

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the CBDT circular dated 15.2.2016 on S.80IA(5) and 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 ear .....

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sment year and not the year of commencement/operation. He submitted that the CBDT, vide circular dated 15.2.2016 has clarified this position, and therefore, assessee is eligible for deduction under S.80IA and the notional brought forward losses of the earlier years may not be set off against the income of the eligible unit for the relevant financial year, while computing the deduction under S.80IA. 7. The Learned Departmental Representative, on the contrary, supported the orders of the CIT(A), r .....

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ained 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 succeeding the initial assessment year 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 .....

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see, whereas the CBDT vide circular dated 15.2.2016 has clarified the matter as under- 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, i961 ( Act }, as substituted by the Finance Act, 1999 with effect from 01.04.2000, provides for deduction of an amount equal to 100 % of the profits and gains derived by an undertaking or enterprise from an eligible business (as referred to in sub-section (4) of that s .....

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g 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 succeeding the initial assessment year 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 .....

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ommencement/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 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 MA has the option to choose the initial/ first year from which it .....

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ould 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 years, as the case may be and the period of claim should be availed in continuity. 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 d .....

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