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2016 (7) TMI 675 - MADRAS HIGH COURT

2016 (7) TMI 675 - MADRAS HIGH COURT - TMI - Reopening of assessment - entitlement to deduction under Section 80 IA without setting off the losses/unabsorbed depreciation pertaining to the windmill - Held that:- Once the losses and other deductions are set off against the income of the assessee in the previous year, it should not be re-opened again, for the purpose of computation of current year income, under Section 80-I and 80-IA of the Act. M/s.Velayudhaswamy Spinning Mills (P) Ltd., v. Assis .....

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dismissed the appeal preferred by the revenue, against the order of the Commissioner of Income-Tax (Appeals)-II, Coimbatore dated 30.06.2014 for the Assessment Year 2010-11. 2. Revenue has come up with the above appeal, raising the following substantial questions of law:- 1. Whether under the facts and circumstance of the case, the Hon'ble Income Tax Appellate Tribunal right in law in holding that assessee is entitled to deduction under Section 80 IA without setting off the losses/unabsorbed .....

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(5) would only mean the year of claim of deduction under Section 80 IA and not the year of commencement of eligible business? 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 choose the first/initial assessment year of claim for deduction under Section 80-IA 3. When the matter came up for admission, in the light of the Board Circular No.1/2016, dated 15/2/2016, Mr.T.R.Senthil Kumar, learned counsel for the revenu .....

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g before the Hon'ble Apex Court in SLP No.1136 of 2011. 5. Central Board of Direct Taxes has issued Circular No.1/ 2016, dated 15/2/2016 and the same reads 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 ), .....

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rs in certain cases) beginning 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 y .....

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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 appli .....

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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 years, as the case may be and the period of cl .....

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uitably instructed. The above be brought to the notice of all Assessing Officers concerned." 6. Similar to the facts and circumstances of the case, while adverting to the substantial questions of law raised and after considering the judgment of the Hon'ble Apex Court in Liberty India vs. CIT reported in (2009) 225 CTR (SC) 233 : (2009) 28 DTR (SC) 73 : (2009) 317 ITR 218 (SC) and the judgment of the Rajasthan High Court in CIT vs. Mewar Oil & General Mills Ltd. reported in (2004) 18 .....

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