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2016 (6) TMI 1116

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..... soon Kabra, Sr. D.R. Respondent by : Shri R.T. Shah, A.R. ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. This appeal filed by the Revenue is directed against the order of Ld. CIT(A)-XIV, Ahmedabad dated 27.07.2012 pertaining to A.Y. 2009-10. 2. The substantive grievance of the revenue read as under:- (1) The Ld. Commissioner of Income-Tax (Appeals)-XIV, Ahmedabad has erred in law and on facts in deleting the disallowance of ₹ 48,77,722/- made by the Assessing Officer u/s.80IA of the Act in respect of Wind Mill business. (2a) The Ld. Commissioner of Income-Tax (Appeals)-XIV, Ahmedabad has erred in law and on facts in deleting the disallowance of ₹ 10,00,000/- made by the Assessing Officer on account of prior period expenses. (2b) The ld. Commissioner of Income-Tax (Appeals)-XIV, Ahmedabad has erred in law and on facts in admitting additional evidence in violation of Rule 46A of the I.T. Rules. 3. The assessee is engaged in the business of manufacturing and job work in electronically engraved copper rollers and trading of pipes, circles etc. 4. While scrutinizing the return of income, the A.O. found that the assessee has claimed de .....

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..... e appellant has not claimed deduction u/s. 80IA of the Act in those years and the claim of the appellant that the deduction have been claimed for the first time in current Asstt. Year is factually correct. Accordingly A. Y. 2009-10 would be the initial Asstt. Year as per provisions of section 801A(5) of the Act. In view of the above mentioned facts, the ratio given by Hon'ble Madras High Court in the case of Velayudhaswamy Spinning Mills Pvt. Ltd.(Supra) would be squarely applicable. While deciding the issue in that case, the Hon'ble High Court has also considered the decision of Special Bench of ITAT in the case of ACIT vs. Goldmine Shares and Finance P. Ltd. [116 TTJ 705 (Ahd)(SB)], which has been relied by A.O., the Hon'ble Court has examined the provisions of section 80IA and has observed that the eligible business was to be taken as the only source of income during the previous year relevant to initial assessment year and every subsequent assessment years when the assessee exercises the option, only losses beginning from initial assessment year alone are to be brought forward and no losses of earlier years which were already set off against the income of the ass .....

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..... by a consortium of such companies (or by an authority or a board or a corporation or any other body established or constituted under any Central or State Act); (b) it has entered into an agreement with the Central Government or a State Government or a local authority or any other statutory body for (i) developing, or (ii) operating and maintaining, or (iii) developing, operating and maintaining a new infrastructure facility; (c) it has started or starts operating and maintaining the infrastructure facility on or after the 1st April, 1995. (5) Notwithstanding anything contained in any other provision of this Act the profits and gains of an eligible business to which the provisions of subsection (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 subsequent assessment year up to and including the assessment year for which the determination is to be made. .....

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..... ncome of the assessee. Looking forward to a period of ten years from the initial assessment is contemplated. It does not allow the Revenue to look backward and find out if there is any loss of earlier years and bring forward nationally even though the same were set off against other income of the assessee and the set off against the current income of the eligible business. Once the set off is taken place in earlier year against the other income of the assessee, the Revenue cannot rework the set off amount and bring it nationally. A fiction created in sub-section does not contemplates to bring set off amount nationally. The fiction is created only for the limited purpose and the same cannot be extended beyond the purpose for which it is created 19. In the present cases, there is no dispute that losses incurred by the assessee were already set off and adjusted against the profits of the earlier years. During the relevant assessment year, the assessee exercised the option under section 80-IA(2). In Tax Case Nos. 909 of 2009 as well as 940 of 2009, the assessment year was 2005-06 and in Tax Case No. 918 of 2008 the assessment year was 2004-05. During the relevant period, there were .....

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..... nd, therefore, recomputation of income for the purpose of computing permissible deduction under section 80-I for the new industrial undertaking was not required in the present case. Accordingly, this appeal fails and is hereby dismissed with no order as to costs. 20. From a reading of the above, the Rajasthan High Court held that if is not at all required that losses or other deductions which have already been set off against the income of the previous year should be reopened again for computation of current income under section 80-1 for the purpose of computing admissible deductions thereunder. We also agree with the same. We see no reason to take a different view. In view of the above judgment which is very logical and clear in all respect, I have no hesitation in holding that the appellant is entitled to the claim u/s. 80IA on the income derived from wind mill project without notional setting off of losses of earlier years. The ground of appeal is accordingly allowed. 7. Aggrieved by this, the revenue is before us. 8. The ld. D.R. could not bring any distinguishing decision in favour of the revenue; ld. counsel for the assessee reiterated what has been stated be .....

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