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2016 (8) TMI 913 - ITAT HYDERABAD

2016 (8) TMI 913 - ITAT HYDERABAD - TMI - Eligibility of deduction under S.80IA - A.O. denying deduction in respect of its wind mill projects installed in the earlier years and further in holding that the past losses have to be notionally adjusted even when they were adjusted against the other business income in earlier year - Held that:- As comsidered in assessee's own case in A.Y. 2008-09 the assessee who is eligible to claim deduction under S.80IA has been given an option to choose initial/fi .....

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e 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 .....

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enying deduction under section 80IA in respect of its wind mill projects installed in the earlier years and further in holding that the past losses have to be notionally adjusted even when they were adjusted against the other business income in earlier years. 2. At the time of hearing, the Ld. Counsel for the assessee submitted that the very same issue had arisen in assessee s own case for the A.Y. 2008-09 and this Tribunal after considering the issue at length has allowed the assessee s appeal .....

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f the Act, brief facts are that the assessee is into the business of generation of power through windmills and also manufacture of pesticides. It filed its return 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 .....

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01-02 and 2006-07 pertaining to the first windmill unit and second windmill unit respectively, and that the assessee has not set off these losses against the profit of the windmills for the relevant financial years before claiming deduction under S.80IA of the Act, as prescribed in the provisions of S.80IA of the Act. Thus, according to him, the mode 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 .....

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rlier years and confirmed the disallowance made by the Assessing Officer . 4. Aggrieved, assessee is in second appeal before us. 5. Though the learned counsel for the assessee fairly admitted that the issue has been decided against the assessee by the decisions of the Tribunal in assessee s own case for earlier years, he has drawn our attention to 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 ne .....

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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 a stand alone basis only from the assessment year which has been opted to by the assessee for claiming deduction under S.80IA for the first time, that year alone shall be considered as the initial assessment year and not the year of commencement/operation. He submitted that the CBDT, vide circular dated 15.2.2016 has clarified this position, and ther .....

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rial on record, we find it necessary to reproduce the relevant provision of the Act for proper appreciation and understanding of the provision of law. Deductions in respect of profits and gains from industrial undertakings or enterprises engaged in infrastructure development, etc. 80-IA.(1) to (4) ……. (5) 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 th .....

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ing 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 15.2.2016 has clarified the matter as under- Subject: Clarification of the term initial assessment year in s .....

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the assessee, at his option, for any ten consecutive assessment years out of fifteen years (twenty years 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 80IA 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, .....

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rescribes 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 c .....

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hereby clarified that once such initial assessment year has been opted for by the assessee, he shall be entitled to claim deduction u/s 80IA for ten consecutive years beginning from the year in respect of which he has exercised such option subject to the fulfilment 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 80IA. However, the total number of years for claiming deduction should no .....

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