TMI Blog2016 (11) TMI 1067X X X X Extracts X X X X X X X X Extracts X X X X ..... 10-2011 under these facts and circumstances, applying the proposition of laws discussed above as referred by learned AR, we do not find any merit in the action of lower authorities for notionally carry forward and set off of losses which have already been set off in the earlier years against the profit of eligible unit during A.Y.2010-11 under consideration. - ITA No.7449/Mum/2014 - - - Dated:- 28-10-2016 - SHRI R.C.SHARMA, AM AND SHRI PAWAN SINGH, JM For The Assessee : Shri. B.V.Jhaveri For The Revenue : Shri. Jeevanlal Lavedia ORDER PER R.C.SHARMA (A.M) : This is an appeal filed by the assessee against the order of CIT(A) for the assessment year 2010-2011 in the matter of order passed under Section 143(3) of the I.T. Act. 2. In this appeal, assessee is aggrieved for reducing the deduction claimed under Section 80-IC(3)(ii) of the I.T. Act. 3. Rival contentions have been heard and record perused. 4. The facts in brief are that Assessee Company is in the business of manufacturing, assembling and repairing construction machinery and piling equipments. Prior to the previous year, relevant to the Assessment Year 2008-09, the Appellant Assessee Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of the years 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 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 notionally 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 notionally. A fiction created in sub-section does not contemplates to bring set off amount notionally. 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 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . There being no carry forward of allowable deductions under the head depreciation or development rebate which needed to be absorbed against the income of the current year and, therefore, recomputation of income for the purpose of computing permissible deduction under section 80-1 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 it 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. 22. We are not agreeing with the counsel for the Revenue. We are, therefore, of the view that loss in the year earlier to the initial assessment year already absorbed against the profit of other business cannot be notionally brought forward and set off against the profits of the eligible business as no such mandate is provided i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a batch of cases in T.C.(A) Nos.40S of 2012, etc., by the order dated 12.1.2015, this Court, following the decision reported in Velayudhaswamy Spinning Mills, held in favour of the asses ee and against the Revenue. 9. We, therefore, taking note of the decision rendered by this Court in Velayudhasamy Spinning Mills and in a batch of cases in T.C.(A) Nos.40S of 2012, etc. dated 12.1.2015, are inclined to dismiss this Tax Case (Appeal), and, thereby, confirm the order passed by the Tribunal. Accordingly, the questions of law raised in this appeal are answered against the Revenue and in favour of the assessee. (iii) In the case of CIT vs. Anil H. Lad (45 taxmann.com 98, Karnataka) dated 5th February, 2014 following the decision of the Madras High Court in the case of Velayudhaswamy Spinning Mills Pvt. Ltd. vs. ACIT (340 ITR 477) the Karnataka High Court held as under: 10. Therefore, keeping in mind the object with which these provisions are introduced, it is clear that an assessee is given the benefit of 100% deduction of the profits and gains from the eligible business. The quantum of deduction is to be calculated when the claim for deduction is made. If before claimi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee by earlier decision of the Co-ordinate Bench of the Tribunal in assessee's own case for assessment years 2009-10 and 2010-11 (supra) wherein the Tribunal followed the judgment of the Hon'ble Madras High Court in the case of Velayudhaswamy Spinning Mills (P) Ltd. vs. ACIT, 38 DTR 57 (Mad.) as well as the decision of the Pune Bench of the Tribunal in the case of Serum International Ltd. vs. Addl. CIT, Range-6 in ITA Nos.290 to 292/PN/2010, order dated 20.09.2011. The operative paras of the order of the Co-ordinate Bench of the Tribunal in assessee's own case in ITA Nos.1373 1374/PN/2013 relating to assessment years 2009-10 2010-11, order dated 27.05.2014 are reproduced hereunder for ready reference :- 5. We have heard the parties . We find that the issue stands squarely covered in favour of the assessee by the decision of the Hon ble High Court of Madras in the case of Velayudhaswamy Spinning Mills Pvt. Ltd., vs. ACIT 38 DTR 57 (Mad.) as well as the decision of the ITAT,Pune in the case of Serum International Ltd. vs. Addl. CIT, Range-6, ITA Nos.290 to 292/PN/2010 dated 20-09-2011. 6. In the case of Serum International Ltd., (Supra) the Tribunal has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction u/s. 80lA without bringing the notionally brought forward any lossor depreciation of earlier years which has already been set off against other income of the assessee. 11. Following the parity of reasoning laid down by the earlier decision of the Co-ordinate Bench of the Tribunal in assessee s own case (supra) we confirm the order of the CIT(A). Accordingly, the Grounds taken by the Revenue are dismissed. (vi) In the case of ACIT vs. Jayshree Polymers Pvt. Ltd., in ITA No.2282/PN/2014 for A.Y. 2010-11 dated 10th February, 2016 wherein following the decisions of Velayudhswamy Spinning Mills Pvt. Ltd., vs. ACIT (340 ITR 477, Mad) and Serum International Ltd. vs. ACIT in ITA 290 to 292/PN/2010 dated 20th September, 2011 dismissed the appeal of the revenue. (vii) In the case of DCIT vs. Bajaj Electricals in ITA No. 909/Mum/2011 for A.Y. 2006-07 dated 15th May, 2015, the Hon. Tribunal following the decision of Velayudhswamy Spinning Mills Pvt. Ltd. vs. ACIT (340 ITR 477,Mad) and the decision of the Karnataka high Court in the case of CIT v. Anil H. Lad held as under: 7. Thus, following the above ratio, we hold that firstly, the choosing of initial asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttarakhand unit has no unabsorbed carry forward losses during the year under consideration, therefore, assessee has claimed deduction in respect of the entire income of the Uttarakhand unit during the year under consideration. The undisputed facts are that losses of assessment years 2008-2009 and 2009-2010 have already been set off against the income of unit at Mumbai. The said losses were not available to be carried forward and set off during the year under consideration i.e., assessment year 2010-2011 under these facts and circumstances, applying the proposition of laws discussed above as referred by learned AR, we do not find any merit in the action of lower authorities for notionally carry forward and set off of losses which have already been set off in the earlier years against the profit of eligible unit during A.Y.2010-11 under consideration. 10. Now we deal with the decisions cited by learned CIT(A) in its order in the case of ACIT vs. Goldmine Shares Finance Pvt. Ltd. (113 ITD 209,Ahd., SB) dated 30th April, 2008. This judgment of Goldmine Shares is rendered prior to the decision of Velayudhswamy Spinning Mills Pvt. Ltd. vs. ACIT (340 ITR 477, Mad) dated 11th March 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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