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2014 (5) TMI 1127 - ITAT PUNE

2014 (5) TMI 1127 - ITAT PUNE - TMI - Claiming the deduction u/s. 80IA(4)(iv)(a) - Held that:- We find that the issue stands squarely covered in favour of the assessee by the decision of Velayudhaswamy Spinning Mills (P) Ltd. Vs. ACIT [2010 (3) TMI 860 - MADRAS HIGH COURT] and f Serum International Ltd. Vs. Addl. CIT, Range-6 [2013 (1) TMI 688 - ITAT PUNE ] wherein held profits are to be computed as if such eligible business is the only source of income of the assessee. When the assessee exercis .....

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earlier years which have been already set off against the income of the assessee.- Decided in favour of assessee. - ITA Nos. 1373 and 1374/PN/2013 - Dated:- 27-5-2014 - SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER. Appellant By: Shri S.P. Walimbe Respondent By: Shri Nikhil Pathak ORDER PER R.S. PADVEKAR, JM:- These two appeals are filed by the Revenue challenging the respective impugned orders of the Ld. CIT(A), Aurangabad dated 05-042013 for the A.Ys. 2009-10 & .....

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correct in interpreting "initial assessment year". 3. Whether in the facts and in the circumstances of the case, the definition of "Initial Assessment Year" as given in Section 80IB(14) of the Act is not applicable in the provision of Section 80IA of the Act. 4. The order of the AO be restored and that of the CIT(A) be vacated. 2. The facts as well as issues are identical in both the assessment years hence, both these appeals are disposed off by this common order. The solita .....

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In the opinion of the Assessing Officer, the profits and gains from the power generation which is the eligible business is to be computed as if the assessee s only source of income is from eligible business. The Assessing Officer rejected the claim of the assessee towards the deduction u/s. 80IA(4)(iv)(a) by working the carry forward losses as under: Assessment Year Current Year Notional Loss/Profit Loss set off as claimed by the appellant Carried forward Cumulative Balance of Unabsorbed losses .....

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t. In the opinion of the Assessing Officer the adjustment of losses for earlier years has to be made as per provisions of Sec. 80IA(5) of the Act, which is a non-obstane clause having overriding effect to the provisions of the Act. As interpreted by the Assessing Officer, the said section provides that for the purpose of determining the quantum of deduction u/s. 80IA of the Act for the assessment year or any subsequent assessment year, the profits and gains derived from the eligible business sha .....

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lso placed reliance on the decision of the Hon'ble Special Bench of the Tribunal in the case of ACIT Vs. Goldmines Shares & Investments Pvt. Ltd. 113 ITD 209 (Ahmadabad) (SB). In both the assessment years the claim of the deduction u/s. 80IA(4)(iv) Act was denied to the assessee. 4. The assessee carried the matter before the Ld. CIT(A) who allowed the claim of the assessee. The relevant part of the discussions and findings of the Ld. CIT(A) are as under: 5.2 I have carefully considered t .....

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ction can be claimed at the assessee's option for any ten consecutive assessment years out of the fifteen years from the year in which the undertaking started generating power. The appellant therefore claimed that the Legislature has not intended that the initial assessment year is to be the first year of operation, but the assessee has option to select initial year not falling beyond the fifteen assessment years starting from the previous years in which the undertaking begins power generati .....

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ives on option to the assessee with effect from 1/4/2000 to claim relief under this section for any 10 consecutive assessment years out of 15 years beginning from the year ending in which the undertaking or enterprise develops or begins to operate any infrastructure facility etc. It is left to the assessee at its will to claim this relief from the first assessment year, or from the second or from the third or so as it might think fit. Once the assessee has opted the first year of relief then it .....

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t years should be always the first year of set up of enterprise. If the intention of the legislature is that the first year of set up is the initial assessment year to claim deduction u/s.80IA, then there is no meaning in giving option to the assessee to claim deduction for 10 consecutive assessment years out of 15 years. The meaning of section 80IA(2) is that the assessee can exercise the option in any 10 consecutive years starting from the first year in which the undertaking begins to operate .....

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to claim from the 6th year, it will end in the 15th year. Section 80IA(2) has not provision for the assessee to claim deduction in any assessment year starting from the first assessment year. The provision of section 80IA(5) is applicable only when the assessee chooses to claim deduction u/s.80IA and if it has not chosen to claim the deduction u/s. 80IA, section 80IA(5) cannot be made applicable. In the instant case there was a categorical finding by the assessing officer and the Commissioner ( .....

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of income, could not be applied to a year prior to the year in which the assessee opted to claim relief u/s.80IA for the first time. Further, depreciation and carry forward loss relief to the unit which claims deduction u/s.80IA cannot be nationally carried forward and set off against the income from the year in which the assessee started claiming deduction u/s.80IA. Therefore there was no question of setting off nationally carried forward unabsorbed depreciation or loss of earlier years against .....

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on this issue vide order dated 30th March, 2010 bearing ITA No.l34/PN/ll. The Hon'ble ITAT, Pune has referred to and followed the decision of Co-ordinate Bench in the case of Serum International Ltd., Pune wherein the Hon'ble ITAT has decided this issue against the revenue and in favour of the assessee. The Hon'ble ITAT, Pune while deciding the similar issue in the case of Serum International Ltd., Pune has considered the decision of ACIT Vs. Goldmines Shares & Investment Pvt.Ltd .....

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issue are available then the decision/views in favour of the assessee are to be followed. It is also settled law that the beneficial or incentive provisions are to be construed liberally. 5.3 In view of the above facts and discussion and respectfully following the ratio laid down by the above decisions and particularly the decisions of Hon'ble Jurisdictional ITAT, I am of the considered view that the appellant has correctly claimed the deduction u/s.80IA(4)(iv)(a) of the Act and the A.O. is .....

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ision of the Hon'ble High Court of Madras in the case of Velayudhaswamy Spinning Mills (P) 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 held as under: "13. Having been considered the above submissions, we find that the issue raised in Ground No. 1 as to what would be the initial A.Y for .....

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(2) of the Act. It was held that the Ld. CIT(A) has erred in holding that the initial A. Y for the purposes of Section 80IA(2) r.w.s. 80IA (5) was the year in which the assessee started generating electricity from the wind mill activity. We also find that the issue raised in Ground No. 2 regarding the eligibility of the assessee to claim deduction u/s. 80IA undiminished by unabsorbed losses and depreciation also set off in earlier years against the other income, is fully covered by the decision .....

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Hon'ble Madras High Court has been further pleased to hold that revenue cannot notionally bring forward any loss of earlier years which had already been set off against the other income of assessee and set off against the correct income of the eligible business. Fiction created by Sub-section (5) of Section 80IA does not contemplate such notional set off, held the Hon'ble High Court. The Hon'ble Madras High Court in that decision has also referred the decision of Hon'ble Supreme .....

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s. Valson Dyeing, Bleaching and Printing Works (Supra) wherein the Hon'ble Bombay High Court has been pleased to hold in a case of excise matter that Tribunal is bound by the decision of High Court, even of a different State, so long as there is no contrary decision of any other High Court. The Hon'ble Bombay High Court has been pleased to hold further that the Tribunal had no option but to follow the judgment of the Madras High Court. An authority like an Income Tax Tribunal acting anyw .....

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of Velayudhaswamy Spinning Mills (P) Ltd Vs. ACIT (Supra). We thus respectfully following the decision taken by the Hon'ble Madras High Court in that case on an identical issue under almost similar facts, hold that when the assessee exercising the option, only the losses of the year beginning from the initial A. Y. are to be brought forward and not the losses of earlier year which have been already set off against the other income of the assessee. The revenue cannot notionally bring forward .....

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