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Commissioner of Income Tax Versus M/s. Defree Engineering Pvt. Ltd.

2015 (12) TMI 1602 - MADRAS HIGH COURT

Entitlement to deduction under Section 80IA - Held that:- In a batch of cases, in CIT Vs. Eastman Exports Global Clothing (P) Ltd. [2015 (1) TMI 830 - MADRAS HIGH COURT] this Court had followed the decision rendered in Velayudhaswamy Spinning Mills (P) Ltd. Vs. Assistant Commissioner of Income Tax, [2010 (3) TMI 860 - Madras High Court] held that the provisions of section 80-IA(5) treating undertaking as a separate sole source of income cannot be applied to a year prior to the year in which the .....

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Mr.T.R.Senthil Kumar For the Respondent : None ORDER M. JAICHANDREN, J This Tax Case Appeal has been filed against the order of the Income Tax Appellate Tribunal B Bench, Chennai, dated 2.6.2015, made in I.T.A.No.450/Mds/2015. 2. The brief facts of the case, necessary for the disposal of the appeal, are as follows: 2.1) The assessee company had been engaged in the business of manufacturing and trading of copper and nickel alloy castings and also generating power through windmills. The assessee .....

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e assessing officer had disallowed ₹ 1,06,26,141/, being the deduction claimed by the assessee,under Section 80IA of the Act, holding that the initial assessment year is the year from which the assessee commences its eligible business, since no profits were available for deduction in the financial year relevant to the assessment year 2011-12, after notionally bringing forward the unabsorbed depreciation and business loss. 2.2. The assessee had claimed 80IA deduction on the basis of the dec .....

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d by the decision of this Court, in Velayudhaswamy Spinning Mills (P) Ltd. Vs. Assistant Commissioner of Income Tax, (231 CTR (Mad.) 368). As such, the claim of the assessee had been allowed. 2.4) Aggrieved by the order passed by the Commissioner of Income Tax (Appeals), the Revenue had filed an appeal before the Income Tax Appellate Tribunal B Bench, Chennai. The Tribunal, by its impugned order, dated 2.6.2015, had dismissed the appeal, following the decision of this Court, in Velayudhaswamy .....

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etting off the losses/unabsorbed depreciation pertaining to the windmill, which were set off in the earlier year against other business income of the assessee, following the decision of the jurisdiction High Court in the case of M/s.Velayudhaswamy Spinning Mills (340 ITR 477) when the same is pending appeal before the Hon'ble Supreme Court in S.L.P.Civil No.33475 of 2012? 2. Whether under the facts and circumstances of the case, the Income Tax Appellate Tribunal was correct in holding that t .....

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impugned order of the Tribunal:- "a. The order of the Income Tax Appellate Tribunal is erroneous in law and opposed to the facts and circumstances of the case. b. The Income Tax Appellate Tribunal erred in holding that losses and unabsorbed depreciation which already stood set off against other income in earlier years could not be carried forward and set off against profits or income of initial/subsequent years in respect of windmill in computing the deduction under Section 80IA. c. The In .....

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inance (No 2) Bill 1980 (123 ITR (St.) 154 also explains that in computing quantum of tax holiday profits for the unit is to be determined as if such units were an independent unit owned by the taxpayer. e. The Income Tax Appellate Tribunal ought to have appreciated that as per provisions of Section 80IA (5) the undertaking eligible for deduction under Section 80IA should be treated as only source of income for computing the quantum of deduction. f. The Income Tax Appellate Tribunal erred in fol .....

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