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Suma Shilp Limited Versus JCIT, Range-6, Pune

2017 (8) TMI 474 - ITAT PUNE

Set-off of losses - assessee installed tall windmills relevant to the Assessment Year 2007-08 - assessee opted 2010-11 as the initial assessment year - losses pertain to AY 2007-08 to 2009-10 - eligibility for set off against the profits of the other income of the ineligible units - Held that:- Tribunal in Poonawalla Estates Stud & Agro Farm Pvt. Ltd. Vs. ACIT [2010 (9) TMI 1080 - ITAT PUNE] was approved by the Hon’ble Madras High Court in the case of Velayudhaswamy Spinning Mills Pvt. Ltd. Vs. .....

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aim of the assessee and the losses of the earlier assessment years prior to A.Y. 2010-11 are eligible for set off against the profits of the other income of the ineligible units of the earlier years. AO has grossly erred in disallowing the said set off of the said brought forward losses against the income earned from the windmills of the eligible units in the current year under consideration. - Whether the assessee is justified in not making a claim u/s.32 while quantifying the allowable ded .....

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The issue, in principle, should be decided in favour of the assessee as the computing of total income is done in accordance with the provisions of sections 28 to 44 which include section 32 of the Act. CIT(A) is directed to grant reasonable opportunity to the assessee and consider the Ground No.2 raised before him in proper perspective and decide the issue afresh in accordance with law - Appeal of the assessee is allowed for statistical purposes. - ITA No. 1036/PUN/2016 - Dated:- 16-6-2017 .....

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; 91,40,903/- in respect of windmill units. Ground No.2 relates to the 2nd issue of claim of disallowance of depreciation amounting to ₹ 66,35,717/- while computing the deduction allowable u/s.80IA (4) (iii) of the Act. 3. Briefly stated relevant facts are that the assessee is a Promoter, engaged in the business of development of residential and commercial properties. He is also in the business of running windmills. During the assessment proceedings, the AO noticed that the assessee instal .....

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e A.Y.2007-08 were set off against the income from the windmills in the year under consideration and thereby AO caused loss to the assessee to the extent of claim of deduction of ₹ 91,40,903/-. The assessee relied heavily on the orders of the Tribunal in the case of Poonawalla Estates Stud & Agro Farm Pvt. Ltd. Vs. ACIT (136 TTJ 236) (Pune) and the judgment of Madras High Court in the case of Velayudhaswamy Spinning Mills Pvt. Ltd. Vs. ACIT (231 CTR 368) and others for the legal propos .....

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irst Appellate Proceedings, assessee made various submissions in writing and relied heavily in the case of Poonawalla Estates Stud & Agro Farm Pvt. Ltd. Vs. ACIT and the judgment of Madras High Court in the case of Velayudhaswamy Spinning Mills Pvt. Ltd. Vs. ACIT (supra). Further, assessee also relied heavily on the CBDT Circular No.01/2016 dated 15-02-2016 in support of the assessee s claim of initial assessment year and the manner of computation of losses of the eligible units against the .....

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e sake of completeness relevant lines are extracted as under : 4.1 . . . . . . . . . . . . In the present case the business income operational in AY 2007-08 and deduction was claimed from AY 2010-11. In case of Poonawalla Estates Stud & Agro Farm Pvt. Ltd. vs. ACIT (supra) in Pune ITAT, the appeal is regarding the initial assessment year. As per the current case, the question is for set off of losses u/s.80IA(4)(iv)(a) and not the initial assessment year. The initial assessment year has been .....

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) issued by the CBDT clarifies the meaning of Initial Assessment Year as given in section 80IA(5) to mean the year of first claiming deduction and not the year of commencement of eligible business. In this regard, I find that, AO has rightly taken the initial assessment year in accordance with the CBDT Circular No.1/2016 (supra) and I find no dispute on this issue. 6. Aggrieved with the above findings of the CIT(A) before us, Ld. Counsel for the assessee submitted that the above findings/observa .....

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d thereby the option of the assessee in chosing the initial assessment was denied completely. First Appellate authority did not appreciate the fact that the claim of losses/brought forward losses against the other income of the ineligible units of the assessee which is intrinsically linked that leads the assessee to chose later assessment year as the initial assessment year,. Therefore, the CIT(A) did not appreciate the above fact before not applying the Circular of CBDT cited (supra) to the fac .....

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in the appeal before the Tribunal. 8. On the other hand, Ld. Departmental Representative for the Revenue, on this issue heavily relied on the orders of the AO and the CIT(A) and submitted for confirming the same. 9. We heard both the sides on this issue and perused the orders of the Revenue and the cited decisions before us. On perusal of the said order of the Pune Bench of the Tribunal, we find the decision of the Tribunal is relevant for the following proposition : Assessee having chosen A.Y. .....

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e above view of the Tribunal was approved by the Hon ble Madras High Court in the case of Velayudhaswamy Spinning Mills Pvt. Ltd. Vs. ACIT (supra). Therefore, the CIT(A) has not properly appreciated the said decision (supra). In the remand proceedings, CIT(A) is directed to consider the existing legal position on the issue under consideration and allow the claim of the assessee in accordance with law. Assessee shall be given reasonable opportunity of being heard to the assessee in accordance wit .....

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cordingly, Ground Nos. 1.1 to 1.4 raised by the assessee are allowed, in principle, subject to the above conditions. 11. Regarding the issue raised in Ground No.2 the limited issue for adjudication before us relates to whether the authorities are justified in reducing the depreciation claimed out of the deduction quantified or the deduction u/s.32 is required to be considered while determining the total income of the assessee, i.e. prior to the computation of deduction under Chapter VIA of the A .....

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7 of CIT(A) is relevant. For the sake of completeness, we proceed to extract relevant lines of the said para (Page 14) and the same reads as under : 7. . . . . . . . . . . . . . . . . . . . . . . . Thus for the purpose of deductions under Chapter VI-A, the gross total income has to be computed by claiming deduction allowable under sections 30 to 43D of the Act and the assessee cannot claim a double advantage, i.e. in the subsequent years for claiming deduction u/s.80IA(4)(iii), the assessee shou .....

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