TMI Blog2018 (10) TMI 783X X X X Extracts X X X X X X X X Extracts X X X X ..... on of correct quantum of deduction to be computed without setting off any notional losses of the windmill power project pertaining to the earlier assessment years as discussed. AO shall allow enhanced deduction under s.80IA(4) of the Act as eligible to assessee in accordance with law regardless of claim made by the assessee in this regard in its return of income. Ground No.1 of the assessee’s appeal is allowed for statistical purposes. Addition on account of differences in the closing balances of one of its party namely Associated Road Carriers Ltd. - Held that:- In the course of hearing, the learned AR for the assessee failed to support the aforesaid ground. A perusal of the order of the CIT(A) gives the impression that the CIT(A) has approached the issue correctly and in right perspective. Therefore, without reiterating the observations of the CIT(A) , we find ourselves in agreement therewith. - Decided against assessee. - I.T.A. No. 2081/Ahd/2016 - - - Dated:- 14-8-2018 - Shri Rajpal Yadav, Judicial Member And Shri Pradip Kumar Kedia, Accountant Member For the Appellant : Shri P. D. Shah, A.R. For the Respondent : Shri dinesh Shah, Sr. D. R. ORDER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ears. Consequently, for such bizarre reasoning the addition of ₹ 3,05,59,000/- was made to the total income by denying the claim of deduction. 4. Aggrieved, the assessee preferred appeal before the CIT(A). 5. Before the CIT(A), the assessee filed additional ground seeking claim of deduction of entire profit generated from windmill power project without reducing notional brought forward losses and depreciation. The CIT(A) agreed on principles that the assessee is eligible for deduction under s.80IA(4)(iv) of the Act of the entire profit from its windmill projects unencumbered and unimpacted by the claims or carry forward of depreciation or losses of the past years prior to initial assessment year as opted by the assessee. The CIT(A) however observed that such additional claim of deduction 80IA(4) on account of wrong set off of notional business loss/depreciation (in deviation with CBDT Circular No.1 of 2016 dated 15.02.2016 order of ITAT in the case of Harsha Engineering in ITA No. 2295/Ahd/2011 and 1795/Ahd/2012) can be entertained only where the assessee has revised its original return as provided under s.139(5) of the Act. The CIT(A) accordingly accepted the claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pose of section 80IA is to be worked out as if eligible industrial undertaking is the only source of income of the assessee during the previous year. This provision of the Act makes it clear that eligible profits for deduction u/s 80IA is to be computed for the eligible industrial undertaking individually. It simply means that if such industrial undertaking had suffered losses in the earlier years, these losses has to be set off against income of the current year. After this set off, if there are some profits, the same is eligible for deduction u/s 80IA(iv). In this regard, we find that in the case of ACTT vs. Goldmine Shares and Finance Pvt. Ltd. (2008) 302 ITR 209 (And), it was held as under: to conclude we answer the question referred in the affirmative, in the favour of the revenue and against the assessee, in the terms that in view of the specific provisions of section 80IA(5) of the Income-tax Act, 1961 the profit from the eligible business for the purpose of determination of the quantum of deduction u/s 80IA of the Act has to be computed after deduction of notional brought forward losses and depreciation of eligible business even though they have been allowed set off a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profits from Shikarpur, Ukhrala, Patelka and Lamba (2) units of windmills have been claimed eligible for deduction u/s 80IA by the appellant before the AO. I find that the Hon. ITAT in appellant's own case has held in favour of the appellant and observed in para 7 of the order that the' computation of eligible profits for A.Y.2009-10 has already exhausted the losses brought forward from earlier years and only the net amount was claimed for deduction during A.Y.2009-10. Therefore, as there is no change in facts, respectfully following the decisions of my Ld. Predecessor and ITAT in appellant's own case, the addition to the extent of ₹ 3,05,59,000/- is deleted. Related grounds succeed. 5. During the course of hearing, the appellant has raised the following additional ground in view of the decision of Jurisdictional Tribunal, Ahmedabad Bench in the case of M/s. Harsha Engineering/in ITA No.2295 of 2011 1795 of 2012. The additional ground reads as under: That the relying on facts, law and order of the Hon'ble ITAT, Ahmedabad, in the case of ACIT Vs. Harsha Engineers Ltd., deduction u/s 80IA(4)(iv) of the Act is to be allowed without reducing not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Ld. AR has also heavily relied on Circular 1 of 2016 dated 15/2/2016 to further plead that as per the Board's Circular, the initial assessment year within the meaning of section 801A(5) has to be necessarily the initial year as chosen by the appellant himself. Once such choice is made by the appellant, it was submitted, all the past baggage of unabsorbed losses or unabsorbed depreciation carried forward from preceding year become irrelevant for quantification of eligible deduction in terms of section 80IA(5) in view of Harsha Engineering and Board circular. The interpretation thus adopted by Hon. ITAT in Harsh Engineering (supra) is thus further sanctified by the Circular No.1 of 2016 wherein the Board has directed that pursuit of pending litigation on allowability of deduction u/s 80IA shall also be decided keeping this particular interpretation of initial year in mind. It was further submitted that for and from initial assessment year (as chosen by the appellant) for the claim of deduction u/s 80IA, the profit of eligible unit has to be computed keeping in mind the initial year as chosen by the appellant, and all preceding assessment years and the profit/loss/deprec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total Rs.10,40,61,204 Rs.3,05,59,270 Relief by way of additional ground claimed Rs.7,35,01,934 8.1 After having carefully considered the facts, the decision in M/s. Harsh Engineering (supra) and the contents of Circular No.1 of 2016, I have no doubt in mind that the profits of the eligible units on 'stand- alone basis has only to be considered for and from the initial assessment year as opted by the appellant. However, from the chart given by the Ld. AR, and from the copy of ITAT's order in appellant's own case (supra) dated 11/12/2015, it becomes crystal clear that as per the prayer of the appellant contained in the additional ground, the appellant would want a direction to the AO that the appellant's returned income be allowed to be reduced by an amount of ₹ 7,35,01,934/- in pursuance to ITAT decision in Harsha Engineering (supra). After having given a careful consideration to the issue raised by way of additional ground and after perusal of the Authorities cited and relied upon by the AR, including Jurisdictional High Court in Arvind Mills Ltd. (supra), I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n made by the assessee before the CIT(A) which was denied on the grounds of absence of revised return of income in this regard. The learned AR submitted that the assessee earned profit from the windmill project amounting to ₹ 10,40,61,204/- in aggregate during the year. However, while making the claim of deduction at the time of filing return of income, the assessee wrongly applied the provisions of law and judicial interpretation rendered in this regard and thus wrongly adjusted the losses incurred in the windmill project in the past prior to the exercise of option towards initial assessment year envisaged under s.80IA(4) of the act. Delving further, the learned AR submitted that the assessee incurred losses in the windmill projects in the earlier years, which was claimed as set off against its regular business in earlier years in accordance with law. Thus, no unadjusted business loss/depreciation remained to be carried forward for set off. However, for the purpose of determination of eligible profit under s.80IA(4) of the Act, the assessee misunderstood the restrictions placed under s.80IA(5) of the Act for the purpose of determination of quantum of deduction. The assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee in its return of income towards deduction under s.80IA(4) of the Act was duly accepted by the CIT(A) at the first appellate stage. The CIT(A) refused his indulgence towards the additional claim arose on account of re-working of deduction in the light of prevailing judicial precedents and CBDT Circular No.1 of 2016 dated 15.02.2016 on the ground that the assessee has failed to file the revised return and consequently the additional relief cannot be entertained as it would have the effect of bringing the assessed income below the returned income. We do not find any merit whatsoever in such reasoning propounded by the CIT(A). The rationale adopted by the CIT(A) for refusal of the additional claim is in direct contravention with the judicial precedents cited on behalf of the assessee (supra). Therefore, we have no hesitation to hold on first principles that the additional claim requires to be entertained when found eligible as per the relevant provisions of the Act in the light of the judicial precedents and CBDT Circular issued in favour of the assessee. It is well settled that the appellate authority is not precluded from adjudicating the additional claims of an assessee regardles ..... X X X X Extracts X X X X X X X X Extracts X X X X
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