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TMI Blog2016 (2) TMI 1188X X X X Extracts X X X X X X X X Extracts X X X X ..... ine Shares and Finance Pvt Ltd in ITA No.4044 to 4049/Ahd/2003 dated 30.04.2008 3. In ITA No.1759/Ahd/2012 for Assessment Year 2009-10, the Revenue has raised the following grounds of appeal:- 1. The ld. CIT(A) has erred in law and on facts in deleting the addition of Rs. 1,05,98,781/- made on account of the claim of assessee for deduction u/s 80IA(4)(iv)(A), without appreciating the fact that the jurisdictional ITAT had decided the issue in favour of Revenue in the case of Goldmine Shares and Finance Pvt Ltd in ITA No.4044 to 4049/Ahd/2003 dated 30.04.2008 (AYs 1997-98 to 2002-03. 2. The ld. CIT(A) has erred in law and on facts in deleting the addition of Rs. 9,00,000/- out of the total disallowance of Rs. 12,00,000/- made on account of the claim of assessee for legal and professional fees of Rs. 82,58,275/- without appreciating the fact that assessee failed to give any justification for the said expenses. 4. The assessee is engaged in the business of manufacturing of various types of Bearing Cages through two manufacturing units located at Changodhar and Moraiya. It also has two wind-mill units at Dhank and Patelka. 5. The first issue is with regard to disallowance of dedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the identical facts, allowed the appeal of the assessee in both the assessment years under appeal. 5.4. Before us, the ld. AR of the assessee pointed out that similar issue came across before the ITAT "A" Bench, Ahmedabad in the case of M/s. Jivraj Tea Company v. DCIT in ITA Nos. 1193 & 1194/Ahd/2013, wherein the ITAT has decided the issue in favour of the assessee, by observing as under:- "4. Next issue with regards to excluding amount received on sale of sales tax entitlements of Rs. 24,20,833/- from the profit derived from eligible unit being wind mill at Satara, Maharashtra. Assessing Officer made addition by way of excluding amount recovered o sale tax entitlement of Rs. 24,20,833/- from the profit derived from eligible unit being wind mill at Satara, Maharashtra. CIT(A) following the order for A.Y. 2009-10 of Jivraj Tea Ltd. decided the issue against the assessee. At the time of hearing ld. A.R. pointed out that ITAT in ITA No. 1994/Ahd/2012 for A.Y. 2009-10 Tribunal following assessee's own case for A.Y. 2007-08 had decided the issue in favour of the assessee by observing as under: "38. We find that Tribunal in assessee's own case for A.Y. 2007-08, vide order dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19. Section 80IA, which has been substituted w.e.f. 1st April 2000, provides that where the gross total income of an assessee includes any profits and gains derived by an undertaking from any eligible business referred to in subsection 4, there shall, in accordance with and subject to the provisions of this section, be allowed in computing the deduction of an amount equal to 100% of the profits and gains derived from such business for 10 consecutive years. Substituted sub-section (2) of section 80IA, provides that an option is given to the assessee for claiming any 10 consecutive assessment year out of 15 years beginning from the year in which the undertaking or the enterprise develops and begin to operate. The 15 years is the outer limit within which the assessee can choose the period of claiming the deduction. Sub-section (5) is a non-obstante clause which deals with the quantum of deduction for an eligible business. The relevant provision of sub-section (5) of section 80IA, reads as under:- "(5) Notwithstanding anything contained in any other provision of this Act, the profits and gains of an eligible business to which the provisions of sub-section (1) apply shall, for the pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rds and the assessee had claimed deduction under section 80IA starting from the first year itself i.e., assessment year 1996-97. Thus, the Special Bench was dealing with the operation of section 80IA(5) where the assessee had first claimed the deduction in the assessment year 1996-97 and for subsequent assessment years. This aspect of the matter has been very well elaborated by the Madras High Court in Velayudhaswamy Spinning Mills Pvt. Ltd. (supra) after considering the Special Bench decision of the Tribunal in Goldmine Shares And Finance Pvt. Ltd. (supra) and relevant provisions of the Act i.e., pre amendment and post amendment have come to the same conclusion:- "From reading of the above, it is clear that the eligible business were the only source of income, during the previous year relevant to initial assessment year and every subsequent assessment years. When the assessee exercises the option, the only losses 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 doe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been germane only if there would have been carry forward of unabsorbed depreciation and unabsorbed development rebate or any other unabsorbed losses of the previous year arising out of the priority industry and whether it was required to be set off against the income of the current year. 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 s.80-I for the purpose of computing admissible deductions thereunder. 23. In view thereof, we are of the opinion that the Tribunal has not erred in holding that there was no rectification possible under s. 8o-I in the present case, albeit, for reasons somewhat different from those which prevailed with the Tribunal. 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 s. 8o-I for the new industrial undertaking was not required in the present case. Accordingly, this appeal fails and is hereby ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent year as adopted by the assessee is assessment year 2008-09 only and, therefore, the loss of assessment year 2007-08 cannot be notionally carried forward within the meaning of section 80IA(5). Thus, the reliance placed by the learned Departmental Representative on the decision of Pidilite Industries (supra), will not be applicable in the present case. 27. The other decision heavily relied upon by the learned Departmental Representative in Hyderabad Chemical Supplies Ltd. (supra) will also not apply to the facts of the present case, as in that case, the wind mill started its operation on 3ist March 1999 and the first year of operation was assessment year 1999-2000. Thus, in the assessment year 1999-2000, the definition of "initial assessment year" was already there in the Act and there was no provision through which the assessee could have chosen its initial assessment year. This provision was brought in statute w.e.f. 1st April 2000, by virtue of section 8oIA. Thus, this decision also will not help the case of the M/s. Shevie Exports Department. In asseessee's case, as specifically stated in the foregoing paragraphs, the assessee's claim for initial assessment year i.e., asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - claimed by the assessee. 6.1 Matter was carried before the First Appellate Authority, wherein various contentions were raised on behalf of assessee and having considered the same, CIT(A) granted relief to the assessee to the extent of Rs. 9,00,000/- out of total disallowance of Rs. 12,00,000/- made by the Assessing Officer and the same has been opposed before us on behalf of the Revenue inter alia submitting that the CIT(A) erred in law and on facts in deleting the addition of Rs. 9,00,000/- out of total disallowance of Rs. 12,00,000/- made on account of claim of assessee for legal and professional fees of Rs. 82,58,275/- without appreciating the fact that assessee failed to give any justification for the said expenses. 6.2 On the other hand, ld. Counsel for the assessee supported the order of the CIT(A). 6.3 After going through rival submissions and material on record, we find that the Assessing Officer, on lump-sum basis, disallowed Rs. 12,00,000/- out of total legal and professional fees of Rs. 82,58,275/- out of which Rs. 9,00,000/- was deleted by CIT(A) against which the Revenue is in appeal before us. The Assessing Officer failed to appreciate that complete details of le ..... X X X X Extracts X X X X X X X X Extracts X X X X
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