TMI Blog2019 (5) TMI 940X X X X Extracts X X X X X X X X Extracts X X X X ..... gular income. He brought forward such depreciation on notional basis, which is contrary to the proposition laid down VELAYUDHASWAMY SPINNING MILLS P. LTD. SUDAN SPINNING MILLS (P.) LTD. MOHAN BREWERIES AND DISTILLERIES LTD. OTHERS [ 2010 (3) TMI 860 - MADRAS HIGH COURT] . FAA has rightly appreciated the controversy and rightly granted the deduction to the assessee. No error in the order of the CIT(A) hence, this ground of appeal is rejected in both the years. - Decided against revenue. - ITA No.1140/Ahd/2017 - - - Dated:- 13-5-2019 - Shri Rajpal Yadav, Judicial Member And Shri Pradipkumar Kedia, Accountant Member For the Assessee : Shri G.C. Pipara, AR For the Revenue : Shri S.K. Dev, Sr.DR ORDER PER RAJPAL YADAV, JUDICIAL MEMBER: Revenue is in appeal before the Tribunal against order of ld.CIT(A)-9, Ahmedabad dated 2.3.2017 passed for the Asstt.Year 2013-14. 2. Sole grievance of the Revenue in this appeal is that the ld.CIT(A) has erred in deleting addition of ₹ 66,79,702/- made on account of disallowance of deduction under section 80IA(4)(iv) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... similar to the issue raised in the Asstt.Year 2010-11 and 2011-12, wherein appeal of the Revenue challenging orders of CIT(A) in deleting identical additions made were confirmed by the Tribunal. We would take note of the discussion and finding of the Tribunal in ITA No.1033 and 1034/Ahd/2015 vide order dated 6.6.2018 for the convenience of adjudication of the issue on hand. It reads as under: 8. The dispute between the assessee and Assessing Officer is that Assessing Officer has notionally brought forward business losses and depreciation of earlier years and notionally set off against the income of the windmill. The case of the assessee is that as per Section 80IA(5) if the deprecation and business losses have already been set off against other income of the assessee before selection of initial year for claiming of deduction u/s.80IA(iv) then such unabsorbed depreciation would not be brought forward notionally and set off against the current year income in which deduction u/s. 80IA(iv) has been claimed. The Ld. Assessing Officer did not accept this contention of the assessee. However, on appeal Ld. First appellate Authority has accepted the cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that there is no income from windmill for the assessment year 2010-11. On the other hand the appellant has submitted that the unabsorbed losses including the unabsorbed depreciation of earlier assessment years in respect of the eligible unit being windmill have already been set off against the income from non-eligible business and for the assessment year under appeal, there is no unabsorbed losses of the windmill. Therefore, for computing the deduction u/s. 80IA(iv) of the Act, no adjustment on account of unabsorbed losses of eligible business on notional basis can be made as if there is only one source of income i.e. eligible business (in the present case windmill). If the unabsorbed losses including depreciation loss of earlier years have already been set off against the income of non-eligible business, then such notional adjustment is outside the purview of sec. 80IA(5) of the Act. The ratio laid down in the various case laws relied upon by the appellant also supports the said contention of the appellant. The Hon'ble Madras High Court in the case of Velayudhaswamy Spinning Mills (P) Ltd. Vs. ACIT 231 CTR 368 (Madras) relied upon by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reads as under: 80-IA. (1) Where the gross total income of an assessee includes any profits and gains derived by an undertaking or an enterprise from any business referred to in sub-section (4) (such business being hereinafter referred to as the eligible business) there shall, in accordance with and subject to the provisions of this section, be allowed in computing the total income of the assessee, a deduction of an amount equal to hundred per cent, of the profits and gains derived from such business for ten consecutive assessment years. (2) The deduction specified in sub-section (1) may, at the option of the assessee, be claimed by him for any ten consecutive assessment years out of fifteen years beginning from the year in which the undertaking or the enterprise develops and begins to operate any infrastructure facility or starts providing telecommunication service or develops an industrial park or develops a special economic zone referred to in clause (iii) of sub-section (4) or generates power or commences transmission or distribution or power or undertakes substantial renovation and modernisation of the existing transmission or distributio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15 years. Option has to be exercised, if it is not exercised, the assessee will not be getting the benefit. Fifteen years is outer limit and the same is beginning from the year in which the undertaking or the enterprise develops and begins to operate any infrastructure activity, etc. Subsection (5) deals with quantum of deduction for an eligible business. The words initial assessment year are used in sub-section (5) and the same is not defined under the provisions. It is to be noted that initial assessment year employed in sub-section (5) is different from the words beginning from the year referred to in sub-section (2). The important factors are to be noted in sub-section (5) and they are as under : (1) It starts with a non obstante clause which means it overrides all the provisions of the Act and other provisions are to be ignored ; (2) It is for the purpose of determining the quantum of deduction; (3) For the assessment year immediately succeeding the initial assessment year ; (4) It is a deeming provision; (5) Fiction created that the eligible business is the only source of inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh Court also considered the scope of section 80-1 and held as follows (page 314 of 271 ITR) : Having considered the rival contentions which follow on the line noticed above, we are of the opinion that on finding the fact that there was no carry forward losses of 1983-84, which could be set off against the income of the current assessment year 1984-85, the recomputation of income from the new industrial undertaking by setting off the carry forward of unabsorbed depreciation or depreciation allowance from previous year did not simply arise and on the finding of fact noticed by the Commissioner of Income-tax (Appeals), which has not been disturbed by the Tribunal and challenged before us, there was no error much less any error apparent on the face of the record which could be rectified. That question would 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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