TMI Blog2015 (10) TMI 2808X X X X Extracts X X X X X X X X Extracts X X X X ..... ried forward and taken into consideration for the purpose of computation of deduction u/s.80IA - HELD THAT:- As decided in Velayudhaswamy Spinning Mills (P) Ltd [ 2010 (3) TMI 860 - MADRAS HIGH COURT ] 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 does not allow the Revenue to look backward and find out if there is any loss of earlier years and bring forward notionally even though the same were set off against other income of the assessee and the set off against the current income of the eligible business, Once the set off is taken place in earlier year against the other income of the assessee, the Revenue can not rework the set off amount and bring it notionally. Fiction created in sub-section does not contemplate to bring set off amount notionally. Fiction is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e purposes and therefore the assessee cannot claim deduction u/s.80IA on the said units. He also submitted that the CIT(Appeals) failed to take note in the assessee s case that there may be an increase in profits by way of cost reduction and such increase in profits could not be considered as profits derived from an eligible industrial undertaking u/s.80-IA of the Act. Further, the ld. DR submitted that the SLP is pending before the Supreme Court against the High Court s order in ITCA Nos.537 to 540 of 2011 dated 01.02.2012 on this issue in assessee s own case. 4. The ld. AR relied on the order of this Tribunal in assessee s own case in ITA Nos. 328 to 331/Mds/2011 dated 13.5.2011. 5. We have heard both the parties and perused the material on record. As submitted by the ld. AR, similar issue was considered and decided in favour of the assessee by this Tribunal in assessee s own case cited supra, wherein it was observed as under : 8. The issue here therefore boils down to whether power produced from TG-3 Boiler 4 and TG-4 Boiler 5 units were also eligible for deduction under Section 80- IA of the Act, on par with the wind farms. Contention of the Revenue is that these t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferentiation. Even otherwise, Hon'ble jurisdictional High Court in the case of Tanfac Industries Ltd. (supra) had held that power produced using steam which was generated in the course of the main production activity of an assessee would still be eligible for claim of deduction under Section 80-IA of the Act. If we have a look at para 8 of the order of Hon'ble jurisdictional High Court in the case of Thiagarajar Mills Ltd. (supra) reproduced by us at para 7 above, their Lordship has held that an assessee should have set up an undertaking or an enterprise and from and out of which electricity should have been generated whether for captive use or otherwise for being eligible for 80-IA deduction. No doubt, here, it is not coming out of the orders of the authorities below whether the turbo generators where powered by diesel or powered by steam or powered by any other byeproducts produced by the assessee in the course of its main activity of producing paper. But, nevertheless this would not by itself be sufficient to hold that the turbo generators were not an undertaking by itself eligible for claiming deduction under Section 80-IA of the Act in respect of power generated theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year 2006-07. 9. We have heard both the sides and perused the material on record. Similar issue was considered in favour of the assessee by this Tribunal in assessee s own case for assessment year 2006-07 vide order dated 30.6.2011. Similarly in the case of Velayudhaswamy Spinning Mills (P) Ltd. v. ACIT(supra), the Jurisdictional High Court has held as under: 13. Sec.80-IA reads as follows: [(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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... derived from such business for ten consecutive Assessment Years. Deduction is given to eligible business and the same is defined in sub-s (4). Subss (2) provides option to the assessee to choose 10 consecutive Assessment Years out of 15 years. Option has to be exercised. If it is not exercised, the assessee will not begetting 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. Sub-s(5) deals with quantum of deduction for an eligible business. The words initial assessment year are used in sub-s(5) and the sa me is not defined under the provisions. It is to noted that initial assessment year employed in sub-s(5) is different from the words beginning from the year referred to in sub-s(2) Important factors are to be noted in sub-s(5) and they are as under:- (1) It starts with 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 Assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that income received from sale of carbon credit is considered as capital receipt and not business receipt and not liable for tax under the Act. Accordingly, we agree with the finding of the Commissioner of Income-tax(Appeals) on this ground and dismiss the ground of appeal taken by the Revenue. 14. Coming to the cross-objection, we find that there is a delay of 27 days. The assessee has filed an affidavit stating the reasons for delay. After going through the reasons stated in the affidavit, we are of the opinion that there is a reasonable cause for the delay of 27 days in filing the cross-objection. Therefore, the same is condoned and the cross-objection is admitted for adjudication. 15. After hearing both the sides, we are of the opinion that the issue, regarding carbon credit receipt raised by the assessee is decided in favour of the assessee vide paragraph 13 above while dealing with the Revenue s appeal. Being so, the cross objection is dismissed as infructuous. 16. In the result, the appeal of the Revenue is dismissed and the cross objection is dismissed as infructuous. Order pronounced on Friday, the 16th of Oct., 2015 at Chennai. - - TaxTMI - TMITax - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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