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TMI Blog2021 (12) TMI 1136X X X X Extracts X X X X X X X X Extracts X X X X ..... see is not maintaining any separate account from which such investments had been made, the provision of Rule 8D are clearly applicable. 1.3 The Ld.CIT(A) has failed to appreciate that the assessee apart from making a bald assertion that it had the interest free funds available for making such investments had not lead any evidence to prove that it had the necessary interest free cash flow during the time of making such investment. 1.4 The Ld.CIT(A) has failed to appreciate that as per Section 106 of Evidence Act, when any fact is especially within the knowledge of any person the burden of proving the fact is upon him. 1.5 The Ld.CIT(A) has erred in facts and in law while deleting the impugned disallowance on the ground no exempt income had been earned by the assessee from such investment. 2. He Ld.CIT(A) has erred in law and on facts in deleting the disallowance of Rs. 2,00,910/- u/s.36(1)(iii) of the Act. 3. The Ld.CIT(A) has erred in law and on facts in allowing the deduction of Rs. 76,33,610/- u/s.80IA(4) of the Act. 4. The Ld.CIT(A) has erred in law and on facts in allowing the depreciation of Rs. 9,52,922/- amount paid to Synefra Engineering & Construction Ltd., whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o exempted dividend income received by the assessee and therefore there cannot be any disallowance under the provisions of section 14A read with rule 8D of Income Tax Rule. In holding so we draw support and guidance from the judgment of Hon'ble Gujarat High Court in the case of CIT vs. Corrtech Energy Pvt. Ltd. reported 45 taxmann.com 116 wherein it was held as under: Section 14A(1) provides that for the purpose of computing total income under chapter IV, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under the Act. In the instant case, the Tribunal has recorded the finding of fact that the assessee did not make any claim for exemption of any income from payment of tax. It was on this basis that the Tribunal held that disallowance under section 14A could not be made. In the process tribunal relied on the decision of Division Bench of Punjab and Haryana High Court in case of CIT v. Winsome Textile Industries Ltd. [2009] 319 ITR 204 in which also the Court had observed that where the assessee did not make any claim for exemption, section 14A could have no application. 8.1 In view o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee at the beginning of the financial year in which amount was advanced stands at Rs. 71,82,47,291/- which is much more than the capital advance as discussed above and this fact is undisputed. Thus it can be safely be presumed that the amount has been advanced by the assessee out of its own fund without involving any borrowed fund. Accordingly, the question of making the disallowance of the proportionate amount of interest on such capital advance does not arise. Hence, we do not find any reason to interfere in the order of the learned CIT (A). Thus we uphold the same. Hence the ground of appeal of the revenue is dismissed. 15. The 3rd issue raised by the Revenue is that the learned CIT (A) erred in allowing the deduction claimed by the assessee for Rs. 76,33,610/- under the provisions of section 80IA of the Act. 16. The assessee in the year under consideration has claimed deduction of its eligible unit being windmill generating the power for Rs. 76,33,610/-. As per the assessee the commercial activities for generating the power using the windmill was commenced from the assessment year 2009-10. However, the assessee has chosen the initial assessment year 2012-13 for claiming t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tial 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 subsection (2). When the assessee exercise the option, the only losses of the years beginning from initial assessment year alone are to be brought forward and not the 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 cannot rework the set off amount and bring it notionally. Fiction created in sub-section does not contemplates to bring set off amount notionally. Fiction is created only for the limited purpose and the same cannot be extended beyond the purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt year later to the year in which the production of electricity commenced. In the present year, there is no unadjusted business loss and depreciation loss and accordingly, the claim has rightly been made by the appellant. Reliance is also placed on recent judgments of ITAT Ahmedabad in the case of Sadbhav Engineering Ltd, 45 taxmann.com 333 and in the case of Jivraj Tea & Industries Ltd. 42 taxmann.com 462. The head note of the decision in the later case is reproduced hereunder:- "Section 80-IA of the Income-tax Act, 1961 - Deductions - Profits and gains from infrastructure undertakings (Computation of deduction) - Whether when an exporter exercises option of choosing initial assessment year as culled out in subsection (2) of Section 80-IA from which it chooses its 10 years of deduction out of 15 years, then only losses of years starting from initial assessment year alone are to be brought forward; loss prior to initial assessment year which has already been set-off cannot be brought forward and adjusted into period often years from initial assessment year - Held, yes- Whether where assessee had not suffered any loss in relevant years and brought forward loss or depreciation did ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the section. Hence, the term 'initial assessment year' would mean the first year opted for by the assessee for claiming deduction u/s 80-IA. However, the total number of years for claiming deduction should not transgress the prescribed slab of fifteen or twenty years, as the case may be and the period of claim should be availed in continuity. The Assessing Officers are, therefore, directed to allow deduction u/s 80-IA in accordance with this clarification and after being satisfied that all the prescribed conditions applicable in a particular case are duly satisfied. Pending litigation on allowability of deduction u/s 80 IA shall also not be pursued to the extent it relates to interpreting 'initial assessment year' as mentioned in sub-section (5) of that section for which the Standing Counsels/D.R.s be suitably instructed. 20.2 From the above there remains no ambiguity that it is the option of the assessee to choose the initial assessment year. Admittedly, the assessee has chosen the assessment year as the initial assessment year 2012-13 for claiming the deduction under the provisions of section 80 IA of the Act. Now the controversy arises in the given facts and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nst 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 cannot rework the set off amount and bring it notionally. Fiction created in sub-section does not contemplates to bring set off amount notionally. Fiction is created only for the limited purpose and the same cannot be extended beyond the purpose for which it is created. Thus, loss in the year earlier to initial assessment year already absorbed against the profit of other business cannot be notionally brought forward and set off against the profits of the eligible business, as no such mandate is provided in section 80-IA(5). 20.3 In view of the above and after considering the facts in totality, we hold that the assessee is eligible for deduction under section 80IA of the Act without setting of/adjusting the unabsorbed depreciation of earlier years as alleged by the AO. Hence, we do not find any infirmity in the order of learned CIT (A) and thus we decline to interfere in his order. Thus the ground of appeal of the Revenue is dismissed. 21. The last issue raised by the revenue is that the learned CIT(A) erred in deleting the disall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same is deleted. 24. Being aggrieved by the order of the learned CIT (A), the revenue is in appeal before us. 25. Both the learned DR and the AR before us vehemently supported the order of the authorities below as favourable to them. 26. We have heard the rival contentions of both the parties and perused the materials available on record. There is no dispute to the fact that the cost/expense was incurred by the assessee to keep the surrounding land where the windmill was installed as open and vacant. It was incurred for the effective functioning and maximum output of the windmill. Admittedly, the cost was incurred by the assessee for the purpose of the business and this fact was not doubted by the authorities below. The assessee has treated such cost as part of the cost of the windmill and therefore, the assessee has claimed the depreciation thereon. To our understanding, the impugned expenses were not incurred by the assessee for the acquisition of the land rather cost was incurred for effective functioning of the windmills. Therefore, such cost was directly connected with the functioning of windmill. Thus there was commercial expediency to incur the expenses hence assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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