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TMI Blog2024 (3) TMI 1255X X X X Extracts X X X X X X X X Extracts X X X X ..... law the CIT (A) is correct in holding that for the purposes of section 80IA(4) all the windmills installed by the assessee are to be considered as a separate undertaking and deduction u/s 80IA(4) be computed independently for each windmill and not on consolidated basis? 3. Whether on the facts and in the circumstances of the case & in the law, the CIT (A) is correct in holding that in view of the provisions of section 80IA(5) of the Act the profit from eligible business for purpose of deduction u/s 80IA of the Act need not be computed after deduction of the notional brought forward losses and depreciation of eligible business even when the same had been set off against income from non-eligible business in earlier years?" Brief facts of the case : 2. The assessee is a partnership firm. It filed return of income electronically for A.Y. 2020-21 on 31.12.2020 declaring the total income of Rs. 15,07,05,950/-. The assessee's case was selected for scrutiny, various notices were issued to the assessee. During the assessment proceedings, assessee made an elaborate submission. The Assessing Officer(AO) observed that assessee is not eligible for deduction under section 80IA(4) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessment order, assessee filed appeal before the ld.CIT(A). The ld.CIT(A)allowed the appeal of the assessee on the ground that on similar facts and circumstances for A.Y. 2013-14 ld.CIT(A) had allowed assessee's appeal. The ld.CIT(A) reproduced the relevant part of the order for the A.Y. 2013-14. 3. Aggrieved by the order of the ld.CIT(A), Revenue filed appeal before this Tribunal. Submission of the ld.DR: 4. The ld.DR for the Revenue submitted that as per section 80IA(5), the assessee has to compute profit of the eligible business as if that was the only business. Therefore, ld.DR submitted that if assessee calculates each wind mills profits from the first year, then, there will be carry forward losses and hence there will not be any eligible profits. Ld.DR read out the relevant part of the assessment order. Submission of the ld.AR: 5. The ld.AR of the assessee submitted that assessee have six(06) wind mills at different locations. These wind mills were installed in various years. Similarly, assessee have solar power plant in Telangana State which was commissioned on 31.03.2015. Ld.AR submitted that the first wind mill was commissioned on 31.03.2004. However, as per s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No.1 & 2 of the Revenue are related to deduction under section 80IA(4) computed in such a way that each wind mill was treated as a separate undertaking. It is a fact that ITAT by consolidated order for A.Y. 2012-13, 2013-14 and 2014-15 in ITA No's.76/PUN/2019, 2614/PUN/2017 and 07/PUN/2018 has held as under : "8. Since, the issue has already been considered by the Tribunal and has held that each unit of windmill has to be considered separately for computing deduction u/s. 80IA(4), we see no reason to deviate from the view already taken. No contrary judgment has been placed on record before us by the Revenue. The Id. DR has pointed that the Department has filed appeal against the Tribunal's decision in the case of M/s. D.J.Malpani Vs. ACIT (supra), however, no order by the Hon'ble High Court either staying or reversing the aforesaid decision of Tribunal has been furnished by the Id. DR. 9. We do not find any infirmity in the order of Commissioner of Income Tax (Appeals) in allowing assessee's claim of deduction u/s. 80IA(4) considering each windmill as separate unit for allowing deduction u/s. 80IA(4) of the Act. Hence, the impugned order is upheld and the appeal of Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsorbed losses or unabsorbed depreciation which required consideration under the provisions of Section 80IA(5) of I.T.Act 1961. Respectfully, following the decision of Hon'ble ITAT, Pune Bench, Pune referred hereinabove the claim of the Appellant as regards to the grant of deduction u/s 80IA(4) of I.T.Act 1961 is in order and cannot be faulted with. 4.8 In view of the discussion in the preceding paragraphs, I hold that, the Appellant has to be granted the deduction as claimed u/s 80IA at Rs. 194.06 Lakhs. The AO is directed to allow the deduction so claimed. The Appellant succeeds in these Grounds of Appeal which are accordingly allowed." Unquote. 8.1.2 The Revenue filed an appeal against the order of ld.CIT(A) for A.Y. 2013-14 before ITAT. Revenue raised following grounds for A.Y. 2013-14 : "1. Whether on the facts and circumstances of the case, the CIT(A) erred in allowing the appellant's claim for deduction u/s 80IA(4) of the I.T.Act amounting to Rs. 1,94,06,597/-? 2. The appellant craves to leave, add, amend or alter the ground(s) of appeal on or before the appeal is heard and disposed off." 8.1.3 Similarly, for A.Y. 2012-13 Revenue raised the following grounds of appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness. Therefore, AO relied on section 80IA(5) and claimed that if assessee's stand along business of power generation is considered, it will result in loss due to carry forward losses of earlier years. However, we make it clear here that the AO has not specified any factual loss vis-a-viz any specific year. In the assessment order, AO has merely made a generalized statement. Be it as it may be, it is observed that this issue has been decided by Hon'ble Delhi High Court in favour of assessee in the case of PCIT Vs. Sterling Agro Industries Limited 455 ITR 65 (Delhi) order dated 20.02.2023 held as under : "13.3 Insofar as the proposed issue is concerned, the following observations made by the Division Bench of the Madras High Court in the Velayudhaswamy Spinning Mills (P.) Ltd. case (supra), being relevant, are extracted hereafter: '16. From a reading of sub-section (1), it is clear that it provides that 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), i.e., referred to as the eligible business, there shall, in accordance with and subject to the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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. A fiction created in sub-section does not contemplates to bring set off amount notionally. The fiction is created only for the limited purpose and the same cannot be extended beyond the purpose for which it is created. ** ** ** 19. From a reading of the above, the Rajasthan High Court held that 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 section 80-1 for the purpose of computing admissible deductions thereunder. We also agree with the same. We see no reason to take a different view. 20. The standing counsel appearing for the Revenue is unable to bring to our notice any relevant material or any compelling reason or any contra judgment of other courts to take a different view. He only relied heavily on the Memorandum explaining the provisions in the Finance (No. Bill, 1980, [1980] 123 ITR (St.) 154 to support this case and the same reads as follows: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on (5) of Section 80IA does not envisage such an adjustment. The fiction which has been created is simply this: the eligible business will be the only source of income. There is no fiction created, that losses which have already been absorbed, will be notionally carried forward and adjusted against the profits derived from the eligible business to quantify the deduction that the assessee could claim under section 80IA of the Act. 14.4 A perusal of the judgment rendered in the Microlabs Ltd. case (supra) would show that the Karnataka High Court gave weight to the fact that sub-section (5) of Section 80IA commenced with a non-obstante clause. It was based on this singular fact that the Karnataka High Court chose to veer away from the view expressed by the Madras High Court in the Velayudhaswamy Spinning Mills (P.) Ltd. case (supra). This aspect emerges on an appraisal of paragraph 6 of the judgement of the Karnataka High Court rendered in Microlabs Ltd. case (supra). 14.5 We have read the aforementioned portion of the judgment along with Mr Rai. For the sake of convenience, the same is extracted hereafter: 6. It is stated that the non-obstante clause in sub-section (5) means it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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