TMI Blog2024 (3) TMI 1255X X X X Extracts X X X X X X X X Extracts X X X X ..... s in earlier years - HELD THAT:- As can be seen from the above grounds of appeal raised by the Revenue for A.Y. 2012-13, A.Y. 2013-14 the Revenue has not raised any ground related to set-off of losses of earlier years of eligible undertaking and applicability of section 80IA(5) of the Act, though in the assessment orders for A.Y. 2012-13 A.Y. 2013-14, the AO had discussed 80IA(5) and set-off of losses of earlier years of the eligible undertaking. It means Revenue has accepted the decision of ld.CIT(A) and preferred not to file an appeal on the impugned issued before ITAT. Once Revenue has not preferred an appeal on the impugned issue before ITAT for A.Y. 2012-13, A.Y. 2013-14 A.Y. 2014-15, means the impugned issue has attained finality. In these facts and circumstances of the case, Revenue cannot raise the impugned issue for A.Y. 2020-21 as Revenue has accepted the decision of ld.CIT(A) for earlier years as discussed above. Therefore, Revenue s Ground No.3 is not maintainable. As deciding on merits once the earlier years losses of eligible undertakings have been set-off against the profit from another business, then those losses will not be carry forwarded notionally to set-off aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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. The AO disallowed assessee s claim of deduction under section 80IA(4) of the Act. It is observed in the assessment order that assessee had installed wind mills and solar power plants. Assessee had claimed deduction under section 80IA(4) of the Act on these wind mills and solar power plants. The details of the wind mills and solar power plants as appearing in the assessment order are reproduced as under : s No Location and Machine No Capacity-MW Date of Commissioning Assessment Year- relevant to commissioning the unit Initial Assessment Year selected u/s 80IA(2) Entitlement u/s 80IA for current A. Y. 1 Rajasthan - J-45 0.350 31.03.2004 2004-05 2011-12 2 Dhulia - K- 97 1.250 20.09.2005 2006-07 2011-12 18,99,315/- 3 Nandurbar - K -414 1.250 06.03.2006 2006-07 2011-12 13,36,489/- 4 Sinner- AD - 27 1.500 30.03.2009 2009-10 2013-14 1,45,53,131/- 5 Sangli- GP -44 1.250 31.03.2012 2012-13 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which was commissioned on 31.03.2015. Ld.AR submitted that the first wind mill was commissioned on 31.03.2004. However, as per section 80IA(2), assessee has freedom to choose the initial assessment year for the purpose of claiming deduction under section 80IA(4) of the Act, accordingly, for the first wind mill, though the wind mill was commissioned on 31.03.2004, the assessee chose initial assessment year as A.Y. 2011-12. Similarly, the second wind mill was commissioned on 20.09.2005 in Dhuliya, Maharashtra, but assessee chose the initial assessment year as 2011-12. Ld.AR further explained date of commissioning and initial assessment year for all other wind mills. Ld.AR submitted that each wind mill is treated as a separate undertaking for the purpose of deduction under section 80IA(4) of the Act. Therefore, each wind mill is eligible for claiming deduction under section 80IA(4) for a period of ten years, starting from the initial assessment year, out of fifteen years. Therefore, for the first three wind mills assessee claimed initial assessment year as 2011-12. Accordingly, the first three wind mills will be eligible for deduction under section 80IA(4) for ten years starting from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te unit for allowing deduction u/s. 80IA(4) of the Act. Hence, the impugned order is upheld and the appeal of Revenue is dismissed. 6.1 Thus, in earlier years, ITAT has allowed assessee s claim of deduction under section 80IA(4) treating each wind mill as a separate undertaking and treating solar power plant as a separate undertaking. Since there are no changes in the facts, we are duty bound to follow the decision of Co-ordinate Bench of ITAT in assessee s own case mentioned above. Accordingly, we hold that each wind mill and solar power plant is a separate undertaking for the purpose of calculation of 80IA(4) deduction. Accordingly, Ground No.1 2 are dismissed. 7. In the result, Ground No.1 2 of the Revenue are dismissed. 8. Ground No.3 is as under : 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 busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f. 8.1.3 Similarly, for A.Y. 2012-13 Revenue raised the following grounds of appeal before ITAT : 1. Whether on the facts and circumstances of the case and in law the learned CIT(A) justified in deleting the addition of Rs. 90,17,493/- made on account of u/s. 80IA(4)? 2. The appellant craves leave to add or amend the grounds of appeal on or before the appeal is heard and disposed off. 8.1.4 Similarly, for A.Y. 2014-15 Revenue raised the following grounds of appeal before ITAT : 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. 2,40,82,745/-? 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. 3. It is prayed that the order of Commissioner of Income Tax (Appeals)-5, Pune be set aside and that of assessing officer be restored. 8.1.5 Thus, as can be seen from the above grounds of appeal raised by the Revenue for A.Y. 2012-13, A.Y. 2013-14 the Revenue has not raised any ground related to set-off of losses of earlier years of eligible undertaking and applicability of section 80IA(5) of the Act, thou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in accordance with and subject to the provisions of the section, be allowed, in computing the total income of the assessee, a deduction of an amount equal to 100 per cent, of the profits and gains derived from such business for ten consecutive assessment years. Deduction is given to eligible business and the same is defined in subsection (4). Sub-section (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 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. Sub-section (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 subsection (5) and they are as under: (1) It starts with a non obstante clause which m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e reads as follows: Clause 30(iii). In computing the quantum of 'tax holiday' profits in all cases, taxable income derived from the new industrial units, etc., will be determined as if such units were an independent unit owned by a taxpayer who does not have any other source of income. In the result, the losses, depreciation and investment allowance of earlier years in respect of the new industrial undertaking, ship or approved hotel will be taken into account in determining the quantum of deduction admissible under the new section 80-1 even though they may have been set off against the profits of the taxpayer from other sources. 21. We are not agreeing with the counsel for the Revenue. We are, therefore, of the view that loss in the year earlier to the 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).' 14. As would be evident, the Division Bench of the Madras High Court in the Velayudhaswamy Spinning Mills (P.) Ltd. case (supra) has broken down sub-section (5) of Section 80IA of the Act and analyse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overrides all the provisions of the Act and other provisions are to be ignored. In the absence of non obstante clause, what the judgment of the Madras Court states is the legal position, because of the non obstante clause, the set off amount against other income of the assessee has to be ignored and because of the fiction created in the sub-section notionally, the set losses is to be treated as losses being carried forward and after deducting the said losses, the profit prior to business is to be calculated, i.e., precisely what the Special Bench has stated and the relevant portion of the judgment reads as under: From the 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 often years from the initial assessment is contemplated. It does not allow the Revenue to look backward and find o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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