Tribunal affirms deduction under Income Tax Act, rejects Revenue's argument.

The Tribunal upheld the CIT(A)'s decision to allow the deduction under section 80IA(4)(iv) of the Income Tax Act for the assessee. The Tribunal rejected the Revenue's argument that the deduction should be based on eligible business as the sole income source and that losses from earlier years should be verified before allowing the deduction. The Tribunal emphasized that the assessee had correctly claimed the deduction and had absorbed losses from previous years. The Revenue's appeal was dismissed, affirming the allowance of the deduction for the assessee.

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Issues:
- Appeal against order of CIT(A) allowing deduction under section 80IA(4)(iv) of the Income Tax Act 1961.

Analysis:

Issue 1: Allowability of Deduction under section 80IA(4)(iv) of the Act

The Revenue contested the allowance of deduction under section 80IA(4)(iv) of the Act by the CIT(A). The Revenue argued that the quantum of deduction should be computed based on eligible business as the only source of income, after adjusting brought forward unabsorbed depreciation against the current year's income. The Assessing Officer disallowed the deduction claimed under section 80IA(4) of the Act, stating that the eligible business should be considered the sole income source, and unabsorbed depreciation should be set off against the profit of such business. However, the CIT(A) reversed the Assessing Officer's decision, allowing the deduction claimed by the assessee. The CIT(A) determined that the provisions of section 80IA(5) of the Act would be applicable from the assessment year 2010-11 onwards, and since the assessee claimed the deduction for the first time in the assessment year 2010-11, the claim was valid. The CIT(A) relied on previous decisions and allowed the claim of the assessee, reversing the Assessing Officer's order.

Issue 2: Verification of Losses Absorption and Previous Year Adjustments

The Revenue contended that losses from earlier years should be absorbed and verified before allowing the deduction under section 80IA(4)(iv)(a) of the Act. The Departmental Representative stressed the need for verification, citing a decision of the Bombay High Court and a Tribunal ruling. However, the Authorized Representative for the assessee argued that the issue was previously resolved in the assessee's favor for the assessment year 2010-11 by the Tribunal. The Authorized Representative also referred to a CBDT circular for clarification. The Tribunal noted that in the instant case, losses from earlier years had been absorbed and adjusted up to the assessment year 2009-10. The Tribunal found no merit in the Revenue's argument, especially since the claim was allowed in the preceding year. The Tribunal held that the assessee was entitled to the deduction under section 80IA(4)(iv)(a) of the Act, dismissing the Revenue's appeal.

In conclusion, the Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s decision to allow the deduction under section 80IA(4)(iv) of the Act for the assessee.

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