ITAT Pune: Deduction u/s.80IA for Windmill Profits Upheld

The Appellate Tribunal ITAT Pune ruled in favor of the assessee in a case concerning the denial of deduction u/s.80IA on profits from windmills. The primary issue was the determination of the 'initial assessment year' for claiming the deduction. The Tribunal held that the 'initial assessment year' should align with the year of first deduction claim, rejecting the AO's imposition of a different assessment year. Citing statutory provisions and recent decisions, the Tribunal allowed the appeal, affirming the assessee's eligibility to claim the deduction for the Assessment Year 2006-07.

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Issues:
- Denial of deduction u/s.80IA on profits from windmills

Analysis:
The appeal before the Appellate Tribunal ITAT Pune concerned the denial of deduction u/s.80IA on profits from windmills for the Assessment Year 2006-07. The primary issue raised was the determination of the 'initial assessment year' for claiming the deduction. The assessee had set up a windmill for power generation in the relevant period and claimed the deduction for the first time in A.Y. 2004-05. The dispute arose as the AO and CIT(A) disagreed on whether the 'initial assessment year' was the year of first operation or the year of first deduction claim. The assessee contended that the 'initial assessment year' should be the year of first deduction claim, not the year of first operation.

The assessee argued that the 'initial assessment year' should be the year in which the deduction was first claimed, citing precedents where the Tribunal had ruled in favor of the assessee in similar cases. The Departmental Representative, on the other hand, supported the CIT(A)'s findings, emphasizing the lack of profits in the impugned assessment year for claiming the deduction. The Departmental Representative relied on a past decision to support the denial of the deduction.

After hearing both parties and reviewing the relevant provisions, the Tribunal observed that the assessee had chosen A.Y. 2004-05 as the 'initial assessment year' for claiming the deduction u/s.80IA. The Tribunal referred to the statutory provisions granting the assessee the option to select the 'initial assessment year' and held that the AO erred in thrusting a different assessment year on the assessee. The Tribunal emphasized that the 'initial assessment year' should align with the year of first deduction claim as per the statutory provisions.

The Tribunal also noted a recent decision reaffirming the position on the 'initial assessment year.' It dismissed the Departmental Representative's reliance on an older decision, stating that subsequent rulings by the Hon'ble Madras High Court had settled the issue. Consequently, the Tribunal set aside the impugned order and allowed the appeal of the assessee, affirming the eligibility to claim the deduction u/s.80IA on profits from windmills for the impugned assessment year.

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