Assessee Wins Appeal for Deduction in Windmill Projects; Court Rules on Initial Assessment Year

The Tribunal allowed the appeal of the assessee regarding the denial of deduction under section 80IA for windmill projects and the notional adjustment of past losses against business income. Relying on a CBDT circular and a Madras High Court judgment, the Tribunal held that the initial assessment year for claiming the deduction is the year chosen by the assessee. The Tribunal directed the Assessing Officer to allow the deduction after verifying the initial assessment year selected by the assessee, following the precedent set in a previous case. The decision favored the assessee and was issued on 20.07.2016.

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Issues:
- Denial of deduction under section 80IA for windmill projects
- Notional adjustment of past losses against business income

Analysis:
1. The appeal concerns the denial of deduction under section 80IA for windmill projects installed in earlier years and the requirement to notionally adjust past losses against business income. The assessee contested the order of the CIT(A) upholding the view taken by the A.O.

2. The Ld. Counsel for the assessee highlighted a similar issue in the A.Y. 2008-09, where the Tribunal allowed the assessee's appeal. The Ld. D.R. acknowledged that the issue was covered by the Tribunal's order for the earlier year.

3. The Tribunal for the A.Y. 2008-09 had considered the deduction under section 80IA extensively. The Assessing Officer disallowed the deduction citing non-compliance with the Act's provisions regarding set off of unabsorbed losses. The CIT(A) affirmed this disallowance.

4. The assessee argued that a CBDT circular and a judgment of the Madras High Court supported their claim for deduction under section 80IA. The circular clarified the term "initial assessment year," stating it is the year opted by the assessee for claiming the deduction, not the year of business commencement.

5. The Tribunal, after analyzing the relevant provision of the Act, accepted the assessee's contentions. It held that the initial assessment year is the year chosen by the assessee for claiming the deduction under section 80IA. The Tribunal directed the Assessing Officer to allow the claim after verifying the initial assessment year chosen by the assessee.

6. Consequently, the Tribunal allowed the appeal of the assessee, following the precedent set in the A.Y. 2008-09 case. The decision was pronounced in favor of the assessee on 20.07.2016.

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