Tribunal overturns deduction disallowance for windmill units, instructs reassessment for proper application of law and provisions.

The Tribunal allowed the appeal, directing a reassessment of both issues to ensure proper application of the law and relevant provisions. The disallowance of the claim of deduction u/s.80IA (4) (iv) (a) for windmill units was overturned, emphasizing the eligibility to set off losses against current income. Additionally, the disallowance of the depreciation amount was also set aside, with the Tribunal instructing a fresh consideration aligned with relevant provisions.

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Issues:
1. Disallowance of claim of deduction u/s.80IA (4) (iv) (a) of the Act in respect of windmill units.
2. Disallowance of depreciation amount while computing the deduction allowable u/s.80IA (4) (iii) of the Act.

Issue 1: Disallowance of Claim of Deduction u/s.80IA (4) (iv) (a) of the Act:
The appellant, engaged in property development and windmill business, claimed deduction u/s.80IA (4) (iv) (a) for windmill units. The AO set off losses from previous years against current income, disallowing the deduction. The appellant cited precedents and CBDT Circular No.01/2016 to support their claim. The CIT(A) disagreed, stating the initial assessment year was correctly chosen and losses could not be set off. The Tribunal disagreed, citing a similar case where losses were allowed to be set off against income. The Tribunal directed CIT(A) to reconsider and allow the claim, emphasizing the eligibility to set off losses against current income.

Issue 2: Disallowance of Depreciation Amount:
The question was whether depreciation should be reduced from the claim of deduction u/s.80IA (4) (iii) or while computing total income. The CIT(A) upheld the AO's decision to restrict the deduction, citing a jurisdictional High Court case. The Tribunal found the CIT(A) misunderstood the issue and directed a reevaluation. The Tribunal noted confusion in the CIT(A)'s decision and instructed a fresh consideration of the matter, emphasizing the need to align with relevant provisions. The Tribunal allowed the appeal, subject to proper consideration of the depreciation issue.

In conclusion, the Tribunal allowed the appeal for statistical purposes, directing a reassessment of both issues to ensure proper application of the law and relevant provisions.

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