Court allows Assessee to choose initial assessment year for Section 80-IA deduction based on CBDT circular

The Court allowed the Assessee to choose the initial assessment year for claiming deduction under Section 80-IA of the Income Tax Act based on a circular issued by the Central Board of Direct Taxes. The Division Bench emphasized adherence to the circular's clarification on the term 'initial assessment year' and directed Assessing Officers to allow deductions in accordance with the circular, leading to the dismissal of the appeals. The Court instructed pending litigation on the interpretation of the 'initial assessment year' not to be pursued, disposing of the Appeals with no costs imposed on either party.

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Issues:
Interpretation of Section 80-IA of the Income Tax Act, 1961 for claiming deduction under initial assessment year.

Analysis:
The judgment revolves around the interpretation of Section 80-IA of the Income Tax Act, 1961 concerning the deduction claim under the initial assessment year. The controversy in the present Appeals is addressed in light of a Division Bench judgment in a previous case. The Court allowed the Assessee to choose the initial assessment for claiming deduction under Section 80-IA based on a circular issued by the Central Board of Direct Taxes. The question of law raised by the Revenue pertains to the applicability of a decision in a specific case regarding the deduction on windmill income under Section 80-IA.

The Division Bench, in a previous case, consistently followed a decision despite the Supreme Court ordering notice. The circular issued by the Central Board of Direct Taxes clarified the term 'initial assessment year' under Section 80-IA(5) of the Income Tax Act, emphasizing the assessee's option to choose the first year for claiming deduction for ten consecutive years out of a prescribed slab. The circular directed Assessing Officers to allow deduction under Section 80-IA in accordance with the clarification provided, ensuring satisfaction of all prescribed conditions. Pending litigation related to the interpretation of the 'initial assessment year' was instructed not to be pursued.

The judgment concludes that the second question of law raised in the present case is covered by the circular, leading to the dismissal of the appeals. The Court emphasizes adherence to the clarification provided in the circular for allowing deductions under Section 80-IA. Consequently, the present Appeals are disposed of accordingly, with no costs imposed on either party.

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