TaxTMI 
TaxTMI 
TaxTMI 
2007 (10) TMI 354
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....e claimed deduction under Section 80-IA for the first time in the current assessment year viz. asst. yr. 2004-05. On going through the P&L a/c, it is seen that the assessee has been setting off loss from these three units against in come of the company for the earlier years. This is the first year of claim of deduction under Section 80-IA. According to the AO while computing the gross total income, the notional brought forward loss has to be taken into account first and after this, if any remaining profit is available then the deduction under Section 80-IA has to be given. Being aggrieved the assessee went in appeal before the CIT(A). The CIT(A) considered submission of assessee and observed that provisions of Section 80-IA are to be applied only in the year in which the deduction is claimed. But when the claim is made, deduction has to be computed as if such eligible business were the only source of income of the assessee during the previous year relevant to the initial assessment years and to every subsequent assessment year. Therefore, the only interpretation of this can be that the earlier years' losses are to be notionally brought forward and adjusted and arrive at what ex....
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....e applied in the case of the assessee in respect of the years prior to the year under appeal. Section 80-IA(5) refers only to assessment years; when Sub-section (1) of 80-IA is applicable, i.e. when the deduction in that section is claimed. If the deduction is not at all claimed, then provision of Sub-section (1) is not applicable and consequently provision of Sub-section (5) is also not applicable. 4.1 The learned Counsel submitted that: (b) Sub-section (2) of Section 80-IA gives an option to the assessee to claim deduction under Sub-section (1) of Section 80-IA for any 10 consecutive years within 15 years from the year of generation of electricity. Therefore, when the assessee does not opt for deduction under Section 80-IA in the initial years, the provision of Section 80-IA itself will not apply. So, for the period when this was not claimed, provision of Sub-section (1) is not at all applicable. 4.2 The learned Counsel submitted that: (c) Sub-section (5) becomes applicable from 'initial assessment year'. But the words 'initial assessment year' have not been defined in Section 80-IA or Section 80-IB in this year. However, a reading of Sub-section (5) would c....
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....er Section 80-IA was claimed in the subsequent year of commercial production. Mumbai Tribunal held that the year in which the relief was claimed was the initial assessment year and therefore, there was no question of carrying forward unabsorbed depreciation from any year prior to the initial assessment year. 5. On the other hand, the Departmental Representative relied on the Tribunal decision in the case of Prasad Productions (P) Ltd. v. Dy. CIT (supra) wherein it is held: Because of non obstante clause contained in Section 80-I(6) the provisions will have overriding effect over other provisions of the Act. Section 80-I(6) does enact a legal fiction providing that the profits and gains of new industrial undertaking shall be computed as if the new industrial undertaking were the only business of the assessee from the date of its establishment and the past years' depreciation and losses are to be set off against the income of assessee from the undertaking. Therefore, the new industrial undertaking is retrospectively quarantined or isolated from the other income-producing activity for determining the profits and gains for the purpose of eligibility under Section 80-I. He furth....
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....e the only source of income of the assessee during that assessment year. This is what which can be reasonably and harmoniously emerged from and derived out on conjoint reading of Sections 80-IA(5), 80A, 80AB and 80B(5) of the Act. 6. We have heard the rival submissions and perused the material on record. We have gone through the case law relied on by the Departmental Representative. These case law are relating to the assessment years prior to the amendment inserted by Finance Act, 1999. The new amended Section 80-IA came into force from 1st April, 2000. Hence the new amended Section 80-IA is applicable to the facts of the case. Now let us examine the case in view of the new amendment in Section 80-IA. 80-IA. Deductions in respect of profits and gains from industrial undertakings or enterprises engaged in infrastructure development, etc.-- (1) Where the gross total income of an assessee includes any profits and gains derived by an undertaking or an enterprise from any business referred to in Sub-section (4) (such business being hereinafter referred to as the eligible business), there shall, in accordance with and subject to the provisions of this section, be allowed, in computi....
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.... first year of relief then it continues for further 9 consecutive years. To claim this relief the undertaking is to be set up during the period 1st April, 1993 to 31st March, 2006. This is as per Section 80-IA(4)(iv). Section 80-IA(2) clearly states that assessee can opt for year of deduction for any 10 consecutive years out of 15 years taken from the first year in which the undertaking or enterprise develops and begins to operate any infrastructure activity. It can be seen that Section 80-IA(2) does not mandate that first year of 10 consecutive assessment years should be always the first year of set up of enterprise. If the intention of the legislature is that the first year of set up is the initial assessment year to claim deduction under Section 80-IA, then there is no meaning giving option to the assessee to claim deduction for 10 consecutive assessment years out of 15th years. The meaning of the Section 80-IA(2) is that the assessee can exercise the option in any 10 consecutive years starting from the first year in which the undertaking begins to operate any infrastructure facility. If the assessee opts to exercise the claim for first year, it should continue to claim the dedu....
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....1999-2000 is initial assessment year. But this letter is contrary to the findings of the lower authorities. The lower authorities categorically observed that the first year in which deduction was claimed was 2004-05. We have already narrated in the facts of the case that if the facts stated by the AO or CIT(A) are wrong the Departmental Representative is required to adduce the evidence as per Rules 10 and 29 of ITAT Rules, 1963 which read as follows: Rule 10. Filing of affidavits.--Where a fact which cannot be borne out by, or is contrary to, the record is alleged, it shall be stated clearly and concisely and supported by a duly sworn affidavit. Rule 29. Production of additional evidence before the Tribunal--The parties to the appeal shall not be entitled to produce additional evidence either oral or documentary before the Tribunal, but if the Tribunal requires any document to be produced or any witness to be examined or any affidavit to be filed to enable it to pass orders or for any other substantial cause, or, if the IT authorities have decided the case without giving sufficient opportunity to the assessee to adduce evidence either on points specified by them or not specifi....