TaxTMI 
TaxTMI 
2011 (1) TMI 173
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....aim of the assessee that losses relating to the industrial undertaking which is already absorbed against other income need not be notionally brought forward against the profit of the current year while allowing the deduction u/s 80IA. The assessees also raised ground in ITA No.40 to 44/H/2006 that the CIT(A) erred in canceling the assessment when the original assessment was completed u/s 143(3) of the Act and all the relevant information at the point of Sec.80IA are furnished before the assessing officer. As such, the it is not open to the CIT(A) to invoke the provisions of sec. 263 of the IT Act. 5. The assessee herein is a company which is carrying on its business in the manufacture and trading of agro chemicals, generation, distribution and sale of power. In the assessment years 2002-03 and 2005-06, assessment was framed u/s 143(3) of the Act wherein the claim of the assessee u/s 80IA was denied on the reason that in view of the specific provisions of section 80IA(5) of the profit from the eligible business for the purpose of determination of the quantum of deduction u/s 80IA of the Act has to be computed after deduction of the notional brought forward losses and depreci....
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....ipatyri, Anantapur District on 31.3.1999. The assessee claimed deduction u/s 80IA on this unit at Rs.11,67,300/-. But the assessee company had losses for the assessment year 1999-2000 and 2000-01 on this unit. It has shown a turnover of Rs.12,85,783/- towards this windmill and claimed expenses at Rs.1,18,483/- and arrived the figure of Rs.11,67,300/-. The assessee set off the brought forward losses against the income of this windmill as per the provisions of section 80IA(5). 8. Further, he submitted that the real intention behind sub section 5 section 80IA is to ensure that the industrial undertaking which is eligible for deduction has to be treated as separate industrial undertaking for initial assessment year and subsequent assessment year to arrive at right quantum of profits that are eligible for deduction i.e., that there is no overlapping of any other income of the undertaking or other undertakings and even if there is any reorganization of that unit subsequent to the claim, the profits of the undertaking should be arrived treating it as a separate unit. Sec.80IA(5) has to be read with section 80IA(8)(9) and (10). The other provisions which give detailed instr....
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....n u/s 80IA without setting off of any brought forward losses shall be when the earlier years losses already absorbed by the income from the other unit of the assessee company. Fiinally, he drew our attention to the following judgements: 1. CIT Vs. Merwer Oil & General Mills Ltd. (271 ITR 311) (Rajas.) wherein it was held: That the question of rectification would have been germane only if there had been carry forward of unabsorbed depreciation and unabsorbed development rebate or any other unabsorbed losses of the previous year arising out of the priority industry and whether it was required to be set off against the income of the current year. In view of the finding that there was no carry forward of allowable deduction under the head depreciation or development rebate which needed to be absorbed against the income of the current assessment year 1984-85, re-computation of income for the purpose of computing permissible deduction u/s 80I for the new industrial undertaking was not required. There was no error apparent on the face of the record which could be rectified. 2. Mohan Breweries & Distilleries Ltd. (116 ITD 241) (Chennai) wherein held that: Assessee having cl....
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....be made. There was no merit in the contention of the assessee that the fiction was for that year alone or that the concept of initial year was dispensed with in the new provision in view of section 80IA(1) of the old provision and section 80IA(2) (iv)(b) sub section (5) (6)(7). Instead of defining the concepts separately by clause (b) to sub section (12) of the pre amended section 80IA, the sub section (2) itself has contained the provisions of the Explanation by providing the period of deduction and the year from which it is to start. Even otherwise the plain reading of the work 'initial year' means the year in which the manufacture or production or other activity begins." 15. We have heard both the parties and perused the materials available on record. In our opinion, the issue relating to computation of 80IA deduction that it has to be computed after deduction of the notional brought forward losses and depreciation of business even though they have been allowed set off against other income in earlier years has been dealt by the Special Bench in the case of ACIT Vs. Gold Mine Shares & Finance (P) Ltd. (113 ITD 209) (SB) (Ahemadabad) and decide the issue against the assess....
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....gument of the assessee counsel is that the assessment for the assessment years 2001-02, 2002-03 and 2003-04 have been completed u/s 143(3) of the IT Act and the assesses have furnished all the information as required for the purpose of assessment and the CIT cannot invoke the provision u/s 263 for the purpose of making roving enquiry and the order of the assessing officer is not erroneous as he has followed one possible view on the issue. We have carefully gone through the argument of the assessee's counsel and also perused the material on record. In our opinion, prejudicial to the interest of revenue appearing section 263 is conjunction with the expression 'erroneous' and that every loss of revenue as a consequence of an order of the assessing officer cannot prejudice to the interest of Revenue. In case, where the assessing officer adopts one of the courses permissible in law where two views are plausible the CIT cannot exercise his power u/s 263 to defer with the assessing officer even if there has been a loss of revenue. On the other hand, when the assessing officer takes a view it is patently unsustainable, the CIT can exercise his powers where the loss of revenue results as a ....