TaxTMI 
TaxTMI 
TaxTMI 
2015 (2) TMI 936
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....ness of power generation, construction and earthmoving. For the A.Y. 2006- 07, assessee filed a return of income declaring total income of Rs. 7,44,078/- which, inter alia, included a claim for deduction u/s 80-IA of the Act amounting to Rs. 25,62,413/- in relation to the profits earned from the activity of power generation in the windmill. The undertaking of the assessee generating power (viz. windmill) was set up in the previous year relevant to the assessment year 2002-03 at Vankusawade, Tal. Pathan, Dist. Satara. In terms of section 80-IA of the Act, the profits derived by such undertaking of the assessee was eligible for the benefit of deduction to the extent of 100% of such profits. This deduction was available for a period of ten consecutive years at the option of the assessee out of the fifteen years beginning from the year in which the undertaking i.e. windmill started generating power. The assessee asserted before the Assessing Officer that such an option was exercised by the assessee w.e.f. 2004-05 and it was explained that the relevant disclosure was made in the income-tax return filed for such assessment year. 5. The bone of contention between the assessee and the Rev....
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....tial assessment year' in this case was 2002-03 being the year of set-up of the windmill. Therefore, the past losses starting from the A.Y. 2002-03 have to be set-off against the profits of this year in order to arrive at the deduction computable u/s 80-IA(1) of the Act for the year under consideration. On the other hand, the plea of the assessee is that the 'initial assessment year' in this case is to be treated as 2004-05 i.e. the year in which assessee exercised the option contained in section 80-IA(2) of the Act of identifying ten consecutive assessment years out of fifteen years for which the deduction is to be availed. It is contended that the expression 'initial assessment year' referred to in section 80-IA(5) is to be understood with respect to A.Y. 2004-05 in this case and therefore, the losses for assessment year prior to 2004-05 cannot be considered, which otherwise also were lying absorbed in the respective years. It is only the losses which have been incurred in the years starting from A.Y. 2004-05 onwards which are to be set off against the profits of the eligible business in order to quantify the deduction u/s 80-IA of the Act. 6. Before us, the learned counsel for t....
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....3 could not have been notionally brought forward and set off against profit for the A.Y. 2004- 05. The Ld. A.R. placed heavy reliance on the decision of Hon'ble Madras High Court in the case of Velayudhaswamy Spinning Mills (P) Ltd Vs. ACIT (Supra). He submitted that the decision of Hon'ble Madras High Court will prevail upon the decision of the Special Bench of the Tribunal in the case of ACIT Vs. Goldmine Shares and Finance (P) Ltd. (Supra) followed by the Pune Bench of the Tribunal in its recent decision in the case of Prima Paper Engg (P) Ltd. Vs. ITO (Supra) and there the assessee did not dispute the fact that the authorities below have decided the issue following the decision of Special Bench of the Tribunal in the case of ACIT Vs. Goldmine Shares.. The Ld. A.R. pointed out that decision of Hon'ble Madras High Court in the case of Velayudhaswamy Spinning Mills (P) Ltd Vs. ACIT (Supra) was not cited before the Pune Bench in the case of Prima Paper Engg (P) Ltd. Vs. ITO (Supra). The Ld. A.R. has also cited the decision of Pune Bench of the Tribunal in the case of ACIT Vs. Aurangabad Holiday Resorts (P) Ltd., (Supra) holding that even a decision of non-jurisdictional High Court ....
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....pleased to hold that such profits are to be computed as if such eligible business is the only source of income of the assessee. The devices adopted to reduce or inflate the profit of eligible business has got to be rejected in view of the overriding provisions of Sub-section (5) of Section 80IA of the Act. 13. Having been considered the above submissions, we find that the issue raised in Ground No. 1 as to what would be the initial A.Y for the purposes of Section 80IA(5) of the Act has been decided in favour of the assessee by the Pune Bench of the Tribunal in the case of Poonawalla Stud and Agro Farm Pvt. Ltd. Vs. ACIT (Supra). In that case after discussing the issue in detail, the Tribunal has come to the conclusion that the initial 'A.Y' for the purpose of claiming deduction u/s. 80IA was the first year in which the assessee claimed the deduction u/s. 80IA (1) after exercising his option as per the provisions of 80IA (2) of the Act. It was held that the Ld CIT(A) has erred in holding that the initial A.Y for the purposes of Section 80IA(2) r.w.s. 80IA (5) was the year in which the a....
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.... as there is no contrary decision of any other High Court on that question. We thus respectfully following the ratio laid down by the Hon'ble jurisdictional High Court in the case of Commissioner of Central Excise Vs. Vakson Dyeing, Bleaching and Printing Works (Supra) hold that the Tribunal is bound by the decision of the Hon'ble Madras High Court on an identical issue in the case of Velayudhaswamy Spinning Mills (P) Ltd Vs. ACIT (Supra). We thus respectfully following the decision taken by the Hon'ble Madras High Court in that case on an identical issue under almost similar facts, hold that when the assessee exercising the option, only the losses of the year beginning from the initial A.Y. are to be brought forward and not the losses of earlier year which have been already set off against the other income of the assessee. The revenue cannot notionally bring forward any loss of earlier years which has already been set off against any other income of the assessee and set off the same against the current income of the eligible business. We thus set aside the orders of the authorities below and direct the A.O to allow the claimed deduction u/s. 80IA without bringing the notionally br....
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.... that of the Hon'ble Madras High Court in the case of Velaydhaswamy Spinning Mills (P) Ltd. (supra) on the issue in question. Therefore, we find that the controversy before us is no longer res integra and is in fact covered in favour of the assessee by the decision of Pune Bench of the Tribunal in the case of Serum International Ld. (supra) which has been decided following the decision of the Hon'ble Madras High Court in the case of Velaydhaswamy Spinning Mills (P) Ltd. (supra). 9. Before parting we may also refer to the decision of the Pune Bench of the Tribunal in the case of Prima Paper Engg. (P) Ltd. Vs. ITO in ITA No. 1755 and 1205/PN/2007 for A.Y. 2002-03 and 2003- 04 vide order dated 31-1-2011 which is contrary to the aforesaid position. The said decision of the Tribunal has been explained in the case of Serum International Ltd (supra) wherein it has been clearly brought out as to how the said decision does not help the case of the Revenue. Following discussion in the order of the Tribunal is relevant. "The decision of Pune Bench of the Tribunal in the case of Prima Paper Engineering P.Ltd....