AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2015 (2) TMI 1028
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....ring the provisions of section 80-IA(5) of the Act, instead of confirming such addition. 3. Whether in terms of provisions under section 80-IA(5) of the Income-tax Act, the profits and gains from the eligible business, for the purpose of determination of quantum of deduction under section 80-IA of the act, has to be computed as if such eligible business were the only source of income of the assessee during the previous year relevant to initial assessment year and every subsequent assessment year upto which the determination of deduction under section 80-IA to be determined but there was notional loss remained to be carried forward for subsequent years. 4. The Commissioner of Income-tax (Appeals) erred in following the decision of the Income-tax Appellate Tribunal, Pune in the case of Serum International even though several supporting judicial deci sions including the decision of the hon'ble Supreme Court in the case of Liberty India v. CIT [2009] 317 ITR 218 (SC). 5. For these and such other reasons as may be urged at the time of the hearing, the order of the ....
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....e allowed if there were any profits and gains of the eligible unit. Considering the power generation unit as a separate unit, the notional loss of the assessee-company as calculated in past assessment year vide order passed under section 143(3) of the Act, relating to the assessment year 2007-08 was tabulated by the Assessing Officer at page 9 of the paper book. As per the Assessing Officer, there was notional loss of Rs. 1,15,36,367 to be carried forward for the assessment year 2008-09 from the windmill unit under section 80-IA(5) of the Act, for calculating the deduction under section 80-IA(4)(i) of the Act for the year under consideration. The Assessing Officer thus tabulated that in view of the brought forward losses, and the balance losses to be carried forward to the succeeding year, the assessee was not entitled to the claim of deduction under section 80-IA of the Act. 4. Before the Commissioner of Income-tax (Appeals), the assessee placed reliance on the ratio laid down by the Pune Bench of the Tribunal in the case of Serum International Ltd. v. ITO in I. T. A. Nos. 290 to 292/PN/2010 dated September 28, 2011 wherein it was held that only the losses of the year beginning f....
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....owever, the Commissioner of Income-tax (Appeals) placed reliance on the ratio laid down by the Mumbai Bench of the Tribunal in the case of Pidilite Industries Ltd. [2011] 46 SOT 263 (Mum) (URO) and the earlier decision of the Pune Bench of the Tribunal in the case of Khinvasara Investment P. Ltd. v. Joint CIT [2008] 110 ITD 198 (Pune) and in view of the decision of the hon'ble Supreme Court in the case of Liberty India v. CIT [2009] 317 ITR 218 (SC) and the explicit provisions of section 80-IA(5) of the Act observed : In these circumstances, I am constrained to follow the decision of the Income-tax Appellate Tribunal Pune in the case of Serum International Ltd. v. ITO, though I do not find myself in agreement with the view taken by the hon'ble Bench on this issue. Accordingly, the Assessing Officer is directed to allow the deduction claimed by the appellant under section 80-IA of the Act of Rs. 14,63,932 as claimed by the appellant in respect of its eligible unit. 6. The Revenue is in appeal against the order of the Commissioner of Income-tax (Appeals). The learned Departmental representative for the Revenue placed reliance on the order of the Assessing Officer. The learne....
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.... forward losses and depreciation of eligible business even though they have been allowed set off against other non-eligible business income in earlier years. The submission of the learned authorised representative remained that on the windmills set up in the previous year relevant to the assessment year 2002-03, the asses see had claimed depreciation at the rate of 100 per cent. thereon i.e., Rs. 3.54 crores, which was fully set-off against the another income in the said assessment year 2002-03 itself. In the assessment year 2004-05, the assessee had positive income from the said generation activity and there were no brought forward losses/ unabsorbed depreciation of the preceding year, which had remained to be set-off in the assess ment year 2004-05. The Assessing Officer notionally brought forward unabsorbed depreciation for the assessment year 2003-04 to the impugned assessment year 2004-05 and denied the claim for deduc tion made by the assessee under section 80-IA in respect of the profit earned by it in the assessment year 2004-05. The learned authorised representative submitted that sub-section (2) of section 80-IA pro vides an option to the assessee to choose 10 consecutive....
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.... representative on the other hand remained that deduction under sections 80-I and 80-IA covered, inter alia, industrial undertakings. The power generation units found a specific mention for the first time with effect from April 1, 1993. In all the years from April 1, 1981 to March 31, 2000 in both under sections 80-I and 80-IA, the term initial assessment year was defined and meant the first assessment year relevant to the previous year in which the eligible unit commences production/power gener ation. Only from April 1, 2000 when section 80-IA was replaced with sections 80-IA and 80-IB, the definition of 'initial assessment year' did not find a mention. But nowhere, in Parliament Speech of memo randum explaining the Finance Bill has any mention that there was any intention to ignore losses and depreciation from first year of power generation/production and that such losses till first year of claim of deduction is to be ignored. The view canvassed by the asses see does not find any support. He submitted that there is no discernible change in law or intention of Parliament with effect from April 1, 2000. The learned Departmental representative submitted that the decision of ....
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....d generating electricity from the windmill activity. We also find that the issue raised in ground No. 2 regarding the eligibility of the assessee to claim deduction under section 80-IA undiminished by unabsorbed losses and depreciation also set off in earlier years against the other income, is fully covered by the decision of the hon'ble Madras High Court in the case of Velayudhaswamy Spinning Mills P. Ltd. v. Asst. CIT [2012] 340 ITR 477 (Mad) holding that as per sub-section (5) of section 80-IA, profits are to be computed as if such eligible business is the only source of income of the assessee. When the assessee exercises the option, only the losses of the years beginning from the initial assessment year are to be brought forward and not the losses of the earlier years which have been already set off against the income of the assessee. The hon'ble Madras High Court has been further pleased to hold that the Reve nue cannot notionally bring forward any loss of earlier years which had already been set off against the other income of the assessee and set off against the correct income of the eligible business. Fiction created by sub-section (5) of section 80-IA does not cont....
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....de the orders of the authorities below and direct the Assessing Officer to allow the claimed deduction under section 80-IA without bringing the notionally brought forward any loss or depreciation of earlier years which has already been set off against other income of the assessee. The decision of the Pune Bench of the Tribunal in the case of Prima Paper Engineering P. Ltd. v. ITO cited by the learned Departmental representative is also not helpful to the Revenue since firstly the decision of the hon'ble Madras High Court in the case of Velayudhaswamy Spinning Mills P. Ltd. v. Asst. CIT [2012] 340 ITR 477 (Mad) on the issue was not cited before the Bench and secondly the learned authorised representative fairly agreed that the issue raised was covered against the assessee by the decision of the Special Bench in the case of Asst. CIT v. Goldmine Shares and Finance P. Ltd. [2008] 302 ITR (AT) 208 (Ahd) [SB] followed by the authorities below. The learned authorised representative therein thus contended that though the issue may be decided against the assessee in view of the Special Bench of the Tribunal in the case of Asst. CIT v. Gold mine Shares and Finance P. Ltd. [2008] 302 ITR....