TaxTMI 
TaxTMI 
2015 (6) TMI 438
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....ecisions dealing with position prior to Finance Act, 1999 and not following the Madras High Court decision which is a Higher Authority than the Full Bench of the Tribunal and is based on similar facts/post Finance Act, 1999 position when the Windmills were set up. 2. The brief facts qua the issue involved are that, the assessee company besides engaged in the business of manufacturing of various items is also engaged in the business of generation electricity/power through its windmill plant which was set in the previous year, relevant to the A.Y. 2006-07. The assessee opted to claim deduction u/s 80IA for the first time during the A.Y. 2009-10 by treating it as initial assessment year. The receipts from the windmill was disclosed at Rs. 1,14,26,601/- and after claiming deduction of expenses under various heads of Rs. 1,00,72,939/- it has shown profit of Rs. 13,53,662/-, which was claimed as deduction u/s 80IA being 100% of the profit derived from the windmill. The assessee has acquired and commissioned the windmill in Erode district of Tamil Nadu in the A.Y. 2006-07. Earlier it had incurred loss of Rs. 6,06,04,500/-on account of depreciation which was set off against the normal b....
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....d in detail after considering the various decisions. 5. On the other hand, Ld. DR strongly relied upon the order of the AO as well as Ld. CIT(A). 6. After careful considering the rival submissions, facts of the case and the issues involved, we find that only issue involved is that whether the earlier year losses of the eligible unit can be set off against the profit of the said unit in this year, when the assessee has exercised to chose the initial assessment year from A.Y. 2009-10. Exactly similar issue was involved in the case of M/s. Shevie Export (supra) wherein, after detailed analysis of the relevant provision and various judicial decisions, including that of Mumbai Bench Tribunal in the case of Pidilite Industries (supra) it was observed and held as under:- "8. We have heard the rival contentions and perused the relevant material placed on record and various case laws relied upon by either party. The assessee had set-up a Wind mill at District Dhule, Maharashtra a commencement of its operation was started on 29th September 2006 i.e., assessment year 2007-08. In assessment year 2007-08, the assessee had shown a loss of Rs. 3,52,47,398 on account of depreciation....
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....ubsequent assessment year up to and including the assessment year for which the determination is to be made. " 10. From a plain reading of the above, it can be gathered that it is a non- obstante clause which overrides the other provisions of the Act and it is for the purpose of determining the quantum of deduction under section 80IA, for the assessment year immediately succeeding the initial assessment year or any subsequent assessment year to be computed as if the eligible business is the only source of income. Thus, the fiction created is that the eligible business is the only source of income and the deduction would be allowed from the initial assessment year or any subsequent assessment year. It nowhere defines as to what is the initial assessment year. Prior to 1st April 2000, the initial assessment year was defined for various types of eligible assessees under section 80IA(12). However, after the amendment brought in statute by the Finance Act, 1999, the definition of "initial assessment year" as been specifically taken away. Now, when the assessee exercises the option of choosing the initial assessment year as culled out in sub-section (2) of section 80IA from whic....
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....come of the eligible business. Once the set off is taken place in earlier year against the other income of the assessee, the Revenue cannot rework the set off amount and bring it notionally. Fiction created in sub- section does not contemplates to bring set off amount notionally. Fiction is created only for the limited purpose and the same cannot be extended beyond the purpose for which it is created. 14. In the present cases, there is no dispute that losses incurred by the assessee were already set off and adjusted against the profits of the earlier years. During the relevant assessment year, the assessee exercised the option under s. 80-IA(2). In Tax Case Nos. 909 of 2009 as well as 940 of 2009, the assessment year was 2005-06 and in the Tax Case No. 918 of 2008 the assessment year was 2004-05. During the relevant period, there were no unabsorbed depreciation or loss of the eligible undertakings and the same were already absorbed in the earlier years. There is a positive profit during the year. The unreported judgment of this Court cited supra considered the scope of sub-so (6) of s. 80-1, which is the corresponding provision of sub-so (5) of S. 80- IA. Both are similarl....
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....against the income of the previous year should be reopened again for computation of current income under s. 80-1 for the purpose of computing admissible deductions thereunder. We also agree with the same. We see no reason to take a different view." 12. This judgment has been further followed by the same High Court in CIT v/s Emerald Jewel Industry (P) Ltd. [2011] 53 DTR 262 (Mad.). From the above, ratio of the High Court, it is amply clear that sub-section (5) of section 80IA will come into operation only from the initial assessment year or any subsequent assessment year. The option of choosing the initial assessment year is wholly upon the assessee in the post amendment period i.e., after 1st April 2000 by virtue of section 80IA(2). 13. Now coming to the decision of the Mumbai Bench Tribunal in Pidilite Industries (supra) as relied upon by the learned Departmental Representative in this case, the Tribunal was dealing with regard to two eligible units one Gujarat Unit which was set-up in the year 1995-96 and second Maharashtra Unit in the year 2000-01. With regard to Gujarat Unit, the Tribunal held that pre-amendment definition of initial assessment year would be ....