TaxTMI 
TaxTMI 
2015 (9) TMI 1009
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....ed set off against other income in earlier years. b. Holding the year of commencement of the eligible business to be initial assessment year from which deduction was available to the appellant. c. Not appreciating that Audit report in Form 10CCB to be filed for claiming deduction u/s. 80-1A includes 'Date of commencement of operation/activity by the undertaking' and 'initial assessment year from when the deduction is being claimed' as two separate dates given in Clause 8 & Clause 9 of the form. d. Relying on Mumbai ITA T decision in case of Pidilite Industries Ltd. V s. DCIT (20 II), which was based on the Special Bench decision of Ahmedabad Tribunal in case of ACIT Vs. Goldmine Shares & Finance (P) Ltd (2008) and on law prior to Finance Act, 1999 amendment. 2. The appellant craves leave to add, alter, amend or delete any of the above referred ground of appeal." 2. As per Ld Counsel of the assessee, only effective issue to be adjudicated by Tribunal is whether the assessee is eligible to claim the benefit of deduction u/s.80-IA without first setting off notional brought forward losses against the current year's profit of exempt unit. 3. The brief facts ar....
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....dgment of Pidilite Industries Ltd. 5. We have gone through the arguments of both the sides and material placed before us. It noted that Hon'ble co-ordinate bench in the case of Shevie Exports has considered the facts & law and the decisions of Hon'ble Madras High Court in the case of Velayudhaswamy Spinning Mills Pvt. Ltd. vs. ACIT, [2011] 340 ITR 477 (Mad) and CIT vs. Emerala Jewel Industry Pvt. Ltd. [2011] 53 DTR 262 (Mad). The Hon'ble co-ordinate Bench has also discussed and distinguished the judgment of Pidilite Industries Ltd. (supra). After considering entire law Hon'ble Bench has decided this issue in the favour of the assessee and held as under: Quote: 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 and 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 ~ 3,52,47,398 on account of depreciation and interest from wind mill undertaking and this loss was set-off against the export business income (which in the pre....
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....ng 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 8OIA, 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"has 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 which it chooses its 10 years of deduction out of 15years, then only the losses of the years starting from the initial assessment year alone are t....
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....f amount and bring it notionally. Fiction created in subsection 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-s. (6) of s. 80-I, which is the corresponding provision of sub-s. (5) of s. 80-IA. Both are similarly worded and therefore we agree entirely with the Division Bench judgment of this Court cited supra. In the case of CIT vs. Mewar Oil & General Mills Ltd. (2004) 186 C....
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....e. 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 applicable i.e., provisions which were prior to 1st April 1999 will apply because the assessee had started commercial production in the financial year 1996-97. Regarding second unit, the Tribunal held that the judgm....