TaxTMI 
TaxTMI 
2017 (8) TMI 608
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....3(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act) was framed vide order dated 29/01/2016. While framing the assessment the Assessing Officer made trading addition of Rs. 5 lacs and disallowed the claim of deduction u/s 80IA of Rs. 1,62,25,183/-. Aggrieved by this, the assessee preferred an appeal before Ld. CIT(A), who after considering the submission, partly allowed the appeal. Thereby, the Ld. CIT(A) restricted the trading addition to the extent of Rs. 1 lacs and deleted the disallowance u/s 80IA. 3. Now, the Revenue is in further appeal. 4. The first ground, is against restricting the trading addition to the extent of Rs. 1 lacs out of Rs. 5 lacs made by the AO. 4.1 Ld. Departmental Representatives vehemently argued that Ld. CIT(A) was not justified in restricting the addition. The Assessing Officer has specifically stated in the order that the assessee is not maintaining stock register. Therefore, consumption of raw materials with finished goods could not be compared and the assessee failed to get it verified from the books. 4.2 On the contrary, Ld. Counsel for the assessee Shri P.C. Parwal supported the order of the Ld. CIT(A). He submitted that there i....
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..... Counsel for the assessee are as under:- "Submission:- 1. The provision of sub section (5) of section 80IA read as under:- "Notwithstanding anything contained in any other provision of this Act, the profits and gains of an eligible business to which the provisions of sub section (1) apply shall, for the purpose of determining the quantum of deduction under that sub section for the assessment year immediately succeeding the initial assessment year or any subsequent year, be computed as if such eligible business were the only source of income of the assessee during the previous year relevant to the initial assessment year and to every subsequent assessment year upto and including the assessment year for which the determination to be made." From the reading of above provision, it is very much clear that for the purpose of determination of quantum of deduction u/s 80IA, income of the eligible business is 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 to every subsequent assessment year. Thus, losses or depreciation from eligible business incurred prior to initial year....
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....nually is a procedural requirement and therefore, even if such report is filed manually instead of electronically, the condition of section should be taken as complied with. For this proposition reliance is placed on the following cases:- CIT Vs. G.M. Knitting Industries Pvt. Ltd. &Anr. (2015) 125 DTR 38(SC) it was held that assessee is entitled to deduction u/s 80-IB even though it has not filed the audit report in Form No. 10CCB along with the return but has filed the same before the completion of assessment. CIT Vs. Godha Chemicals (P.) Ltd. 83 DTR 190 (Raj.) The expression 'along with return of income' as occurring in sub-section (4) of section 80HHC is directory in nature in so far as it relates to the time for furnishing of the report of an accountant by the assessee in the prescribed form & even if such a report in the prescribed form is not furnished along with the ROI but is furnished during the course of assessment proceedings, it cannot be removed out of consideration only for the reason of the same having not been filed at the initial stage of filing the return. Therefore, assessee could not be denied the benefit of deduction u/s 80HHC because the audit repo....
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.... such eligible business was the only source of income of the assessee during the previous year relevant to initial assessment year and to every subsequently assessment years. Thus, losses and depreciation from eligible business incurred prior to initial year already absorbed is not to be considered for determination of the eligible profit. 5.4 We have heard the rival contentions, perused the material available on record and gone through the order of the authorities below. The objection of the Assessing Officer disallowing the claim are that generation of power has to be considered as a separate business and single unit can not considered as a separate unit. Even if each unit is considered separately then also the individual unit has not earned profit since installations, from assessment year 2013-14, e-filing of audit report of u/s 80IB in Form 10CCB have become mandatory and the assessee has not e-filed the Form No. 10CCB either before the due date or even after the due date. The assessee has filed Form 10CCB in paper form on 30/9/2013. The CBDT circular extended the date of filing of audit report to 31/10/2013 subject to the conditions that the assesee should file the audit repo....
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....ery subsequent assessment year. It was thus pleaded that losses on depreciation incurred in eligible business from initial year is to be set off while computing eligible amount of deduction of subsequent assessment year i.e the loss or depreciation from eligible business incurred prior to initial year and already absorbed has no relevance. Reliance was placed on decisions of Velayudhaswamy Spinning Mills (P) Ltd. vs. ACIT, (2012) 21 taxmann com 95 (Madras), CIT vs. Mewar Oil & Gen. Mills Ltd. 271 ITR 311. Sourabh Agrotech Pvt. Ltd. ITA No. 786 & 826/JP/2011. It was further claimed that the issue of initial assessment year, is also clarified by CBDT Circular No. 1/2016 dated 5/Feb, 2016 as per which the assessee has an option to choose the initial/first year from which he may desire to claim deduction for 10 consecutive assessment years. As regards filing of audit report it was stated that the form No. 10CCB was filed manually on 30.09.2013 and one audit report was filed electronically on 30.09.2013. It was claimed that there was no option to file more than one audit report online and therefore the balance reports could not be filed electronically. It is seen that out of the 8....
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.... case has been dismissed by the Apex Court and the same has attained finality. Further, the concept of initial year has been clarified by the CBDT, Circular No. 1/2016 issued on 15th February, 2016. The relevant portion of the same is reproduced below: "Subject" Clarification of the term ' initial assessment year in section 80IA (5) of the Income Tax Act, 1961. In the above sub-section, which prescribes the manner of determining the quantum of deduction, a reference has been made to the term 'initial assessment year' as the year in which the eligible business/manufacturing activity had commenced and are considering such first year of commencement/operation etc. itself as the first year for granting deduction, ignoring the clear mandate provided under sub-section (2) which allows a choice to the assessee for deciding the year from which it desires to claim deduction out of the applicable slab of fifteen (or twenty) years. The matter has been examined by the Board. It is abundantly clear from sub-section (2) that assessee may desire the claim of deduction for ten consecutive years. Out of a slab of fifteen (or twenty) years, as prescribed under that sub-section. It ....