TaxTMI 
TaxTMI 
2017 (12) TMI 1323
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....t, 1961. 2. The CIT(A) erred in confirming the order of the AO of excluding the interest income of Rs. 1,83,654 and Foreign Exchange Gains of Rs. 23,10,796 for the purpose of computing deduction u/s 80-IA of the Income Tax Act, 1961 and assessing combined income of Rs. 24,94,451 under the heading "Income from Other Sources". The Ground Number 2, so far as pertaining to interest income is concerned, has not been pressed by Ld. Counsel for Assessee [AR] during proceedings before us and therefore, the same stands dismissed as being 'not pressed' to that extent. 2.1 Briefly stated the assessee being resident corporate assessee, was assessed for impugned AY u/s 143(3) on 27/02/2013 at Rs. 2,09,14,500/- as against returned income of Rs. 74,49,479/- e-filed by the assessee on 15/10/2010 which was later revised on 03/02/2011 to Rs. 74,21,462/-. The assessee has been denied deduction u/s 80-IA of the Income Tax Act and the same form subject matter of this appeal. 2.2 During assessment proceedings, it was noted that the assessee had wind power unit at Karnataka under the name and style of Sanjana Power Karnataka which was an eligible unit to claim deduction in terms of Section 80-IA. ....
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....able under the head Income from other sources and therefore, deduction u/s 80-IA, at least, on these items were not available to the assessee in view of the judgment of Hon'ble Apex Court rendered in Liberty India Vs. CIT [317 ITR 218]. 3. Aggrieved, the assessee contested the same without any success before Ld.CIT(A) vide impugned order dated 14/11/2014 where the stand of Ld. AO were confirmed. Aggrieved, the assessee is in further appeal before us. 4.1 The Ld. Counsel for Assessee [AR], at the outset, drew our attention to CBDT circular No. 1/2016 dated 15/02/2016 to contend that the issue stood squarely in assessee's favor by the said circular since the circular has clarified the meaning of expression 'initial assessment year' for the purpose of Section 80-IA(5). Our attention is drawn to the fact that the said expression would mean the first year opted for by the assessee for claiming deduction u/s 80-IA and not the first years of commencement of operations of the eligible unit. 4.2 The Ld. AR also drew our attention to the following judicial pronouncements where a view favorable to the assessee has been taken:- (i) Hon'ble Karnataka High Court in CIT Vs. Anil H.Lad [45 ta....
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....nt 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 an assessee who is eligible to claim deduction u/s 80-IA has the option to choose the initial/ first year from which it 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 is hereby clarified that once such initial assessment year has been opted for by the assessee, he shall be entitled to claim deduction u/s 80-IA for ten consecutive years beginning from the year in respect of which he has exercised such option subject to the fulfilment of conditions prescribed in the section. Hence, the term 'initial assessment year' would mean the first year opted for by the assessee....
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....2007-08, 2008-09, 2011-12 & 2012-13 and offered the same to tax as Business Income and assessee's stand has been accepted by the revenue in all those years in assessment u/s 143(1) as well as under 143(3) and therefore, rule of consistency demands that the same treatment is given to the same in the impugned AY. 8. The Ld. AR further pleaded that the resultant gain, being capital in nature, was not taxable at all in view of several judicial pronouncements on the issue. In the alternative, Ld. AR contended that the resultant gains were eligible for deduction u/s 80-IA. 9. Per contra, Ld. DR contended that principle of res judicata was not applicable to Income Tax proceedings. Moreover, the assessee himself offered the gains to tax in earlier AYs and therefore, debarred from taking a stand that the same being on capital account, are exempted. Further, deduction u/s 80-IA was available only to the profits derived from the eligible business in view of the settled legal position. 10. So far as the factual matrix is concerned, the documents placed on record reveal that the assessee obtained term loan facility of USD 17.50 Lacs from Robo Bank, Singapore vide offer of credit facilities l....
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....ot alter the cost of the asset, 13. Further, in terms of Accounting Standard-11 titled as 'effects of changes in foreign exchange rates', such resultant foreign exchange differences were required to be recognized as income / loss in the Profit & Loss Account during relevant accounting period which is fully supported by the decision of Pune Bench of Tribunal rendered in Cooper Corporation Pvt. Ltd. Vs. DCIT [159 ITD 165] where resultant forex losses, in similar situation, has been allowed to the assessee u/s 37(1). Moreover, it may further be noted that the assessee himself has offered the same to tax in all other Assessment Years and therefore, debarred from changing stands since rule of consistency equally applies to the assessee. 14. In view of the above, we are inclined to conclude that the resultant forex gain earned by the assessee was chargeable to tax and similarly losses accruing to him on this account were allowable to him, being revenue in nature. 15. The only issue remaining to be decided is whether the deduction u/s 80-IA would be available to the assessee against forex gain. We find that this issue stood squarely against the assessee by the judgment of Hon'ble Apex ....