TaxTMI 
TaxTMI 
2018 (2) TMI 340
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....me of Rs. 3,33,03,214, on September 30, 2012. The case was selected for scrutiny and a notice under section 143(2) of the Act was issued to the assessee. 3. It was noticed by the Assessing Officer that the assessee had claimed deduction under section 80-IA of the Act to the extent of Rs. 1,30,82,753. This deduction was claimed on the windmill power generation receipt of Rs. 1,45,38,490, claiming depreciation of Rs. 2,61,647 and maintenance of Rs. 11,94,089. It was noticed by the Assessing Officer that the assessee has purchased the windmill during the assessment years 2005-06 and 2006-07 and the depreciation on the cost of windmills was claimed in the earlier years at the rate of 80 per cent. As per the Assessing Officer, these losses need....
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....ementioned decision of the hon'ble Karnataka High Court he held that the appellant's claim for deduction under section 80-IA is in accordance with the provisions of law, and hence allowable to the assessee-appellant. It is further held that the assessment year 2010-11 is the 'initial assessment year', of the claim of deduction under section 80-IA for the windmill division or undertaking of the appellant, consisting of four windmills, as per the option exercised by the appellant. The profits of the undertaking shall be accordingly eligible for the said deduction for nine more succeeding assessment years. It is only in the case of loss in business of the eligible undertaking during the tax holiday period of ten years beginning....
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....nation of the quantum of deduction under section 80-IA of the Income-tax Act has to be computed after deducting the brought forward losses and depreciation of eligible business, even though they have been set off against other income in the earlier years as per the general computation of total income. 4. The Commissioner of Income-tax (Appeals) erred in allowing relief to the assessee, without considering the fact that if the initial assessment year were to be held as starting from the year in which the positive income is arrived, without setting off the carried forward depreciation and business loss, then the whole sub-section (5) of section 80-IA becomes redundant and defeats the purpose of section 80-IA(5). 5. The Commissioner of Inc....
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....n the matter of Anil H. Lad (supra) is not sustainable and therefore is required to be annulled and therefore the appeal is required to be allowed. 7. On the other hand, the learned authorised representative has drawn our attention to the order of the hon'ble jurisdictional High Court and also the Board Circular No. 1 of 2016, dated February 15, 2016 See [2016] 381 ITR (St.) 1. 8. We have heard the rival contentions and perused the materials on record, as also the judgment in Anil H. Lad (supra) and Circular of the Central Board of Direct Taxes (supra). In our view, the issue is squarely covered by the jurisdictional High Court decision as mentioned in the impugned order. Paragraphs 8 and 9 of the said judgment is reproduced hereunder....
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.... previous year shall be the period beginning with the date of setting up of the business or profession. But section 80-IA comes into picture only when a claim is put- forth for deduction. It is only then the profits earned in the eligible business is to be set off against the depreciation and losses of the eligible business. If no claim is put forth, there is no question of setting off the profits against the losses. If the assessee is carrying on other business, that loss and depreciation incurred by him under the provisions of the Act can be set off against other sources. There is no prohibition. Therefore, once the assessee sets off his profits earned from other source against the depreciation and loss suffered in the eligible business, ....
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.... the provisions. It is to be noted that "initial assessment year" employed in sub-section (5) is different from the words 'beginning from the year' referred to in sub-section (2). Sub-section (5) starts with a non obstante clause which means it overrides all the provisions of the Act and other provisions are to be ignored for the purpose of determining the quantum of deduction for the assessment year immediately succeeding the initial assessment year, thereby a fiction is created by introducing a deeming provision and therefore, it is clear that the eligible business were the only source of income, during the previous year relevant to the initial assessment year and every subsequent assessment years. When the assessee exercises the ....