TaxTMI 
TaxTMI 
2018 (10) TMI 783
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....the learned Commissioner of Income Tax (Appeals) has erred in law and facts by confirming the addition to the extent of Rs. 1,70,439/- made on account of non-reconciliation of difference in the closing balance and therefore the learned AO should be directed to delete the said addition while computing the total income." 3. As regards Ground No.1 of the assessee's appeal, the relevant facts are that the assessee, a domestic company, is engaged in the business of manufacturing and trading of sale tubes and pipes. The assessee is also engaged in generation of electricity through windmill which is eligible business for the purposes of deduction under s.80IA(4) of the Act. The assessee filed its return of income for the AY 2012-13 and claimed deduction of Rs. 3,05,59,000/- under s. 80IA(4) of the Act in respect of income earned from the activity of generation of electricity through its windmill project. The assessee submitted before the AO that the aforesaid amount of deduction has been arrived after considering the notional brought forward losses and depreciation of windmill business even though such losses/depreciation have been duly set off against other income generated in the ear....
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....and in view of section 80IA(5), the carried forward loss has to be reduced from the income from the windmill before computation of income eligible for deduction u/s 80IA(4)(iv). The appellant's reply has been reproduced by the Ld. AO and, insisting that his own interpretation of section 80IA(5) is to be given effect to, and because the decision of CIT(A) holding in favour of the appellant on the issue has been further contested in appeal before the ITAT, he holds vide page 6 of his order that the deduction claimed by the appellant is not to be allowed in view of carried forward losses of the eligible unit on stand-alone basis. Thus he makes an addition of Rs. 3,05,59,000/- disallowing claim of the appellant. 3. Before me, the Ld. AR has submitted the copy of order No.CIT(A)-III/724/DCIT/CC2(3)/13-14 dated 16/5/2014 of my Ld. Predecessor for A.Y.2011-12, wherein, relying on ITAT Special Bench in the case of Goldmine Shares & Finance Put. Ltd. and Madras High Court decision in the case of Velayudhaswammy Spinning Mills (P) Ltd. 38 DT 57, the claim of the appellant u/s 80IA(4) without any reduction of the same by amount of losses of the earlier years was held allowable by....
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....(68,90,448 + 1,21,53,374 + 1,19,52,978). This way, at the end of Assessment Year 2008-09, the assessee was having a brought forward business loss of eligible unit at Rs. 46,21,180 (3,56,17,980-3,09,96,800). During the year under consideration, assessee has declared profit from wind mills at Rs. 1,30,26,967/-. As per the above discussions, eligible profits for deduction u/s80IA(iv) can be computed after set off of notional brought forward loss of Rs. 46,21,180 against this profit. Likewise, the eligible profit u/s 80IA(iv) was worked out at Rs. 84,05,787/-, (1,30,26,967-46,21,180). Assessee has claimed deduction u/s 80IA(iv) on a profit of Rs. 84,05,787/- only. Thus, the assessee's computation for eligible .profits for the purpose of deduction u/s 80IA(iv) was well within the purview of Income-tax Act. Thus, in our opinion, the CIT(A) has rightly deleted the addition of Rs. 84,05,787/- made by the Assessing Officer u/s 80IA(iv) of the Act. Accordingly, we uphold the order of the CIT(A) in this regard." 4. I have gone through the assessment order, order of my Ld. Predecessor, written submissions made by the AR and further the order of the Hon. Tribunal. I find as per par....
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....vraj Tea Company (para 28) to the effect that no brought forward loss or depreciation could be reduced for determining the amount on which the deduction is to be allowed u/s 80IA of the Act. To a query raised by the undersigned as to how the additional ground with respect to a claim which was made neither in the return of income nor by way of a contention or written submissions before the AO can be raised in the appellate proceedings, the Ld. AR furnished the copy of ITAT decision in ITA No.473/AHD/2011 dated 30/6/2011 in the case of Arvind Mills Ltd. and Hon. Gujarat High Court judgement in Tax. Appeal No. 1407 of 2011 dated 5/7/2012 upholding the view therein to contend that the additional ground has been validly raised in view of the correct law as learnt by the appellant as declared by ITAT in Harsh Engineering (supra) subsequent to the completion of the assessment proceedings. Para 5 to 7 from High Court decision is reproduced as under: "5. As such in Goetze (supra) the Supreme Court while dismissing the appeal clarified that its decision was restricted to the power of Assessing Officer to entertain a claim for deduction otherwise than by a revised return, and did not....
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.... department, the additional ground as raised by the appellant is admitted in view of clear mandate contained in the High Court decision in M/s. Arvind Mills Ltd. (supra). I therefore proceed to adjudicate the additional ground. 8. The appellant, by way of a small enclosure to the additional ground, has furnished the copy of the Profit & Loss Account for the windmill projects at Shikarpur, Ukharala, Patelka, Lamba (2 and 3), Vanku and Moti Sindholi, as per Annexure 5 to the written submissions dated 12/2/2016 to contend that the profits for the windmills for F.Y.2011-12 relatable to A.Y.2012-13 works out as under: Sr. No. Windmill Project Amount of profit from windmill for the year Progressive profit/loss (on which 80IA claimed in the return after set off of notional carry forward loss) 1 Shikarpur Rs.43,60,740 Rs.43,60,740 2 Ukharala Rs. 1,44,22, 475 Rs. 1,44,22,475 3 Patelka Rs.95,18,397 Rs.95,18,397 4 Lamba (2) Rs. 81,01,264 Rs.22,57,388 5 Lamba (3) Rs.94,48,211 (-)Rs.26,21,360 6 Vanku Ra.78, 47,801 (-)Rs.1,65,03,084 7 Moti Sindholi Rs.5, 03,62,3 16 (-)Rs.37,42,52,717  ....
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....Court in Arvind Mills Ltd., in my considered opinion, cannot be stretched or applied so as to grant a "relief or allow an additional ground which has effect of reducing the returned income. As such, the prayer made before the AO not resulting into redaction of returned income and rejected by the AO can only, in my considered opinion, qualify, on facts, for application of Jurisdictional High Court decision in Arvind Mills Ltd. (supra). In view of this, I find no merit in the additional ground raised by the appellant and therefore, the same is dismissed." 6. Aggrieved by the denial of the additional claim which has the effect of reducing the assessed income below the return of income, the assessee knocked the door of Tribunal. 7. The learned AR for the assessee submitted at the outset that the dispute in the present case is not towards eligibility of deduction under s.80IA(4) of the Act. It was submitted that the CIT(A) after examination of facts has readily accepted the claim of deduction to the extent made by the assessee in its return of income. The dispute is towards additional claim of deduction made by the assessee before the CIT(A) which was denied on the grounds of abse....
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..... JCIT 245 ITR 84 (Guj); CIT vs. Milton Laminates Ltd. Tax Appeal No. 1022 of 2010 judgment dated 24.01.2012; CIT vs. Arvind Mills Ltd. Tax Appeal No. 1407 of 2011 judgment dated 05.07.2012; CIT vs. Pruthvi Brokers & Shareholders Pvt. Ltd. [2012] 349 ITR 336 (Bom.) etc. The learned AR thus submitted that the additional claim towards enhanced deduction eligible under s.80IA(4) of the Act be directed to be allowed to the assessee in accordance with law. 8. The learned DR, on the other hand, relied upon the order of the CIT(A). 9. We have carefully considered the rival submissions and perused the orders of the authorities below as well as the case laws cited. The central issue in the present appeal is whether the claim of the assessee towards higher quantification of deduction under s. 80IA(4) of the Act can be entertained on the basis of facts available on record and in the light of judicial precedents and CBDT Circular where the assessee has originally claimed lower amount of deduction by way of return of income under erroneous impression of law. As noticed, the claim made by the assessee in its return of income towards deduction under s.80IA(4) of the Act was duly accepted by....