TaxTMI 
TaxTMI 
2020 (1) TMI 908
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.... to the solitary issue of allowing deduction u/s. 80IA(4) to the extent of income of eligible business i.e. Rs. 435,59,637/- in the year under consideration without adjusting the losses/depreciation of earlier years brought forward notional losses since the assessee has chosen the assessment year 2012-13 as the initial assessment year. 3. The fact in brief is that return of income declaring income at Rs. 16,06,36,998/- was filed on 5th Sep, 2013. The case of the assessee was subject to scrutiny assessment and notice u/s. 143(2) of the act was issued on 2nd Sep, 2014. The assessee is a partnership firm engaged in the business of manufacturing and sale of Bidi. During the course of assessment, the assessing officer noticed that assessee ha....
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....the case of the assessee. The relevant part of the decision of ld. CIT(A) is reproduced as under:- "4.1.2 In order to settle the controversy and also to avoid litigation, CBDT has also issued a circular clarifying the meaning of term "Initial assessment year" vide Circular No. 1 of 2016 dated 15.02.2016 which is reproduced as under:- "Section 80-IA of the Income-tax Act, 1961 ('Act'), as substituted by the Finance Act, 1999 with effect from 1-4-2000, provides for deduction of an amount equal to 100 % of the profits and gains derived by an undertaking or enterprise from -- an eligible business (as referred to in sub-section (4) of-that--section) in accordance with the prescribed provisions. Subsection (2) of section....
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....the first year for granting deduction, ignoring the clear mandate provided und^r 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 subsection (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 ded....
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....rward and again set off against the income of eligible business of the year which was chosen as "initial assessment year" for claim of deduction u/s. 80IA. I also find that SLP filed by the Department against the decision of Hon'ble Madras High Court in the lead case of Velayudhaswamy Spinning Mills (P) Ltd. (supra) has also been dismissed and the same is reported as ACIT Vs. Velayudhaswamy Spinning Mills (P) Ltd. (2016) 76 taxmann.com 176 (SC). 4.1.3. Therefore, in view of the above discussion and legal position, it is crystal clear that losses/depreciation of the Wind Mill business for the years prior to the "initial assessment year" which had been already set off against the income of other business, cannot be brought forwar....
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....nt has chosen the A.Y. 2012-13 as the "initial assessment year". Thus, appellant succeeds in respect of Ground Nos. 1 to 5." 5. Heard both the sides and perused the material on record. During the course of appellate proceedings before us, the ld. counsel has submitted copy of CBDT Circular No. 1 of 2016 (F.No. 200/31/2015-ITA-I) dated 15-02- 2016. We have gone through the above referred circular submitted by the ld. counsel which is also elaborated in the findings of ld. CIT(A) as cited above in this order. It is categorically explained in the circular that to claim deduction u/s. 80IA, the assessee has option to choose the initial year from which it intends to claim deduction for 10 consecutive years out of period of 15 years 15 years i....