TaxTMI 
TaxTMI 
2018 (10) TMI 1804
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....herefore, prayed that the order of the Ld. CIT(A) may be set aside and that of the Assessing Officer may be restored to the above extent." 3. The brief fact of the case is that return of income declaring income of Rs. 297,08,11,060/- was filed on 27th Sep, 2010. Subsequently, the case was selected under scrutiny by issuing of notice u/s. 143(2) of the act on 25th August, 2011. The further fact of the case is discussed under respective ground of appeal filed by the revenue. Disallowance u/s. 80IA 4. During the course of appellate proceedings, the assessing officer noticed that assessee has claimed deduction of Rs. 43,62,61,420/- u/s. 80IA of the act. The assessing stated that section 80IA(5) provides that notwithstanding any thing contained in the provision of the act ,the profit and gain of eligible business to which the provision of sub section (1) applies 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 assessment year, be computed as if such eligible business were only the only source of income of the assessee during the previous year relevant....
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....s need not be nationally brought forward and, therefore, the deduction should not be reduced. On a careful consideration of the entire facts of the case, it is noted that the issue whether the deduction under section 80IA of the Act is to be allowed without adjusting the notional brought forward losses and depreciation of earlier years is to be allowed or not, is almost legally settled now. It is noted from the perusal of various judicial pronouncements that the preponderant judicial opinion is in favour of the appellant. The leading judgment on the issue is that of honourable High Court of Madras in the case of Velayudhaswamy Spinning Mills Private Limited(supra). The judgment has subsequently been followed by several other Courts and Tribunals. The basic principle that has been laid down by various courts is that there should be no carry forward loss pertaining to the eligible unit, if the losses of eligible unit had earlier been adjusted with the losses of other units prior to the initial assessment year. The initial assessment year is the year in which the appellant make the claim for the first time and not the year in which -the eligible unit commences production. As ....
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....e discussion, the reduction- of claim under section 80I-A made by the AO is directed to be deleted. The ground of appeal is accordingly, allowed." 6. During the course of appellate proceedings before us, the ld. departmental representative has supported the order of assessing officer. On the other hand, the ld. counsel has referred the CBDT Circular No. 1/2016 dated 15th Feb, 2016 stating that ld. CIT(A) has correctly allowed the deduction u/s. 80IA of the act. 7. We have heard the rival contention and perused the material on record carefully. We consider that the initial assessment year is the year in which the assessee makes the claim for the first time and not the year in which the eligible unit commences production. In the case of the assessee the initial assessment year will be A.Y. 2010-11 as the assessee has made first time claim of deduction under section 80IA of the act and the assessemt year 2005-05 the year in which the production was commenced. Further In this connection, we have gone through the above referred circular of the CBDT which is reproduced as under:- CIRCULAR NO.1/2016 [F.NO.200/31/2015-ITA-I], DATED 15-2-2016 "Section 80-IA of the....
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....ears, 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 for claiming deduction u/s 80-IA. However, the total number of years for claiming deduction should not transgress the prescribed slab of fifteen or twenty years, as the case may be and the period of claim should be availed in continuity. The Assessing Officers are, therefore, directed to allow deduction u/s 80-IA in accordance with this clarification and after being satisfied that all the prescribed conditions applicable in a particular case are duly satisfied. Pending litigation on allowability of deduction u/s 80 IA shall also not be pursued to the extent it relates to interpreting 'initial assessment year' as mentioned in sub-section (5) of that section for which the....