TaxTMI 
TaxTMI 
TaxTMI 
2021 (11) TMI 105
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the sake of clarity and convenience, the facts relevant for the appeal in ITA No.1668/PUN/2018 for A.Y. 2013-14 are stated herein. 4. The Revenue has raised the following grounds of appeal: (1) On the facts and in the circumstances of the case and in law, the CIT(A) has erred in holding that assessee is eligible for deduction u/s 80IA(5) on its business profit whereas the earlier year's business losses/unabsorbed depreciation should be adjusted against the income of the eligible undertaking which assessee has set off against current year's income from other business / sources. (2) On the facts and in the circumstances of the case and in law, the CIT(A) erred in not appreciating the fact that the provisions of set off or carry ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... that the order of the CIT(A) be vacated and that of the Assessing Officer be restored. 5. Briefly, the facts of the case are as under: The respondent-assessee is a company incorporated under the provisions of Companies Act, 1956. It is engaged in the business of manufacturing of HDPE & PP Woven Sacks and Wind mill. The return of income for the A.Y. 2013-14 was filed on 20.09.2013 disclosing income of Rs. 3,47,52,530/-. Against the said return of income, assessment was completed by the Assessing Officer (hereinafter referred to as 'AO') vide order dated 15.02.2016 passed u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as 'the Act') at total income of Rs. 6,81,00,110/-. 6. While doing so, the AO allowed the deduction u....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the above addition, an appeal was filed before the ld. CIT(A) contending that each Windmill has to be treated as separate undertaking for the purpose of computing the amount of deduction allowable u/s 80IA of the Act and also contending that the losses prior to the initial year cannot be set off against the profits of eligible units of 80IA for the purpose of computing the amount of quantum of deduction u/s 80IA of the Act. The ld. CIT(A) after due consideration of submissions made and after making a reference to the decisions of Co-ordinate Bench of Tribunal in Shreem Capacitators Pvt. Ltd. Vs JCIT and Jsons Foundry Pvt. Ltd. Vs. DCIT in ITA No.815/PN/2011 for A.Y. 2008-09 allowed the claim of the appellant. 7. Being aggrieved by the deci....
X X X X Extracts X X X X
X X X X Extracts X X X X
....le profits for the purpose of deduction u/s 80IA of the Act by setting off of unabsorbed losses of earlier years against current year profits of the eligible unit i.e. Windmill. The relevant provisions of sub-section (5) of section 80IA of the Act are reproduced hereunder for the purpose of better appreciation of law: "80IA.... (5) Notwithstanding anything contained in any other provision of this Act, the profits and gains of an eligible business to which the provisions of sub-section (1) apply shall, for the purposes 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 the....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... appeal. The Tribunal held, the carried forward loss of the eligible business was required to be set off first against the income of the subsequent years of eligible business while determining the profits eligible for deduction under Section 801A of the Act and set off losses from other sources under the same head is not permissible. However, it should not forgotten that section 80IA of the Act is a beneficial section permitting certain deduction in respect of certain income under Chapter VIA of the Act. A provision granting incentive for promotion of economic growth and development in taxing statues should be liberally construed and restriction placed on it by way of exception, should be construed in a reasonable and purposive manner so as....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... losses of eligible units should be set off against the profits of current year for the purpose of computing the amount of deduction u/s 80IA of the Act, but losses incurred prior to the initial assessment year opted by the assessee cannot be set off against the profits of eligible units in the light of provisions of sub-section (5) of section 80IA of the Act. In the present case, the AO was of the opinion that the initial year should be reckoned from the year in which the unit or undertaking had commenced the commercial production. The approach of AO is obviously against the plain provisions of sub-section (2) of section 80IA of the Act. The Hon'ble Madras High Court in the case of Velayudhaswamy Spinning Mills Vs. ACIT 340 ITR 477 (Mad) c....