TaxTMI 
TaxTMI 
TaxTMI 
2018 (9) TMI 2131
X X X X Extracts X X X X
X X X X Extracts X X X X
....6-07. 2. Based on the facts and circumstances of the case and in law, the Hon'ble CIT(A) has erred in holding that there is no merit in the argument of he appellant that the initial year was wrongly mentioned in the Chartered Accountants certificate (in Form 10CCB) for Assessment Year 2006-07 and that the same appears to be a change of mind, which is not permissible. 3. Based on the facts and circumstances of the case and in law, the Hon'ble CIT(A)ought to have held that under the terms of sub-section (2) of section 80-IA of the Act, an assessee engaged in the business inter alia of providing telecommunication services is entitled to claim a deduction for any ten consecutive assessment years out of fifteen years beginning from the year in which the undertaking begins to provide telecommunication services and having regard to the fact that deduction under section 80-IA of the Act could be claimed only if there is positive gross total income, the deduction was claimed and allowed only from Assessment Year 2007-08. 4 All of the above grounds of appeal are independent and without prejudice and notwithstanding each other. The appellant craves leave to add, alter, amend, vary....
X X X X Extracts X X X X
X X X X Extracts X X X X
....te in Form No. 10CCB for A.Y 2006-07 it was noted that no deduction was claimed under Sec. 80-IA(4)(ii) as the gross total income of the assessee was Nil; and (v). that the same Chartered Accountant had in his audit report in Form No. 10CCB for A.Y 2007-08 certified that the initial assessment year for claim of deduction was A.Y 2007-08, thus declined to accept the same. The A.O while disapproving the contention of the assessee that as it had not claimed deduction under Sec. 80-IA(4)(ii) for A.Y 2006-07, therefore, it had opted to claim such deduction in A.Y 2007-08 i.e the year when deduction was first claimed, observed that as per Sec. 80-IA(2) what is relevant is the exercise of option for claim of deduction under Sec. 80- IA(4)(ii) and actual deduction whether claimed or not was not relevant at all. Further, the A.O observed that a perusal of the audit report in Form No. 10CCB of the assessee for A.Y 2006-07 clearly revealed that the assessee had made its claim of deduction under Sec. 80-IA(4)(ii). The A.O deliberating on the obvious reasons for making of claim by the assessee in A.Y 2006-07 observed that the same was prompted by an apprehension of certain disallowances which t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... favour with the contentions of the assessee and dismissed the appeal. 5. The assessee being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. The ld. Authorised representative (for short "A.R‟) for the assessee Sh. Percy Pardiwala, Senior counsel taking us through the facts of the case submitted that the assessee company which was engaged in the business of providing telecommunication services had started providing services from the F.Y 2003-04. It was submitted by the ld. A.R that till the period relevant to A.Y 2005-06 the assessee was assessed at a loss. In the A.Y 2006-07 the gross total income of the assessee after claiming set off of the brought forward losses was reduced to Nil. In the backdrop of the aforesaid facts it was submitted by the ld. A.R that the assessee had for the first time in its return of income for A.Y 2007-08 claimed 100% deduction under Sec. 80-IA of the Act. The ld. A.R further submitted that during the year under consideration viz. A.Y 2008-09 the assessee had claimed 100% deduction under Sec. 80-IA which was allowed by the A.O in the assessment framed by him under Sec. 143(3) of the Act. It was averred by the ld....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the assessee for the A.Y 2006-07 (Page 173 of "APB‟), which revealed that no deduction under Sec. 80-IA was claimed by the assessee in the said year. Rather, it was the contention of the ld. A.R that as the gross total income of the assessee for the A.Y 2006-07 was reduced to Nil after setting off the unabsorbed depreciation and the brought forward losses of the preceding years, thus there was no occasion for the assessee to have claimed any deduction under Sec. 80-IA of the Act. The ld. A.R drew our attention to the "Computation of income‟ of the assessee for A.Y 2007-08 (Page 135 of "APB‟), perusal of which revealed that the assessee had during the said year claimed a deduction of Rs. 24,51,38,793/- under Sec. 80IA(4)(ii) of the Act. The ld. A.R further took us through the audit report in Form 10CCB r.w Rule 18BBB for the A.Y 2007-08 (Page 115 of "APB‟), and drawing our attention to "Column No. 9‟ of the said report submitted that the initial assessment year from which deduction is being claimed was correctly mentioned as "A.Y 2007-08". The ld. A.R controverting the observations of the CIT(A) submitted that the assessee had never opted to claim dedu....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 2006-07 as the initial assessment year for claim of deduction under Sec. 80-IA. It was further submitted by the ld. D.R that in case there was a mistake on the part of the Chartered Accountant in wrongly mentioning A.Y 2006-07 in her audit report in Form 10CCB as the initial assessment year for claim of deduction under Sec. 80-IA, then in the backdrop of the fact that the same Chartered Accountant had signed the audit report in the succeeding year also then why a revised audit report in Form 10CCB for A.Y 2006-07 was not filed. It was averred by the ld. D.R that as the appeal of the assessee was devoid of any force and did not merit acceptance, hence the same may be dismissed. 7. We have heard the authorised representatives of both the parties, perused the orders of the lower authorities and the material available on record. We find that our indulgence in the present appeal has been sought for adjudicating as to whether the lower authorities are right in law and facts of the case in concluding that A.Y 2006-07 is to be taken as the initial assessment year for claim of deduction under Sec. 80-IA(4)(ii) by the assessee. It is the claim of the assessee that A.Y 2007-08 is the initia....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... was first claimed. 9. We shall now in the backdrop of the aforesaid mandate of law contemplated in Sec. 80-IA proceed with the issue under consideration. The lower authorities had observed that as the assessee had in its audit report in Form No. 10CCB for A.Y 2006-07 at "Column No. 9‟ stated that A.Y 2006- 07 was the initial assessment year from when deduction is being claimed, hence for the said reason had concluded that the assessee had adopted A.Y 2006-07 as the "initial year" for claim of deduction under Sec. 80-IA(2) of the Act. We find that the contention advanced by the assessee before the lower authorities that as it had not claimed deduction under Sec. 80-IA(4)(ii) for A.Y 2006-07, and had opted to claim deduction under Sec. 80-IA(4)(ii) for A.Y 2007-08 i.e the year when deduction was first claimed, did not find favour with them. On a perusal of the records it emerges that the lower authorities had rejected the aforesaid claim of the assessee by holding a conviction that for Sec. 80-IA(2) what is relevant is the exercise of option for claim of deduction under Sec. 80-IA(4)(ii), and actual deduction whether claimed or not was not relevant at all. We are unable to pe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r be relevant to point out that the Hon‟ble High Court of Bombay in the case of Synco Industries Ltd. Vs Assessing Officer & Ors. (2002) 254 ITR 0608 (Bom) has held that as the aggregate amount of deduction under Chapter VI-A shall not exceed the gross total income of the assessee, therefore, if the gross total income is nil, then deduction cannot be claimed because it would mean that the aggregate amount of deduction would exceed the gross total income of the assessee. Further, it was observed by the Hon‟ble High Court that Sec. 80B(5) defined "gross total income‟ to mean total income computed in accordance with the provisions of the Act before making any deduction under Chapter VI-A. In the backdrop of the aforesaid position of law, now when in the case before us the gross total income of the assessee for A.Y 2006-07 after setting off the brought forward losses of the preceding years was reduced to Nil, hence on the said count itself the assessee could not have claimed any deduction under Sec. 80-IA(1) in the said year viz. A.Y 2006-07. Thus, in the backdrop of our aforesaid observations our view that the assessee had not claimed any deduction under Sec. 80-IA(1....
X X X X Extracts X X X X
X X X X Extracts X X X X
....grounds. We find that the lower authorities while arriving at self-suiting inferences by restricting their focus to "Column 9‟ of the audit report in Form 10CCB for A.Y 2006-07, had however lost sight of the "Column 30‟ of the very same report, despite the fact that the assessee had specifically drawn their attention to the same. On a perusal of "Column No. 30‟ of Form 10CCB for A.Y 2006-07, it emerges that the auditor had specifically remarked as under: "30. Deduction under section 80-IA/80- IB/80-IC (strike out whichever is not applicable) The profit derived as mentioned in point no. 29 above is eligible for deduction u/s 80IA(4)(ii) however since the GTI is Nil the same is not claimed during the year." Thus, the auditor at "Column No. 30‟ of the Form 10CCB for A.Y 2006-07 had clearly stated that though the assessee was eligible for deduction under Sec. 80IA(40(ii), however since its gross total income was Nil, hence no such deduction was being claimed in the said year. We are of the considered view that the auditor had in clear words stated that though the assessee was eligible for claim of deduction under Sec. 80IA(4)(ii), the same was however not be....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hat though the assessee had filed the audit report in Form 10CCB, but then the issue boils down to the fact that as to whether the assessee had claimed any deduction under Sec. 80-IA in A.Y 2006-07. The answer to the same as had been deliberated by us at length hereinabove is that neither any deduction under Sec. 80-IA was ever claimed by the assessee in A.Y 2006-07, nor in the backdrop of the fact that as its gross total income was Nil any such deduction could have been claimed by it as per the settled position of law. We thus are of the considered view that as the assessee had in A.Y 2006-07 neither opted to claim deduction under Sec. 80-IA, nor was allowed any such deduction by the A.O, thus it would be incorrect to draw adverse inferences in the hands of the assessee for the reason that it had filed the audit report in Form 10CCB. Still further, the qualifications/remarks by the auditor in Column No. 30 of the audit report in Form 10CCB for A.Y 2006- 07 that though the assessee was eligible for claim of deduction under Sec. 80-IA(4)(ii), however as its gross total income was Nil, hence it had not claimed any deduction under the said statutory provision also cannot be lost sight....