TaxTMI 
TaxTMI 
2024 (9) TMI 1881
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....tal income at Rs. 7,30,45,150/-. A search and seizure action u/s 132 of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') was carried out in the Malpani Group of cases of Sangamner on 17.02.2021. In response to the notice issued u/s 153A of the Act dated 25.10.2021, the assessee submitted its return of income on 17.11.2021 declaring income of Rs. 7,30,45,150/-. The statutory notices u/s 143(2) and 142(1) of the Act were issued and served on the assessee, in response to which the assessee filed the requisite details. 3. During the course of assessment proceedings the Assessing Officer, on perusal of the computation of total income, noticed that the assessee has claimed deduction of Rs. 31,82,48,769/- u/s 80IA(4)(iv)(a) of the Act towards profit earned from wind power generation of its windmills and also from solar division. The Assessing Officer asked the assessee to explain as to why the said claim of deduction u/s 80IA(4) of the Act should not be disallowed in view of the provisions of section 80IA(5) of the Act. The assessee in response to the same filed a detailed reply justifying the claim of deduction u/s 80IA(4) of the Act. It was submitted that similar issue....
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.... has also relied on various case laws. However, it is seen that this issue has also not attained finality and Hon'ble Supreme Court has not yet decided the issue on merits. Further, the department in its own case for AY 2013-14 is in appeal before Hon'ble Bombay High Court on similar issue and issue has not been finally adjudicated and still alive. As such, request of assessee to treat each windmill project as separate undertaking and thereby to allow the claim of deduction thereupon u/s 80IA(4) is untenable and accordingly claim of deduction u/s 80IA is required to be disallowed. 4.5.3 As per section 80IA(5) profits and gains from 'Eligible Business for the purpose of determining the quantum of deduction is required to be computed as if such eligible business were the only source of income of the assessee during the year. During the year assessee from Eligible Business' of Power Generation/Renewable Energy, has gross income which is a Loss of Rs. (-) 32,43,79,000/- The deduction can be allowed only when there is positive income. Hence, question of allowing deduction u/s 80IA(4) of the Act does not arise. Therefore claim of deduction made u/s 80IA(....
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....sub-section (1) of 80IA and there is nothing in the section which prohibits the assessee from claiming the deduction in respect of individual undertakings. 10. The appellant has further submitted that an identical issue was involved in appellant's own case for earlier assessment years wherein the Hon'ble ITAT, Pune Bench has decided the issue in assessee's favour. The appellant has also relied on various other decisions of different High Courts and ITAT, as mentioned in its written submission. 11. During the appellate proceedings, the appellant was asked to furnish the unit-wise Profit & loss and claim of deduction u/s 80IA for each unit which has been submitted by the appellant, and is tabulated as under- Sr. No. Address of the site/Undertaking Year of Installation (FY) Initial year of claim of deduction u/s 80IA(4) (AY) Income from operation claim of deduction u/s 80IA(4) 1 Kas (MH) 3.0 MW 2010-11 2013-14 1,06,37,621 Wind 2 Dhule I (MH) 7.5 MW 2005-06 2011-12 3,64,89,415 Wind 3 Dhule II (MH) 2.50 MW 2005-06 2011-12 1,41,24,881 Wind 4 Dhule III (MH) 5.0 MW 2006-07 ....
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....and erected in different assessment years as noted by the authorities below. Assessee is maintaining separate books of accounts in respect of 3 wind mills and working out the profit or losses. Though the first wind mill was erected and commissioned in the A.Y. 200203, there were consistent losses up to the AY 2007-08 and assessee did not opt for claiming the deduction u/s 80IA(2) of the Act. So far as A.Y. 200809 is concerned, assessee opted for claiming the deduction u/s 80IA(2) treating the said assessment year (A.Y.) as an initial assessment year as there was the profit in Satara wind mill but losses in the Tamil Nadu wind mill and Panchgani wind mill. If we look at the scheme of the section 80IA(2), it speaks about the "undertaking" or "enterprise" and not the business of the assessee. Admittedly, three wind mills at the 3 locations are independently operated and the financial results are separately worked out. As per sub-sec. (5) of section 80IA, for computing the deduction u/s 80IA(2), the eligible business is to be treated as the only source of income. Sub- sec. (5) of section 80IA has been explained by the Hon'ble High Court and Kerala in the case of CIT Vs. Accel Trans....
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.... commissioned and erected in different assessment years as noted by the authorities below. Assessee is maintaining separate books of accounts in respect of 3 wind mills and working out the profit or losses. Though the first wind mill was erected and commissioned in the A.Y. 2002- 03, there were consistent losses up to the A.Y. 2007-08 and assessee did not opt for claiming the deduction u/s 80IA(2) of the Act. So far as A.Y. 2008-09 is concerned, assessee opted for claiming the deduction u/s 80IA(2) treating the said assessment year (A.Y.) as an initial assessment year as there was the profit in Satara wind mill but losses in the Tamil Nadu wind mill and Panchgani wind mill. If we look at the scheme of the section 80IA(2), it speaks about the "undertaking" or "enterprise" and not the business of the assessee. Admittedly, three wind mills at the 3 locations are independently operated and the financial results are separately worked out. As per sub-sec. (5) of section 80IA, for computing the deduction u/s 80IA(2), the eligible business is to be treated as the only source of income. Sub-sec (5) of section 80IA has been explained by the Hon'ble High Court and Kerala in the case of CI....
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....012-13 to 2014-15 in ITA No. 76/PUN/2019, ITA No. 2614/PUN/2017 and ITA No. 07/PUN/2018, the Hon'ble ITAT has allowed the claim, by observing as under- 7. The assessee has claimed deduction u/s 80IA(4) separately for each unit of windmill it is an undisputed fact that the date of commencement of operation of each windmill is different. The stand of the Revenue is that instead of claiming deduction uls. 80IA(4) on each windmill as separate unit, the assessee should have computed deduction on all the windmills as single undertaking. We find that the issue whether deduction u/s 80IA(4) is to be computed on each windmill unit separately or on consolidated basis was considered by the Co-ordinate Bench in the case of M/s. D.J. Malpani Vs. ACIT (supra). The Tribunal after considering the earlier decision rendered in the case of Dy. Commissioner of Income Tax Vs. J-Sons Foundry Pvt. Ltd. (supra) concluded as under: "58. Respectfully following the decision of the Coordinate Bench of the Tribunal cited (Supra) and in absence of any contrary material brought to our notice we hold that each phase of windmill has to be considered as separate undertaking eligible f....
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....ction from "such profits and gains of an amount equal to the percentage specified in sub-section (5) and for such number of assessment years specified in subsection (6). Therefore, it provides for a deduction from "such profits and gains from any business of an Industrial undertaking where the gross total income of an assessee includes any profits and gains derived from any business of an industrial undertaking. It is quite clear that each industry must be or each unit must be considered on its own working only when adjudging its entitlement to the deduction under section 80-IA. It cannot be allowed to suffer because it keeps company with some other industry or unit in the hands of the assessee. In the application of section 80-IA the profits and gains earned by an industry mentioned in that section cannot be reduced by the loss suffered by any other industry or industries owned by the assessee. This view is confirmed by clause (i) (a) of sub-section (5) of section 80-IA" (emphasis supplied) 13.3 Hon'ble Madras High Court in the case of CIT vs Bannari Amman Sugars Limited[2019] 104 taxmann.com 1 (Madras) held that for the purposes of grant of deduction under section....
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.... Tribunal. 14. An identical issue arose in the case of Marudhar Fashions ITA No. 6967, 6968 & 6969/MUM/2017 wherein the Hon'ble Mumbai Tribunal held that the deduction u/s 80IA should be computed independently for each unit and not on consolidated basis. The relevant portion of this decision is as under: 8. We have heard both the parties, perused the materials available on record and gone through the orders of authorities below. There is no dispute with regard to the fact that the assessee is eligible for deduction u/s 80IA in respect of five windmills. The only dispute is with regard to whether each windmill constitute a separate undertaking and the profit or loss of that undertaking alone will be considered for the purpose of deduction u/s 80IA or the sum of profit or loss of all five undertakings together is eligible for deduction u/s 80IA. The co-ordinate bench of ITAT, Mumbai Bench "C" in the case of Punit Construction Co vs JCIT (supra) has considered an identical issue in light of number of windmills and after considering relevant provisions of the Act, including sub section (5) of section 80IA, held that deduction has to be given unit-wise without cons....
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....In this case admittedly, the assessee does not have any other head of income except income from Business or Profession. The assessee has only two segment of business income ie. construction business and power generation business. Admittedly, construction business is not eligible business for claiming deduction under section 80IA, therefore, there is controversy about consolidation of profit from construction business activity. The assessee is having power generation segment through windmills. The assessee has set up five windmills. All the five units are part of power generation segment. Now the question is whether deduction provided under section 80IA shall be given on profits and gains derived from power segment business as the only eligible business or profits and gains derived from each windmills as an eligible business without considering profit or loss of other windmills. There is no dispute with regard to deduction to be given under chapter VIA against gross total income computed from all source of income. Even various decisions of the Hon'ble Supreme Court, including in the case of CIT vs. Liberty India (supra) have clearly held that special deduction under chapter VIA ....
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....aces. Meantime, the Govt. has announced incentives for setting up units in some places and within such period. The assessee has set up one eligible unit and starts claiming deduction under that provision Next year, the assessee has set up one more eligible unit at different place and starts claiming deduction from that year and so on. Now both units are eligible units. The period of deduction specified under the act is 10 years for eligible units. Unit one is claiming deduction from initial assessment year and it may end up in some period. Unit two is claiming deduction from next year and it may end up in different year. If one takes initial assessment year from which unit one claims deduction for ten years, the assessee may lose benefit of deduction for one year for unit two, because it has commenced deduction from next year. If you take initial year of claim from the date on which unit two starts claiming deduction, then the assessee may get the benefit for more than 10 years for unit one, if you consider both units as one eligible business and profit or loss of both units is consolidated. This may not be the true intention of the legislature and for that reason the legislature c....
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....the Kalamb unit, being the only unit of the assessee eligible for deduction under section 50-1A, was to be treated as an independent unit and the same was to be treated as the only source of income for the assessee for the purpose of computing deduction under section 80- IA. The deduction claimed by the assessee under section 80-JA, thus, was in accordance with said provisions and as such there was no 10. In this view of the matter and being consistent with the view taken by the co-ordinate bench, which is further supported by the decision of Hon'ble Delhi High Court in the case of CIT vs Dewan Kraft Systems Pvt Ltd (supra), we are of the considered view that the Ld. CIT(A) was right in allowing the benefit of deduction u/s 80IA in respect of each unit without setting off of loss incurred by other eligible units. Hence, we are inclined to uphold the findings of Ld. CIT(A) and dismiss appeal filed by the revenue. (emphasis supplied) 15. It is further seen that for A.Y. 2014-15 in appellant's own case, the assessing officer has accepted the methodology adopted by the appellant and allowed the claim of deduction u/s 80IA(4) while completing the assessment ....
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.... erred in not appreciating the fact that the combined reading of section 80IA(4) & 80IA(5) of the Act makes it amply clear that the deduction is with reference to the profits derived from eligible business of the assessee and not with reference to the profits derived from every unit engaged in the eligible business. 3. On the facts and circumstances of the case and in law, the Ld. CIT(A) decided the appeal in favour of assessee without appreciating the facts that there is no mandate u/s 80IA to treat each windmill project as 'separate undertaking' of the assessee and Section 80IA envisages only two classification of the business of the assessee viz. 'eligible business [as per explicit wording of section 80IA(5)] and non-eligible business 7. The Ld. DR relying on the order of the Assessing Officer submitted that the matter is pending before the Hon'ble High Court and therefore, the order of the Ld. CIT(A) deleting the addition is not justified in allowing the claim of the assessee. 8. The Ld. Counsel for the assessee on the other hand while relying on the order of the CIT(A) submitted that similar disallowances were made in assessment years 2007-08 to 2010....
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....3/PUN/2015 and ACIT vs. M/s. Damodar Jagannath Malpani vide ITA Nos. 1467 & 1468/PUN/2015, order dated 16.10.2017 3. ACIT vs. M/s. Damodar Jagannath Malpani vide ITA No. 1374/PUN/2017, order dated 01.08.2019 4. M/s. L.B. Kunjir vs. DCIT vide ITA Nos. 417 & 418/PUN/2024, DCIT vs. M/s. L.B. Kunjir vide ITA Nos. 1046 & 1088/PUN/2024 and DCIT vs. M/s. L.B. Kunjir vide ITA No. 240/PUN/2024, order dated 05.07.2024 5. M/s. J-Sons Foundry Pvt. Ltd. vs. DCIT vide ITA No. 815/PN/2011, M/s. J-Sons Foundry Pvt. Ltd. vs. JCIT vide ITA No. 1494/PUN/2011 and DCIT vs. J-Sons Foundry Pvt. Ltd. vide ITA Nos. 891 & 1600/PN/2011, order dated 30.01.2013 6) The decision of the Hon'ble High Court of Karnataka in the case of CIT & Anr. vs. M/s. Karnataka Power Corporation Ltd. vide I.T.A. 778/2009, judgment dated 19.01.2015 7) The decision of the Hon'ble Bombay High Court in the case of CIT vs. Maharashtra Hybrid Seeds Co. Ltd. (2021) 133 taxmann.com 43 (Bom) 12. We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and the Ld. CIT(A) and the paper book filed on behalf of the assessee. We have also considered t....
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....case of assessee in A.Ys. 2011-12 and 2012-13 before ITAT in ITA Nos. 1382 & 1383/PUN/2015 vide order dt. 16.10.2017 (supra) and the issue was decided by the Co-ordinate Bench of the Tribunal in assessee's favour by observing as under: 6. We perused the facts of the case as well as legal proposition emanating from the order of Tribunal in assessee's own case (supra.) and are found relevant and we proceed to extract the same as under: 54. Ground of appeal No. 7 relates to methodology of computation of deduction u/s 80IA (4) as adopted by the AO by considering difference phases of windmills as separate undertaking. The Ld. CIT(A) following his order for A.Y.2005-06 held that in a fresh claim made by the assessee unless it is supported by some incriminating material found during the course of search the claim cannot be entertained during proceedings u/s.153A. He accordingly dismissed the above ground raised by the assessee. 55. The Id. Counsel for the assessee referring to the decision of the Pune Bench of the Tribunal in the case of J. Sons Foundry Pvt. Ltd. Vs. DCIT and vice versa vide consolidated order dated 30.01.2013 for A.Y.2007-08 and 2008-09....
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.... there is no mention of word business Sub-sec (5) of Sec. 80IA speaks of business but same is to be construed as business of undertaking or Enterprise as referred to in Sub- sec (2) of See 80IA. It is well settled principle of interpretation of slutatory provision that they are to be interpreted Harmoniously to make workable to give intended results. Hence, as rightly held by Ld. CIT(A) term "business" used its sec. 80IA(5) is to be construed and understood to mean "Business" or ITA Νο. 815, 891, 1494 & 1600/PN/2011 Ms. J. Sans Foundry Pvt. Ltd., Sangli 'undertaking or enterprise de our opinion, the Ld. CITIA) in his well reasoned order has rightly held that every unit constitute a separate undertaking engaged in the eligible business and losses from one unit cannot be set off against the profit of another unit engaged in the same business for the purpose of computing the deduction u/s 80IA. We find no reason to interfere with the findings of the Ld. CIT(A) on this issue. Accordingly, the same are confirmed and grounds taken by the revenue are dismissed. 58. Respectfully following the decision of the Coordinate Bench of the Tribunal cited (supra.) and in abs....
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.................. .................................... .................................... 65. Respectfully following the decision of the Coordinate Bench of the Tribunal cited (supra) and in absence of any contrary material brought to our notice we hold that the provisions of section 80IA(5) are applicable only from the initial assessment year, i.e. the assessment year in which deduction u/s.80IA was first claimed by the assessee after exercising his option as per the provisions of section 80IA(2) of the Act, The grounds raised by the assessee are accordingly allowed." 10. Considering the above, it is evident that the initial assessment year for the assessee for claiming deduction u/s.80IA (4) r.w.s (5) is the issue adjudicated by the Tribunal in favour of the assessee. While granting relief in para 65 of the Tribunal order, the Tribunal relied on the decision of Coordinate Bench of the Tribunal in the case of Poonawala Estate Stud & Agro Farm Pvt. Ltd. reported in 136 TTJ (Pune) 236 and also following the judgment of Hon'ble Madras High Court in the case of Velayudhaswamy Spinning Mills Pvt. Ltd reported in 340 ITR 477. As such, L....