Vibrant Greentech India Pvt.Ltd., Hyd, Hyderabad V. ACIT, Circle-2(2), Hyd, Hyderabad

ITA 1195/HYD/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6269 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2017
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 12-09-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: U. MINI CHANDRAN
• Keywords: Business income; Depreciation; Unabsorbed depreciation
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 80IB; 80IA

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SMT P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 1195/HYD/2016 ASSESSMENT YEAR: 2012-13 M/S VIBRANT GREENTECH INDIA PVT, LTD., HYDERABAD. PAN AABCH1014K VS. ACIT, CIRCLE- 2 (2), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI A.V. RAGHU RAM REVENUE BY : SMT U. MINI CHANDRAN DATE OF HEARING : 27-12-2016 DATE OF PRONOUNCEMENT : 11-01-2017 ORDER PER P. MADHAVI DEVI, J.M.: THIS IS THE ASSESSEES APPEAL FOR THE A.Y. 2012-13 , AGAINST THE ORDER OF THE CIT(A)-5, HYDERABAD, DATED 30-06- 2016. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE LD. COMMISSIONER (APPEALS) IS CONTRARY TO THE FACTS AND LAW ON THE POINTS IN DISPUTE. 2. THE LD. COMMISSIONER (APPEALS) ERRED IN DENYING THE EXCISE DUTY REFUND FOR CLAIMING DEDUCTION U/S 80-IB OF INCOME TAX ACT, 1961 HOLDING THE VIEW THAT THE EXCISE DUTY REFUND IS NOT DERIVED FROM THE JAMMU UNDERTAKING. 3. THE LD. COMMISSIONER (APPEALS) ERRED IN DENYING THE CLAIM OF DEDUCTION U/S 80-IA OF INCOME TAX ACT, 19 61 IN RESPECT OF PROFIT FROM WINDMILL UNITS. 4. THE LD. COMMISSIONER (APPEALS) ERRED IN NOT CONS IDERING THE FACTS AND CASE LAWS RELIED UPON BY THE APPELLAN T. 2. GROUND NO.1 IS GENERAL IN NATURE AND NEEDS NO ADJUDICATION. AS REGARDS GROUND NO. 2, BRIEF FACTS ARE THAT 2 ITA NO. 1195/HYD/2016 M/S. VIBRANT GREENTECH INDIA PVT. LTD., HYD. THE ASSESSEE HAD CLAIMED DEDUCTION U/S 80-IB OF THE ACT, IN RESPECT OF THE INCOME FROM JAMMU UNIT AND THE NE T PROFIT DISCLOSED IN THE JAMMU UNIT INCLUDED THE REF UND OF EXCISE DUTY AND IN THE PROFIT AND LOSS ACCOUNT, THE REFUND WAS NOT SHOWN SEPARATELY. THE A.O. OBSERVED THAT TH E EXCISE DUTY REFUND IS MAINLY ATTRIBUTABLE TO THE UNDERTAKING BUT IS NOT DERIVED FROM THE UNDERTAKING . HE, THEREFORE, HELD THAT THE REFUND CANNOT BE TREATED A S PART OF THE PROFITS DERIVED FROM THE INDUSTRIAL UNDERTAKING OF THE ASSESSEE AND IS NOT ELIGIBLE FOR DEDUCTION U/S 80-I A OF THE ACT. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL B EFORE THE CIT(A), WHO CONFIRMED THE ORDER OF THE A.O. AND THE ASSESSEE IS IN SECOND APPEAL BEFORE US. 3. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THA T THIS ISSUE HAD ARISEN IN ASSESSEES OWN CASE FOR THE ASS ESSMENT YEARS 2008-09 AND 2009-10 AND THE TRIBUNAL IN ITA N OS. 263 & 264/HYD/2016, BY ORDERS 30/09/2016, HAS DIREC TED THE A.O. TO RECOMPUTE THE DEDUCTION BY TAKING INTO CONSIDERATION THE EXCISE DUTY COMPONENT IN THE COST OF CONSUMPTION OF RAW MATERIAL. THUS, HE SUBMITTED T HE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE. 4. THE LD. DR, HOWEVER, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 5. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT COORDINATE BENCH O F THIS TRIBUNAL IN THE ASSESSEES OWN CASE FOR 2008-09 & 2 009-10 (SUPRA), HAS HELD AS UNDER: 3 ITA NO. 1195/HYD/2016 M/S. VIBRANT GREENTECH INDIA PVT. LTD., HYD. 5. THE ONLY ISSUE FOR CONSIDERATION IN ASSESSEE'S APPEALS IN BOTH THE YEARS IS THE ELIGIBILITY OF REFUND OF EXCI SE DUTY FOR DEDUCTION U/S. 80-IB. ASSESSEE HAS OBTAINED REFUND OF EXCISE DUTY PAID AND REDUCED' THE SAME FROM EXCISE DUTY AC COUNT AND ONLY NET AMOUNT WAS CLAIMED IN P&L ACCOUNT IN COMPU TING THE PROFITS OF THE UNIT. AO EXCLUDED THE AMOUNT OF RS. 5.65 CRORES WHICH WAS DEDUCTED FROM THE EXCISE DUTY PAID ACCOUN T IN AY. 2008-09 AND AN AMOUNT OF RS. 3.27 CRORES IN AY. 200 9-10. IT WAS' THE CASE OF ASSESSEE THAT THE COST OF RAW-MATE RIAL INCLUDES EXCISE DUTY PAID AND REFUND OF EXCISE DUTY WILL RED UCE THE COST OF RAW MATERIAL AND ACCORDINGLY, ASSESSEE HAS REDUC ED THE AMOUNTS FROM THE COST OF MATERIAL IN THE MANUFACTUR ING ACTIVITY. AO IS OF THE OPINION THAT EXCISE DUTY REFUND IS MAI NLY 'ATTRIBUTABLE' TO THE UNDERTAKING BUT NOT 'DERIVED' FROM THE UNDERTAKING. HE RELIED UPON THE CASES OF CIT VS. IN DIA GELATIN AND CHEMICALS LTD., [275 ITR 284] (GUJ), CIT VS. IN DIA REITESH INDUSTRIES LTD., [274 ITR 324] (DEL) AND STERLING F OODS [237 ITR 579] (SC) AND OTHER CASES. IT WAS CONTENDED THAT IN ALL THESE JUDICIAL DECISIONS, IT WAS HELD THAT CONCESSIONS OR RELIEFS MAY BE INCIDENTAL OR ATTRIBUTABLE TO THE UNDERTAKING BUT N OT IMMEDIATE SOURCE, THEREFORE, NOT DERIVED FROM THE UNDERTAKING . IT WAS CONTENDED BY ASSESSEE BEFORE THE CIT(A) THAT ISSUES COVERED IN ITS FAVOUR BY THE DECISION OF THE IT AT IN THE CASE OF DCIT VS. M/S. COROMANDEL INTERNATIONAL LTD., HYDERABAD IN IT A NO. 1147 AND 1157/HYD/2014 DT. 21-11-2014 WHICH ARE ON SIMIL AR FACTS. LD. CIT(A) HOWEVER, DID NOT AGREE AND HELD THAT THI S MAY BE BUSINESS INCOME OF ASSESSEE, BUT IT IS NOT 'DERIVED ' FROM THE INDUSTRIAL UNDERTAKING SO AS TO BE ELIGIBLE FOR DED UCTION U/S 80IB. HE AFFIRMED THE ACTION OF AO AND DIRECTED TO RE-COMPUTE DEDUCTION BY EXCLUDING THE REFUND OF EXCISE DUTY FR OM THE COMPUTATION. ASSESSEE IS AGGRIEVED AND RAISED GROUN D NOS. 4 & 5 IN BOTH THE YEARS WHICH ARE SIMILAR. 6. AFTER CONSIDERING THE RIVAL CONTENTIONS, WE ARE OF THE OPINION THAT ASSESSEE IS ELIGIBLE FOR DEDUCTION ON THE EXCI SE DUTY. WHEN EXCISE DUTY IS PAID, IT INCREASES THE COST OF RAW-M ATERIAL OR MATERIAL CONSUMPTION AND WHEN THE SAME WAS REFUNDED , THE SAME WILL SET OFF THE COST. THIS ISSUE WAS CONSIDER ED BY THE CO- ORDINATE BENCH IN THE CASE OF DCIT VS. M/S. COROMAN DEL INTERNATIONAL LTD., HYDERABAD IN ITA NO. 1147 AND 1157/HYD/2014 DT. 21-11-2014 (SUPRA), WHEREIN AFTER CONSIDERING ASSESSEE'S SUBMISSIONS HAVE HELD AS UND ER: '8. HAVING CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF REVENUE AUTHORITIES AS WELL AS OTHER MATE RIALS ON RECORD AND AFTER HAVING APPLIED OUR MIND TO THE DEC ISIONS RELIED UPON BY THE PARTIES, WE DO NOT FIND ANY INFI RMITY IN THE ORDER OF LD. CIT(A) IN ALLOWING BENEFIT U/ S 8O IB TO ASSESSEE ON EXCISE DUTY REFUND FOR THE FOLLOWING RE ASONS . 9. IT IS CLEAR FROM THE ASSESSMENT ORDER THAT AO HA S DENIED 80IB DEDUCTION ON EXCISE DUTY REFUND FOR THE SOLE REASON THAT IT CANNOT BE TREATED AS INCOME DERIVED FROM 4 ITA NO. 1195/HYD/2016 M/S. VIBRANT GREENTECH INDIA PVT. LTD., HYD. ELIGIBLE BUSINESS OF THE UNDERTAKING. HOWEVER, AS C AN BE SEEN' FROM THE FACTS BROUGHT ON RECORD, THERE IS NO DISPUTE THAT ASSESSEE HAS PAID THE EXCISE DUTY ON THE GOODS MANUFACTURED AND SOLD AND AS SUCH IT FORMS PART OF THE SALE PRICE OF ASSESSEE. THEREFORE, PAYMENT OF CENTR AL EXCISE DUTY IS INTEGRALLY CONNECTED WITH THE MANUFA CTURING AND SALE OF GOODS PRODUCED BY ASSESSEE. IT IS ALSO NOT IN DISPUTE THAT AS PER THE INDUSTRIAL POLICY RESOLUTIO N DECLARED FOR THE STATE OF J&K AND CONSEQUENT TO CEN TRAL EXCISE DEPARTMENT NOTIFICATION, ASSESSEE BECAME ELI GIBLE FOR REFUND OF EXCISE DUTY PAID AFTER SET OFF OF CEN VAT CREDIT. THEREFORE, IN SUM AND SUBSTANCE, IT IS ONLY A REFUND OF AN AMOUNT ALREADY PAID BY ASSESSEE AND REDUCED FROM THE SALE PRICE WHILE COMPUTING THE PRO FIT. THEREFORE, WHEN ASSESSEE GETS REFUND OF AN EXPENDIT URE ALREADY INCURRED THE SAME HAS TO BE DEEMED TO BE TH E PROFITS AND GAINS OF BUSINESS OR PROFESSION CARRIED ON BY ASSESSEE IN TERMS OF SECTION 41(1)(A) OF THE ACT. I N THAT VIEW OF THE MATTER EXCISE DUTY REFUND RECEIVED BY ASSESSEE HAS TO BE TREATED AS PART OF THE BUSINESS PROFIT, HENCE, ELIGIBLE FOR DEDUCTION U/S 8OIB OF THE ACT. OTHERWISE, ALSO, AS PAYMENT OF EXCISE DUTY IS DIREC TLY LINKED WITH THE MANUFACTURING OF GOODS, REFUND OF E XCISE DUTY HAS TO BE TREATED, AS INCOME DERIVED FROM ELIG IBLE BUSINESS AS PROVIDED U/S 80IB. IN THE AFORESAID VIE W OF THE MATTER, ASSESSEE WILL BE ELIGIBLE, TO CLAIM DED UCTION U/S 80IB ON THE INCOME ACCRUING FROM REFUND OF EXCI SE DUTY. SO FAR AS THE RATIO IN CASE OF LIBERTY INDIA VS. CIT (SUPRA), THE FACTS ARE CLEARLY DISTINGUISHABLE AND DO NOT APPLY TO THE FACTS OF THE PRESENT CASE. IN CASE OF LIBERTY INDIA, THE HON'BLE SUPREME COURT WAS CONSIDERING TH E PROFITS DERIVED FROM SALE/TRANSFER OF DEPB/ DUTY DR AW SACK BENEFITS. DEPB/ DUTY DRAW BACK BENEFITS, IS GI VEN UNDER A SCHEME FRAMED UNDER THE CUSTOMS ACT AND IT IS TRANSFERABLE, IN OTHER WORDS, IT IS A MARKETABLE COMMODITY, EXCISE DUTY REFUND BY ASSESSEE IN THE PR ESENT CASE IS NEITHER A MARKETABLE COMMODITY NOR TRANSFER ABLE. IT IS ONLY A REFUND OF EXPENDITURE ALREADY INCURRED BY ASSESSEE, HENCE THE DECISION OF THE HON'BLE SUPREME COURT IN CASE OF LIBERTY INDIA (SUPRA) WILL NOT APPLY. IN THE AFORESAID VIEW OF THE MATTER, WE UPHOLD THE ORDER O F LD. CIT(A) BY DISMISSING GROUNDS RAISED'. 6. RESPECTFULLY FOLLOWING THE SAME, SINCE THE FACTS ARE SIMILAR, WE DIRECT THE AO TO RE-COMPUTE THE DEDUCTI ON BY TAKING INTO CONSIDERATION THE EXCISE DUTY COMPONENT IN THE COST OF CONSUMPTION OF RAW-MATERIAL. THE GROUNDS OF ASSESS EE ON THIS ISSUE ARE ACCORDINGLY ALLOWED. 5 ITA NO. 1195/HYD/2016 M/S. VIBRANT GREENTECH INDIA PVT. LTD., HYD. RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINA TE BENCH IN THE ASSESSEES OWN CASE, THE GROUND OF APPEAL NO . 2 IS ALLOWED. 6. AS REGARDS GROUND NO.3, BRIEF FACTS OF THE CASE ARE THAT APART FROM THE PESTICIDE MANUFACTURING UNITS, THE ASSESSEE IS ALSO HAVING WINDMILL UNITS AND THE ASS ESSEE CLAIMED ENTIRE PROFITS OF THE WINDMILL UNITS AS DED UCTION U/S 80-IA OF THE ACT. FOR THE F.Y 2011-12 THE ASSES SEE DERIVED A PROFIT OF RS. 2,08,05,316/- WHICH WAS CLA IMED AS DEDUCTION U/S 80-IA OF THE ACT. THE A.O OBSERVED T HAT OUT OF SIX PHASES OF THE WINDMILL UNITS, FOUR PHASES AR E IN ANANTAPUR DISTRICT OF ANDHRA PRADESH, AND ONE IN SA NGLI DISTRICT IN MAHARASHTRA, AND THAT THE ASSESSEE HAS CLAIMED DEDUCTION U/S 80-IA OF THE ACT FOR PHASES THREE, F OUR AND FIVE THE TOTAL OF WHICH WAS RS. 2,08,05,316/-. HE OBSERVED FROM THE RECORDS THAT THE ASSESSEE HAD UNABSORBED BROUGHT FORWARD LOSSES IN RESPECT OF THE ABOVE MENT IONED UNITS. HE WAS OF THE OPINION THAT THE UNABSORBED B ROUGHT FORWARD LOSSES IN RESPECT OF EACH PHASE OF WINDMILL IS TO BE SET OFF FROM THE NET PROFIT OF THE WINDMILL UNITS B EFORE CLAIMING THE DEDUCTION U/S 80-IA OF THE ACT. HE, T HEREFORE, ASKED THE ASSESSEE AS TO WHY THE BROUGHT FORWARD LO SSES SHOULD NOT BE SET OFF AGAINST THE CURRENT YEAR INCO ME OF THE WINDMILLS BEFORE ALLOWING DEDUCTION U/S 80-IA OF TH E ACT. THE ASSESSEE SUBMITTED THAT SUCH LOSSES HAVE ALREAD Y BEEN SET OFF AGAINST OTHER INCOME IN THE RESPECTIVE YEAR S AND THEREFORE, THE SAME IS NOT TO BE DISALLOWED IN THE CURRENT YEAR. 6 ITA NO. 1195/HYD/2016 M/S. VIBRANT GREENTECH INDIA PVT. LTD., HYD. 6.1 THE A.O. HOWEVER, HELD THAT UNABSORBED BROUGHT FORWARD LOSSES HAVE TO BE NOTIONALLY BROUGHT FORWAR D TO BE SET OFF AGAINST THE INCOME OF THE UNITS DURING THE RELEVANT FINANCIAL YEAR AND ONLY THERE-AFTER, THE DEDUCTION U/S 80-IA OF THE ACT, IS TO BE ALLOWED. FURTHER, HE ALSO OBS ERVED THAT THE ASSESSEES COMPANY HAS BEEN CLAIMING DEDUCTION U/S 80-IA OF THE ACT, FROM THE ASSESSMENT 2001-02 ONWAR DS AND THEREFORE, THE CLAIMS FOR TEN YEARS WERE EXHAU STED AND ASSESSEE IS NOT ELIGIBLE FOR CLAIMING ANY FURTHER D EDUCTION IN THE A.Y. 2010-11 ONWARDS. THUS, HE DENIED THE CL AIM OF DEDUCTION U/S 80-IA OF THE ACT AND THE CIT(A) CONFI RMED THE ORDER OF THE A.O, AND THE ASSESSEE IS IN SECOND APPEAL BEFORE US. 7. THE LD. COUNSEL FOR THE ASSESSEE, WHILE REITERAT ING THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW, HAS PLACED RELIANCE UPON THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF M/S HYDERABAD CHEMICAL PROD UCTS PVT. LTD., HYDERABAD, 2008-2009 AND 2010-11, WHEREI N AFTER TAKING INTO CONSIDERATION THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF VELAYUDHASWAMY SPINNING MILLS PVT. LTD. V/S ACIT (340 ITR 477) AND CBDT CIRCULAR DATED 15-02-2016 WHICH CLARIFIED THE TERM THE INITIAL ASSESSMENT YEAR IN SEC. 80-IA(5) OF THE IT ACT, HAS HELD THAT THE INITIAL ASSESSMENT YEAR IS NOT THE Y EAR OF OPERATION OR COMMENCEMENT OF THE BUSINESS, AS INTERPRETED BY THE A.O, BUT IT IS THE FIRST YEAR IN WHICH THE ASSESSEE HAS OPTED TO CLAIM THE DEDUCTION U/S 80-I A OF THE ACT, AND THEREFORE, THE BROUGHT FORWARD LOSSES OF T HE EARLIER YEARS WHICH HAS ALREADY BEEN SET OFF AGAINST OTHER INCOME 7 ITA NO. 1195/HYD/2016 M/S. VIBRANT GREENTECH INDIA PVT. LTD., HYD. OF THOSE YEARS CANNOT BE NOTIONALLY BROUGHT FORWARD TO BE SET OFF AGAINST THE INCOME OF THE CURRENT YEAR. 8. THE LD. DR HOWEVER, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 9. HAVING REGARD TO THE RIVAL CONTENTIONS AND MATER IAL ON RECORD, WE FIND THAT THERE IS NO DISPUTE THAT THE W INDMILL UNIT IS ELIGIBLE FOR DEDUCTION U/S 80-IA OF THE AC T. IT IS THE CASE OF THE ASSESSEE THAT DEFERENT PHASES OF THE UN ITS HAVE BEEN STARTED IN DIFFERENT YEARS AND THE ASSESSEE HA S BEEN CLAIMING THE DEDUCTION UNDER SECTION 80-IA ALSO FRO M DIFFERENT FINANCIAL YEARS. THEREFORE, ACCORDING TO HIM, THE PERIOD OF TEN YEARS HAVE NOT BEEN EXHAUSTED FOR THE RESPECTIVE UNITS, THE INCOME OF WHICH HAS BEEN CLAI MED U/S 80-IA OF THE ACT. AS REGARDS BRINGING FORWARD OF T HE UNABSORBED DEPRECIATION NOTIONALLY TO BE SET OFF A GAINST THE INCOME OF ELIGIBLE UNITS FOR THE CURRENT YEAR, WE FIND THAT THE COORDINATE BENCH OF THE TRIBUNAL IN THE CA SE OF M/S HYDERABAD CHEMICAL PRODUCTS PVT. LTD., HYDERABA D, IN ITA NO. 1033/HYD/2015 FOR AY 2008-09, ORDER DATED 10/06/2016, TO WHICH BOTH OF US ARE SIGNATORIES HAS HELD AS UNDER: 8. HAVING REGARD TO THE RIVAL SUBMISSIONS AND THE MATERIAL ON RECORD, WE FIND IT NECESSARY TO REPRODUCE THE RELEV ANT PROVISION OF THE ACT FOR PROPER APPRECIATION AND UNDERSTANDIN G OF THE PROVISION OF LAW. 'DEDUCTIONS IN RESPECT OF PROFITS AND GAINS FROM IN DUSTRIAL UNDERTAKINGS OR ENTERPRISES ENGAGED IN INFRASTRUCTU RE DEVELOPMENT, ETC. 80-IA.(L) TO (4) . (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 8 ITA NO. 1195/HYD/2016 M/S. VIBRANT GREENTECH INDIA PVT. LTD., HYD. 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 ONLY SOURCE OF INCOME OF THE ASSESSEE DURING THE PREVIOUS YEAR RELEVANT TO THE I NITIAL ASSESSMENT YEAR AND TO EVERY SUBSEQUENT ASSESSMENT YEAR UP TO AND INCLUDING THE ASSESSMENT YEAR FOR WH ICH THE DETERMINATION IS TO BE MADE. (6) ..... ' FROM A LITERAL READING OF THE ABOVE PROVISION, IT I S SEEN THAT THE PROFITS AND GAINS FROM THE BUSINESS OF THE ASSESSEE SHALL BE COMPUTED ON A STANDALONE BASIS FROM THE INITIAL ASS ESSMENT YEAR OR ANY SUBSEQUENT ASSESSMENT YEAR. THE INITIAL ASSESSMENT YEAR HAS BEEN UNDERSTOOD BY THE ASSESSIN G OFFICER TO BE THE YEAR OF COMMENCEMENT OF OPERATION OF THE UNIT BY THE ASSESSEE, WHEREAS THE CBDT VIDE CIRCULAR DATED 15.2 .2016 HAS CLARIFIED THE MATTER AS UNDER- 'SUBJECT: CLARIFICATION OF THE TERM 'INITIAL ASSESS MENT YEAR IN SECTION, 80IA (5) OF THE INCOME-TAX ACT, 1961 SECTION 80IA OF THE INCOME-TAX ACT, 1961 ('ACT'), A S SUBSTITUTED BY THE FINANCE ACT, 1999 WITH EFFECT FR OM 01.04.2000, PROVIDES FOR DEDUCTION OF AN AMOUNT EQU AL TO 100 % OF THE PROFITS AND GAINS DERIVED BY AN UNDERT AKING OR ENTERPRISE FROM AN ELIGIBLE BUSINESS (AS REFERRE D TO IN SUB-SECTION (4) OF THAT SECTION) IN ACCORDANCE WITH THE PRESCRIBED PROVISIONS. SUB-SECTION (2) OF SECTION 8 0LA FURTHER PROVIDES THAT THE AFORESAID DEDUCTION CAN B E CLAIMED BY THE ASSESSEE, AT HIS OPTION, FOR ANY TEN CONSECUTIVE ASSESSMENT YEARS OUT OF FIFTEEN YEARS ( TWENTY YEARS IN CERTAIN CASES) BEGINNING FROM THE YEAR IN WHICH THE UNDERTAKING COMMENCES OPERATION, BEGINS DEVELOPMENT OR STARTS PROVIDING SERVICES ETC. AS ST IPULATED THEREIN. SUB-SECTION (5) OF SECTION 80IA FURTHER PR OVIDES AS UNDER: '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 ONLY SOURCE OF INCOME OF THE ASSESSEE DURING THE PREVIOUS YEAR RELEVANT TO THE I NITIAL ASSESSMENT YEAR AND TO EVERY SUBSEQUENT ASSESSMENT YEAR UP TO AND INCLUDING THE ASSESSMENT YEAR FOR WH ICH THE DETERMINATION IS TO BE MADE'. IN THE ABOVE SUB-SECTION, WHICH PRESCRIBES THE MANN ER OF DETERMINING THE QUANTUM OF DEDUCTION, A REFERENCE H AS 9 ITA NO. 1195/HYD/2016 M/S. VIBRANT GREENTECH INDIA PVT. LTD., HYD. BEEN MADE TO THE TERM 'INITIAL ASSESSMENT YEAR'. IT HAS BEEN REPRESENTED THAT SOME ASSESSING OFFICERS ARE INTERPRETING THE TERM 'INITIAL ASSESSMENT YEAR' AS THE YEAR IN WHICH THE ELIGIBLE BUSINESS/ MANUFACTURING ACTIV ITY HAD COMMENCED AND ARE CONSIDERING SUCH FIRST YEAR OF COMMENCEMENT/OPERATION ETC. ITSELF AS THE FIRST YEA R FOR GRANTING DEDUCTION, IGNORING THE CLEAR MANDATE PROV IDED UNDER SUB-SECTION (2) WHICH ALLOWS A CHOICE TO THE ASSESSEE FOR DECIDING THE YEAR FROM WHICH IT DESIRE S TO CLAIM DEDUCTION OUT OF THE APPLICABLE SLAB OF FIFTE EN (OR TWENTY) YEARS. THE MATTER HAS BEEN EXAMINED BY THE BOARD. IT IS ABUNDANTLY CLEAR FROM SUB-SECTION (2) THAT AN ASSES SEE WHO IS ELIGIBLE TO CLAIM DEDUCTION U/S.80-IA HAS TH E OPTION TO CHOOSE THE INITIAL/ FIRST YEAR FROM WHICH IT MAY DESIRE THE CLAIM OF DEDUCTION FOR TEN CONSECUTIVE YEARS, O UT 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 80IA FOR TEN CONSECUTIVE YEARS BEGINNING FROM THE YEAR I N RESPECT OF WHICH HE HAS EXERCISED SUCH OPTION SUBJE CT TO THE FULFILLMENT OF CONDITIONS PRESCRIBED IN THE SEC TION. HENCE, THE TERM 'INITIAL ASSESSMENT YEAR' WOULD MEA N THE FIRST YEAR OPTED FOR BY THE ASSESSEE FOR CLAIMING D EDUCTION U/S 80IA. HOWEVER, THE TOTAL NUMBER OF YEARS FOR CL AIMING 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 80IA IN ACCORDANCE WITH THIS CLARIFIC ATION AND AFTER BEING SATISFIED THAT ALL THE PRESCRIBED C ONDITIONS APPLICABLE IN A PARTICULAR CASE ARE DULY SATISFIED. PENDING LITIGATION ON ALLOWABILITY OF DEDUCTION U/S 80IA SH ALL ALSO NOT BE PURSUED TO THE EXTENT IT RELATES TO INTERPRE TING 'INITIAL, ASSESSMENT YEAR' AS MENTIONED IN SUB-SECT ION (5) OF THAT SECTION FOR WHICH THE STANDING COUNSELS/DRS BE SUITABLY INSTRUCTED.' FROM A READING OF THE ABOVE CIRCULAR, IT IS CLEAR T HAT THE ASSESSEE WHO IS ELIGIBLE TO CLAIM DEDUCTION UNDER S .80IA HAS BEEN GIVEN AN OPTION TO CHOOSE INITIAL/FIRST YEAR F ROM WHICH IT MAY DESIRE TO CLAIM THE DEDUCTION FOR TEN CONSECUTI VE YEARS OUT OF THE SLAB OF 15 OR 20 YEARS AS PRESCRIBED UNDER T HE ABOVE SUB- SECTION. THE TERM 'INITIAL ASSESSMENT YEAR' HAS BEE N HELD TO MEAN THE FIRST YEAR OPTED TO BY THE ASSESSEE FOR CL AIMING DEDUCTION UNDER S.80IA OF THE ACT. THUS, IT IS CLEA R THAT THE INITIAL ASSESSMENT YEAR IS NOT THE YEAR OF OPERATIO N OR COMMENCEMENT OF BUSINESS, AS INTERPRETED BY THE ASS ESSING OFFICER, BUT IT IS THE FIRST YEAR IN WHICH THE ASSE SSEE HAS OPTED TO CLAIM THE DEDUCTION UNDER S.80IA. IN VIEW. OF TH IS CLARIFICATION 10 ITA NO. 1195/HYD/2016 M/S. VIBRANT GREENTECH INDIA PVT. LTD., HYD. OF THE BOARD, WHICH CLINCHES THE ISSUE IN FAVOUR OF THE ASSESSEE, AND IS BINDING ON THE REVENUE AUTHORITIES, WE ACCEP T THE CONTENTIONS OF THE ASSESSEE IN THIS BEHALF, AND DIR ECT THE ASSESSING OFFICER TO ALLOW THE CLAIM OF THE ASSESSE E, AFTER VERIFYING THE RECORDS AS TO THE INITIAL ASSESSMENT YEAR IN WHICH THE ASSESSEE FOR THE FIRST TIME HAS CLAIMED THE DED UCTION UNDER S.80IA OF THE ACT, AND CONSIDER THE INCOME OF THE A SSESSEE FROM THE ELIGIBLE UNIT FROM THAT YEAR ALONE ON A STANDAL ONE BASIS. ASSESSEES GROUNDS ON THIS ISSUE ARE ACCORDINGLY AL LOWED. AS THE ISSUE IN DISPUTE IS COVERED BY SAID DECISIO N OF THE TRIBUNAL, WE DEEM IT FIT AND PROPER TO REMAND THE ISSUE TO FILE OF THE A.O. WITH A DIRECTION TO VERIFY THE CLA IM IN EACH OF THE PHASES AND RE-COMPUTE THE DEDUCTION U/S 80-I A IN ACCORDANCE WITH THE DECISION OF THE COORDINATE BENC H IN THE CASE OF M/S HYDERABAD CHEMICAL PRODUCTS PVT. LTD., HYDERABAD (SUPRA). ACCORDINGLY, GROUND OF APPEAL N O.3 IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 10. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 11 TH JANUARY, 2017. SD/- SD/- (S. RIFAUR RAHMAN) (P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 11 TH JANUARY, 2017 KRK 1) M/S VIBRANT GREENTECH INDIA PVT., LTD, C/O SHRI RAJ U & PRASAD CAS, 401, DIAMOND HOUSE, ADJ TO AMRUTHA HILLS, PUNJAGUTTA, HYDERABAD -82. 2) ACIT, CIR - 2(2), HYDERABAD. 3) CIT -5, HYDERABAD 4) PCIT-5, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., H YDERABAD. 6) GUARD FILE.