Asst. CIT, Circle-1, Aurangabad V. M/s Sanjeev Auto Parts Manufacturers Pvt. Ltd., Aurangabad

ITA 1373/PUN/2013

• Counselvise Citation: 137324514 RSA 2013
• Duration Of Justice: 10 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 01-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Keywords: Depreciation; Unabsorbed depreciation
• Section: 10; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE: SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO S. 1373 & 1374 / P N/ 20 1 3 ASSESSMENT YEAR S : 200 9 - 10 & 2010 - 11 THE ASSTT. COMM ISSIONER OF INCOME TAX, CIRCLE 1 , AURANGABAD VS. M/S. SANJEEV AUTO PARTS MANUFACTURERS PVT. LTD., K - 96, MIDC WALUJ, AURANGABAD (APPELLANT) (RESPONDENT) PAN NO. AAECS0129H APPELLANT BY: SHRI S.P. WALIMBE RESPONDENT BY: SHRI NIKHIL PATHAK DATE OF HEARING : 30 - 0 4 - 2014 DATE OF PRONOUNCEMENT : 27 - 05 - 2014 ORDER PER R.S . PADVEKAR , JM : - THESE TWO APPEALS ARE FILED BY THE REVENUE CHALLENGING THE RESPECTIVE IMPUGNED ORDERS OF THE LD. CIT(A) , AURANGABAD DATED 05 - 04 - 2013 FOR THE A.YS. 200 9 - 10 & 20 10 - 11 . THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS IN THE APPEAL WHICH ARE VERBATIM IN BOTH THE ASSESSMENT YEARS. 1. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS CORRECT IN INTERPRETING THE PROVISION OF SECTION 80IA(5) IN T HE LIGHT OF DECISION IN THE CASE OF M/S HYDERABAD CHEMICALS SUPPLIES LTD., APIE, BALANAGAR HYDERABAD - 37 VS. THE ACIT, CIRCLE 1(4), HYDERABAD DATED 21ST JANUARY, 2011. 2. WHETHER IN THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS CORRECT IN INTERPRETING 'INITIAL ASSESSMENT YEAR'. 2 ITA NO S. 1373 & 1374/PN/2013, M/S. S ANJEEV AUTO PARTS MANUFACTURERS PVT. LTD., AURANGABAD 3. WHETHER IN THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE DEFINITION OF 'INITIAL ASSESSMENT YEAR' AS GIVEN IN SECTION 80IB(14) OF THE ACT IS NOT APPLICABLE IN THE PROVISION OF SECTION 80IA OF THE ACT. 4. THE ORDER OF THE AO BE RESTORED AND THAT OF THE CIT(A) BE VACATED. 2. THE FACTS AS WELL AS ISSUES ARE IDENTICAL IN BOTH THE ASSESSMENT YEARS HENCE, BOTH TH ESE APPEALS ARE DISPOSED OF F BY THIS CO MMON ORDER. THE SOLITARY ISSUE IS IN RESPECT OF THE INITIAL ASSESSME NT YEAR FOR CLAIMING THE DEDUCTION U/S. 80IA(4)(IV)(A) OF THE INCOME - TAX ACT. THE FACTS WHICH ARE REVEALED FROM THE RECORD AS UNDER. THE ASSESSEE COMPANY IS ENGAGED IN THE MANUFACTURING OF AUTOMOBILE COMPONENTS. THE ASSESSEE ALSO HAVE THE WINDMILLS FROM WHICH THE POWER IS GENERATED. THE ASSESSEE CLAIMED THE DEDUCTION U/S. 80IA(4)(IV)(A) OF THE INCOME - TAX ACT OF RS.13,83, 980/ - AND RS.63,27,017/ - IN THE A.YS. 2009 - 10 AND 2010 - 11 RESPECTIVELY. IN THE OPINION OF THE ASSESSING OFFICER , THE PROFITS AND GAINS FROM THE POWER GENERATION WHICH IS THE ELIGIBLE BUSINESS IS TO BE COMPUTED AS IF THE ASSESSEE S ONLY SOURCE OF INCOME IS FROM ELIGIBLE BUSINESS. THE ASSESSING OFFICER REJECTED THE CLAIM OF THE ASSESSEE TOWARDS THE DEDUCTION U/S. 80IA(4)(IV)(A) BY WORKING THE CARRY FORWARD LOSSES AS UNDER: ASSESSMENT YEAR CURRENT YEAR NOTIONAL LOSS/PROFIT LOSS SET OFF AS CLAIMED BY THE APPELLANT CARRIED FORWARD CUMULATIVE BALANCE OF UNABSORBED LOSSES 2006 - 07 (5,70,63,691) - (5,70,63,691) (5,70,63,691) 2007 - 08 31,06,047 3 1,06,047 - (5,39,57,643) 2008 - 09 31,30,123 31,30,123 - (5,08,27,519) 2009 - 10 13,83,975 13,83,975 - (4,94,43,544) 2010 - 11 62,73,330 62,73,330 - (4,31,70,214) 3 ITA NO S. 1373 & 1374/PN/2013, M/S. S ANJEEV AUTO PARTS MANUFACTURERS PVT. LTD., AURANGABAD 3. THE ASSESSING OFFICER HELD THAT AS THERE IS CUMULATIVE BALANCES OF UNABSORBED LOSSES FRO M A.Y. 2006 - 07 ONWARDS , MORE PARTICULARLY FROM THE BUSINESS OF GENERATION OF POWER AND HENCE , ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION IN VIEW OF PROVISIONS OF SEC. 80IA(5) OF THE ACT. IN THE OPINION OF THE ASSESSING OFFICER THE ADJUSTMENT OF LOSSES FOR EA RLIER YEARS HAS TO BE MADE AS PER PROVISIONS OF SEC. 80IA(5) OF THE ACT, WHICH IS A NON - OBST ANE CLAUSE HAVING OVERRIDING EFFECT TO THE PROVISIONS OF THE ACT. AS INTERPRETED BY THE ASSESSING OFFICER , THE SAID SECTION PROVIDES THAT FOR THE PURPOSE OF DETERM INING THE QUANTUM OF DEDUCTION U/S. 80IA OF THE ACT FOR THE ASSESSMENT YEAR OR ANY SUBSEQUENT ASSESSMENT YEAR, THE PROFITS AND GAINS DERIVED FROM THE ELIGIBLE BUSINESS SHALL BE COMPUTED AS IF SUCH ELIGIBLE BUSINESS WAS THE ONLY SOURCE OF INCOME OF THE ASSE SSEE DURING THE PREVIOUS YEAR RELEVANT TO THE INITIAL ASSESSMENT YEARS AND TO EVERY SUBSEQUENT ASSESSMENT YEAR, FOR WHICH THE DETERMINATION IS TO BE MADE. THE ASSESSING OFFICER PLACED HIS HEAVY RELIANCE ON THE DECISION OF THE ITAT, HYDERABAD, A BENCH IN TH E CASE OF M/S. HYDERABAD CHEMICALS SUPPLIERS LTD., APIE, BALANAGAR, HYDERABAD - 37 VS. ACIT, CIRCLE - 1(4), HYDERABAD DATED 21 - 01 - 2011. THE ASSESSING OFFICER HAS ALSO PLACED RELIANCE ON THE DECISION OF THE HON'BLE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. GOLDMINES SHARES & INVESTMENTS PVT. LTD. 113 ITD 209 (AHMADABAD) (SB). IN BOTH THE ASSESSMENT YEARS THE CLAIM OF THE DEDUCTION U/S. 80IA(4)(IV) ACT WAS DENIED TO THE ASSESSEE. 4. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) WHO ALLOWE D THE CLAIM OF THE ASSESSEE. THE RELEVANT PART OF THE DISCUSSION S AND FINDINGS OF THE LD. CIT(A) ARE AS UNDER: 5.2 I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDER OF THE A.O. AND THE SUBMISSIONS OF THE APPELLANT. THE A.O. HAS CONSIDERED THE INITIAL ASSE SSMENT YEAR TO BE A.Y.2006 - 07 AND HAS ACCORDINGLY WORKED OUT AND CARRIED FORWARD THE LOSSES OF THE ELIGIBLE BUSINESS IN THE SUBSEQUENT YEARS INCLUDING THE YEARS UNDER APPEAL. THE A.O. 4 ITA NO S. 1373 & 1374/PN/2013, M/S. S ANJEEV AUTO PARTS MANUFACTURERS PVT. LTD., AURANGABAD HAS, THEREFORE, HELD THAT NO PROFIT OF THE ELIGIBLE BUSINESS IS AVAILABL E FOR CLAIMING DEDUCTION U/S 80IA OF THE ACT. THE APPELLANT HAS CLAIMED THAT AS PER PROVISIONS OF SECTION 80IA(2) OF THE ACT, THE DEDUCTION CAN BE CLAIMED AT THE ASSESSEE'S OPTION FOR ANY TEN CONSECUTIVE ASSESSMENT YEARS OUT OF THE FIFTEEN YEARS FROM THE Y EAR IN WHICH THE UNDERTAKING STARTED GENERATING POWER. THE APPELLANT THEREFORE CLAIMED THAT THE LEGISLATURE HAS NOT INTENDED THAT THE INITIAL ASSESSMENT YEAR IS TO BE THE FIRST YEAR OF OPERATION, BUT THE ASSESSEE HAS OPTION TO SELECT INITIAL YEAR NOT FALLI NG BEYOND THE FIFTEEN ASSESSMENT YEARS STARTING FROM THE PREVIOUS YEARS IN WHICH THE UNDERTAKING BEGINS POWER GENERATION. THIS CONTENTION OF THE APPELLANT IS SUPPORTED BY THE DECISION IN THE CASE OF MOHAN BREWERIES & DISTILLERIES LTD. VS. CIT (2008) 116 IT D 241 (CHENNAI) - WHEREIN IT HAS BEEN LAID DOWN THAT LOSSES PERTAINING TO THE PERIOD PRIOR TO THE INITIAL ASSESSMENT YEAR OPTED BY THE ASSESSEE SHALL NOT BE TAKEN INTO CONSIDERATION FOR CALCULATING THE AMOUNT OF DEDUCTION U/S 80IA OF THE ACT. THE RELEVANT PORTION OF THE DECISION IS REPRODUCED BELOW 'SECTION 80IA AS AMENDED BY THE FINANCE ACT, 1999 GIVES ON OPTION TO THE ASSESSEE WITH EFFECT FROM 1/4/2000 TO CLAIM RELIEF UNDER THIS SECTION FOR ANY 10 CONSECUTIVE ASSESSMENT YEARS OUT OF 15 YEARS BEGINNING FROM THE YEAR ENDING IN WHICH THE UNDERTAKING OR ENTERPRISE DEVELOPS OR BEGINS TO OPERATE ANY INFRASTRUCTURE FACILITY ETC. IT IS LEFT TO THE ASSESSEE AT ITS WILL TO CLAIM THIS RELIEF FROM THE FIRST ASSESSMENT YEAR, OR FROM THE SECOND OR FROM THE THIRD OR S O AS IT MIGHT THINK FIT. ONCE THE ASSESSEE HAS OPTED THE FIRST YEAR OF RELIEF THEN IT CONTINUES FOR FURTHER 9 CONSECUTIVE YEARS. TO CLAIM THIS RELIEF, THE UNDERTAKING IS TO BE SET UP DURING THE PERIOD 1/4/1993 TO 31/3/2006. THIS IS AS PER SECTION 80IA(4)(I V). SECTION 80IA(2), CLEARLY STATES THAT THE ASSESSEE CAN OPT FOR YEAR OF DEDUCTION FOR ANY 10 CONSECUTIVE YEARS OUT OF 15 YEARS TAKEN FROM THE FIRST YEAR IN WHICH THE UNDERTAKING OR ENTERPRISE DEVELOPS AND BEGINS TO OPERATE ANY INFRASTRUCTURE ACTIVITY. SE CTION 80IA(2) DOES NOT MANDATE THAT FIRST YEAR OF 10 CONSECUTIVE ASSESSMENT YEARS SHOULD BE ALWAYS THE FIRST YEAR OF SET UP OF ENTERPRISE. IF THE INTENTION OF THE LEGISLATURE IS THAT THE FIRST YEAR OF SET UP IS THE INITIAL ASSESSMENT YEAR TO CLAIM DEDUCTIO N U/S.80IA, THEN THERE IS NO MEANING IN GIVING OPTION 5 ITA NO S. 1373 & 1374/PN/2013, M/S. S ANJEEV AUTO PARTS MANUFACTURERS PVT. LTD., AURANGABAD TO THE ASSESSEE TO CLAIM DEDUCTION FOR 10 CONSECUTIVE ASSESSMENT YEARS OUT OF 15 YEARS. THE MEANING OF SECTION 80IA(2) IS THAT THE ASSESSEE CAN EXERCISE THE OPTION IN ANY 10 CONSECUTIVE YEARS STARTING F ROM THE FIRST YEAR IN WHICH THE UNDERTAKING BEGINS TO OPERATE ANY INFRASTRUCTURE FACILITY. IF THE ASSESSEE OPTS TO EXERCISE THE CLAIM FOR FIRST YEAR IT SHOULD CONTINUE TO CLAIM THE DEDUCTION FOR ANOTHER 9 YEARS. IF IT OPTS THE SECOND YEAR TO CLAIM DEDUCTIO N IT SHOULD CONTINUE FOR ANOTHER 9 YEARS TILL THE IT' YEAR, SIMILARLY IF IT OPTS TO CLAIM RELIEF FROM THE 3 RD YEAR, IT WILL END IN THE 12 TH YEAR, IF IT OPTS TO CLAIM FROM THE 4 TH YEAR THEN IT WILL END IN THE 13 TH YEAR, IF IT OPTS TO CLAIM FROM THE 5 TH YEAR , IT WILL END IN THE 14 TH YEAR AND IF IT OPTS TO CLAIM FROM THE 6 TH YEAR, IT WILL END IN THE 15 TH YEAR. SECTION 80IA(2) HAS NOT PROVISION FOR THE ASSESSEE TO CLAIM DEDUCTION IN ANY ASSESSMENT YEAR STARTING FROM THE FIRST ASSESSMENT YEAR. THE PROVISION OF S ECTION 80IA(5) IS APPLICABLE ONLY WHEN THE ASSESSEE CHOOSES TO CLAIM DEDUCTION U/S.80IA AND IF IT HAS NOT CHOSEN TO CLAIM THE DEDUCTION U/S. 80IA, SECTION 80IA(5) CANNOT BE MADE APPLICABLE. IN THE INSTANT CASE THERE WAS A CATEGORICAL FINDING BY THE ASSESSI NG OFFICER AND THE COMMISSIONER (APPEALS) THAT THE FIRST YEAR CLAIMED BY THE ASSESSEE WAS FROM THE ASSESSMENT YEAR 2004 - 05. SINCE THE ASSESSEE HAD OPTED TO CLAIM THIS DEDUCTION ONLY IN THE ASSESSMENT YEAR, THE INITIAL ASSESSMENT YEAR COULD NOT BE THE YEAR IN WHICH THE UNDERTAKING COMMENCE ITS OPERATION AND IN THE INSTANCE CASE, THE INITIAL ASSESSMENT YEAR WAS THE ASSESSMENT YEAR IN WHICH THE ASSESSEE HAS CHOSEN TO CLAIM DEDUCTION U/S.80IA. HENCE, THE PROVISION OF SECTION 80IA(5), TREATING UNDERTAKING HAS A SEPARATE SOLE SOURCE OF INCOME, COULD NOT BE APPLIED TO A YEAR PRIOR TO THE YEAR IN WHICH THE ASSESSEE OPTED TO CLAIM RELIEF U/S.80IA FOR THE FIRST TIME. FURTHER, DEPRECIATION AND CARRY FORWARD LOSS RELIEF TO THE UNIT WHICH CLAIMS DEDUCTION U/S.80IA CANNOT BE NATIONALLY CARRIED FORWARD AND SET OFF AGAINST THE INCOME FROM THE YEAR IN WHICH THE ASSESSEE STARTED CLAIMING DEDUCTION U/S.80IA. THEREFORE THERE WAS NO QUESTION OF SETTING OFF NATIONALLY CARRIED FORWARD UNABSORBED DEPRECIATION OR LOSS OF EARLIER YEAR S AGAINST THE 6 ITA NO S. 1373 & 1374/PN/2013, M/S. S ANJEEV AUTO PARTS MANUFACTURERS PVT. LTD., AURANGABAD PROFITS OF THE UNITS AND THE ASSESSEE WAS ENTITLED TO CLAIM DEDUCTION U/S.80IA ON THE CURRENT ASSESSMENT YEAR'S PROFIT. FURTHER SIMILAR RATIO HAS BEEN LAID DOWN IN THE CASE OF ACIT VS. VODAFONE ESSAR GUJARAT LTD. (2010) 41 DTK 146 (AHD.TR IB.). FURTHER, THE CONTENTION OF THE APPELLANT ON THE VERY SAME ISSUE IN RESPECT OF A.Y.2007 - 08 IN THE CASE OF M/S LAXMI RICKSHAW BODY PVT.LTD. HAS BEEN DECIDED BY HON'BLE ITAT, PUNE IN FAVOUR OF THE ASSESSEE BY DISMISSING THE APPEAL OF THE REVENUE ON THIS ISSUE VIDE ORDER DATED 30 TH MARCH, 2010 BEARING ITA NO.L34/PN/LL. THE HON'BLE ITAT, PUNE HAS REFERRED TO AND FOLLOWED THE DECISION OF CO - ORDINATE BENCH IN THE CASE OF SERUM INTERNATIONAL LTD., PUNE WHEREIN THE HON'BLE ITAT HAS DECIDED THIS ISSUE AGAIN ST THE REVENUE AND IN FAVOUR OF THE ASSESSEE. THE HON'BLE ITAT, PUNE WHILE DECIDING THE SIMILAR ISSUE IN THE CASE OF SERUM INTERNATIONAL LTD., PUNE HAS CONSIDERED THE DECISION OF ACIT VS. GOLDMINES SHARES & INVESTMENT PVT.LTD., (SPECIAL BENCH AHMADABAD ITA T) 113 ITD 209 WHICH HAS BEEN RELIED ON BY THE A.O. THE HON'BLE ITAT WHILE DECIDING THE ABOVE REFERRED APPEAL HAS REFERRED TO AND FOLLOWED ANOTHER DECISION OF THE CO - ORDINATE BENCH IN THE CASE OF LAP FINANCE & CONSULTANCY (P) LTD. FURTHER, THE CONTENTION O F THE APPELLANT IS SUPPORTED BY THE DECISION IN THE CASE OF VELAYUDHASWAMY SPINNING MILLS (P) LTD. VS. ACIT (2010) 38 DTR 57 (MAD). IT IS ALSO SETTLED LAW WHEN THE TWO CONTRARY DECISIONS/VIEWS ON THE SAME ISSUE ARE AVAILABLE THEN THE DECISION/VIEWS IN FAVO UR OF THE ASSESSEE ARE TO BE FOLLOWED. IT IS ALSO SETTLED LAW THAT THE BENEFICIAL OR INCENTIVE PROVISIONS ARE TO BE CONSTRUED LIBERALLY. 5.3 IN VIEW OF THE ABOVE FACTS AND DISCUSSION AND RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY THE ABOVE DECISIONS AND PARTICULARLY THE DECISIONS OF HON'BLE JURISDICTIONAL ITAT, I AM OF THE CONSIDERED VIEW THAT THE APPELLANT HAS CORRECTLY CLAIMED THE DEDUCTION U/S.80IA(4)(IV)(A) OF THE ACT AND THE A.O. IS NOT JUSTIFIED IN DISALLOWING THE DEDUCTION CLAIMED BY THE APPELLANT AMOUNTING TO RS.13,83,975/ - AND RS.62,73,330/ - IN A.YS. 2009 - 10 & 2010 - 11 RESPECTIVELY. THE ADDITION OF RS.13,83,975/ - IN A.Y.2009 - 10 AND RS.62,73,975/ - IN A.Y. 2010 - 11 IS, THEREFORE, DELETED. GROUND NO. L FOR BOTH THE YEARS UNDER APPEAL STANDS ALLOWED . 7 ITA NO S. 1373 & 1374/PN/2013, M/S. S ANJEEV AUTO PARTS MANUFACTURERS PVT. LTD., AURANGABAD NOW THE REVENUE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD THE PARTIES. WE FIND THAT THE ISSUE STANDS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HON'BLE HIGH COURT OF MADRAS IN THE CASE OF VELAYUDHASWAMY SPINNING MILLS (P) LTD. VS . ACIT 38 DTR 57 (MAD) AS WELL AS THE DECISION OF THE ITAT, PUNE IN THE CASE OF SERUM INTERNATIONAL LTD. VS. ADDL. CIT, RANGE - 6 ITA NOS. 290 TO 292/PN/2010 DATED 20 - 09 - 2011. 6. IN THE CASE OF SERUM INTERNATIONAL LTD. (SUPRA) THE TRIBUNAL HAS HELD AS UNDER : '13. HAVING BEEN CONSIDERED THE ABOVE SUBMISSIONS, WE FIND THAT THE ISSUE RAISED IN GROUND NO. 1 AS TO WHAT WOULD BE THE INITIAL A.Y FOR THE PURPOSES OF SECTION 80IA(5) OF THE ACT HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE PUNE BENCH OF THE TRIBUN AL IN THE CASE OF POONAWALLA STUD AND AGRO FARM PVT. LTD. VS. ACIT (SUPRA). IN THAT CASE AFTER DISCUSSING THE ISSUE IN DETAIL, THE TRIBUNAL HAS COME TO THE CONCLUSION THAT THE INITIAL 'A. Y' FOR THE PURPOSE OF CLAIMING DEDUCTION U/S. 80IA WAS THE FIRST YEA R IN WHICH THE ASSESSEE CLAIMED THE DEDUCTION U/S. 80IA (1) AFTER EXERCISING HIS OPTION AS PER THE PROVISIONS OF 80IA (2) OF THE ACT. IT WAS HELD THAT THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE INITIAL A. Y FOR THE PURPOSES OF SECTION 80IA(2) R.W.S. 80IA (5) WAS THE YEAR IN WHICH THE ASSESSEE STARTED GENERATING ELECTRICITY FROM THE WIND MILL ACTIVITY. WE ALSO FIND THAT THE ISSUE RAISED IN GROUND NO. 2 REGARDING THE ELIGIBILITY OF THE ASSESSEE TO CLAIM DEDUCTION U/S. 80IA UNDIMINISHED BY UNABSORBED LOSSES AND DEPRECIATION ALSO SET OFF IN EARLIER YEARS AGAINST THE OTHER INCOME, IS FULLY COVERED BY THE DECISION OF HON 'BLE MADRAS HIGH COURT IN THE CASE OF VELAYUDHASWAMY SPINNING MILLS (P) LTD VS. ACIT (SUPRA) HOLDING THAT AS PER SUB - SECTION (5) OF SECTION 801 A, PROFITS ARE TO BE COMPUTED AS IF SUCH ELIGIBLE BUSINESS IS THE ONLY SOURCE OF INCOME OF THE ASSESSEE. WHEN THE ASSESSEE EXERCISES THE OPTION, ONLY THE LOSSES OF THE YEARS BEGINNING FROM THE INITIAL A. Y. ARE TO BE BROUGHT FORWARD AND NOT THE LOSSES OF THE EARLIER YEARS WHICH HAVE BEEN ALREADY 8 ITA NO S. 1373 & 1374/PN/2013, M/S. S ANJEEV AUTO PARTS MANUFACTURERS PVT. LTD., AURANGABAD SET OFF AGAINST THE INCOME OF THE ASSESSEE. THE HON'BLE MADRAS HIGH COURT HAS BEEN FURTHER PLEASED TO HOLD THAT REVENUE CANNOT NOTIONALLY BRING FORWARD ANY LOSS OF EARLIER YEARS WHICH HAD ALREADY BEEN SET OFF AGAIN ST THE OTHER INCOME OF ASSESSEE AND SET OFF AGAINST THE CORRECT INCOME OF THE ELIGIBLE BUSINESS. FICTION CREATED BY SUB - SECTION (5) OF SECTION 80IA DOES NOT CONTEMPLATE SUCH NOTIONAL SET OFF, HELD THE HON'BLE HIGH COURT. THE HON'BLE MADRAS HIGH COURT IN TH AT DECISION HAS ALSO REFERRED THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF LIBERTY INDIA VS. CIT (SUPRA) AND THE DECISION OF SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF GOLDMAN SHARES & FINANCE (P) LTD. (SUPRA). THERE IS NO DISPUTE THAT EVEN A DEC ISION OF NON - JURISDICTIONAL HIGH COURT IS A BINDING PRECEDENT FOR THE TRIBUNAL UNTIL A CONTRARY DECISION IS GIVEN BY ANY OTHER COMPETENT HIGH COURT. IN THIS REGARD, WE FIND STRENGTH FROM THE RECENT DECISION OF HON'BLE JURISDICTIONAL BOMBAY HIGH COURT IN TH E CASE OF COMMISSIONER OF CENTRAL EXCISE VS. VALSON DYEING, BLEACHING AND PRINTING WORKS (SUPRA) WHEREIN THE HON'BLE BOMBAY HIGH COURT HAS BEEN PLEASED TO HOLD IN A CASE OF EXCISE MATTER THAT TRIBUNAL IS BOUND BY THE DECISION OF HIGH COURT, EVEN OF A DIFFE RENT STATE, SO LONG AS THERE IS NO CONTRARY DECISION OF ANY OTHER HIGH COURT. THE HON'BLE BOMBAY HIGH COURT HAS BEEN PLEASED TO HOLD FURTHER THAT THE TRIBUNAL HAD NO OPTION BUT TO FOLLOW THE JUDGMENT OF THE MADRAS HIGH COURT. AN AUTHORITY LIKE AN INCOME TA X TRIBUNAL ACTING ANYWHERE IN THE COUNTRY HAS TO RESPECT THE LAW LAID DOWN BY THE HIGH COURT, THOUGH OF A DIFFERENT STATE, SO LONG AS THERE IS NO CONTRARY DECISION OF ANY OTHER HIGH COURT ON THAT QUESTION. WE THUS RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF COMMISSIONER OF CENTRAL EXCISE VS. VAKSON DYEING, BLEACHING AND PRINTING WORKS (SUPRA) HOLD THAT THE TRIBUNAL IS BOUND BY THE DECISION OF THE HON'BLE MADRAS HIGH COURT ON AN IDENTICAL ISSUE IN THE CA SE OF VELAYUDHASWAMY SPINNING MILLS (P) LTD VS. ACIT (SUPRA). WE THUS RESPECTFULLY FOLLOWING THE DECISION TAKEN BY THE HON'BLE MADRAS HIGH COURT IN THAT CASE ON AN IDENTICAL ISSUE UNDER ALMOST SIMILAR FACTS, HOLD THAT WHEN THE ASSESSEE EXERCISING THE OPTIO N, ONLY THE LOSSES OF THE YEAR BEGINNING FROM THE 9 ITA NO S. 1373 & 1374/PN/2013, M/S. S ANJEEV AUTO PARTS MANUFACTURERS PVT. LTD., AURANGABAD INITIAL A. Y. ARE TO BE BROUGHT FORWARD AND NOT THE LOSSES OF EARLIER YEAR WHICH HAVE BEEN ALREADY SET OFF AGAINST THE OTHER INCOME OF THE ASSESSEE. THE REVENUE CANNOT NOTIONALLY BRING FORWARD ANY LOSS OF E ARLIER YEARS WHICH HAS ALREADY BEEN SET OFF AGAINST ANY OTHER INCOME OF THE ASSESSEE AND SET OFF THE SAME AGAINST THE CURRENT INCOME OF THE ELIGIBLE BUSINESS. WE THUS SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DIRECT THE A. O TO ALLOW THE CLAIMED DE DUCTION U/S. 80IA WITHOUT BRINGING THE NOTIONALLY BROUGHT FORWARD ANY LOSS OR DEPRECIATION OF EARLIER YEARS WHICH HAS ALREADY BEEN SET OFF AGAINST OTHER INCOME OF THE ASSESSEE. THE DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF PRIMA PAPER ENGINEERI NG P. LTD. VS. I TO (SUPRA) CITED BY THE LD. DR IS ALSO NOT HELPFUL TO THE REVENUE SINCE FIRSTLY THE DECISION OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF VELAYUDHASWAMY SPINNING MILLS (P) LTD. VS. ACIT (SUPRA) ON THE ISSUE WAS NOT CITED BEFORE THE BENC H AND SECONDLY THE ID. AR FAIRLY AGREED THAT THE ISSUE RAISED WAS COVERED AGAINST THE ASSESSEE BY THE DECISION OF SPECIAL BENCH IN THE CASE OF ACIT VS. GOLDMINE SHARES & FINANCE (P) LTD. (SUPRA) FOLLOWED BY THE AUTHORITIES BELOW. THE ID. AR THEREIN THUS CO NTENDED THAT THOUGH THE ISSUE MAY BE DECIDED AGAINST THE ASSESSEE IN VIEW OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. GOLDMINE SHARES & FINANCIAL (P) LTD., BUT IT SHOULD NOT BE CONSTRUED AS ACQUIESCENCE FROM THE SIDE OF THE ASSESSEE AS THE LEGAL POSITION ON THE SUBJECT IS YET NOT SETTLED. THE GROUND NO. 2 IS THUS DECIDED IN FAVOUR OF THE ASSESSE'. THE ABOVE DECISION HAS BEEN FURTHER FOLLOWED BY OUR CO - ORDINATE BENCH IN A SUBSEQUENT DECISION IN THE CASE OF LAP FINANCE & CONSULTANCY P. LTD. ( SUPRA). THEREFORE, FOLLOWING THE PRECEDENTS, WE CONFIRM THE ORDER OF THE COMMISSIONER OF INCOME - TAX (APPEALS) ON THIS GROUND. THE REVENUE FAILS ON THIS GROUND OF APPEAL. 7. WE, THEREFORE, FOLLOWING THE DECISION OF THE ITAT, PUNE IN THE CASE OF SERUM INTE RNATIONAL LTD. (SUPRA) CONFIRM THE ORDER OF THE LD. CIT(A) IN 10 ITA NO S. 1373 & 1374/PN/2013, M/S. S ANJEEV AUTO PARTS MANUFACTURERS PVT. LTD., AURANGABAD BOTH THE ASSESSMENT YEARS. ACCORDINGLY, THE GROUNDS TAKEN BY THE REVENUE ARE DISMISSED. 8. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 2 7 - 05 - 201 4 SD/ - SD/ - ( R.K. PANDA ) ( R.S. PADVEKAR ) ACCOUNTANT MEMBER JUDICIAL MEMBER RK /PS PUNE , DATED : 27 TH MAY, 20 1 4 COPY TO 1 ASSESSEE 2 DEPARTMENT 3 THE CIT(A) , AURANGABAD 4 THE CIT, AURAN GABAD 5 THE DR, ITAT, B BENCH, PUNE . 6 GUARD FILE. //TRUE COPY// BY ORDER PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE