DCIT, Yamunanagar V. M/s KEC Industries Ltd., Yamunanagar

ITA 149/CHANDI/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8504 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 01-12-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 05-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Question of law; Unabsorbed depreciation
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI H.L.KARWA, VICE PRESIDENT AND MS. RANO JAIN, ACCOUNTANT MEMBER ITA NO.149/CHD/2014 (ASSESSMENT YEAR : 2010-11) THE D.C.I.T. , VS. M/S KEC INDUSTRIES LTD., YAMUNA NAGAR CIRCLE, 56, INDUSTRIAL ESTATE, YAMUNA NAGAR. YAMUNA NAGAR. PAN: AAACK 4706 E (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUSHIL KUMAR, DR RESPONDENT BY : SHRI TEJ MOHAN SINGH DATE OF HEARING : 02.12.2015 DATE OF PRONOUNCEMENT : 08.02.2016 O R D E R PER RANO JAIN, A.M . : THE APPEAL FILED BY THE REVENUE IS DIRECTED AGA INST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS), PANCHKULA DATED 28.11.2013 FOR ASSESSMEN T YEAR 2010-11. 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSESSEE ESTABLISHED A WIND MILL OF 1.65 MEGA WATT IN THE STATE OF MAHARASHTRA IN THE YEAR RELEVANT TO ASSESS MENT YEAR 2006-07. ANOTHER WIND MILL OF 1250 KILO WATT WAS SET UP BY THE ASSESSEE IN TAMILNADU, WHICH COMMENCED 2 PRODUCTION IN THE YEAR RELEVANT TO ASSESSMENT YEAR 2005- 06. THE INITIAL ASSESSMENT YEARS, FROM WHICH THE A SSESSEE OPTED TO CLAIM DEDUCTION UNDER SECTION 80IA OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) WERE ASSESSMENT YEARS 2009-10 AND 2008-09 RESPECTIVELY. THE ASSESSEE CL AIMED DEDUCTION UNDER SECTION 80IA OF THE ACT DURING THE RELEVANT ASSESSMENT YEAR AMOUNTING TO RS.1,30,51,59 8/- @ 100% OF INCOME EARNED FROM THE BUSINESS OF WIND P OWER GENERATION PROJECTS. DURING THE ASSESSMENT PROCEED INGS, THE ASSESSING OFFICER NOTICED THAT ON THESE POWER P LANTS, THE ASSESSEE HAS INCURRED LOSSES FOR ASSESSMENT YEA RS 2005-06 TO 2009-10 AS DETAILED BELOW : A.Y. LOSSES DECLARED IN MAHARASHTRA WIND MILL LOSSES DECLARED IN TAMILNADU WIND MILL 2005-06 ---- -2,75,63,910/- 2006-07 -4,66,82,134/- -1,82,13,230/- 2007-08 -3,14,07,233/- -8,17,770/- 2008-09 -30,65,682/- TOTAL -7,80,89,367/- -4,96,60,592/- 3. THESE LOSSES INCLUDE UNABSORBED DEPRECIATION, WHICH WERE SET OFF BY THE ASSESSEE AGAINST THE INCO ME DERIVED FROM THE BUSINESS OF MANUFACTURING OF HEAVY MACHINERY ETC. I.E. FROM THE BUSINESS OF INELIGIBLE UNIT. FURTHER, THE ASSESSEE HAD ALSO EARNED AND DECLARED INCOME FROM BUSINESS OF POWER PROJECTS FOR ASSESSME NT YEARS 2008-09 AND 2009-10 AS DETAILED BELOW : 3 A.Y. LOSSES DECLARED IN MAHARASHTRA WIND MILL LOSSES DECLARED IN TAMILNADU WIND MILL 2005-06 -2,75,63,910/- 2006-07 -4,66,82,134/- -1,82,13,230/- 2007-08 -3,14,07,233/- -8,17,770/- 2008-09 -30,65,682/- TOTAL -7,80,89,367/- -4,96,60,592/- 4. THE ASSESSING OFFICER NOTICED THAT THE LOSSES WERE SET OFF AGAINST THE NON-ELIGIBLE BUSINESS FOR DEDUCTION UNDER SECTION 80IA OF THE ACT. ON THE APPLICABILITY OF SECTION 80IA(5) OF THE ACT, THE AS SESSING OFFICER ELABORATED THAT IN CASE SUCH NOTIONAL SET O FF OF LOSSES OF EARLIER YEARS WITH THE PROFITS OF ELIGIBL E BUSINESS IS NOT MADE, THEN UNDUE AND UNINTENDED BENEFIT WILL ACCRUE TO THE ASSESSEE, WHO RUNS TWO PARALLEL BUSIN ESS, ONE ELIGIBLE FOR DEDUCTION AND THE ANOTHER NON-ELIG IBLE FOR DEDUCTION. AFTER ISSUING A SHOW CAUSE TO THE ASSES SEE AND CONSIDERING THE REPLY OF THE ASSESSEE, THE ASSESSIN G OFFICER HELD THAT THE INITIAL ASSESSMENT YEAR WOULD REFER ONLY TO THE YEAR IN WHICH THE ASSESSEE BEGINS TO GE NERATE POWER. FOR THIS, HE RELIED ON THE FOLLOWING JUDGME NTS : I) ACIT VS. GOLD MINE SHARES & FINANCE PVT. LTD. (ITAT, SB - AHD) 113 ITD 209. II) M/S HYDERABAD CHEMICALS PRODUCTS VS. ACIT 20 TAXMANN.COM 289 (HYD.) III) PARSHAD PRODUCTIONS PVT. LTD. VS. DCIT (ITAT, CHENNAI) 98 ITD212 IV) ADDL.CIT VS. ASHOK ALCO CHEM. LTD. (ITAT, MUM) 96 ITD 160 5. AFTER SETTING OFF OF THE LOSSES FOR ASSESSMENT YEARS 2005-06 TO 2008-09 AGAINST THE INCOME FOR 4 ASSESSMENT YEARS 2008-09 TO 2010-11, THERE WERE STI LL BROUGHT FORWARD LOSSES OF RS.1068.58 LACS, WHICH WE RE SET OFF FIRST AGAINST THE INCOME FROM THE WIND MILL PRO JECTS. THIS EXERCISE RENDERED THE INCOME FROM THE ELIGIBLE BUSINESS AT NIL. THEREFORE, THE EXEMPTION CLAIMED BY THE ASSESSEE AT RS.1,30,51,598/- WAS NOT ALLOWED BY THE ASSESSING OFFICER AND ADDED TO THE INCOME OF THE AS SESSEE. 6. BEFORE THE LEARNED CIT (APPEALS), THE CONTENTIO N OF THE ASSESSEE WAS THAT THE LEGISLATURE INTENDS TO MEAN THE INITIAL ASSESSMENT YEAR AS APPEARING IN SECTION 80IA(5) OF THE ACT TO BE THE FIRST YEAR OF THE BLOCK PERIOD OF TEN CONSECUTIVE ASSESSMENT YEARS OUT OF THE FIRST FIFTE EN YEARS BEGINNING FROM THE YEAR FROM WHICH THE ENTERPRISE S TARTS FUNCTIONING, AS OPTED BY THE ASSESSEE IN TERMS OF S UB- SECTION (2) OF SECTION 80IA OF THE ACT. IT WAS FUR THER CONTENDED THAT THE NEW SECTIONS 80IA AND 80IB OF TH E ACT WERE SUBSTITUTED FOR OLD SECTION 80IA BY THE FINANC E ACT, 1999 W.E.F. 1.4.2000 AND THE ASSESSEES CASE IS COV ERED BY THE AMENDED SECTION 80IA AND THE RELEVANT SUB- SECTIONS (1), (2) AND (5) OF THE ACT. WITH THE SU BSTITUTION OF ERSTWHILE SECTION 80IA WITH TWO SECTIONS, NAMELY 80IA AND 80IB OF THE ACT THE, THE UNDERTAKINGS ORIGINALL Y ELIGIBLE FOR DEDUCTION FOR A BLOCK OF PERIODS ARE C OVERED BY SECTION 80IB AND UNDERTAKINGS WHICH HAVE THE OPTION TO CLAIMED DEDUCTION FOR TEN CONSECUTIVE YEARS WITHIN A BLOCK OF FIFTEEN YEARS,, LIKE THE INFRASTRUCTURE UNDERTAK INGS COME UNDER THE NEW SECTION 80IA OF THE ACT. THE 5 ASSESSING OFFICER HAS OPINED THAT THE INITIAL ASSES SMENT YEAR HAS BEEN DEFINED IN SECTION 80IB OF THE ACT AN D ALSO IN SECTION 80IC OF THE ACT, BUT NOT IN SECTION 80IA OF THE ACT. THEREFORE, SHE HAS APPLIED THE SAME DEFINITIO N TO THE CONCEPT OF INITIAL ASSESSMENT YEAR AS APPEARING IN SECTION 80IA ALSO AS THAT OF THE SAME IN SECTIONS 80IB AND 80IC OF THE ACT. THE CONTENTION OF THE ASSESSEE WAS THAT T HIS PRESUMPTION IS NOT CORRECT. THE ASSESSEE FURTHER C LARIFIED THAT IT HAD OPTED THE BLOCK PERIOD OF TEN YEARS W.E .F. 2008- 09. IN VIEW OF SECTION 80IA (2) OF THE ACT THE FI RST ASSESSMENT YEAR OF OPERATION IS ASSESSMENT YEAR 200 5-06. THEREFORE, ASSESSMENT YEAR 2008-09 IS THE FIRST YEA R FOR CLAIMING THE DEDUCTION AND ASSESSMENT YEAR 2009-10 IS THE ASSESSMENT YEAR IMMEDIATELY FOLLOWING IT AND I S ALSO THE ASSESSMENT YEAR IMMEDIATELY SUCCEEDING THE INIT IAL YEAR FOR THE PURPOSES OF DETERMINING THE QUANTUM OF DEDUCTION UNDER THE PROVISIONS OF SECTION 80IA(5) O F THE ACT. THE ASSESSEE RELIED ON THE DECISION OF THE I .T.A.T., JAIPUR BENCH IN THE CASE OF ACIT VS.. SAURABH AGRO TECH PVT. LTD. IN ITA NO.829/JP/2011, DATED 18.10.2012 A ND THAT OF I.T.A.T., MUMBAI BENCH IN THE CASE OF SHEV IE EXPORTS VS. JCIT IN ITA NO.321/MUM/2012, DATED 10.4.2013. IN ADDITION TO THIS THE ASSESSEE RELIE D ON JUDGMENTS OF MADRAS HIGH COURT IN THE CASE OF DCIT VS. SRI VELAYUDHASWAMY SPINNING MILLS (P) LTD., 231 CTR 368 AND CHENNAI BENCH OF THE I.T.A.T. IN THE CASE OF P RABHU SPINNING MILLS (P) LTD. IN ITA NO.1939 TO 1946/MDS/ 2001. 6 7. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND ANALYZING THE PROVISIONS OF VARIOUS SU B- SECTIONS OF SECTION 80IA OF THE ACT, THE LEARNED CI T (APPEALS) HELD THAT THE ASSESSEE HAS OPTION FOR CHO OSING THE INITIAL ASSESSMENT YEAR AND ONCE THE INITIAL ASSESSMENT YEAR HAS BEEN OPTED BY THE ASSESSEE, THE CLAIM OF DEDUCTION WILL BE AVAILABLE FOR TEN CONSEC UTIVE ASSESSMENT YEARS INCLUDING THE INITIAL ASSESSMENT Y EAR. THEREFORE, THE LEARNED CIT (APPEALS) HELD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN HOLDING THAT THE INITIAL ASSESSMENT YEAR WILL BE THE YEAR IN WHICH T HE BUSINESS OF THE ASSESSEE HAS BEGUN TO OPERATE. FOR THIS, HE RELIED ON THE ORDER OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF SHEVIE EXPORTS (SUPRA). A S REGARDS THE GROUND RAISED BY THE ASSESSEE FOR CLAIM OF CARRY FORWARD LOSSES, WHICH WERE ALREADY ABSORBED A GAINST THE PROFIT OF OTHER BUSINESS. AGAIN RELYING ON THE ORDER OF SHEVIE EXPORTS (SUPRA), THE LEARNED CIT (APPEALS) H ELD THAT THE LOSSES WHICH HAVE BEEN INCURRED FROM THE I NITIAL ASSESSMENT YEAR ARE TO CARRY FORWARD AND ADJUSTED A GAINST THE PROFIT IN THE SUBSEQUENT ASSESSMENT YEARS AND W HICH HAVE TO BE COMPUTED AS IF ELIGIBLE BUSINESS IS THE ONLY SOURCE OF INCOME. THEREFORE, IN THE PRESENT CASE, WHERE THE ASSESSEE HAS TWO UNITS AND HAS CHOSEN DIFFERENT INITIAL ASSESSMENT YEAR FOR TWO UNITS, THE LOSSES F OR ADJUSTMENT AGAINST THE PROFIT BY EACH ELIGIBLE UNIT WILL BE ADJUSTED SEPARATELY AND THE CARRY FORWARD LOSS WILL BE ONLY ON ACCOUNT OF LOSS OR PROFIT FROM THAT ELIGIBLE BUS INESS 7 UNIT. THE LEARNED CIT (APPEALS) ALSO HELD THAT THE ACTION OF THE ASSESSING OFFICER WHILE COMPUTING THE CARRY FORWARD OF LOSSES WAS JUSTIFIED IN NOTIONAL SET OFF OF LOSS ES OF EARLIER YEAR WITH THE PROFIT OF ELIGIBLE BUSINESS W HERE THE LOSSES WERE COMPUTED WITHOUT SET OFF AGAINST THE IN COME DERIVED FROM ANY OTHER ACTIVITY OTHER THAN ELIGIBLE BUSINESS ACTIVITY OF WIND POWER PROJECTS SEPARATELY . THEREFORE, HE HELD THAT THE LOSS INCURRED IN THE EL IGIBLE BUSINESS WITHOUT ANY SET OFF OF INCOME FROM INELIGI BLE UNIT IS NOTIONALLY CARRIED FORWARD TO THE SUBSEQUENT YEA RS AND CONSIDERED AS SUCH IN THE SUBSEQUENT YEARS UNTIL IT IS CLEARED WITH THE PROFIT OF ELIGIBLE UNIT FOR THE SU CCEEDING YEARS. IN THIS WAY, HE DISMISSED THE GROUND OF THE ASSESSEE WITH REGARD TO NOTIONAL SET OFF OF EARLIER YEARS LOSSES. AS REGARDS THE GROUND RELATING OF INITIAL ASSESSMENT YEAR, THE LEARNED CIT (APPEALS) HELD THA T THE INITIAL ASSESSMENT YEAR IS AVAILABLE TO THE ASSESSE E AS OPTED BY THE ASSESSEE FOR ITS RESPECTIVE ELIGIBLE B USINESS UNITS. BUT THE LOSSES WILL BE COMPUTED AND CARRIED FORWARD FOR THE ELIGIBLE BUSINESS UNITS SEPARATELY TREATING THEM AS THE ONLY SOURCE OF INCOME BEGINNING FROM TH E OPTED INITIAL ASSESSMENT YEARS. ANY LOSS COMPUTED SINCE THE ASSESSMENT YEARS 2009-10 AND 2008-09 FOR UNITS AT MAHARASHTRA AND TAMILNADU RESPECTIVELY WILL BE CARR IED FORWARD WITHOUT SET OFF AGAINST THE INCOME DERIVED BY THE ASSESSEE FROM THE BUSINESS OF INELIGIBLE UNIT. IN THIS WAY, THE LEARNED CIT (APPEALS) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 8 8. AGGRIEVED BY THIS ORDER, THE DEPARTMENT HAS COME UP IN APPEAL, BY RAISING THE FOLLOWING GROUNDS OF APPEAL : .1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS ERNE LD. CLT(A) HAS ERRED IN TREATING THE INITIAL ASSESS MENT YEAR FROM THE BEGINNING OF BLOCK AND NOT FROM THE YEAR IN WHICH THE UNDERTAKING BEGINS ITS OPERATION. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE LOSSES WILL BE COMPUTED AND CARRIED FORWARD FOR THE ELIGIBLE BUSINES S UNITS SEPARATELY TREATING THEM AS THE ONLY SOURCE OF INCOME BEGINNING FROM THE OPTED INITIAL ASSESSMENT YEAR AND NOT BY SETTING OFF ALL LOSSES OF ELIGIBLE BUSINESS WITH PROFIT OF NON ELIGIBLE BUSINESS. 3. IT IS PRAYED THAT THE ORDER OF THE LD. CIT (APPEA L) BE SET- ASIDE AND THAT OF THE A.O. BE RESTORED. 4. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND THE GROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD AND DISPOSED OFF. 9. IT IS TO BE KEPT IN MIND THAT THE ASSESSEE IS N OT IN APPEAL AGAINST THE DISALLOWANCE UPHELD BY THE LE ARNED CIT (APPEALS). 10. THE LEARNED D.R. WHILE ARGUING BEFORE US STATE D THAT THE LEARNED CIT (APPEALS) HAS DECIDED THE GROU ND NOS.3 AND 4 RAISED BY THE ASSESSEE BEFORE HIM IN FA VOUR OF THE REVENUE AND AGAINST THE ASSESSEE. RELYING ON T HE DECISION IN THE CASE OF ACIT VS . GOLDMINE SHARES & FINANCE (P) LTD. (2008) 113 ITD 209 ( AHD) (SB) . FURTHER, FOLLOWING THE SAME JUDGMENT THE LEARNED CIT (APPEAL S) HAS 9 DECIDED THE GROUND NOS.3 AND 4 RAISED BY THE ASSESS EE BEFORE HIM IN FAVOUR OF THE REVENUE. WHILE ADJUDIC ATING THESE GROUNDS, THE LEARNED CIT (APPEALS) HAS VERY CATEGORICALLY STATED THE NON-APPLICABILITY OF THE D ECISION IN THE CASE OF SRI VELAYUDHASWAMY SPINNING MILLS ( P) LTD. (SUPRA). OUR ATTENTION WAS INVITED TO THESE FACTS TO BRING ON RECORD THAT AS PER THESE FINDINGS OF THE LEARNED CIT (APPEALS), THE PROFIT OF THE ELIGIBLE BUSINESS FOR THE PURPOSES OF DETERMINATION OF QUANTUM OF DEDUCTION U NDER SECTION 80IA OF THE ACT HAS TO BE COMPUTED AFTER DE DUCTION OF THE NOTIONAL BROUGHT FORWARD LOSSES AND DEPRECIA TION OF ELIGIBLE BUSINESS EVEN THOUGH THEY HAVE BEEN ALLOWE D SET OFF AGAINST OTHER INCOME FROM INELIGIBLE BUSINESS IN EARLIER YEARS. FURTHER, IT WAS STATED THAT THESE F INDINGS OF THE LEARNED CIT (APPEALS) FORM THE BASIS FOR COMPUT ATION OF QUANTUM OF DEDUCTION UNDER SECTION 80IA OF THE A CT, WHICH WAS GROUND NO.1 TAKEN BY THE ASSESSEE BEFORE THE CIT (APPEALS). HOWEVER, THESE FINDINGS AUTOMATICAL LY DECIDE GROUND NO.1 IN FAVOUR OF THE REVENUE AND AGA INST THE ASSESSEE. THERE IS ANOTHER ERROR IN THE ORDER OF THE LEARNED CIT (APPEALS) THAT WHILE DECIDING GROUND NO .1, HE HAS GIVEN A FINDING WHICH IS CONTRARY TO FINDING AL READY GIVEN BY HIM ELSEWHERE IN HIS ORDER WHILE DECIDING GROUND NOS.3 AND 4 IN FAVOUR OF THE REVENUE. IN THIS VIEW , IT WAS PRAYED THAT THE ISSUE OF DETERMINATION OF QUANTUM O F DEDUCTION UNDER SECTION 80IA OF THE ACT BE COMPUTED AFTER DEDUCTION OF NOTIONAL BROUGHT FORWARD LOSSES AND DEPRECIATION OF ELIGIBLE BUSINESS EVEN THOUGH THEY HAVE 10 BEEN ALLOWED SET OFF AGAINST OTHER INCOME FROM INEL IGIBLE BUSINESS IN EARLIER YEARS, MAY BE DECIDED IN FAVOUR OF THE REVENUE. RELIANCE WAS PLACED ON THE ORDER OF THE AHMEDABAD BENCH OF THE TRIBUNAL IN THE CASE OF GOL DMINE SHARES & FINANCE (P) LTD. (SUPRA), ON THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. IN DIAN FARMERS FERTILIZERS CO-OPERATIVE LTD. (2011) 197 TA XMAN 204 (DEL) AND I.T.A.T., HYDERABAD IN THE CASE OF M /S HYDERABAD CHEMICALS PRODUCTS VS. ACIT, 20 TAXMANN., 289 (HYD). 11. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATE D THE SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER A S WELL AS THE LEARNED CIT (APPEALS). THE CRUX OF HIS ARGU MENTS IS THAT THERE CANNOT BE TWO INITIAL ASSESSMENT YEAR S WHILE INTERPRETING THE SAME PROVISIONS OF THE ACT. SINCE POST AMENDMENT THERE IS NO DEFINITION OF INITIAL YEAR AS USED IN SECTION 80IA(5) OF THE ACT. THE INITIAL YEAR SHOUL D BE GIVEN GENERAL MEANING AS THE OPTION HAS BEEN GIVEN TO THE ASSESSEE TO DECIDE THE INITIAL ASSESSMENT YEAR. TH ERE SHOULD BE NO QUARREL ABOUT THE FACT THAT THE TERM INITIAL YEAR USED AT BOTH PLACES HAVE THE SAME MEANING THA T THE YEAR IN WHICH THE ASSESSEE OPTS TO CLAIM ITS DEDUCT ION UNDER SECTION 80IA OF THE ACT. IN ADDITION TO THE CASES RELIED ON BY HIM BEFORE THE ASSESSING OFFICER AND T HE LEARNED CIT (APPEALS), HE PLACED RELIANCE ON ANOTHE R JUDGMENT OF THE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. ANIL H. LAD, 102 DTR 241. 11 12. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE FINDINGS OF THE AUTHO RITIES BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECO RD. THE ONLY CONTROVERSY TO BE DECIDED IS WHETHER FOR C LAIMING DEDUCTION UNDER SECTION 80IA OF THE ACT, THE LOSSES WHICH WERE INCURRED BY THE ELIGIBLE BUSINESS IN THE PERIO D EARLIER TO THE INITIAL YEAR ARE TO BE NOTIONALLY CARRIED FO RWARD TO THE INITIAL ASSESSMENT YEAR AND BE ADJUSTED BEFORE CLAIMING DEDUCTION UNDER SECTION 80IA OF THE ACT. WE HAVE PERUSED THE JUDGMENT OF THE KARNATAKA HIGH COU RT IN THE CASE OF ANIL H. LAD. (SUPRA), WHEREBY ADJUDICA TING THE SAME ISSUE, THE HON'BLE COURT HAS ANALYZED THE JUDG MENT OF THE MADRAS HIGH COURT IN CASE OF SRI VELAYUDHASW AMY SPINNING MILLS (P) LTD. (SUPRA), WHICH HAS BEEN REL IED VERY HEAVILY BY THE ASSESSEE. THE FINDINGS OF THE HON'B LE COURT ARE AT PARAS 9 AND 10 OF THE JUDGMENT, WHICH READS AS UNDER : 9. THE MADRAS HIGH COURT IN THE AFORESAID VELAYUDHASWAMY'S CASE INTERPRETING THE VERY PROVISI ON HELD, FROM A READING OF SUB-SECTION (1) SECTION 80-IA , IT IS CLEAR THAT IT PROVIDES THAT WHERE THE GROSS TOTAL INCOME OF AN ASSESSEE INCLUDES ANY PROFITS AND GAINS DERIVED BY AN UNDERTA KING OR AN ENTERPRISE FROM ANY BUSINESS REFERRED TO IN SUB-S ECTION (4) I.E. REFERRED TO AS THE ELIGIBLE BUSINESS, THERE SHALL, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THE SECTION, BE ALLOWED, IN COMPUTING THE TOTAL INCOME OF THE ASSESS EE, A DEDUCTION OF AN AMOUNT EQUAL TO 100 PER CENT OF THE PROFITS AND GAINS DERIVED FROM SUCH BUSINESS FOR TEN CONSEC UTIVE ASSESSMENT YEARS. DEDUCTION IS GIVEN TO ELIGIBLE BUS INESS AND 12 THE SAME IS DEFINED IN SUB-SECTION (4). SUB-SECTION (2) P ROVIDES OPTION TO THE ASSESSEE TO CHOOSE 10 CONSECUTIVE ASS ESSMENT YEARS OUT OF 15 YEARS. OPTION HAS TO BE EXERCISED. IF IT IS NOT EXERCISED, THE ASSESSEE WILL NOT BE GETTING THE BENE FIT. FIFTEEN YEARS IS OUTER LIMIT AND THE SAME IS BEGINNING FROM T HE YEAR IN WHICH THE UNDERTAKING OR THE ENTERPRISE DEVELOPS AND BEGINS TO OPERATE ANY INFRASTRUCTURE ACTIVITY ETC. SUB- SECTION (5 ) DEALS WITH QUANTUM OF DEDUCTION FOR AN ELIGIBLE BUSINESS. T HE WORDS 'INITIAL ASSESSMENT YEAR' ARE USED IN SUB-SECTION (5) AN D THE SAME IS NOT DEFINED UNDER THE PROVISIONS. IT IS TO BE NOTED THAT 'INITIAL ASSESSMENT YEAR' EMPLOYED IN SUB-SECTION (5) IS DIFFERENT FROM THE WORDS 'BEGINNING FROM THE YEAR' REFERRED TO IN SUB-SECTION (2). SUB-SECTION (5) STARTS WITH NON OBSTA NTE CLAUSE WHICH MEANS IT OVERRIDES ALL THE PROVISIONS O F THE ACT AND OTHER PROVISIONS ARE TO BE IGNORED; FOR THE PURP OSE OF DETERMINING THE QUANTUM OF DEDUCTION; FOR THE ASSESS MENT YEAR IMMEDIATELY SUCCEEDING THE INITIAL ASSESSMENT YEAR, THEREBY A FICTION IS CREATED BY INTRODUCING A DEEMI NG PROVISION AND THEREFORE, IT IS CLEAR THAT THE ELIGIBLE BUSINESS WERE THE ONLY SOURCE OF INCOME, DURING THE PREVIOUS YEAR RELEVA NT TO INITIAL ASSESSMENT YEAR AND EVERY SUBSEQUENT ASSESSMEN T YEARS. WHEN THE ASSESSEE EXERCISES THE OPTION, THE ONLY LOS SES OF THE YEARS BEGINNING FROM INITIAL ASSESSMENT YEAR ALON E ARE TO BE BROUGHT FORWARD AND NO LOSSES OF EARLIER YEARS WHICH WERE ALREADY SET OFF AGAINST THE INCOME OF THE ASSES SEE. LOOKING FORWARD TO A PERIOD OF TEN YEARS FROM THE I NITIAL ASSESSMENT IS CONTEMPLATED. IT DOES NOT ALLOW THE REVEN UE TO LOOK BACKWARD AND FIND OUT IF THERE IS ANY LOSS OF EA RLIER YEARS AND BRING FORWARD NOTIONALLY EVEN THOUGH THE SAME WE RE SET OFF AGAINST OTHER INCOME OF THE ASSESSEE AND THE SE T OFF AGAINST THE CURRENT INCOME OF THE ELIGIBLE BUSINESS. O NCE THE SET OFF IS TAKEN PLACE IN EARLIER YEAR AGAINST THE OTHER INCOME OF THE ASSESSEE, THE REVENUE CANNOT REWORK THE SET O FF AMOUNT AND BRING IT NOTIONALLY. FICTION CREATED IN SUB - SECTION DOES NOT CONTEMPLATES TO BRING SET OFF AMOUNT NOTIO NALLY. FICTION IS CREATED ONLY FOR THE LIMITED PURPOSE AND TH E SAME 13 CANNOT BE EXTENDED BEYOND THE PURPOSE FOR WHICH IT I S CREATED. 10. THEREFORE, KEEPING IN MIND THE OBJECT WITH WHICH T HESE PROVISIONS ARE INTRODUCED, IT IS CLEAR THAT AN ASSESS EE IS GIVEN THE BENEFIT OF 100% DEDUCTION OF THE PROFITS AND GA INS FROM THE ELIGIBLE BUSINESS. THE QUANTUM OF DEDUCTION IS TO BE CALCULAT ED WHEN THE CLAIM FOR DEDUCTION IS MADE. IF BEFORE CLAIMIN G DEDUCTION, THE LOSS AND DEPRECIATION CLAIMED BY THE AS SESSEE EVEN IN RESPECT OF ELIGIBLE BUSINESS IS SETOFF AGAIN ST INCOME OF THE ASSESSEE OR OTHER SOURCE, THE SAID LOSS OR DEPREC IATION IS ALREADY ABSOLVED, IT DOES NOT EXIST. FOR THE PURPOSE OF DETERMINING THE QUANTUM OF DEDUCTION UNDER SUB-SECTI ON (5) OF SECTION 80IA , THE REVENUE CANNOT TAKE INTO CONSIDERATION THE LOSS AND DEPRECIATION WHICH IS ALREADY SETOFF AGAINST T HE INCOME OF THE ASSESSEE FROM OTHER SOURCE AND COMPUT E THE PROFIT UNDER SECTION 80IA . THEREFORE, THE APPROACH OF THE TRIBUNAL IS IN ACCORDANCE WITH LAW. THE ASSESSING AUTH ORITY AND THE COMMISSIONER COMMITTED A SERIOUS ERROR IN SE TTING OFF THE PROFIT EARNED BY THE ASSESSEE UNDER SECTION 80I A AGAINST THE LOSSES AND DEPRECIATION OF THE ELIGIBLE BUSINESS WHICH IS ALREADY SETOFF FROM OTHER SOURCE BEFORE SUCH A CLAIM IS PUTFORTH. THUS, THERE IS NO ERROR COMMITTED BY THE TRI BUNAL IN SETTING ASIDE THE ORDER PASSED BY THE ASSESSING AUT HORITY AS WELL AS THE LOWER APPELLATE AUTHORITY. THE SUBSTANTIAL QUESTION OF LAW IS ANSWERED IN FAVOUR OF THE ASSESSE E AND AGAINST THE REVENUE. 13. THIS VIEW HAS ALSO BEEN UPHELD BY THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF SHEVIE EXPORT S (SUPRA), WHEREBY ALL THE JUDGMENTS RELIED ON BY THE ASSESSEE AS WELL AS THE REVENUE HAVE BEEN CONSIDERE D AND THE BENCH HAS GIVEN FINDINGS AT PARAS 9 TO 12, WHIC H READS AS UNDER : 14 9. SECTION 80IA, WHICH HAS BEEN SUBSTITUTED W.E.F. 1 ST APRIL 2000, PROVIDES THAT WHERE THE GROSS TOTAL INCOME OF A N ASSESSEE INCLUDES ANY PROFITS AND GAINS DERIVED BY A N UNDERTAKING FROM ANY ELIGIBLE BUSINESS REFERRED TO I N SUB SECTION 4, THERE SHALL, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THIS SECTION, BE ALLOWED IN COMPUTING TH E TOTAL INCOME, THE DEDUCTION OF AN AMOUNT EQUAL TO 100% OF TH E PROFITS AND GAINS DERIVED FROM SUCH BUSINESS FOR 10 CONSECUTIVE YEARS. SUBSTITUTED SUBSECTION (2) OF SECT ION 80IA, PROVIDES THAT AN OPTION IS GIVEN TO THE ASSESSEE FO R CLAIMING ANY 10 CONSECUTIVE ASSESSMENT YEAR OUT OF 15 YEARS BEGINNING FROM THE YEAR IN WHICH THE UNDERTAKING OR THE ENTERPRISE DEVELOPS AND BEGIN TO OPERATE. THE 15 YEAR S IS THE OUTER LIMIT WITHIN WHICH THE ASSESSEE CAN CHOOSE THE P ERIOD OF CLAIMING THE DEDUCTION. SUBSECTION (5) IS A NONOBSTA NTE CLAUSE WHICH DEALS WITH THE QUANTUM OF DEDUCTION FOR AN ELIGIBLE BUSINESS. THE RELEVANT PROVISIONS OF SUBSECT ION (5) OF SECTION 80IA, READS AS UNDER: (5) NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISION OF THIS ACT, THE PROFITS AND GAINS OF AN E LIGIBLE BUSINESS TO WHICH THE PROVISIONS OF SUB-SECTION (1) A PPLY 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 AN Y SUBSEQUENT ASSESSMENT YEAR, BE COMPUTED AS IF SUCH ELIGIBLE BUSINESS WERE THE ONLY SOURCE OF INCOME OF T HE ASSESSEE DURING THE PREVIOUS YEAR RELEVANT TO THE IN ITIAL ASSESSMENT YEAR AND TO EVERY SUBSEQUENT ASSESSMENT YEAR UP TO AND INCLUDING THE ASSESSMENT YEAR FOR WHICH TH E DETERMINATION IS TO BE MADE. 10. FROM A PLAIN READING OF THE ABOVE, IT CAN BE GATH ERED THAT IT IS A NONOBSTANTE CLAUSE WHICH OVERRIDES THE OTHER PROVISIONS OF THE ACT AND IT IS FOR THE PURPOSE OF DETERMINING THE QUANTUM OF DEDUCTION UNDER SECTION 80IA, FOR THE ASSESSMENT YEAR IMMEDIATELY SUCCEEDING THE INITIAL ASSESSMENT YEAR OR ANY SUBSEQUENT ASSESSMENT YEAR T O BE 15 COMPUTED AS IF THE ELIGIBLE BUSINESS IS THE ONLY SOU RCE OF INCOME. THUS, THE FICTION CREATED IS THAT THE ELIGIBLE BUS INESS IS THE ONLY SOURCE OF INCOME AND THE DEDUCTION WOULD BE ALLOWED FROM THE INITIAL ASSESSMENT YEAR OR ANY SUBSEQUENT ASSESSMENT YEAR. IT NOWHERE DEFINES AS TO WHAT IS T HE INITIAL ASSESSMENT YEAR. PRIOR TO 1 ST APRIL 2000, THE INITIAL ASSESSMENT YEAR WAS DEFINED FOR VARIOUS TYPES OF ELI GIBLE ASSESSEES UNDER SECTION 80IA(12). HOWEVER, AFTER THE AMENDMENT BROUGHT IN STATUTE BY THE FINANCE ACT, 19 99, THE DEFINITION OF INITIAL ASSESSMENT YEAR HAS BEEN SPECI FICALLY TAKEN AWAY. NOW, WHEN THE ASSESSEE EXERCISES THE OPT ION OF CHOOSING THE INITIAL ASSESSMENT YEAR AS CULLED OUT IN SU B SECTION (2) OF SECTION 80IA FROM WHICH IT CHOOSES ITS 10 YEARS OF DEDUCTION OUT OF 15 YEARS, THEN ONLY THE LOSSES OF THE YEARS STARTING FROM THE INITIAL ASSESSMENT YEAR ALONE ARE TO BE BROUGHT FORWARD AS STIPULATED IN SECTION 80IA(5). THE LOSS PRIOR TO THE INITIAL ASSESSMENT YEAR WHICH HAS ALREADY BEEN SETOFF CANNOT BE BROUGHT FORWARD AND ADJUSTED INTO THE PERIOD OF TEN YEARS FROM THE INITIAL ASSESSMENT YEAR A S CONTEMPLATED OR CHOSEN BY THE ASSESSEE. IT IS ONLY W HEN THE LOSS HAVE BEEN INCURRED FROM THE INITIAL ASSESSMENT YEA R, THEN THE ASSESSEE HAS TO ADJUST LOSS IN THE SUBSEQUENT AS SESSMENT YEARS AND IT HAS TO BE COMPUTED AS IF ELIGIBLE BUSINE SS IS THE ONLY SOURCE OF INCOME AND THEN ONLY DEDUCTION UNDER SECTION 80IA CAN BE DETERMINED. THIS IS THE TRUE IMPORT OF SE CTION 80IA(5). 11. IN THE DECISION OF GOLDMINE SHARES AND FINANCE PVT. LTD. (SUPRA), DECIDED BY THE SPECIAL BENCH OF THE TRIBUNAL, T HE CLAIM OF DEDUCTION BY THE ASSESSEE HAD STARTED FROM ASSESSMENT YEAR 199697 ONWARDS AND THE ASSESSEE HA D CLAIMED DEDUCTION UNDER SECTION 80IA STARTING FROM T HE FIRST YEAR ITSELF I.E., ASSESSMENT YEAR 199697. THUS, THE SPE CIAL BENCH WAS DEALING WITH THE OPERATION OF SECTION 80IA(5) WHERE THE ASSESSEE HAD FIRST CLAIMED THE DEDUCTION IN THE ASSESSMENT YEAR 199697 AND FOR SUBSEQUENT ASSESSME NT YEARS. THIS ASPECT OF THE MATTER HAS BEEN VERY WELL EL ABORATED BY THE MADRAS HIGH COURT IN VELAYUDHASWAMY SPINNING MILLS 16 PVT. LTD. (SUPRA) AFTER CONSIDERING THE SPECIAL BENCH D ECISION OF THE TRIBUNAL IN GOLDMINE SHARES AND FINANCE PVT. L TD. (SUPRA) AND RELEVANT PROVISIONS OF THE ACT I.E., PRE AME NDMENT AND POST AMENDMENT HAVE COME TO THE SAME CONCLUSION: FROM READING OF THE ABOVE, IT IS CLEAR THAT THE ELIGI BLE BUSINESS WERE THE ONLY SOURCE OF INCOME, DURING THE PREVIOUS YEAR RELEVANT TO INITIAL ASSESSMENT YEAR AND E VERY SUBSEQUENT ASSESSMENT YEARS. WHEN THE ASSESSEE EXERCISES THE OPTION, THE ONLY LOSSES OF THE YEARS B EGINNING FROM INITIAL ASSESSMENT YEAR ALONE ARE TO BE BROUGHT FORWARD AND NO LOSSES OF EARLIER YEARS WHICH WERE ALR EADY SET OFF AGAINST THE INCOME OF THE ASSESSEE. LOOKING FORWARD TO A PERIOD OF TEN YEARS FROM THE INITIAL ASSESSMENT I S CONTEMPLATED. IT DOES NOT ALLOW THE REVENUE TO LOOK BACKWARD AND FIND OUT IF THERE IS ANY LOSS OF EARLIE R YEARS AND BRING FORWARD NOTIONALLY EVEN THOUGH THE SAME WE RE SET OFF AGAINST OTHER INCOME OF THE ASSESSEE AND TH E SET OFF AGAINST THE CURRENT INCOME OF THE ELIGIBLE BUSINESS. O NCE THE SET OFF IS TAKEN PLACE IN EARLIER YEAR AGAINST THE O THER INCOME OF THE ASSESSEE, THE REVENUE CANNOT REWORK TH E SET OFF AMOUNT AND BRING IT NOTIONALLY. FICTION CREATED I N SUB- SECTION DOES NOT CONTEMPLATES TO BRING SET OFF AMOU NT NOTIONALLY. FICTION IS CREATED ONLY FOR THE LIMITED PUR POSE AND THE SAME CANNOT BE EXTENDED BEYOND THE PURPOSE FOR WHICH IT IS CREATED. 14. IN THE PRESENT CASES, THERE IS NO DISPUTE THAT LOSS ES INCURRED BY THE ASSESSEE WERE ALREADY SET OFF AND AD JUSTED AGAINST THE PROFITS OF THE EARLIER YEARS. DURING TH E RELEVANT ASSESSMENT YEAR, THE ASSESSEE EXERCISED THE OPTION U NDER S. 80-IA(2). IN TAX CASE NOS. 909 OF 2009 AS WELL AS 940 OF 2009, THE ASSESSMENT YEAR WAS 2005-06 AND IN THE TAX CASE NO. 918 OF 2008 THE ASSESSMENT YEAR WAS 2004-05. DURING THE RELEVANT PERIOD, THERE WERE NO UNABSORBED DEPRECIATION OR LOSS OF THE ELIGIBLE UNDERTAKINGS AND THE SAME WERE ALREADY ABSORBED IN THE EARLIER YEARS. THER E IS A POSITIVE PROFIT DURING THE YEAR. THE UNREPORTED JUDG MENT OF 17 THIS COURT CITED SUPRA CONSIDERED THE SCOPE OF SUB-S. (6) OF S.80-I, WHICH IS THE CORRESPONDING PROVISION OF SUB-S. (5) OF S. 80-IA. BOTH ARE SIMILARLY WORDED AND THEREFORE WE AGREE ENTIRELY WITH THE DIVISION BENCH JUDGMENT OF THIS COURT C ITED SUPRA. IN THE CASE OF CIT VS. MEWAR OIL & GENERAL MILLS LTD. (2004) 186 CTR (RAJ) 141 : (2004) 271 ITR 311 (RAJ), THE RAJASTHAN HIGH COURT ALSO CONSIDERED THE SCOPE OF S. 80-I AND HELD AS FOLLOWS: 'HAVING CONSIDERED THE RIVAL CONTENTIONS WHICH FOLLOW ON THE LINE NOTICED ABOVE, WE ARE OF THE OPINION THAT O N FINDING THE FACT THAT THERE WAS NO CARRY FORWARD LOS SES OF 1983-84, WHICH COULD BE SET OFF AGAINST THE INCOME OF THE CURRENT ASST. YR. 1984-85, THE RECOMPUTATION OF INCOME FROM THE NEW INDUSTRIAL UNDERTAKING BY SETTING OFF TH E CARRY FORWARD OF UNABSORBED DEPRECIATION OR DEPRECI ATION ALLOWANCE FROM PREVIOUS YEAR DID NOT SIMPLY ARISE AND ON THE FINDING OF FACT NOTICED BY THE CIT(A), WHICH HAS NOT BEEN DISTURBED BY THE TRIBUNAL AND CHALLENGED BEFORE U S, THERE WAS NO ERROR MUCH LESS ANY ERROR APPARENT ON T HE FACE OF THE RECORD WHICH COULD BE RECTIFIED. THAT QUE STION WOULD HAVE BEEN GERMANE ONLY IF THERE WOULD HAVE BEEN CARRY FORWARD OF UNABSORBED DEPRECIATION AND UNABSORBED DEVELOPMENT REBATE OR ANY OTHER UNABSORBE D LOSSES OF THE PREVIOUS YEAR ARISING OUT OF THE PRIOR ITY INDUSTRY AND WHETHER IT WAS REQUIRED TO BE SET OFF AGAINST THE INCOME OF THE CURRENT YEAR. IT IS NOT A T ALL REQUIRED THAT LOSSES OR OTHER DEDUCTIONS WHICH HAVE ALREADY BEEN SET OFF AGAINST THE INCOME OF THE PREVI OUS YEAR SHOULD BE REOPENED AGAIN FOR COMPUTATION OF CUR RENT INCOME UNDER S. 80-I FOR THE PURPOSE OF COMPUTING ADMISSIBLE DEDUCTIONS THEREUNDER. IN VIEW THEREOF, WE ARE OF THE OPINION THAT THE TRIB UNAL HAS NOT ERRED IN HOLDING THAT THERE WAS NO RECTIFIC ATION POSSIBLE UNDER S. 80-I IN THE PRESENT CASE, ALBEIT, FOR REASONS SOMEWHAT DIFFERENT FROM THOSE WHICH PREVAILE D WITH THE TRIBUNAL. THERE BEING NO CARRY FORWARD OF 18 ALLOWABLE DEDUCTIONS UNDER THE HEAD DEPRECIATION OR DEVELOPMENT REBATE WHICH NEEDED TO BE ABSORBED AGAINST THE INCOME OF THE CURRENT YEAR AND, THEREFOR E, RECOMPUTATION OF INCOME FOR THE PURPOSE OF COMPUTIN G PERMISSIBLE DEDUCTION UNDER S. 80-I FOR THE NEW INDUST RIAL UNDERTAKING WAS NOT REQUIRED IN THE PRESENT CASE. ACCORDINGLY, THIS APPEAL FAILS AND IS HEREBY DISMISSED WITH NO ORDER AS TO COSTS.' FROM READING OF THE ABOVE, THE RAJASTHAN HIGH COURT HELD THAT IT IS NOT AT ALL REQUIRED THAT LOSSES OR OTHER DE DUCTIONS WHICH HAVE ALREADY BEEN SET OFF AGAINST THE INCOME O F THE PREVIOUS YEAR SHOULD BE REOPENED AGAIN FOR COMPUTATI ON OF CURRENT INCOME UNDER S. 80-I FOR THE PURPOSE OF COMPU TING ADMISSIBLE DEDUCTIONS THEREUNDER. WE ALSO AGREE WITH TH E SAME. WE SEE NO REASON TO TAKE A DIFFERENT VIEW. 12. THIS JUDGMENT HAS BEEN FURTHER FOLLOWED BY THE SAME H IGH COURT IN CIT V/S EMERALD JEWEL INDUSTRY (P) LTD. [2011] 53 DTR 262 (MAD.). FROM THE ABOVE, RATIO OF THE HIGH COUR T, IT IS AMPLY CLEAR THAT SUBSECTION (5) OF SECTION 80IA WIL L COME INTO OPERATION ONLY FROM THE INITIAL ASSESSMENT YEAR OR ANY SUBSEQUENT ASSESSMENT YEAR. THE OPTION OF CHOOSING T HE INITIAL ASSESSMENT YEAR IS WHOLLY UPON THE ASSESSEE IN THE POST AMENDMENT PERIOD I.E., AFTER 1 ST APRIL 2000 BY VIRTUE OF SECTION 80IA(2). 14. IN VIEW OF THE JUDGMENT OF THE KARNATAKA HIGH COURT, WHICH HAS ALSO BEEN RELIED ON BY THE MUMBAI BENCH OF THE TRIBUNAL AND IN THE BACKGROUND THAT NO JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT H AS BEEN CITED BEFORE US, WE HOLD THAT CHOOSING OF INIT IAL ASSESSMENT YEAR FOR CLAIMING DEDUCTION UNDER SECTIO N 80IA OF THE ACT IN A BLOCK OF TEN YEARS OUT OF FIFT EEN YEARS IS WITH THE ASSESSEE I.E. IT IS THE OPTION OF THE A SSESSEE TO 19 CHOOSE THE INITIAL ASSESSMENT YEAR FOR CLAIMING DED UCTION UNDER SECTION 80IA OF THE ACT. FURTHER, THE LOSS C LAIMED BY THE ASSESSEE IN RESPECT OF ELIGIBLE BUSINESS IS TO BE SET OFF AGAINST THE INCOME OF THE ASSESSEE FROM OTHER INELIGIBLE BUSINESS AS IN RESPECT OF ASSESSMENT YEA RS AND THERE IS NOT NEED TO NOTIONALLY CARRY FORWARD THESE LOSSES UP TO THE INITIAL ASSESSMENT YEAR AND WRITE OFF THE SAME OUT OF THE PROFITS OF ELIGIBLE BUSINESS. 15. AS REGARDS THE CONTRADICTION ARISING IN THE OR DER OF THE LEARNED CIT (APPEALS) AND THE ASSESSEE NOT B EING IN APPEAL AGAINST THE ADVERSE FINDINGS GIVEN BY HIM, W E WISH TO CLARIFY THAT WE HAVE STATED IN PARA 14 ABOVE, TH E POSITION OF LAW AS ON DATE, WITH REGARD TO THE ISSU ES ARISING OUT OF THE ORDER OF THE ASSESSING OFFICER. NOW THE ASSESSING OFFICER IS DIRECTED TO GIVE EFFECT AS PER OUR FINDINGS GIVEN IN PARA 14 ABOVE. 16. IN THE RESULT, THE DEPARTMENTAL APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 8 TH DAY OF FEBRUARY, 2016. SD/- SD/- (H.L. KARWA) (RANO JAIN) VICE PRESIDENT ACCOUNTANT MEMBER DATED : 8 TH FEBRUARY, 2016 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/THE CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH 20