JAYANT AGRO ORGANICS LTD, MUMBAI V. DCIT RG 8(2), MUMBAI

ITA 1602/MUM/2013

• Counselvise Citation: 160219914 RSA 2013
• Duration Of Justice: 2 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2015
• Appeal Filed By: Assessee
• Bench Allotted: J
• Next Hearing Date: 26-02-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 27-02-2013
• Court: TRIBUNAL
• Department Lawyers: K RAVIKIRAN
• Keywords: Business income; Depreciation; Unabsorbed depreciation
• Section: 263

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES J , MUMBAI BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER & SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER . / ITA NO.1602/MUM/2013 ( / ASSESSMENT YEAR : 2009-10 ) M/S. JAYANT AGRO ORGANICS LIMITED , C/O. AKANDANAND, 38 MORAL CO. OP. INDL. ESTATE OFF. M.V. ROAD, SAKINAKA, ANDHERI (E) MUMBAI -400059 .. / APPELLANT V/S DCIT, RANGE 8(2) AAYAKAR BHAVAN, MUMBAI-20 .... / RESPONDENT . / PERMANENT ACCOUNT NUMBER AACJ7581Q APPELLANT BY : SHRI MADHUR AGARWAL (AR) REVENUE BY : SHRI K.RAVI KIRAN (DR) ! ' #$ / DATE OF HEARING 11.08.2015 %& '( ' #$ / DATE OF ORDER 28.08.2015 / ORDER PER ASHWANI TANEJA, A.M. THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGA INST ORDER DATED 11.12.2012, PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)17,MUMBAI PASSED FOR THE ASSESSMENT YEAR 2009-10. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL:- JAYANT AGRO ORGANI CS 2 1.ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE, T HE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) GROSSLY ERRED I N CONFIRMING DISALLOWANCE OF DEDUCTION U/S. 80IA OF T HE INCOME TAX ACT, 1961 OF RS. 71, 10,231/- CLAIMED BY THE AP PELLANT. IN DOING SO HE ERRED IN: A. HOLDING THAT ACCORDING TO THE PROVISIONS OF S. 8 0-IA(S) OF THE IT ACT, 1961, THE PROFIT FROM THE ELIGIBLE BUSINESS FOR THE PURPOSE OF DEDUCTION UNDER S. 80-IA OF THE ACT HAS TO BE CO MPUTED AFTER DEDUCTION OF THE NOTIONAL BROUGHT FORWARD LOSSES AN D DEPRECIATION OF ELIGIBLE BUSINESS EVEN THOUGH THEY HAVE BEEN ALLOWED SET OFF AGAINST OTHER INCOME IN EARLIER YEA RS. B. HOLDING THE YEAR OF COMMENCEMENT OF THE ELIGIBLE BUSINESS TO BE INITIAL ASSESSMENT YEAR FROM WHICH DEDUCTION WAS AVAILABLE TO THE APPELLANT. C. NOT APPRECIATING THAT AUDIT REPORT IN FORM 10CCB TO BE FILED FOR CLAIMING DEDUCTION U/S. 80-1A INCLUDES 'DATE OF COMMENCEMENT OF OPERATION/ACTIVITY BY THE UNDERTAKI NG' AND 'INITIAL ASSESSMENT YEAR FROM WHEN THE DEDUCTION IS BEING CLAIMED' AS TWO SEPARATE DATES GIVEN IN CLAUSE 8 & CLAUSE 9 OF THE FORM. D. RELYING ON MUMBAI ITA T DECISION IN CASE OF PIDI LITE INDUSTRIES LTD. V S. DCIT (20 II), WHICH WAS BASED ON THE SPEC IAL BENCH DECISION OF AHMEDABAD TRIBUNAL IN CASE OF ACIT VS. GOLDMINE SHARES & FINANCE (P) LTD (2008) AND ON LAW PRIOR TO FINANCE ACT, 1999 AMENDMENT. 2. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR DELETE ANY OF THE ABOVE REFERRED GROUND OF APPEAL. 2. AS PER LD COUNSEL OF THE ASSESSEE, ONLY EFFECTIVE ISSUE TO BE ADJUDICATED BY TRIBUNAL IS WHETHER THE ASSESSEE IS E LIGIBLE TO CLAIM THE BENEFIT OF DEDUCTION U/S.80-IA WITHOUT FIRST SETTING OF F NOTIONAL BROUGHT FORWARD LOSSES AGAINST THE CURRENT YEARS PROFIT OF EX EMPT UNIT. 3. THE BRIEF FACTS ARE THAT THE ASSESSEE CLAIMED THE B ENEFIT OF DEDUCTION U/S 80-IA IN ITS RETURN OF INCOME WITH RESPE CT TO THE ELIGIBLE BUSINESS FROM WINDMILL FARMS (HEREINAFTER CALLED AS EXEMPT UNIT). THE ASSESSEE EARNED INCOME FROM BUSINESS FROM OTHER UNITS ALSO (HEREINAFTER CALLED AS TAXABLE UNITS). THE AO, INVO KING THE PROVISIONS OF SECTION 80IA(5), HELD THAT THE ASSESSEE SHOULD, FIR ST, NOTIONALLY REDUCE THE PROFITS OF THE EXEMPT UNIT BY THE AMOUNT OF LOSSES AND JAYANT AGRO ORGANI CS 3 UNABSORBED DEPRECIATION WHICH WERE SET OFF AGAINST THE PROFITS OF TAXABLE UNITS IN THE EARLIER YEARS. THE ACTION OF AO WA S CONFIRMED BY THE LD. CIT(A). BEFORE US, LD. COUNSEL HAS SUBMITTED THAT THE EXEMPT UNIT OF WINDMILL FARMS WAS SET UP IN ASSESSMENT YEAR 2006-07 AND NO DEDUCTION HAS BEEN CLAIMED IN ASSESSMENT YEARS 2006-0 7, 2007-08 & 2008-09. THE DEDUCTION U/S 80IA HAS BEEN CLAIMED WI TH RESPECT TO THIS UNIT FOR THE FIRST TIME IN IMPUGNED ASSESSMENT YEAR I.E. ASSESSMENT YEAR 2009-10. AS PER LAW, THE ASSESSEE CAN CHOOSE A NY 10 CONSECUTIVE YEARS OUT OF FIRST 15 YEARS. THUS, IMPUGNED YEAR IS INITIAL YEAR OF CLAIM OF DEDUCTION OF U/S 80IA. IT WAS FURTHER SUBMITTED THA T THE INITIAL YEAR BEING IMPUGNED ASSESSMENT YEAR, ANY LOSSES INCURRED BY THE ASSESSEE IN EARLIER YEARS FROM THE EXEMPT UNIT, COULD BE AND SHOULD BE, SET OFF AGAINST THE PROFIT OF TAXABLE UNITS AND ONLY THE BAL ANCE LEFT, IF ANY, COULD HAVE BEEN CARRIED FORWARD FOR SET OFF IN THE IM PUGNED YEAR. IT WAS REITERATED THAT THE EXEMPT UNIT DID NOT CLAIM ANY DE DUCTION IN EARLIER YEARS. THE FACTS ON RECORD REVEAL THAT THE LOSSES OF THIS EXEMPT UNIT HAVE ALREADY BEEN ACTUALLY SET OFF AGAINST THE PR OFITS IN THE EARLIER YEARS. THEREFORE, NOTHING REMAINED TO BE BROUGHT FO RWARD TO THE IMPUGNED YEAR AND THEREFORE, THE ACTION OF LD. AO IN NOTIONALLY BRINGING THE AMOUNT OF LOSSES AS BROUGHT FORWARD LO SSES WAS CONTRARY TO LAW AND FACTS. THE LD. COUNSEL RELIED UPON FOLLOWI NG JUDGMENTS IN SUPPORT OF THIS ISSUE:- (I) VELAYUDHASWAMY SPINNING MILLS (P)LTD. VS. ACIT 2 31 CTR 368(MAD) (II) CIT VS. ANIL H. LAD 102 DTR (KAR) 0241 (III) SHEVIE EXPORTS VS. JT. CIT ITA NO.321/MUM/2012 4. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDER OF LD. CIT(A) AND ALSO RELIED UPON THE JUDGMENT OF ITAT MUMBAI IN THE CASE OF JAYANT AGRO ORGANI CS 4 PIDILITE INDUSTRIES LTD. VS. DCIT IN ITA NO.3355/MUM /2009 DATED 10.06.2011 AND SUBMITTED THAT THE LD. CIT(A) HAS RIGH TLY CONFIRMED THE ACTION OF AO BY RELYING UPON THE JUDGMENT OF PIDILI TE INDUSTRIES LTD. 5. WE HAVE GONE THROUGH THE ARGUMENTS OF BOTH THE SID ES AND MATERIAL PLACED BEFORE US. IT NOTED THAT HONBLE CO-OR DINATE BENCH IN THE CASE OF SHEVIE EXPORTS HAS CONSIDERED THE FACTS & LAW AND THE DECISIONS OF HONBLE MADRAS HIGH COURT IN THE CASE OF VELAYUDHASWAMY SPINNING MILLS PVT. LTD. VS. ACIT, [2011] 340 ITR 4 77 (MAD) AND CIT VS. EMERALA JEWEL INDUSTRY PVT. LTD. [2011] 53 DTR 26 2 (MAD). THE HONBLE CO-ORDINATE BENCH HAS ALSO DISCUSSED AND DI STINGUISHED THE JUDGMENT OF PIDILITE INDUSTRIES LTD. (SUPRA). AFTER C ONSIDERING ENTIRE LAW HONBLE BENCH HAS DECIDED THIS ISSUE IN THE FAVO UR OF THE ASSESSEE AND HELD AS UNDER: QUOTE: 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RELEVANT MATERIAL PLACED ON RECORD AND VARIOUS CASE LAWS RELIED UPON BY EITH ER PARTY. THE ASSESSEE HAD SET-UP A WIND MILL AT DISTRICT DHULE, MAHARASHTRA A ND COMMENCEMENT OF ITS OPERATION WAS STARTED ON 29TH SEPTEMBER 2006 I.E., ASSESSMENT YEAR 2007-08. IN ASSESSMENT YEAR 2007-08, THE ASSESSEE HAD SHOWN A L OSS OF ~ 3,52,47,398 ON ACCOUNT OF DEPRECIATION AND INTEREST FROM WIND MILL UNDERTAKING AND THIS LOSS WAS SET-OFF AGAINST THE EXPORT BUSINESS INCOME (WHICH I N THE PRESENT CASE, CAN BE CONSIDERED AS NON-ELIGIBLE UNIT) IN THE ASSESSMENT YEAR 2007-08. IN THE ASSESSMENT YEAR 2008-09, THE ASSESSEE HAS EARNED PR OFIT OF RS. 7,16,904 AND HAS CLAIMED DEDUCTION UNDER SECTION 80IA BY TREATING TH E ASSESSMENT YEAR 2008-09 AS INITIAL ASSESSMENT YEAR. THE SOLE GROUND FOR CANCEL ING THE ASSESSMENT ORDER UNDER SECTION 263 BY THE LEARNED COMMISSIONER IN THIS REG ARD IS THAT IN THE SUBSEQUENT YEAR I.E., THE ASSESSMENT YEAR 2009-10, THE CLAIM O F THE ASSESSEE UNDER SECTION 8OLA HAS BEEN REJECTED BY THE ASSESSING OFFICER ON THE GROUND THAT THE SPECIAL BENCH DECISION OF THE TRIBUNAL, AHMEDABAD BENCH IN GOLDMINE SHARES AND FINANCE PVT. LTD. (SUPRA) DOES NOT SUPPORT SUCH A C LAIM. 9. SECTION 8OLA, WHICH HAS BEEN SUBSTITUTED W.E.F. 1ST APRIL 2000, PROVIDES THAT WHERE THE GROSS TOTAL INCOME OF AN ASSESSEE INCLUDE S ANY PROFITS AND GAINS DERIVED BY AN UNDERTAKING FROM ANY ELIGIBLE BUSINES S REFERRED TO IN SUB-SECTION 4, THERE SHALL, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THIS SECTION, BE ALLOWED IN COMPUTING THE TOTAL INCOME, THE DEDUCTIO N OF AN AMOUNT EQUAL TO 100% JAYANT AGRO ORGANI CS 5 OF THE PROFITS AND GAINS DERIVED FROM SUCH BUSINESS FOR 10 CONSECUTIVE YEARS. SUBSTITUTED SUB-SECTION (2) OF SECTION 8OLA, PROVID ES THAT AN OPTION IS GIVEN TO THE ASSESSEE FOR 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 YEARS IS THE OUTER LIMIT W ITHIN WHICH THE ASSESSEE CAN CHOOSE THE PERIOD OF CLAIMING THE DEDUCTION. SUB-SE CTION (5) IS A NON-OBSTANTE CLAUSE WHICH DEALS WITH THE QUANTUM OF DEDUCTION FO R AN ELIGIBLE BUSINESS. THE RELEVANT PROVISIONS OF SUB-SECTION (5) OF SECTION 8 OLA, READS AS UNDER:- '(5) NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHE R 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 DE TERMINING THE QUANTUM OF DEDUCTION UNDER THAT SUB-SECTION FOR THE ASSESSMENT YEAR IMMEDIATELY SUCCEEDING THE INITIAL ASSESSMENT YEAR OR ANY SUBSE QUENT ASSESSMENT YEAR, BE COMPUTED AS IF SUCH ELIGIBLE BUSINESS WERE THE O NLY SOURCE OF INCOME OF THE ASSESSEE DURING THE PREVIOUS YEAR RELEVANT TO T HE INITIAL ASSESSMENT YEAR AND TO EVERY SUBSEQUENT ASSESSMENT YEAR UP TO AND INCLUDING THE ASSESSMENT YEAR FOR WHICH THE DETERMINATION IS TO B E MADE. ' 10. FROM A PLAIN READING OF THE ABOVE, IT CAN BE GA THERED THAT IT IS A NON-OBSTANTE CLAUSE WHICH OVERRIDES THE OTHER PROVISIONS OF THE ACT AND IT IS FOR THE, PURPOSE OF DETERMINING THE QUANTUM OF DEDUCTION UNDER SECTION 8OIA, FOR THE ASSESSMENT YEAR IMMEDIATELY SUCCEEDING THE INITIAL ASSESSMENT YEAR OR ANY SUBSEQUENT ASSESSMENT YEAR TO BE COMPUTED AS IF THE ELIGIBLE B USINESS IS THE ONLY SOURCE OF INCOME. THUS, THE FICTION CREATED IS THAT THE ELIGI BLE BUSINESS 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 THE INITIAL ASSESSMENT YEAR. PRIOR TO 1ST APRIL 2000, THE INITI AL ASSESSMENT YEAR WAS DEFINED FOR VARIOUS TYPES OF ELIGIBLE ASSESSEES UNDER SECTI ON 80IA(12). HOWEVER, AFTER THE AMENDMENT BROUGHT IN STATUTE BY THE FINANCE ACT, 19 99, THE DEFINITION OF INITIAL ASSESSMENT YEARHAS BEEN SPECIFICALLY TAKEN AWAY. N OW, WHEN THE ASSESSEE EXERCISES THE OPTION OF CHOOSING THE INITIAL ASSESS MENT YEAR AS CULLED OUT IN SUB SECTION(2) OF SECTION 80IA FROM WHICH IT CHOOSES IT S 10 YEARS OF DEDUCTION OUT OF 15YEARS, THEN ONLY THE LOSSES OF THE YEARS STARTING FROM THE INITIAL ASSESSMENT YEAR ALONE ARE TO BE BROUGHT FORWARD AS STIPULATED IN SE CTION 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 F ROM THE INITIAL ASSESSMENT YEAR AS CONTEMPLATED OR CHOSEN BY THE ASSESSEE. IT IS ON LY WHEN THE LOSS HAVE BEEN INCURRED FROM THE INITIAL ASSESSMENT YEAR, THEN THE ASSESSEE HAS TO ADJUST LOSS IN THE SUBSEQUENT ASSESSMENT YEARS AND IT HAS TO BE CO MPUTED AS IF ELIGIBLE BUSINESS IS THE ONLY SOURCE OF INCOME AND THEN ONLY DEDUCTIO N UNDER SECTION 80IA CAN BE DETERMINED. THIS IS THE TRUE IMPORT OF SECTION 80IA (5). 11. IN THE DECISION OF GOLDMINE SHARES AND FINANCE PVT. LTD. (SUPRA), DECIDED BY THE SPECIAL BENCH OF THE TRIBUNAL, THE CLAIM OF DED UCTION BY THE ASSESSEE HAD STARTED FROM ASSESSMENT YEAR 199697 ONWARDS AND TH E ASSESSEE HAD CLAIMED DEDUCTION UNDER SECTION 80IA STARTING FROM THE FIRS T YEAR ITSELF I.E., ASSESSMENT YEAR 199697. THUS, THE SPECIAL BENCH WAS DEALING W ITH THE OPERATION OF SECTION 80IA(5) WHERE THE ASSESSEE HAD FIRST CLAIMED THE DE DUCTION IN THE ASSESSMENT YEAR 199697 AND FOR SUBSEQUENT ASSESSMENT YEARS. THIS A SPECT OF THE MATTER HAS BEEN VERY WELL ELABORATED BY THE MADRAS HIGH COURT IN VE LAYUDHASWAMY SPINNING MILLS PVT. LTD. (SUPRA) AFTER CONSIDERING THE SPECI AL BENCH DECISION OF THE JAYANT AGRO ORGANI CS 6 TRIBUNAL IN GOLDMINE SHARES AND FINANCE PVT. LTD. ( SUPRA) AND RELEVANT PROVISIONS OF THE ACT I.E., PRE AMENDMENT AND POST AMENDMENT HAVE COME TO THE SAME CONCLUSION: FROM READING OF THE ABOVE, IT IS CLEAR THAT THE EL IGIBLE BUSINESS WERE THE ONLY SOURCE OF INCOME, DURING THE PREVIOUS YEAR REL EVANT TO INITIAL ASSESSMENT YEAR AND EVERY SUBSEQUENT ASSESSMENT YEARS. WHEN TH E ASSESSEE EXERCISES THE OPTION, THE ONLY LOSSES OF THE YEARS BEGINNING FROM INITIAL ASSESSMENT YEAR ALONE ARE TO BE BROUGHT FORWARD AND NO LOSSES OF EARLIER YEARS WHICH WERE ALREADY SET OFF AGAINST THE INCOME OF THE ASSESSEE. LOOKING FOR WARD TO A PERIOD OF TEN YEARS FROM THE INITIAL ASSESSMENT IS CONTEMPLATED. IT DOE S NOT ALLOW THE REVENUE TO LOOK BACKWARD AND FIND OUT IF THERE IS ANY LOSS OF EARLI ER YEARS AND BRING FORWARD NOTIONALLY EVEN THOUGH THE SAME WERE SET OFF AGAINS T OTHER INCOME OF THE ASSESSEE AND THE SET OFF AGAINST THE CURRENT INCOME OF THE E LIGIBLE BUSINESS. ONCE THE SET OFF IS TAKEN PLACE IN EARLIER YEAR AGAINST THE OTHER IN COME OF THE ASSESSEE, THE REVENUE CANNOT REWORK THE SET OFF AMOUNT AND BRING IT NOTIONALLY. FICTION CREATED IN SUBSECTION DOES NOT CONTEMPLATES TO BRING SET OF F AMOUNT NOTIONALLY. FICTION IS CREATED ONLY FOR THE LIMITED PURPOSE AND THE SAME C ANNOT BE EXTENDED BEYOND THE PURPOSE FOR WHICH IT IS CREATED. 14. IN THE PRESENT CASES, THERE IS NO DISPUTE THAT LOSSES INCURRED BY THE ASSESSEE WERE ALREADY SET OFF AND ADJUSTED AGAINST THE PROFITS OF THE EARLIER YEARS. DURING THE RELEVANT ASSESSMENT YEAR, THE ASSESSEE E XERCISED THE OPTION UNDER S. 80-IA(2). IN TAX CASE NOS. 909 OF 2009 AS WELL AS 9 40 OF 2009, THE ASSESSMENT YEAR WAS 2005-06 AND IN THE TAX CASE NO. 918 OF 200 8 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. THERE IS A POSITIVE PROFIT DURING TH E YEAR. THE UNREPORTED JUDGMENT OF THIS COURT CITED SUPRA CONSIDERED THE SCOPE OF S UB-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 CITED SUPRA. IN THE CASE OF CIT VS. MEWAR OIL & GENERAL M ILLS LTD. (2004) 186 CTR (RAJ) 141 : (2004) 271 ITR 311 (RAJ), THE RAJASTH AN HIGH COURT ALSO CONSIDERED THE SCOPE OF S. 80-I AND HELD AS FOLLOWS: 'HAVING CONSIDERED THE RIVAL CONTENTIONS WHICH FOLL OW ON THE LINE NOTICED ABOVE, WE ARE OF THE OPINION THAT ON FINDING THE FA CT THAT THERE WAS NO CARRY FORWARD LOSSES OF 1983-84, WHICH COULD BE SET OFF A GAINST THE INCOME OF THE CURRENT ASST. YR. 1984-85, THE RE-COMPUTATION OF IN COME FROM THE NEW INDUSTRIAL UNDERTAKING BY SETTING OFF THE CARRY FORWARD OF UNA BSORBED DEPRECIATION OR DEPRECIATION ALLOWANCE FROM PREVIOUS YEAR DID NOT S IMPLY ARISE AND ON THE FINDING OF FACT NOTICED BY THE CIT(A), WHICH HAS NOT BEEN D ISTURBED BY THE TRIBUNAL AND CHALLENGED BEFORE US, THERE WAS NO ERROR MUCH LESS ANY ERROR APPARENT ON THE FACE OF THE RECORD WHICH COULD BE RECTIFIED. THAT Q UESTION WOULD HAVE BEEN GERMANE ONLY IF THERE WOULD HAVE BEEN CARRY FORWARD OF UNABSORBED DEPRECIATION AND UNABSORBED DEVELOPMENT REBATE OR ANY OTHER UNAB SORBED LOSSES OF THE PREVIOUS YEAR ARISING OUT OF THE PRIORITY INDUSTRY AND WHETHER IT WAS REQUIRED TO BE SET OFF AGAINST THE INCOME OF THE CURRENT YEAR. IT IS NOT AT ALL REQUIRED THAT LOSSES OR OTHER DEDUCTIONS WHICH HAVE ALREADY BEEN SET OFF AGAINST THE INCOME OF THE PREVIOUS YEAR SHOULD BE REOPENED AGAIN FOR COMP UTATION OF CURRENT INCOME UNDER S. 80-I FOR THE PURPOSE OF COMPUTING ADMISSIB LE DEDUCTIONS THEREUNDER. IN VIEW THEREOF, WE ARE OF THE OPINION THAT THE TRIBUN AL HAS NOT ERRED IN HOLDING THAT JAYANT AGRO ORGANI CS 7 THERE WAS NO RECTIFICATION POSSIBLE UNDER S. 80-I I N THE PRESENT CASE, ALBEIT, FOR REASONS SOMEWHAT DIFFERENT FROM THOSE WHICH PREVAIL ED WITH THE TRIBUNAL. THERE BEING NO CARRY FORWARD OF ALLOWABLE DEDUCTIONS UNDE R THE HEAD DEPRECIATION OR DEVELOPMENT REBATE WHICH NEEDED TO BE ABSORBED AGAI NST THE INCOME OF THE CURRENT YEAR AND, THEREFORE, RECOMPUTATION OF INCOM E FOR THE PURPOSE OF COMPUTING PERMISSIBLE DEDUCTION UNDER S. 80-I FOR T HE NEW INDUSTRIAL 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 DEDUCTIONS WHICH HAVE ALREADY BEEN SET OFF AGAINST THE INCOME OF THE PREVIOUS YEAR SHOULD BE REOPENED AGAIN FOR COMPUTATION OF CURRENT INCOME UN DER S. 80-I FOR THE PURPOSE OF COMPUTING ADMISSIBLE DEDUCTIONS THEREUNDER. WE A LSO AGREE WITH THE SAME. WE SEE NO REASON TO TAKE A DIFFERENT VIEW. 12. THIS JUDGMENT HAS BEEN FURTHER FOLLOWED BY THE SAME HIGH COURT IN CIT V/S EMERALD JEWEL INDUSTRY (P) LTD. [2011] 53 DTR 262 ( MAD.). FROM THE ABOVE, RATIO OF THE HIGH COURT, IT IS AMPLY CLEAR THAT SUB SECTION (5) OF SECTION 80IA WILL COME INTO OPERATION ONLY FROM THE INITIAL ASSESSMEN T YEAR OR ANY SUBSEQUENT ASSESSMENT YEAR. THE OPTION OF CHOOSING THE INITIA L ASSESSMENT YEAR IS WHOLLY UPON THE ASSESSEE IN THE POST AMENDMENT PERIOD I.E. , AFTER 1ST APRIL 2000 BY VIRTUE OF SECTION 80IA(2). 13. NOW COMING TO THE DECISION OF THE MUMBAI BENCH TRIBUNAL IN PIDILITE INDUSTRIES (SUPRA) AS RELIED UPON BY THE LEARNED DE PARTMENTAL REPRESENTATIVE IN THIS CASE, THE TRIBUNAL WAS DEALING WITH REGARD TO TWO ELIGIBLE UNITS ONE GUJARAT UNIT WHICH WAS SETUP IN THE YEAR 199596 AND SECON D MAHARASHTRA UNIT IN THE YEAR 200001. WITH REGARD TO GUJARAT UNIT, THE TRIB UNAL HELD THAT PRE AMENDMENT DEFINITION OF INITIAL ASSESSMENT YEAR WOU LD BE APPLICABLE I.E., PROVISIONS WHICH WERE PRIOR TO 1ST APRIL 1999 WILL APPLY BECAUSE THE ASSESSEE HAD STARTED COMMERCIAL PRODUCTION IN THE FINANCIAL YEAR 199697. REGARDING SECOND UNIT, THE TRIBUNAL HELD THAT THE JUDGMENT OF MADRAS HIGH COURT IN VELAYUDHASWAMY SPINNING MILLS PVT. LTD. (SUPRA) WIL L NOT BE APPLICABLE BECAUSE THE INCOME FROM NON ELIGIBLE BUSINESS WAS SETOFF FROM THE LOSS OF ELIGIBLE BUSINESS IN T HE YEAR OF COMMENCEMENT. IN THIS CASE, IT WAS NOT AN ISSUE AS TO WHETHER THE LOSSES PERTAINED TO PRIOR TO INITIAL ASSESSMENT YEAR OR AFTER THE INITIAL ASSESSMENT YEA R. IF THE LOSSES HAVE BEEN INCURRED IN THE ELIGIBLE UNIT AND HAS BEEN SETOFF AGAINST THE NON ELIGIBLE UNIT AFTER THE INITIAL ASSESSMENT YEAR, THEN THE RATIO L AID DOWN BY THE TRIBUNAL IS IN FULL CONSONANCE WITH THE LAW. HOWEVER, THIS IS NOT THE C ASE IN THE INSTANT CASE BECAUSE THE LOSS PERTAINED TO PRIOR TO INITIAL ASSESSMENT Y EAR WHICH HAVE BEEN SETOFF AGAINST THE PROFITS OF NONELIGIBLE UNITS. THE BEGI NNING OF THE INITIAL ASSESSMENT YEAR AS ADOPTED BY THE ASSESSEE IS ASSESSMENT YEAR 200809 ONLY AND, THEREFORE, THE LOSS OF ASSESSMENT YEAR 200708 CANNOT BE NOTIO NALLY CARRIED FORWARD WITHIN THE MEANING OF SECTION 80IA(5). THUS, THE RELIANCE PLACED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE DECISION OF PIDI LITE INDUSTRIES (SUPRA), WILL NOT BE APPLICABLE IN THE PRESENT CASE. 14. THE OTHER DECISION HEAVILY RELIED UPON BY THE L EARNED DEPARTMENTAL REPRESENTATIVE IN HYDERABAD CHEMICAL SUPPLIES LTD. (SUPRA) WILL ALSO NOT APPLY TO THE FACTS OF THE PRESENT CASE, AS IN THAT CASE, THE WIND MILL STARTED ITS OPERATION ON 31 ST MARCH 1999 AND THE FIRST YEAR OF OPERATION WAS AS SESSMENT YEAR 1999 2000. THUS, IN THE ASSESSMENT YEAR 19992000, THE D EFINITION OF INITIAL JAYANT AGRO ORGANI CS 8 ASSESSMENT YEAR WAS ALREADY THERE IN THE ACT AND T HERE WAS NO PROVISION THROUGH WHICH THE ASSESSEE COULD HAVE CHOSEN ITS IN ITIAL ASSESSMENT YEAR. THIS PROVISION WAS BROUGHT IN STATUTE W.E.F. 1 ST APRIL 2000, BY VIRTUE OF SECTION 80IA. THUS, THIS DECISION ALSO WILL NOT HELP THE CASE OF THE DEPARTMENT. IN ASSESSEES CASE, AS SPECIFICALLY STATED IN THE FOREGOING PARAG RAPHS, THE ASSESSEES CLAIM FOR INITIAL ASSESSMENT YEAR I.E., ASSESSMENT YEAR 2008 09 AND ITS CLAIM FOR DEDUCTION UNDER SECTION 80IA MADE FOR THE FIRST TIME FROM ASS ESSMENT YEAR 200809, HAS NOT BEEN DISPUTED. THUS, THE AFORESAID JUDGMENT RELIED UPON BY THE LEARNED DEPARTMENTAL REPRESENTATIVE WILL NOT BE APPLICABLE TO THE FACTS OF THE PRESENT CASE. UNQUOTE: 6. THIS FACT IS NOT IN DISPUTE THAT BUSINESS LOSS/DEPR ECIATION OF EARLIER YEARS OF THE EXEMPT UNIT HAVE ALREADY BEEN S ET OFF IN EARLIER YEARS AGAINST OTHER INCOME AND ACCEPTED AS SUCH BY THE REVENUE. THIS FACT IS ALSO NOT IN DISPUTE THAT DEDUCTION U/S.80IA IN THE CASE OF EXEMPT UNIT HAS BEEN CLAIMED FOR THE FIRST TIME IN THE IMPUGNED YEAR. IN THE AFORESAID JUDGMENT OF SHEVIE EXPORTS, IT HAS B EEN OBSERVED THAT LOSSES OF EARLIER YEARS COULD NOT BE NOTIONALLY CAR RIED FORWARD IN TERMS OF SECTION 80IA(5). 7. THUS, RESPECTFULLY FOLLOWING THESE JUDGMENTS AS R ELIED UPON LD. COUNSEL OF THE ASSESSEE, WE HOLD THAT THE AO WAS NOT J USTIFIED IN DENYING THE BENEFIT OF DEDUCTION U/S 80IA OF RS.71, 10,231/-. THE AO IS DIRECTED TO GRANT THE BENEFIT OF DEDUCTION CLAIMED BY TH E ASSESSEE. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH DAY OF AUGUST, 2015. SD/- SD/- (JOGINDER SINGH) (ASHWANI TANEJA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED:28 .08.2015 JAYANT AGRO ORGANI CS 9 PATEL %& ' #) * +*# / COPY OF THE ORDER FORWARDED TO : (1) ,# / THE ASSESSEE; (2) / THE REVENUE; (3) -#( ) / THE CIT(A); (4) -# / THE CIT, MUMBAI CITY CONCERNED; (5) *01 #2, $ 2, ! / THE DR, ITAT, MUMBAI; (6) 14 5! / GUARD FILE. *# # / TRUE COPY %& / BY ORDER 6 / 7 / (DY./ASSTT. REGISTRAR) $ 2, ! / ITAT, MUMBAI