Deputy Commissioner of Income-tax, V. Jagadamba Auto Componenets Ltd., Pune

ITA 1738/PUN/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1699 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 07-06-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 17-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HITENDRA NINAWE
• Keywords: Business income; Depreciation; Unabsorbed depreciation
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E , , !'#'' $ , % & BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM / ITA NO. 1738/PN/2014 %' ( ')( / ASSESSMENT YEAR : 2010-11 DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 11(1), PUNE ....... / APPELLANT ' / V/S. JAGDAMBA AUTO COMPONENTS LTD., GAT NO. 151, 52, KOREGAON BHIMA, SHIRUR, PUNE-411016 PAN : AAACJ7019H / RESPONDENT ASSESSEE BY : SHRI NEELESH KHANDELWAL REVENUE BY : SHRI HITENDRA NINAWE / DATE OF HEARING : 07-06-2016 / DATE OF PRONOUNCEMENT : 08-06-2016 * / ORDER PER VIKAS AWASTHY, JM : THIS APPEAL BY THE DEPARTMENT IS DIRECTED AGAINST THE OR DER OF COMMISSIONER OF INCOME TAX (APPEALS)-I, PUNE DATED 28-02- 2014 FOR THE ASSESSMENT YEAR 2010-11. 2 ITA NO. 1738/PN/2014, A.Y. 2010-11 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORD S ARE: THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTU RING AND SALE OF ENGINEERING GOODS AND MACHINERIES AND SALE OF POWER . THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEA R 2010-11 ON 07-10-2010 DECLARING TOTAL INCOME OF ` 10,41,28,300/-. IN THE RETURN OF INCOME THE ASSESSEE HAD INTER ALIA CLAIMED DEDUCTION OF ` 32,16,249/- U/S. 80IA(4) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFER RED TO AS THE ACT) ON THE INCOME FROM GENERATION OF POWER FROM WINDMILL. THE ASSESSING OFFICER DISALLOWED THE SAME BY RAISING QUESTION OF INITIAL ASSESSMENT YEAR IN RESPECT OF CLAIM OF DEDUCTION. AGGRIEVED BY THE ASSESSMENT ORDER DATED 13-01-2013, T HE ASSESSEE PREFERRED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) VIDE IMPU GNED ORDER ACCEPTED THE CLAIM OF THE ASSESSEE BY FOLLOWING THE ORDER OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF SERUM INTERNATIONAL L TD. VS. ADDL. CIT IN ITA NOS. 290 TO 292/PN/2010 FOR THE ASSESSMENT YEARS 2004-05 TO 2006-07 DECIDED ON 28-09-2011. AGAINST THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) THE REVENUE IS IN APPE AL BEFORE THE TRIBUNAL. 3. THE REVENUE HAS ASSAILED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) BY RAISING FOLLOWING GROUNDS : 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS) IS CONTRARY TO LAW AND TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) GR OSSLY ERRED IN DELETING THE ADDITION OF RS.32,16,249/- MADE IN THE ASSESSMENT ON ACCOUNT OF DISALLOWANCE OF U/S 80IA(4) ONLY ON THE BASIS OF THE PRINCIPLE OF BINDING PRECEDENT SO FAR AS THE INTERPRETATION T O BE GIVEN TO SECTION 80- 3 ITA NO. 1738/PN/2014, A.Y. 2010-11 IA(5) IS CONCERNED, IN VIEW OF THE DECISION OF ITAT , MUMBAI IN THE CASE OF PIDILITE INDUSTRIES (46 SOT 263) AND THE DECISION O F ITAT, PUNE IN THE CASE OF KHINVASARA INVESTMENT (P) LTD (110 ITO 198) . 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) GR OSSLY ERRED IN FAILING TO APPRECIATE THAT ON AN APPLICATION OF SEC TION 80-IA(5), THE ASSESSEE DOES NOT HAVE ANY PROFIT FROM THE ELIGIBLE BUSINESS DURING THE RELEVANT PREVIOUS YEAR AND, ON THE CONTRARY HAS HUG E LOSS; AND, THEREFORE THE ASSESSEE IS NOT ENTITLED TO ANY DEDUCTION U/S 8 0-IA(4) OF THE INCOME- TAX ACT, 1961. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) GR OSSLY ERRED IN NOT FOLLOWING THE DECISION OF THE HON'BLE SUPREME COURT IN A CASE OF LIBERTY INDIA VS. CIT, (2009) 317 ITR 218 WHEREIN THE APEX COURT HELD THAT U/S 80-IA(5) PROFITS ARE TO BE COMPUTED AS IF THE ELIGI BLE BUSINESS IS THE ONLY SOURCE OF INCOME OF THE ASSESSEE. 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) GR OSSLY ERRED IN DELETING THE ADDITION BY HOLDING THAT WHEN THE ASSE SSEE EXERCISES THE OPTION, ONLY THE LOSSES OF THE YEAR BEGINNING FROM THE INITIAL ASSESSMENT YEAR ARE TO BE BOUGHT FORWARD AND NOT THE LOSSES OF THE EARLIER YEARS. SUCH AN INTERPRETATION IS ALIEN TO SECTION 80-IA(5) . 6. FOR THESE AND SUCH OTHER GROUNDS AS MAY BE URGED AT THE TIME OF HEARING, THE ORDER OF THE LD COMMISSIONER OF INCOME TAX (APPEALS) MAY BE VACATED AND THAT OF THE ASSESSING OFFICER BE RES TORED. 7. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL DURING THE COURSE OF THE AP PELLATE PROCEEDINGS BEFORE THE HONBLE TRIBUNAL. ALTHOUGH, THE DEPARTMENT HAS RAISED SEVEN GROUNDS, BUT ALL THE GROUNDS RELATE TO SINGLE ISSUE I.E. DELETING OF ADDITION OF ` 32,16,249/- BY ALLOWING DEDUCTION U/S. 80IA(4) OF THE ACT TO THE ASSESSEE. 4. SHRI NEELESH KHANDELWAL APPEARING ON BEHALF OF THE ASSE SSEE SUBMITTED AT THE OUTSET THAT THE ISSUE RAISED BY THE DEPARTMENT IN APPEAL IS SQUARELY COVERED BY THE DECISION OF CO-ORDINAT E BENCH OF THE 4 ITA NO. 1738/PN/2014, A.Y. 2010-11 TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO. 967/PN/2013 FO R THE ASSESSMENT YEAR 2008-09 DECIDED ON 25-07-2014. THE LD . AR OF THE ASSESSEE FURTHER SUBMITTED THAT THE ISSUE RELATING TO INIT IAL ASSESSMENT YEAR FOR CLAIMING DEDUCTION HAS NOW BEEN CLARIFIED BY THE CB DT VIDE CIRCULAR NO. 1/2016 DATED 15-02-2016. THE LD. AR PLACED O N RECORD A COPY OF THE ORDER OF TRIBUNAL IN ITA NO. 967/PN/2013 (SUPR A) AND THE CBDT CIRCULAR. THE LD. AR VEHEMENTLY PRAYED FOR DISMISSING THE APPEAL OF THE REVENUE. 5. PER CONTRA SHRI HITENDRA NINAWE REPRESENTING THE DEP ARTMENT SUBMITTED THAT DURING THE COURSE OF SCRUTINY ASSESSMEN T, THE ASSESSING OFFICER OBSERVED THAT AFTER CONSIDERING DEPRECIATION AND OT HER RELEVANT EXPENSES IN RESPECT OF UNIT ELIGIBLE TO CLAIM DEDUCTION U/S. 8 0IA(4) THAT THERE IS NO POSITIVE INCOME AS ON 31-03-2010. IN FACT, T HE ELIGIBLE UNIT HAD SUFFERED LOSS OF ` 43,46,304/-. ACCORDINGLY, THE ASSESSING OFFICER INVOKED THE PROVISIONS OF SECTION 80IA(5) AND MADE DISALLOW ANCE OF ` 32,16,249/- ON THE DEDUCTION CLAIMED U/S. 80IA(4) OF THE AC T. THE LD. DR STRONGLY DEFENDED THE ACTION OF ASSESSING OFFICER IN DISA LLOWING THE CLAIM OF ASSESSEE U/S. 80IA(5) AND PRAYED FOR SUSTAINING THE SAME. 6. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESEN TATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIE S BELOW. WE HAVE ALSO CONSIDERED THE DECISION ON WHICH THE LD. AR OF T HE ASSESSEE HAS PLACED RELIANCE. WE FIND THAT THE IDENTICAL GROUNDS WE RE RAISED BY THE REVENUE IN ASSESSEES OWN CASE IN ITA NO. 967/PN/2 013 FOR THE ASSESSMENT YEAR 2008-09 DECIDED ON 25-07-2014. THE T RIBUNAL DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDINGS AS UNDER : 5 ITA NO. 1738/PN/2014, A.Y. 2010-11 20. THE BONE OF CONTENTION BETWEEN THE ASSESSEE AN D THE REVENUE IS WITH REGARD TO THE PROVISIONS OF SECTION 80-IA(5) O F THE ACT. SECTION 80- IA(5) OF THE ACT CREATES A FICTION THAT FOR THE PUR POSE OF COMPUTING DEDUCTION U/S 80-IA OF THE ACT, IT WAS TO BE PRESUM ED THAT THE ELIGIBLE UNIT WAS ONLY THE SOURCE OF INCOME OF THE ASSESSEE DURING THE PREVIOUS YEAR RELEVANT TO INITIAL ASSESSMENT YEAR AND ALSO T O EVERY SUBSEQUENT YEAR UPTO AND INCLUDING THE ASSESSMENT YEAR FOR WHI CH THE DETERMINATION IS TO BE MADE. HAVING SET UP THE WINDMILL UNIT IN T HE A.Y. 2002-03, ASSESSEE INCURRED BUSINESS LOSSES AND UNABSORBED DE PRECIATION IN A.Y. 2002-03 AS WELL AS 2003-04 FOR RS.87,26,335/- AND R S.55,72,484/- RESPECTIVELY. SUCH LOSSES WERE SET-OFF AGAINST INCO ME FROM OTHER BUSINESS AND INCOMES FROM HEADS OTHER THAN THE BUSINESS INCO ME. FROM A.Y. 2004-05 ONWARDS, THERE IS PROFIT IN THE WINDMILL AC TIVITY. IN THE YEAR UNDER CONSIDERATION I.E. 2008-09, THE ASSESSEE HAD PROFITS FROM WINDMILL ACTIVITY AT RS.13,43,816/- WHICH WAS CLAIMED TO BE E XEMPT IN TERMS OF SECTION 80-IA OF THE ACT. HOWEVER, AS PER THE REVEN UE, THE LOSSES INCURRED BY THE ASSESSEE FOR A.Y. 2002-03 AND 2003- 04 FROM THE ACTIVITY OF WINDMILL HAVE TO BE REDUCED FROM THE CURRENT YEA RS PROFITS OF THE WINDMILL ACTIVITY IN ORDER TO COMPUTE THE AMOUNT EL IGIBLE FOR DEDUCTION U/S 80-IA OF THE ACT, HAVING REGARD TO THE PROVISIO NS OF SECTION 80-IA(5) OF THE ACT. PERTINENTLY, IT IS NOT DISPUTED THAT THE L OSSES OF A.Y. 2002-03 AND 2003-04 FROM WINDMILL ACTIVITY ARE OTHERWISE LYING ABSORBED AGAINST ASSESSABLE INCOMES IN THE PAST YEARS. AS PER THE RE VENUE, SECTION 80- IA(5) OF THE ACT REQUIRES THAT THE PROFITS OF THE E LIGIBLE UNITS I.E. WINDMILL ARE TO BE COMPUTED FOR THE PURPOSES OF DETERMINING THE QUANTUM OF DEDUCTION U/S 80-IA(1) OF THE ACT, IN A MANNER AS I F SUCH ELIGIBLE BUSINESS WAS THE ONLY SOURCE OF INCOME OF THE ASSES SEE DURING THE PREVIOUS YEAR RELEVANT TO THE INITIAL ASSESSMENT Y EAR AND TO EVERY SUBSEQUENT ASSESSMENT YEAR THEREOF. AS PER THE REVE NUE, INITIAL ASSESSMENT YEAR IN THIS CASE WAS 2002-03 BEING THE YEAR OF SET-UP OF THE WINDMILL. THEREFORE, THE PAST LOSSES STARTING F ROM THE A.Y. 2002-03 HAVE TO BE SET-OFF AGAINST THE PROFITS OF THIS YEAR IN ORDER TO ARRIVE AT THE DEDUCTION COMPUTABLE U/S 80-IA(1) OF THE ACT FOR TH E YEAR UNDER CONSIDERATION. ON THE OTHER HAND, THE PLEA OF THE A SSESSEE IS THAT THE INITIAL ASSESSMENT YEAR IN THIS CASE IS TO BE TRE ATED AS 2007-08 I.E. THE YEAR IN WHICH ASSESSEE EXERCISED THE OPTION CONTAIN ED IN SECTION 80-IA(2) OF THE ACT OF IDENTIFYING TEN CONSECUTIVE ASSESSMEN T YEARS OUT OF FIFTEEN YEARS FOR WHICH THE DEDUCTION IS TO BE AVAILED. IT IS CONTENDED THAT THE EXPRESSION INITIAL ASSESSMENT YEAR REFERRED TO IN SECTION 80-IA(5) IS TO BE UNDERSTOOD WITH RESPECT TO A.Y. 2007-08 IN THIS CAS E AND THEREFORE, THE 6 ITA NO. 1738/PN/2014, A.Y. 2010-11 LOSSES FOR ASSESSMENT YEAR PRIOR TO 2007-08 CANNOT BE CONSIDERED, WHICH OTHERWISE ALSO WERE LYING ABSORBED IN THE RESPECTIV E YEARS. IT IS ONLY THE LOSSES WHICH HAVE BEEN INCURRED IN THE YEARS STARTI NG FROM A.Y. 2007-08 ONWARDS WHICH ARE TO BE SET OFF AGAINST THE PROFITS OF THE ELIGIBLE BUSINESS IN ORDER TO QUANTIFY THE DEDUCTION U/S 80- IA OF THE ACT. THE CIT(A) HAS UPHELD THE AFORESAID STAND, AGAINST WHIC H REVENUE IS IN APPEAL BEFORE US. 21. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF SERUM INTERNATIONAL LTD. VS. ADDL. CIT RANGE 6, PUNE IN ITA NOS. 290 TO 292/ PN/2010 FOR A.Y. 2004-05 TO 2006- 07 VIDE ORDER DATED 28.09.2011 HAS CONSIDERED AN IDENTICAL CONTROVERSY AND AFTER FOLLOWING THE DECIS ION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF VELAYUDHASWAMY SPI NNING MILLS (P) LTD. VS. ACIT, (2010) 38 DTR (MAD) 57 DECIDED THE I SSUE IN FAVOUR OF THE ASSESSEE. FOLLOWING DISCUSSION IN THE ORDER OF THE TRIBUNAL IS RELEVANT IN THIS REGARD:- 11. THE ISSUE RAISED BEFORE THE BENCH IS AS TO WHE THER IN VIEW OF THE PROVISIONS OF SEC. 80IA(5) OF THE I.T. ACT 1961, TH E PROFIT FROM THE ELIGIBLE BUSINESS FOR THE PURPOSE OF DEDUCTION U/S. 80IA OF THE ACT HAS TO BE COMPUTED AFTER DEDUCTION OF THE NOTIONAL BROUGHT FO RWARD LOSSES AND DEPRECIATION OF ELIGIBLE BUSINESS EVEN THOUGH THEY HAVE BEEN ALLOWED SET OFF AGAINST OTHER NON-ELIGIBLE BUSINESS INCOME IN E ARLIER YEARS. THE SUBMISSION OF THE LD A.R. REMAINED THAT ON THE WIND MILLS SET UP IN THE PREVIOUS YEAR RELEVANT TO A.Y. 2002-03, THE ASSESSE E HAD CLAIMED DEPRECIATION AT THE RATE OF 100% THEREON I.E. RS. 3 .54 CRORES, WHICH WAS FULLY SET OFF AGAINST THE ANOTHER INCOME IN THE SAI D A.Y. 2002-03 ITSELF. IN THE A.Y. 2004-05, THE ASSESSEE HAD POSITIVE INCOME FROM THE SAID GENERATION ACTIVITY AND THERE WERE NO BROUGHT FORWA RD LOSSES/ UNABSORBED DEPRECIATION OF THE PRECEDING YEAR, WHIC H HAD REMAINED TO BE SET OFF IN THE A.Y. 2004-05. THE A.O., NOTIONALL Y BROUGHT FORWARD UNABSORBED DEPRECIATION FOR THE A.Y. 2003-04 TO THE IMPUGNED A.Y. 2004-05 AND DENIED THE CLAIM FOR DEDUCTION MADE BY THE ASSESSEE U/S. 80IA IN RESPECT OF THE PROFIT EARNED BY IT IN A.Y. 2004-05. THE LD. A.R. SUBMITTED THAT SUBSECTION (2) OF SECTION 80IA PROVI DES AN OPTION TO THE ASSESSEE TO CHOOSE 10 CONSECUTIVE A.YS. OUT OF 15 Y EARS FOR CLAIMING THE DEDUCTION. HE SUBMITTED THAT THE TERM INITIAL YEAR IN SUB-SECTION (5) OF 80IA IS NOT DEFINED AND IS USED IN CONTRADICTION TO THE WORDS BEGINNING FROM THE YEAR USED IN SUB-SECTION (2). HE SUBMITTE D THAT THE ASSESSEE CHOSE A.Y. 2004-05 AS INITIAL A.Y BEING THE FIRST Y EAR IN WHICH IT CLAIMED DEDUCTION U/S. 80IA AND THEREFORE, LOSSES/DEPRECIAT ION BEGINNING FROM A.Y. 2004-05 ALONE COULD ONLY BE BROUGHT FORWARD AN D SET OFF. 7 ITA NO. 1738/PN/2014, A.Y. 2010-11 DEPRECIATION OF THE PRECEDING A.Y. 2002-03 COULD NO T HAVE BEEN NOTIONALLY BROUGHT FORWARD AND SET OFF AGAINST PROF IT FOR THE A.Y. 2004- 05. THE LD. A.R. PLACED HEAVY RELIANCE ON THE DECIS ION OF HONBLE MADRAS HIGH COURT IN THE CASE OF VELAYUDHASWAMY SPINNING M ILLS (P) LTD VS. ACIT (SUPRA). HE SUBMITTED THAT THE DECISION OF HON BLE MADRAS HIGH COURT WILL PREVAIL UPON THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. GOLDMINE SHARES AND FINANCE (P) LTD. (SUPRA) FOLLOWED BY THE PUNE BENCH OF THE TRIBUNAL IN ITS R ECENT DECISION IN THE CASE OF PRIMA PAPER ENGG (P) LTD. VS. ITO (SUPRA) A ND THERE THE ASSESSEE DID NOT DISPUTE THE FACT THAT THE AUTHORITIES BELOW HAVE DECIDED THE ISSUE FOLLOWING THE DECISION OF SPECIAL BENCH OF THE TRIB UNAL IN THE CASE OF ACIT VS. GOLDMINE SHARES. THE LD. A.R. POINTED OUT THAT DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF VELAYUDHAS WAMY SPINNING MILLS (P) LTD VS. ACIT (SUPRA) WAS NOT CITED BEFORE THE PUNE BENCH IN THE CASE OF PRIMA PAPER ENGG (P) LTD. VS. ITO (SUPRA). THE LD. A.R. HAS ALSO CITED THE DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. AURANGABAD HOLIDAY RESORTS (P) LTD., (SUPRA) HOLDIN G THAT EVEN A DECISION OF NON-JURISDICTIONAL HIGH COURT IS A BIND ING PRECEDENT FOR THE TRIBUNAL UNTIL A CONTRARY DECISION IS GIVEN BY ANY OTHER COMPETENT HIGH COURT. SIMILAR VIEW HAS BEEN EXPRESSED BY THE HONB LE BOMBAY HIGH COURT IN THE CASE OF COMMISSIONER OF CENTRAL EXCISE VS. M/S. VALSON DYEING, BLEACHING AND PRINTING WORKS (SUPRA). 12. THE CONTENTION OF THE LD. D.R. ON THE OTHER HAN D REMAINED THAT DEDUCTION U/S. 801 AND 801A COVERED INTER ALIA, IND USTRIAL UNDERTAKINGS. THE POWER GENERATION UNITS FOUND A SPECIFIC MENTION FOR THE FIRST TIME W.E.F. 1.4.1993. IN ALL THE YEARS FROM 1.4.1981 TO 31 TO 31 ST MARCH 2000 IN BOTH U/S. 80I AND 80IA, THE TERM INITIAL A.Y WAS DEFINED AND MEANT THE FIRST A.Y. RELEVANT TO THE PREVIOUS YEAR IN WHI CH THE ELIGIBLE UNIT COMMENCES PRODUCTION/POWER GENERATION. ONLY FROM 1. 4.2000, WHEN SECTIONS 80IA WAS REPLACED WITH SECTION 80IA AND 80 IB, THE DEFINITION OF INITIAL A.Y. DID NOT FIND A MENTION. BUT NOWHERE, IN THE PARLIAMENT SPEECH OF MEMORANDUM EXPLAINING THE FINANCE BILL HA S ANY MENTION THAT THERE WAS ANY INTENTION TO IGNORE LOSSES AND DEPREC IATION FROM FIRST YEAR OF POWER GENERATION/PRODUCTION AND THAT SUCH LOSSES TILL FIRST YEAR OF CLAIM OF DEDUCTION IS TO BE IGNORED. THE VIEW CANVA SSED BY THE ASSESSEE DOES NOT FIND ANY SUPPORT. HE SUBMITTED THAT THERE IS NO DISCERNIBLE CHANGE IN LAW OR INTENTION OF PARLIAMENT W.E.F. 1.4 .2000. THE LD. D.R. SUBMITTED THAT THE DECISION OF SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF GOLDMINE SHARES AND FINANCE (P) LTD. (SUPRA) IS FULLY APPLICABLE IN THE PRESENT CASE. HE POINTED OUT THAT IN ITS RECENT DEC ISION DT. 21ST JANUARY 2011, THE HYDERABAD BENCH OF THE TRIBUNAL IN THE CA SE OF HYDERABAD CHEMICAL SUPPLIES LTD. VS. ACIT (SUPRA) HAS ALSO DE CIDED AN IDENTICAL DECISION IN FAVOUR OF THE REVENUE FOLLOWING THE DEC ISION OF SPECIAL BENCH 8 ITA NO. 1738/PN/2014, A.Y. 2010-11 OF THE TRIBUNAL IN THE CASE OF ACIT VS. GOLDMAN SHA RES & FINANCE (P) LTD. (SUPRA). HE SUBMITTED THAT THE HYDERABAD BENCH OF THE TRIBUNAL WHILE DECIDING THE ISSUE HAS ALSO DISCUSSED THE DEC ISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF VELAYUDHASWAMY SPI NNING MILLS (P) LTD VS. ACIT (SUPRA). THE LD. D.R. SUBMITTED THAT E VEN IN THE CASE OF LIBERTY INDIA VS. CIT (SUPRA), THE HONBLE SUPREME COURT HAS BEEN PLEASED TO EXPLAIN THE INTENTION OF PARLIAMENT AND SCOPE OF DEDUCTION U/S. 80IA AND 80IB OF THE ACT. THE HONBLE SUPREME COURT HAS BEEN PLEASED TO HOLD THAT SUCH PROFITS ARE TO BE COMPUTE D AS IF SUCH ELIGIBLE BUSINESS IS THE ONLY SOURCE OF INCOME OF THE ASSESS EE. THE DEVICES ADOPTED TO REDUCE OR INFLATE THE PROFIT OF ELIGIBLE BUSINESS HAS GOT TO BE REJECTED IN VIEW OF THE OVERRIDING PROVISIONS OF SU BSECTION (5) OF SECTION 80IA OF THE ACT. 13. HAVING BEEN CONSIDERED THE ABOVE SUBMISSIONS, W E FIND THAT THE ISSUE RAISED IN GROUND NO. 1 AS TO WHAT WOULD BE TH E INITIAL A.Y FOR THE PURPOSES OF SECTION 80IA(5) OF THE ACT HAS BEEN DEC IDED IN FAVOUR OF THE ASSESSEE BY THE PUNE BENCH OF THE TRIBUNAL IN THE C ASE OF POONAWALLA STUD AND AGRO FARM PVT. LTD. VS. ACIT (SUPRA). IN T HAT CASE AFTER DISCUSSING THE ISSUE IN DETAIL, THE TRIBUNAL HAS CO ME TO THE CONCLUSION THAT THE INITIAL A.Y FOR THE PURPOSE OF CLAIMING DEDUCTION U/S. 80IA WAS THE FIRST YEAR IN WHICH THE ASSESSEE CLAIMED THE DE DUCTION U/S. 80IA (1) AFTER EXERCISING HIS OPTION AS PER THE PROVISIONS O F 80IA (2) OF THE ACT. IT WAS HELD THAT THE LD CIT(A) HAS ERRED IN HOLDING TH AT 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 WI ND MILL ACTIVITY. WE ALSO FIND THAT THE ISSUE RAISED IN GROUND NO. 2 REG ARDING THE ELIGIBILITY OF THE ASSESSEE TO CLAIM DEDUCTION U/S. 80IA UNDIMINIS HED BY UNABSORBED LOSSES AND DEPRECIATION ALSO SET OFF IN EARLIER YEA RS AGAINST THE OTHER INCOME, IS FULLY COVERED BY THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF VELAYUDHASWAMY SPINNING MILLS (P) LTD V S. ACIT (SUPRA) HOLDING THAT AS PER SUB-SECTION (5) OF SECTION 80IA , PROFITS ARE TO BE COMPUTED AS IF SUCH ELIGIBLE BUSINESS IS THE ONLY S OURCE OF INCOME OF THE ASSESSEE. WHEN THE ASSESSEE EXERCISES THE OPTION, O NLY THE LOSSES OF THE YEARS BEGINNING FROM THE INITIAL A.Y. ARE TO BE BRO UGHT FORWARD AND NOT THE LOSSES OF THE EARLIER YEARS WHICH HAVE BEEN ALR EADY SET OFF AGAINST THE INCOME OF THE ASSESSEE. THE HONBLE MADRAS HIGH COURT HAS BEEN FURTHER PLEASED TO HOLD THAT REVENUE CANNOT NOTIONA LLY BRING FORWARD ANY LOSS OF EARLIER YEARS WHICH HAD ALREADY BEEN SET OF F AGAINST THE OTHER INCOME OF ASSESSEE AND SET OFF AGAINST THE CORRECT INCOME OF THE ELIGIBLE BUSINESS. FICTION CREATED BY SUB-SECTION (5) OF SEC TION 80IA DOES NOT CONTEMPLATE SUCH NOTIONAL SET OFF, HELD THE HONBLE HIGH COURT. THE HONBLE MADRAS HIGH COURT IN THAT DECISION HAS ALSO REFERRED THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF LI BERTY INDIA VS. CIT 9 ITA NO. 1738/PN/2014, A.Y. 2010-11 (SUPRA) AND THE DECISION OF SPECIAL BENCH OF THE TR IBUNAL IN THE CASE OF GOLDMAN SHARES & FINANCE (P) LTD. (SUPRA). THERE IS NO DISPUTE THAT EVEN A DECISION OF NONJURISDICTIONAL HIGH COURT IS A BIN DING PRECEDENT FOR THE TRIBUNAL UNTIL A CONTRARY DECISION IS GIVEN BY ANY OTHER COMPETENT HIGH COURT. IN THIS REGARD, WE FIND STRENGTH FROM THE RE CENT DECISION OF HONBLE JURISDICTIONAL BOMBAY HIGH COURT IN THE CASE OF COM MISSIONER OF CENTRAL EXCISE VS. VALSON DYEING, BLEACHING AND PRINTING WO RKS (SUPRA) WHEREIN THE HONBLE BOMBAY HIGH COURT HAS BEEN PLEASED TO H OLD IN A CASE OF EXCISE MATTER THAT TRIBUNAL IS BOUND BY THE DECISIO N OF HIGH COURT , EVEN OF A DIFFERENT STATE, SO LONG AS THERE IS NO CONTRA RY DECISION OF ANY OTHER HIGH COURT. THE HONBLE BOMBAY HIGH COURT HAS BEEN PLEASED TO HOLD FURTHER THAT THE TRIBUNAL HAD NO OPTION BUT TO FOLL OW THE JUDGMENT OF THE MADRAS HIGH COURT. AN AUTHORITY LIKE AN INCOME TAX 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 THER E IS NO CONTRARY DECISION OF ANY OTHER HIGH COURT ON THAT QUESTION. WE THUS R ESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY THE HONBLE JURISDICTIONAL H IGH COURT IN THE CASE OF COMMISSIONER OF CENTRAL EXCISE VS. VAKSON DYEING, B LEACHING AND PRINTING WORKS (SUPRA) HOLD THAT THE TRIBUNAL IS BO UND BY THE DECISION OF THE HONBLE MADRAS HIGH COURT ON AN IDENTICAL ISSUE IN THE CASE OF VELAYUDHASWAMY SPINNING MILLS (P) LTD VS. ACIT (SUP RA). WE THUS RESPECTFULLY FOLLOWING THE DECISION TAKEN BY THE HO NBLE MADRAS HIGH COURT IN THAT CASE ON AN IDENTICAL ISSUE UNDER ALMO ST SIMILAR FACTS, HOLD THAT WHEN THE ASSESSEE EXERCISING THE OPTION, ONLY THE LOSSES OF THE YEAR BEGINNING FROM THE INITIAL A.Y. ARE TO BE BROUGHT F ORWARD AND NOT THE LOSSES OF EARLIER YEAR WHICH HAVE BEEN ALREADY SET OFF AGAINST THE OTHER INCOME OF THE ASSESSEE. THE REVENUE CANNOT NOTIONAL LY BRING FORWARD ANY LOSS OF EARLIER YEARS WHICH HAS ALREADY BEEN SET OF F 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 ORD ERS OF THE AUTHORITIES BELOW AND DIRECT THE A.O. TO ALLOW THE CLAIMED DEDU CTION U/S. 80IA WITHOUT BRINGING THE NOTIONALLY BROUGHT FORWARD ANY LOSS OR DEPRECIATION OF EARLIER YEARS WHICH HAS ALREADY BEEN SET OFF AGA INST OTHER INCOME OF THE ASSESSEE. THE DECISION OF PUNE BENCH OF THE TRI BUNAL IN THE CASE OF PRIMA PAPER ENGINEERING P.LTD. VS. ITO (SUPRA) CITE D BY THE LD. DR IS ALSO NOT HELPFUL TO THE REVENUE SINCE FIRSTLY THE D ECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF VELAYUDHASWAMY SPI NNING MILLS (P) LTD. VS. ACIT (SUPRA) ON THE ISSUE WAS NOT CITED BE FORE THE BENCH AND SECONDLY THE LD. AR FAIRLY AGREED THAT THE ISSUE RA ISED WAS COVERED AGAINST THE ASSESSEE BY THE DECISION OF SPECIAL BEN CH IN THE CASE OF ACIT VS. GOLDMINE SHARES & FINANCE (P) LTD. (SUPRA) FOLL OWED BY THE AUTHORITIES BELOW. THE LD. AR THEREIN THUS CONTENDE D THAT THOUGH THE ISSUE MAY BE DECIDED AGAINST THE ASSESSEE IN VIEW O F THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. GOLDMINE SH ARES & FINANCIAL (P) 10 ITA NO. 1738/PN/2014, A.Y. 2010-11 LTD., BUT IT SHOULD NOT BE CONSTRUED AS ACQUIESCENC E FROM THE SIDE OF THE ASSESSEE AS THE LEGAL POSITION ON THE SUBJECT IS YE T NOT SETTLED. THE GROUND NO. 2 IS THUS DECIDED IN FAVOUR OF THE ASSES SEE. 22. OSTENSIBLY, IN THE CASE OF SERUM INTERNATIONAL LTD. (SUPRA), THE TRIBUNAL HAS CONSIDERED AN IDENTICAL CONTROVERSY. O N BEHALF OF THE ASSESSEE, THE JUDGMENT OF HONBLE MADRAS HIGH COURT IN THE CASE OF VELAYDHASWAMY SPINNING MILLS (P) LTD. (SUPRA) WAS B EING CITED WHEREAS THE REVENUE HAD RELIED UPON THE DECISION OF SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF ASSTT. CIT VS. GOLDMINE SHA RES AND FINANCE (P) LTD., (2008) 116 TTJ (AHD) (SB) 705 TO THE CONTRARY . THE TRIBUNAL NOTICED THAT HAVING REGARD TO THE DECISION OF THE HONBLE M ADRAS HIGH COURT THE ISSUE WAS TO BE DECIDED ACCORDINGLY AND NOT ON THE BASIS OF DECISION OF SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF GOLDMI NE SHARES AND FINANCE (P) LTD. (SUPRA) WHICH WAS TO THE CONTRARY. IN THIS CONTEXT, THE TRIBUNAL CAME TO THE CONCLUSION THAT WHEN THE ASSES SEE EXERCISED OPTION IDENTIFYING TEN CONSECUTIVE YEARS AS CONTAINED IN S UB-SECTION (2) OF SECTION 80-IA OF THE ACT, ONLY THE LOSSES OF THE YE AR BEGINNING FROM SUCH INITIAL ASSESSMENT YEAR ARE TO BE BROUGHT FORWARD A ND SET-OFF WHILE APPLYING THE PROVISIONS OF SECTION 80-IA(5) OF THE ACT AND NOT THE LOSSES OF EARLIER YEARS WHICH OTHERWISE WERE SET-OFF AGAINST OTHER INCOME OF THE ASSESSEE. 23. AT THE TIME OF HEARING, THE LEARNED DR HAS NOT BROUGHT TO OUR NOTICE ANY DECISION OF A HIGH COURT CONTRARY TO THAT OF TH E HONBLE MADRAS HIGH COURT IN THE CASE OF VELAYDHASWAMY SPINNING MILLS ( P) LTD. (SUPRA) ON THE ISSUE IN QUESTION. THEREFORE, WE FIND THAT THE CONTROVERSY BEFORE US IS NO LONGER RES INTEGRA AND IS IN FACT COVERED IN FAV OUR OF THE ASSESSEE BY THE DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE C ASE OF SERUM INTERNATIONAL LD. (SUPRA) WHICH HAS BEEN DECIDED FO LLOWING THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF VEL AYDHASWAMY SPINNING MILLS (P) LTD. (SUPRA). 24. IN VIEW OF THE AFORESAID DISCUSSION, WE FIND TH AT THE CIT(A) MADE NO ERROR IN ALLOWING THE APPEAL OF ASSESSEE, WHICH WE HEREBY AFFIRM. 7. THE LD. DR HAS NOT BEEN ABLE TO CONTROVERT THE FINDING S OF CO- ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE. T HEREFORE, 11 ITA NO. 1738/PN/2014, A.Y. 2010-11 RESPECTFULLY FOLLOWING THE SAME WE UPHOLD THE ORDER OF COM MISSIONER OF INCOME TAX (APPEALS) AND DISMISS THE APPEAL OF THE REVENUE. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON WEDNESDAY, THE 08 TH DAY OF JUNE, 2016. SD/- SD/- ( . . / R.K. PANDA) ( ! ' / VIKAS AWASTHY) #' / ACCOUNTANT MEMBER $ % #' / JUDICIAL MEMBER / PUNE; &# / DATED : 08 TH JUNE, 2016 RK *+,%-.#/#)- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ' () / THE CIT(A)-I, PUNE 4. ' / THE CIT-I, PUNE 5. !*+ %%,- , ,- , . ./0 , / DR, ITAT, B BENCH, PUNE. 6. + 1 23 / GUARD FILE. // ! % // TRUE COPY// #4 / BY ORDER, %5 ,0 / PRIVATE SECRETARY, ,- , / ITAT, PUNE