M/s. Patankar Wind Farm Pvt. Ltd., Satara V. Deputy Commissioner of Income-tax,

ITA 2225/PUN/2013

• Counselvise Citation: 222524514 RSA 2013
• Duration Of Justice: 1 year(s) 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 18-02-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 24-12-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: HEMANTKUMAR C LEUVA
• Assessee Lawyers: PRAYAG JHA PRATEEK JHA
• Keywords: Business income; Depreciation; Period of limitation; Condonation of delay; Unabsorbed depreciation
• Section: 143(3); 80HHC; 80IB; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND MS SUSHMA CHOWLA, JUDICIAL MEMBER ITA NOS.2225 & 2226/PN/2013 ASSESSMENT YEARS: 2004-05 & 2005-06 M/S. PATANKAR WIND FARM PVT. LTD., SHIKKA MANSION, PATAN, DIST. SATARA 415206 . APPELLANT PAN: AABCP1365R VS. THE DY. COMMISSIONER OF INCOME TAX, SATARA CIRCLE, SATARA . RESPONDENT APPELLANT BY : S/SHRI PRAYAG JHA / PRATEEK JHA RESPONDENT BY : SHRI HEMANTKUMAR C. LEUVA DATE OF HEARING : 18-02-2015 DATE OF PRONOUNCEMENT : 10-04-2015 ORDER PER SUSHMA CHOWLA, JM: BOTH THE APPEALS FILED BY THE ASSESSEE ARE AGAINST SEPARATE ORDERS OF CIT(A)-II, PUNE, DATED 03.09.2007 RELATING TO ASSES SMENT YEARS 2004-05 AND 2005-06 AGAINST RESPECTIVE ORDERS PASSED UNDER SECT ION 143(3) OF THE INCOME TAX ACT, 1961. 2. BOTH THE APPEALS RELATING TO THE SAME ASSESSEES ON SIMILAR ISSUE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CO NSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. HOWEVER, REFERENCE IS BEING MADE T O THE FACTS AND ISSUES IN ITA NO.2225/PN/2013 TO ADJUDICATE THE ISSUES. 3. IN ITA NO.2225/PN/2013, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- ITA NOS.2225 AND 2226/PN/2013 M/S. PATANKAR WIND FARM PVT. LTD 2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW- 1.THE LD. CIT(A) WAS NOT JUSTIFIED IN REJECTING THE APPELLANT'S CONTENTION THAT THE SALES TAX BENEFIT WAS INEXTRICABLY LINKED TO THE INDUSTRIAL UNDERTAKING AND WAS INTEGRAL PART OF THE PROFIT DER IVED FROM POWER GENERATION BY THE SAID UNDERTAKING, ELIGIBLE FOR DE DUCTION U/S 80IA(I) 2.THE ID. CIT(A) WAS NOT JUSTIFIED IN REJECTING THE APPELLANT'S CONTENTION THAT THE SALES TAX BENEFIT GRANTED TO THE APPELLANT WAS PART OF A BENEFICIAL SCHEME OF THE STATE GOVERNMENT TO PROMOTE GENERATIO N OF WIND ENERGY AND, THEREFORE, WAS ELIGIBLE FOR DEDUCTION U/S 80IA (I). 3.THE LD. CIT(A) WAS NOT JUSTIFIED IN NOT APPRECIAT ING THAT BECAUSE OF THE AMENDMENT BROUGHT IN SUB-SECTION (2) OF SECTION 80I A BY THE FINANCE ACT, 1999 W.E.F 1/04/2000, THE APPELLANT HAD OPTION TO C LAIM DEDUCTION U/S 80IA FOR ANY TEN CONSECUTIVE ASSESSMENT YEARS OUT OF FIF TEEN YEARS BEGINNING FROM THE YEAR OF GENERATION OF ELECTRICITY. 4.THE LD. CIT(A) WAS NOT JUSTIFIED IN NOT APPRECIAT ING THAT SEC.80IA(1) DID NOT PROVIDE FOR THE MEANING OF THE TERM' INITIAL YE AR' AND THE APPELLANT HAD OPTED FOR 2003-04 AS THE INITIAL YEAR FOR CLAIMING DEDUCTION U/S 80IA(1). 5.THE LD. CIT(A) WAS NOT JUSTIFIED IN NOT APPRECIAT ING THAT THERE WAS NO NOTIONAL LOSS OF RS.1,60,32,591/- TO BE CARRIED FOR WARD TO ASSESSMENT YEAR 2005-06, AND SUCH LOSS WAS ALREADY ADJUSTED AG AINST THE APPELLANT'S INCOME IN THE EARLIER ASSESSMENT YEARS. 6. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY OF THE ABOVE GROUNDS OR TO ADD NEW GROUNDS DURING THE COURSE OF APPEAL P ROCEEDINGS. 4. BOTH THE CAPTIONED APPEALS WERE FILED AFTER A DE LAY OF 2193 DAYS. THE ASSESSEE HAS MOVED AN APPLICATION FOR CONDONATION O F DELAY IN FILING THE APPEALS LATE BEFORE THE TRIBUNAL. THE PLEA OF THE ASSESSEE BEFORE US WAS THAT THE ORDER OF CIT(A) WAS FORWARDED TO THE CONSULTANT / LEGAL A DVISOR OF THE ASSESSEE COMPANY FOR FURTHER ACTION. HOWEVER, DUE TO INADVE RTENCE OF THE STAFF IN THE OFFICE OF THE LEGAL CONSULTANT, THE SAID ORDER WAS MIS-PLACED AND THE APPEAL WAS NOT FILED WITHIN PERIOD OF LIMITATION. HOWEVER, AF TER LAPSE OF CONSIDERABLE TIME, THE SAID CONSULTANT INFORMED THE ASSESSEE THAT THE COPY OF THE ORIGINAL DOCUMENT WAS FOUND IN SOME OTHER CLIENTS FILE. THEREAFTER, THE ASSESSEE ENGAGED ANOTHER LEGAL ADVISOR AND WHO IN TURN FILED THE APPEAL BEFO RE THE TRIBUNAL AFTER A DELAY OF 2193 DAYS. 5. THE ASSESSEE IN THIS REGARD, HAS FURNISHED AN AF FIDAVIT WHICH READS AS UNDER:- ITA NOS.2225 AND 2226/PN/2013 M/S. PATANKAR WIND FARM PVT. LTD 3 AFFIDAVIT I, VIKRAMSINH PATANKAR, DIRECTOR OF M/S PATANKAR WI ND FARMS PVT. LTD., HAVING OFFICE AT SHIKKA MANSION, AT & P O PA TAN, DIST - SATARA PIN CODE-415206, MAHARASHTRA STATE, HEREBY SOLEMNLY AND STALE AS UNDER- THAT COPY OF THE APPELLATE ORDER DATED 03/09/2007 I N THE CASE OF THE COMPANY FOR ASSESSMENT YEAR 2005-06 PASSED U/S 250 OF THE IT ACT BY THE CIT(APPEALS)-II, PUNE, WAS RECEIVED II THE OFFI CE OF THE COMPANY ON 24-10-2007. THAT THE COPY OF THE ORDER WAS FORWARDED TO THE COM PANY'S CONSULTANT/LEGAL ADVISOR FOR FURTHER ACTION. THAT, THE SAID CONSULTANT / LEGAL ADVISOR HAS BEEN LOOKING AFTER THE COMPANYS ALL TAX RELATED MATTERS IN THE PAST. THAT, DUE TO INADVERTENCE OF THE STAFF OF THE CONSU LTANT/LEGAL ADVISOR, THE SAID ORDER WAS MISPLACED. THAT, BECAUSE OF THE INADVERTENCE OR NEGLIGENCE OF THE STAFF OF THE SAID CONSULTANT / LEGAL ADVISOR APPEAL AGAINST THE APPEL LATE ORDER COULD NOT BE FILED WITHIN THE PERIOD OF LIMITATION. THAT, AFTER LAPSE OF CONSIDERABLE TIME, THE SAID CO NSULTANT / LEGAL ADVISOR INFORMED THE APPELLANT THAT THE COPY OF THE ORIGINA L DOCUMENT WHICH WAS MISPLACED, HAS NOW BEEN FOUND IN SOME OTHER CLIENT S FILE. THAT, THE ASSESSEE COMPANY HAS NOW ENGAGED ANOTHER LEGAL ADVISOR WHO HAS GIVEN NECESSARY INSTRUCTION TO DRAFT AND FILE A PPEAL AGAINST THE APPELLATE ORDER. THAT, ON ACCOUNT OF THE SAID MISTAKE OR INADVERTENC E OF THE STAFF OF THE CONSULTANT / LEGAL ADVISOR APPEAL AGAINST THE SAID ASSESSMENT ORDER COULD NOT BE FILED WITHIN THE PERIOD OF LIMITATION. THAT, THERE WAS NO DELIBERATE DELAY OR INACTION ON THE PART OF THE APPELLANT COMPANY IN FILING THE SAID APPEAL. SOLEMNLY AFFIRMED ON THIS DAY OF 29 TH NOVEMBER OF 2013, AT PATAN DEPONENT BEFORE ME, NOTARY PUBLIC 6. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE AS SESSEE PLACED RELIANCE ON THE RATIOS LAID DOWN ON THE FOLLOWING CASES:- I) COLLECTOR LAND ACQUISITION, ANANTNAG & ANR. VS. MST. KATIJI & ORS, 1987 SCC (2) 107 JT 1987 (1) 537 II) CIT VS. WEST BENGAL INFRASTRUCTURE DEVELOPMENT FINANCE CORPORATION LTD. (2011) 196 TAXMAN 321 (SC) ITA NOS.2225 AND 2226/PN/2013 M/S. PATANKAR WIND FARM PVT. LTD 4 III) CIT VS. SMT. B. SUMANGALADEVI (2012) 26 TAXMAN N.COM 26 (KAR.) (IV) M/S. PRIMA PAPER & ENGINEERING PVT. LTD. VS. C IT IN ITA (L) NO.403 OF 2013, VIDE ORDER DATED 09.07.2013 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE OTHER HAND POINTED OUT THAT THE APPEAL OF ASSESSEE WAS DI SMISSED BY THE CIT(A) ON 03.09.2007 AND THE APPEAL AGAINST THE SAID DISMISSA L WAS NOT FILED BY THE ASSESSEE IN TIME. THE LEARNED DEPARTMENTAL REPRESE NTATIVE FOR THE REVENUE FURTHER STATED THAT THERE WAS NO MERIT IN THE SUBMI SSIONS MADE BY THE ASSESSEE AND RELIANCE WAS PLACED ON THE FOLLOWING DECISIONS: - I) JYOTI CHEMICALS VS. DCIT (2009) 27 SOT 433 (MUM) II) ACIT VS. PETROLEUM INDIA INTERNATIONAL (2012) 2 7 TAXMANN.COM 325 (MUM) III) SRF LIMITED VS. ACIT, IN ITA NO.3555/DEL/2009, ORDER DATED 13.11.2014 IV) SOMERSET PLACE CO-OPERATIVE HOUSING SOCIETY LTD . VS. ITO IN ITA NO.874 OF 2014 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE FIRST ASPECT OF THE APPEAL BEFORE US IS IN RELATION TO TH E CONDONATION OF DELAY IN FILING THE APPEAL LATE BY 2193 DAYS. THE ASSESSEE HAS FIL ED AN AFFIDAVIT ALONG WITH AN APPLICATION FOR CONDONATION OF DELAY IN FILING THE APPEAL LATE BEFORE THE TRIBUNAL. THE PERUSAL OF REASONS IN THE SAID AFFIDAVIT REFLEC TS THE DELAY IN FURNISHING THE APPEAL WERE FOR REASONS WHICH WERE BEYOND THE CONTR OL OF THE ASSESSEE. THE HONBLE SUPREME COURT IN COLLECTOR, LAND ACQUISITIO N VRS. MST. KATIJI AND OTHERS (SUPRA) HELD AS UNDER:- 'WHEN TECHNICAL CONSIDERATION AND SUBSTANTIAL JUSTI CE ARE PITTED AGAINST EACH OTHER, THE COURTS ARE EXPECTED TO FURTHER THE CAUSE OF SUBSTANTIAL JUSTICE. THIS IS FOR THE REASON THAT AN OPPOSING PA RTY IN A DISPUTE CANNOT HAVE A VESTED RIGHT IN INJUSTICE BEING DONE BECAUSE OF A NON-DELIBERATE DELAY. THEREFORE, IT FOLLOWS THAT WHILE CONSIDERING MATTERS RELATING TO THE CONDONATION OF DELAYS A JUDICIOUS AND LIBERAL APPRO ACH IS TO BE ADOPTED. IF SUFFICIENT CAUSE IS FOUND TO EXIST WHICH IS BONA FI DE AND NOT DUE TO NEGLIGENCE OF THE APPLICANT, THE DELAY NEEDS TO BE CONDONED IN SUCH WHICH ITA NOS.2225 AND 2226/PN/2013 M/S. PATANKAR WIND FARM PVT. LTD 5 SUBSERVES THE END OF JUSTICE - THAT BEING THE LIFE PURPOSE OF THE EXISTENCE OF THE INSTITUTION OF COURTS.' 9. WE FIND THAT THE HONBLE SUPREME COURT IN IMPROV EMENT TRUST, LUDHIANA VS. UJAGAR SINGH & ORS. IN CIVIL APPEAL NO.2395 OF 2008, ORDER DATED 09.06.2010 HELD AS UNDER:- 2. AFTER ALL, JUSTICE CAN BE DONE ONLY WHEN THE MA TTER IS FOUGHT ON MERITS AND IN ACCORDANCE WITH LAW RATHER THAN TO DI SPOSE IT OF ON SUCH TECHNICALITIES AND THAT TOO AT THE THRESHOLD. BOTH SIDES HAD TRIED TO ARGUE THE MATTER ON MERITS BUT WE REFRAIN OURSELVES FROM TOUCHING THE MERITS OF THE MATTER AS THAT CAN BEST BE DONE BY THE EXECUTIN G COURT WHICH HAD DENIED AN OPPORTUNITY TO THE APPELLANT TO LEAD EVID ENCE AND TO PROVE THE ISSUES SO FORMULATED. 3. IN OUR OPINION, ENDS OF JUSTICE WOULD BE MET BY SETTING ASIDE THE IMPUGNED ORDERS AND MATTER IS REMITTED TO THE EXECU TING COURT TO CONSIDER AND DISPOSE OF APPELLANT'S OBJECTIONS FILED UNDER O RDER 21 RULE 90 OF CPC ON MERITS AND IN ACCORDANCE WITH LAW, AT AN EARLY D ATE. IT IS PERTINENT TO POINT OUT THAT UNLESS MALAFIDES ARE WRIT LARGE ON T HE CONDUCT OF THE PARTY, GENERALLY AS A NORMAL RULE, DELAY SHOULD BE CONDONE D. IN THE LEGAL ARENA, AN ATTEMPT SHOULD ALWAYS BE MADE TO ALLOW THE MATTE R TO BE CONTESTED ON MERITS RATHER THAN TO THROW IT ON SUCH TECHNICALITI ES. APART FROM THE ABOVE, APPELLANT WOULD NOT HAVE GAINED IN ANY MANNER WHATS OEVER, BY NOT FILING THE APPEAL WITHIN THE PERIOD OF LIMITATION. IT IS A LSO WORTH NOTICING THAT DELAY WAS ALSO NOT THAT HUGE, WHICH COULD NOT HAVE BEEN C ONDONED, WITHOUT PUTTING THE RESPONDENTS TO HARM OR PREJUDICE. IT IS THE DUTY OF THE COURT TO SEE TO IT THAT JUSTICE SHOULD BE DONE BETWEEN THE P ARTIES. 10. WE FURTHER FIND THAT THE HONBLE BOMBAY HIGH CO URT IN M/S. PRIMA PAPER & ENGINEERING PVT. LTD. VS. CIT (SUPRA) ON THE ISSUE OF CONDONATION OF DELAY OF 515 DAYS IN FILING THE APPEAL LATE OBSERVED AS UNDER:- 6. LEARNED COUNSEL SUBMITS THAT THERE WAS NO DELIB ERATE DELAY OR INACTION ON THE PART OF THE APPELLANT. LEARNED COUNSEL HAS P LACED RELIANCE UPON THE DECISIONS OF THE SUPREME COURT IN COLLECTOR LAND AC QUISITION V/S. MST. KATIJI AND ORS, (1987) 167 ITR 471 (SC) = 1987 SCR (2) 387, N.BALAKRISHNAN VS. KRISHNAMURTHY, (1998) 7 SCC 123 AND ALSO STATE OF WEST BENGAL V/S. ADMINISTRATOR HOWRAH MUNICIPALITY & ORS. AIR 1972 SC 749, IN SUPPORT OF THE CONTENTION THAT THE EXPRESSI ON ''SUFFICIENT CAUSE' SHOULD BE INTERPRETED LIBERALLY. IT IS FURTHER SUB MITTED THAT SINCE THE APPELLANT'S APPEAL RAISING THE SAME QUESTION FOR TH E EARLIER ASSESSMENT YEAR HAS ALREADY BEEN ADMITTED, THIS COURT MAY EXER CISE ITS DISCRETION FOR, CONDONING THE DELAY. 7. ON, THE OTHER HAND, LEARNED COUNSEL FOR RESPONDE NT-REVENUE HAS OPPOSED THE NOTICE OF MOTION. IT IS SUBMITTED THAT THERE IS GROSS DELAY AND NEGLIGENCE ON THE PART OF THE APPELLANT IN TAKING N ECESSARY STEPS WITHIN THE PERIOD OF LIMITATION OR WITHIN REASONABLE TIME. 8. IN STATE OF WEST BENGAL (SUPRA), THE SUPREME COU RT HAS HELD THAT IT IS NOT POSSIBLE TO LAY DOWN PRECISELY AS TO WHAT FA CTS CONSTITUTE 'SUFFICIENT ITA NOS.2225 AND 2226/PN/2013 M/S. PATANKAR WIND FARM PVT. LTD 6 CAUSE UNDER SECTION 5 OF THE LIMITATION ACT. BUT I T MAY BE SAFELY STATED THAT DELAY IN FILING AN APPEAL SHOULD NOT HAVE BEEN FOR REASONS WHICH INDICATE THE PARTY'S NEGLIGENCE IN NOT TAKING NECES SARY STEPS, WHICH HE COULD HAVE OR SHOULD HAVE TAKEN. HERE AGAIN, WHAT W ILL BE SUCH NECESSARY STEPS WILL DEPEND UPON THE CIRCUMSTANCES OF THE CAS E. ANY OBSERVATION OF AN ILLUSTRATIVE CIRCUMSTANCE OR FACT, WILL ONLY TEN D TO BE A CURB ON THE FREE EXERCISE OF THE JUDICIAL MIND BY THE COURT IN DETER MINING WHETHER THE FACTS AND CIRCUMSTANCES OF A PARTICULAR CASE AMOUNT TO S UFFICIENT CAUSE OR NOT. IT IS NEEDLESS TO EMPHASIZE THAT COURTS HAVE TO USE THEIR JUDICIAL DISCRETION IN THE MATTER SOUNDLY IN THE INTEREST OF JUSTICE. T HE WORDS 'SUFFICIENT CAUSE SHOULD RECEIVE A LIBERAL CONSTRUCTION SO AS TO ADVA NCE SUBSTANTIAL JUSTICE WHEN NO NEGLIGENCE OR INACTION WERE IMPUTABLE TO THE APPELLANT. 9. HAVING REGARD TO THE FOLLOWING FACTS:- (I) APPELLANT'S APPEAL RAISING THE SAME QUESTION FOR TH E EARLIER ASSESSMENT YEAR HAS BEEN ADMITTED. (II) THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL, WHICH HAS BEEN FOLLOWED BY THE TRIBUNAL IN THE IMPUGNED ORDER, HAS NOT BEEN APPROVED BY THE MADRAS HIGH COURT IN VELAYUDHASWAMY SPINNING MILLS PVT. LTD. VS. ASST.CLT, (2010) 231 CTR (MAD) 368 AND (III) THE DELAY IN FILING THE APPEAL HAS BEEN CAUSED ON ACCOUNT OF WHAT APPEARS TO BE NEGLIGENCE ON THE PAR T OF THE STAFF OF THE APPELLANT'S CONSULTANT, WE ARE OF THE VIEW THAT INTERESTS OF JUSTICE WOULD BE SERVED IF DELAY IN FILING THE APPEAL IS CONDONED, SUBJECT TO THE CONDITION TH AT THE APPELLANT SHALL PAY COSTS QUANTIFIED AT RS.10,000/- TO THE RESPONDE NT-, WHICH SHALL BE PAID WITHIN ONE MONTH FROM TODAY. 11. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE OTHER HAND HAD PLACED RELIANCE ON THE VARIOUS DECISIONS O F DIFFERENT TRIBUNALS WHICH CANNOT BE APPLIED IN VIEW OF THE RATIO LAID DOWN BY THE JURISDICTIONAL HIGH COURT IN M/S. PRIMA PAPER & ENGINEERING PVT. LTD. VS. CIT (S UPRA) AND ALSO THE RATIO PROPOUNDED BY THE HONBLE SUPREME COURT ON THE ISSU E. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ALSO PL ACED RELIANCE ON THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN SOMER SET PLACE CO-OPERATIVE HOUSING SOCIETY LTD. VS. ITO (SUPRA), WHEREIN THE H ONBLE BOMBAY HIGH COURT HAD NOT CONDONED THE DELAY IN FILING THE APPEAL LAT E AS IN THE REASONS, THE ASSESSEE HAD CLAIMED THAT IT HAD FIRST TAKEN A DECI SION NOT TO MOVE FURTHER PROCEEDINGS AGAINST THE ORDER OF TRIBUNAL SINCE THE RE WERE THREE AUTHORITIES ITA NOS.2225 AND 2226/PN/2013 M/S. PATANKAR WIND FARM PVT. LTD 7 AGAINST HIM AND LATER ON A DECISION IN THE CASE OF OTHER PERSONS, IT MOVED AN APPEAL BEFORE THE HONBLE HIGH COURT AND IT WAS HEL D THAT THE CASE OF THE ASSESSEE DID NOT FALL WITHIN THE PARAMETERS OF SUFF ICIENT CAUSE. HOWEVER, AS REFERRED TO BY US IN THE PARAS HEREINABOVE, THE ASS ESSEE IN THE PRESENT CASE COULD NOT FILE THE APPEAL BEFORE THE TRIBUNAL IN TI ME BECAUSE OF THE NEGLIGENCE ON THE PART OF STAFF OF THE LEGAL CONSULTANT OF THE AS SESSEE. THE HONBLE BOMBAY HIGH COURT IN SIMILAR CIRCUMSTANCES IN M/S. PRIMA P APER & ENGINEERING PVT. LTD. VS. CIT (SUPRA) HAD CONDONED THE DELAY OF 515 DAYS. SIMILARLY, IN THE CASE BEFORE US, THERE IS NO MATERIAL ON RECORD TO DOUBT THE BONAFIDES OF THE ASSESSEE AND THERE IS NO REASON TO DOUBT THE BONAFIDES OF RE ASON FOR DELAY. IN THE TOTALITY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES, THE DELA Y IN FILING THE PRESENT APPEAL BELATEDLY DESERVED TO BE CONDONED. ACCORDINGLY, WE CONDONE THE DELAY IN FILING THE APPEAL BEFORE THE TRIBUNAL AND PROCEED TO DECID E THE APPEAL ON MERITS AFTER HEARING BOTH THE PARTIES. 12. THE ISSUE RAISED IN BOTH THE APPEALS IS IN RELA TION TO THE CLAIM OF DEDUCTION UNDER SECTION 80IA OF THE ACT. 13. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE WAS ENGAGED IN THE BUSINESS OF WIND POWER GENERATION AND WAS ALSO DEAL ING IN LAND PURCHASES AND SALE AND LAND DEVELOPMENT. THE CASE OF THE ASSESSE E WAS TAKEN FOR SCRUTINY AND THE ASSESSING OFFICER NOTED FROM ANNEXURE 1 T O THE STATEMENT SHOWING COMPUTATION OF TAXABLE INCOME THAT THE ASSESSEE HAD CONSIDERED SUM OF RS.43,48,161/- UNDER THE HEAD SALE OF SALES TAX BEN EFIT AS POWER GENERATION RECEIPTS, ON WHICH DEDUCTION UNDER SECTION 80IA OF THE ACT WAS CLAIMED. THE ASSESSING OFFICER SHOW CAUSED THE ASSESSEE AS TO WH Y DEDUCTION BE ALLOWED UNDER SECTION 80IA OF THE ACT WHEN THE RECEIPTS OF SALE OF SALES TAX BENEFIT WERE NOT DERIVED FROM THE BUSINESS OF POWER GENERATION A ND THERE WAS NO NEXUS OF SUCH RECEIPTS WITH THAT OF WINDMILL POWER GENERATIN G. IN REPLY, THE ASSESSEE EXPLAINED THAT IT WAS ENGAGED IN THE BUSINESS OF MA NUFACTURE AND SALE OF ITA NOS.2225 AND 2226/PN/2013 M/S. PATANKAR WIND FARM PVT. LTD 8 ALTERNATE SOURCE OF ENERGY I.E. ENERGY GENERATED FR OM WIND FARM . FURTHER, THE CONTENTION OF THE ASSESSEE WAS THAT WITH A VIEW TO ENCOURAGE INSTALLATION OF WIND ENERGY GENERATOR UNITS, THE STATE GOVERNMENT HAD PU BLISHED A POLICY ON 12.03.1998, ACCORDING TO WHICH, SALES TAX BENEFIT W AS AVAILABLE EQUIVALENT TO THE QUALIFYING INVESTMENT ON WIND ENERGY GENERATION PRO JECTS. THE SAID BENEFIT WAS ALLOWED SUBJECT TO CERTAIN CONDITIONS, ONE SUCH CON DITION WAS THAT THE WIND ENERGY GENERATED FROM THE WIND POWER PLANTS HAD TO BE SOLD TO MAHARASHTRA STATE ELECTRICITY BOARD AT A FIXED RATE OF 225 PAIS A PER UNIT. ANOTHER CONDITION WAS THAT THE PLANT HAD TO SUCCESSFULLY OPERATE EVER Y YEAR WITH A MINIMUM OF 12% PLANT LOAD FACTOR. IN CASE, THE SAID 12% LOAD FACT OR IS NOT OBTAINED, THE SALES TAX BENEFIT WOULD NOT BE AVAILABLE UNDER THE SCHEME. T HE SALES TAX BENEFIT, WHICH WAS EQUIVALENT TO THE AMOUNT OF INVESTMENT IN PLANT & MACHINERY, NEW BUILDING, ETC. WAS TO BE DISBURSED IN SIX EQUAL INSTALLMENTS OVER A PERIOD OF SIX YEARS UNDER THE CONDITION THAT THE PLANT HAD SUCCESSFULLY OPERA TED EVERY YEAR WITH A MINIMUM OF 12% PLANT LOAD FACTOR. AS PER THE ASSESSEE, SIN CE THE SALES TAX BENEFIT WAS INEXTRICABLY LINKED TO THE INDUSTRIAL UNDERTAKING C ARRYING ON THE ACTIVITY OF WIND GENERATION ENERGY, IT WAS ENTITLED TO THE DEDUCTION UNDER SECTION 80IA OF THE ACT. RELYING ON THE RATIO LAID DOWN BY THE HONBLE SUPRE ME COURT IN PANDIAN CHEMICALS LTD. VS. CIT (2003) 262 ITR 278 (SC) AND ALSO THE RATIO LAID DOWN IN CIT VS. STERLING FOODS (1999) 237 ITR 579 (SC), THE ASSESSING OFFICER OBSERVED THAT FOR CLAIMING THE BENEFIT UNDER SECTION 80-I / 80-IA, THERE SHOULD BE DIRECT NEXUS BETWEEN THE UNDERTAKING AND THE RELATED INCOM E. FURTHER, WORDS WHICH WERE EARLIER USED I.E. ATTRIBUTABLE TO, HAVE BEEN REPLACED WITH THE WORD DERIVED FROM AND IN VIEW OF THE DEFINITION, THE SALES TAX BENEFIT AVAILED BY THE ASSESSEE WHICH WAS PERMITTED TO BE SOLD, DOES NOT HAVE ANY I NCIDENTAL NEXUS WITH THE RUNNING OF UNDERTAKING PERSE, BUT HAS DIRECT NEXUS TO THE STATE GOVERNMENTS BENEFITS SCHEMES. THE ASSESSING OFFICER HELD THAT THE BENEFIT GIVEN TO THE ASSESSEE DO NOT QUALIFY FOR DEDUCTION UNDER SECTION 80IA OF THE ACT. ANOTHER ASPECT NOTED BY THE ASSESSING OFFICER WAS THE CALCU LATION OF DEDUCTION UNDER ITA NOS.2225 AND 2226/PN/2013 M/S. PATANKAR WIND FARM PVT. LTD 9 SECTION 80IA OF THE ACT. CONSIDERING THE NOTIONAL CARRY FORWARD UNABSORBED DEPRECIATION, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD NOT CONSIDERED THE BROUGHT FORWARD DEPRECIATION LOSS ON NOTIONAL B ASIS IN RESPECT OF WINDMILL I.E. MACHINE NO.1 AND 2 BEFORE CLAIMING THE DEDUCTION UN DER SECTION 80IA OF THE ACT. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD T WO BUSINESS UNITS I.E. WIND POWER GENERATION AND THE OTHER OF DEALING IN LAND P URCHASE, SALE AND LAND DEVELOPMENT. AS PER THE ASSESSING OFFICER, WHILE C OMPUTING THE DEDUCTION UNDER SECTION 80IA(4)(IV)(A) OF THE ACT, THE ASSESS EE HAD NOT CORRECTLY COMPUTED THE DEDUCTION UNDER SECTION 80IA(5) OF THE ACT. WH ERE, AS PER THE ASSESSING OFFICER, THE INCOME OF BOTH THE UNITS SHOULD HAVE B EEN COMPUTED SEPARATELY AS INDIVIDUAL UNITS AND DEDUCTION WAS REQUIRED TO BE A LLOWED ONLY IF THERE WERE PROFITS AND GAINS OF ELIGIBLE UNITS. AS PER WORKIN G OF ASSESSING OFFICER, THE INCOME FROM WINDMILL UNIT AFTER ADJUSTMENT OF BROUG HT FORWARD LOSSES OF THE EARLIER YEAR, THE BALANCE WAS LOSS TO BE CARRIED FO RWARD TO THE NEXT YEAR AND HENCE, THE ASSESSEE WAS NOT ENTITLED TO THE CLAIM O F DEDUCTION UNDER SECTION 80IA OF THE ACT. 14. THE CIT(A) AFTER TAKING NOTE OF THE JUDICIAL DE CISIONS ON THE ISSUE, POINTED OUT THAT THE EXPRESSION DERIVED FROM WAS NARROWER IN SCOPE THAT THE EXPRESSION ATTRIBUTABLE TO AND CONSEQUENTLY, WITHIN THE MEAN ING OF EXPRESSION DERIVED FROM AS USED IN SECTION 80IA OF THE ACT, THE SAME SHOULD BE UNDERSTOOD AS PROFIT DIRECTLY ARISING FROM THE BUSINESS AND NOT INCIDENT AL TO. THE CIT(A) FURTHER HELD THAT THE SALE OF SALES TAX SUBSIDY RECEIVED BY THE ASSESSEE SOLD TO THE OUTSIDE PARTIES, WAS NOT THE DIRECT RESULT OF ANY GENERATIO N OR DISTRIBUTION OF POWER AND IT WAS FURTHER HELD THAT JUST BECAUSE THE ASSESSEE GOT THIS BENEFIT BY VIRTUE OF ITS WINDMILL GENERATION, IT COULD NOT BE SAID THAT THE SALE OF SUCH BENEFIT WAS PART OF MAIN ACTIVITY. ACCORDINGLY, IT WAS HELD THAT THE P ROFIT DERIVED BY THE ASSESSEE ON SALE OF SALES TAX BENEFIT WAS TO BE ASSESSED AS INC OME FROM OTHER SOURCES, ON WHICH THE ASSESSEE WAS NOT ENTITLED TO THE CLAIM OF DEDUCTION UNDER SECTION 80IA OF THE ACT. WITH REGARD TO THE RE-COMPUTATION OF T HE DEDUCTION ALLOWABLE TO THE ITA NOS.2225 AND 2226/PN/2013 M/S. PATANKAR WIND FARM PVT. LTD 10 ASSESSEE UNDER SECTION 80IA OF THE ACT ON THE PROFI TS GENERATED FROM WINDMILL POWER GENERATION, THE CIT(A) NOTED THE PROVISIONS O F THE ACT AND OBSERVED THAT SINCE THE SECTION 80IA(5) STARTS WITH NON-OBSTINATE CLAUSE OVERRIDING THE EFFECT OF PROVISIONS OF SECTION 80AB OF THE ACT ALSO MANDATES THAT THE PROFITS OF ELIGIBLE BUSINESS WOULD HAVE TO BE COMPUTED AS IF THEY WERE THE ONLY SOURCE OF INCOME. AGAINST THE GROSS RECEIPTS FROM THE SAID WIND POWER GENERATION, THE EXPENDITURE INCURRED IN EARNING THE INCOME FROM THE ELIGIBLE BU SINESS WOULD HAVE TO BE DEDUCTED AND ONLY ON THE NET INCOME DEDUCTION UNDER SECTION 80IA OF THE ACT WAS TO BE ALLOWED. IN VIEW OF THE PROVISIONS OF SE CTION 80IA(5) OF THE ACT, WHEREIN IT HAS BEEN LAID DOWN THAT FOR THE PURPOSES OF DETERMINING THE QUANTUM OF DEDUCTION UNDER SUBSECTION (1), THE PROFITS AND GAINS OF THE ELIGIBLE BUSINESS, I.E. THE WINDMILL HAS TO BE COMPUTED AS IF THE WIND MILL WAS THE ONLY SOURCE OF INCOME OF THE ASSESSEE DURING THE PREVIOUS YEAR REL EVANT TO THE INITIAL ASSESSMENT YEAR AND TO EVERY SUBSEQUENT ASSESSMENT YEAR. THE DEDUCTION UNDER SECTION 80IA(1) OF THE ACT IS ALLOWABLE AT TH E OPTION OF THE ASSESSEE FOR ANY 10 CONSECUTIVE ASSESSMENT YEARS OUT OF 15 YEARS BEG INNING FROM THE YEAR IN WHICH THE UNDERTAKING OR ENTERPRISE BEGINS TO OPERA TE THE INFRASTRUCTURE FACILITY. A HARMONIOUS CONSTRUCTION OF SECTIONS 80IA(1), 80LA(2 ), 80IA(5) AND 80AB OF THE INCOME TAX ACT, 1961 MAKES IT CLEAR THAT THESE SECT IONS DO NOT GIVE ANY RIGHT TO THE ASSESSEE TO FIRST SET OFF DEPRECIATION AGAINST THE OTHER INCOME IN THE INITIAL ASSESSMENT YEAR WHEN THE UNDERTAKING BEGINS TO OPER ATE AND THEN START CLAIMING DEDUCTION UNDER SECTION 80IA(1) OF THE INCOME TAX A CT 1961 ON THE PLEA THAT SINCE UNABSORBED DEPRECIATION HAS ALREADY BEEN SET OFF AGAINST INCOME FROM OTHER SOURCES, THERE WAS NO SUCH UNABSORBED DEPRECI ATION WHICH COULD BE SET OFF AGAINST THE RECEIPTS OF POWER GENERATION DURING THE YEAR UNDER CONSIDERATION AND, THEREFORE, THE ENTIRE PROFIT AFTER DEDUCTING N ORMAL EXPENDITURE IS ALLOWABLE FOR DEDUCTION UNDER SECTION 80IA(1) OF THE INCOME T AX ACT, 1961. THE CIT(A) FURTHER HELD THAT THE DEPRECIATION ON WINDMILL OUGH T TO HAVE BEEN DEDUCTED FROM THE RECEIPTS GENERATED FROM THE BUSINESS OF GENERAT ION OF POWER, BY TREATING THE ITA NOS.2225 AND 2226/PN/2013 M/S. PATANKAR WIND FARM PVT. LTD 11 SAID BUSINESS ON STANDALONE BASIS AND THE CONTENTIO N OF THE ASSESSEE IN THIS REGARD, WAS REJECTED. THE ASSESSING OFFICER WAS DI RECTED TO RE-COMPUTE THE CARRIED FORWARD LOSSES FROM THE WINDMILL FROM THE I NITIAL ASSESSMENT YEAR AFTER GIVING OPPORTUNITY TO THE ASSESSEE TO REBUT SO THAT THERE WAS NO MISTAKE IN SETTING OFF THE LOSS COMPUTED AS IF THE WINDMILL WA S ONLY THE BUSINESS OF THE ASSESSEE. 15. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 16. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE A SSESSEE POINTED OUT THAT THE ISSUE ARISING IN THE PRESENT APPEAL IS IN RELAT ION TO THE SALES TAX SUBSIDY RECEIVED I.E. WHETHER IT IS PART OF THE BUSINESS RE CEIPT AND IS ENTITLED TO THE DEDUCTION UNDER SECTION 80IA OF THE ACT. THE LEARN ED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FURTHER POINTED OUT THAT THE RECEI PT IS SIMILAR IN NATURE AS CONSIDERED BY THE PUNE BENCH OF THE TRIBUNAL IN RAS IKLAL M. DHARIWAL (HUF) VS. DCIT IN ITA NO.575/PN/2007 & 150/PN/2008 RELATING T O ASSESSMENT YEARS 2003- 04 & 2004-05, VIDE ORDER DATED 31.03.2011, THE TRIB UNAL HELD THE RECEIPT TO BE A REVENUE RECEIPT. IT WAS FURTHER POINTED OUT BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT THE SALES TAX SUBSIDY RECEIVED BY THE ASSESSEE WAS AN INTEGRAL PART OF THE BUSINESS INCOM E AND HENCE WAS BUSINESS RECEIPT, WHICH HAD BEEN DECLARED AS BUSINESS RECEIP TS BY THE ASSESSEE. HOWEVER, THE DEDUCTION UNDER SECTION 80IA OF THE AC T HAD NOT BEEN ALLOWED ON SUCH SALES TAX SUBSIDY BY THE ASSESSING OFFICER BY APPLYING THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN CIT VS. STERLING FO ODS (SUPRA). IT WAS FURTHER CONTENDED BY HIM THAT IN THE CASE OF THE ASSESSEE, THERE WAS ONLY ONE UNIT PRODUCING ELECTRICITY THROUGH TWO WINDMILLS, ON WHI CH IT WAS RECEIVING THE DEDUCTION UNDER SECTION 80IA OF THE ACT AND SINCE T HE ASSESSEE HAD ONLY ONE SOURCE OF INCOME, THEN THE SAID SUBSIDY RECEIVED BY THE ASSESSEE WAS DERIVED FROM THE BUSINESS UNDERTAKING. FURTHER RELIANCE WA S PLACED ON THE RATIO LAID DOWN BY THE HONBLE GAUHATI HIGH COURT IN CIT VS. M EGHALAYA STEELS LTD. (2013) ITA NOS.2225 AND 2226/PN/2013 M/S. PATANKAR WIND FARM PVT. LTD 12 34 TAXMANN.COM 34 (GAUHATI) AND BY THE HONBLE DELH I HIGH COURT IN CIT VS. KOSHIKA TELECOM LTD. (2006) 287 ITR 479 (DELHI) AND HONBLE BOMBAY HIGH COURT IN CIT VS. VALIANT GLASS WORKS (P.) LTD. (201 4) 50 TAXMANN.COM 268 (BOMBAY). THE PLEA RAISED BY THE ASSESSEE WAS THAT SINCE THE RATE OF SALE OF POWER WAS VERY LOW, WHICH RESULTED IN LOSSES AND HE NCE, THE SALES TAX SUBSIDY WAS GRANTED TO THE ASSESSEE WHICH IS IN INEXTRICABL Y LINKED TO THE BUSINESS INCOME. 17. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE PLACING RELIANCE ON THE ORDER OF CIT(A) POINTED OUT THAT TH E SALES TAX INCENTIVE WAS OTHER INCOME, ON WHICH BENEFIT OF SECTION 80IA OF THE ACT WAS NOT ALLOWED BY THE PANJI BENCH OF THE TRIBUNAL IN ACIT VS. M/S. SHAIV DISTIL LERIES (P) LTD., IN ITA NO.179/PNJ/2014, RELATING TO ASSESSMENT YEAR 2009-1 0, VIDE ORDER DATED 14.08.2014. 18. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE IN GROUNDS OF APPEAL NOS.1 AND 2 IS HOLDING THE ASSESS EE NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80IA OF THE ACT ON THE SALES TAX BENE FIT GRANTED TO THE ASSESSEE UNDER THE SCHEME OF STATE GOVERNMENT TO PROMOTE GEN ERATION OF WIND ENERGY. THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION WA S ENGAGED IN THE BUSINESS OF WIND POWER GENERATION AND ALSO DEALING IN LAND P URCHASE AND SALE AND ALSO IN LAND DEVELOPMENT. THE ASSESSEE HAD CLAIMED THE PRO FITS ARISING FROM THE BUSINESS OF WIND POWER GENERATION AS ELIGIBLE TO TH E CLAIM OF DEDUCTION UNDER SECTION 80IA OF THE ACT. FURTHER, DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD RECEIVED RS.43,48,161/- ON ACCOUNT OF SALES TAX BENEFIT RECEIVED FROM THE STATE GOVERNMENT, WHICH WAS CLAIMED AS ELI GIBLE FOR DEDUCTION UNDER SECTION 80IA OF THE ACT. THE CASE OF THE ASSESSEE WAS THAT THE STATE GOVERNMENT IN ORDER TO ENCOURAGE INSTALLATION OF WI ND ENERGY GENERATOR UNITS HAD PUBLISHED POLICY DATED 12.03.1998, UNDER WHICH SALE S TAX BENEFIT WAS AVAILABLE TO THE PERSON, EQUIVALENT TO QUALIFYING INVESTMENT ON WIND ENERGY GENERATION ITA NOS.2225 AND 2226/PN/2013 M/S. PATANKAR WIND FARM PVT. LTD 13 PROJECTS. THE SAID BENEFIT UNDER THE SCHEME WAS GI VEN UNDER PRESCRIBED CONDITIONS. ONE OF THE CONDITIONS WAS THAT THE WIN D ENERGY GENERATED HAD TO BE SOLD TO MAHARASHTRA STATE ELECTRICITY BOARD AT A FI XED RATE, SUBJECT TO CERTAIN ESCALATIONS AND FURTHER, THE ASSESSEE HAD TO OBTAIN 12% PLANT LOAD FACTOR AND IN THE YEAR, IN WHICH IT WAS NOT SO OBTAINED, THE ASSE SSEE WAS NOT ENTITLED TO THE SALES TAX BENEFIT. THE SAID BENEFIT WAS AVAILABLE UP TO AN AMOUNT OF QUALIFYING INVESTMENT IN PLANT AND MACHINERY, NEW BUILDINGS, T ECHNICAL DEVELOPMENT, DESIGNING, ETC. ADMITTEDLY, THE ASSESSEE HAD QUALI FIED THE CONDITIONS OF THE SCHEME AND WAS GIVEN THE AFORESAID SALES TAX SUBSID Y. THE CLAIM OF THE ASSESSEE BEFORE THE AUTHORITIES BELOW WAS THAT THE SAID SALES TAX BENEFIT AVAILED BY THE ASSESSEE IS IN INEXTRICABLY LINKED TO THE IN DUSTRIAL UNDERTAKING CARRYING ON THE ACTIVITY OF WIND GENERATION ENERGY. SINCE IT I S DIRECTLY LINKED TO THE MANUFACTURING OF WIND ENERGY AND WAS ALSO DERIVED F ROM CARRYING ON OF INDUSTRIAL ACTIVITY OF WIND ENERGY, IT WAS ENTITLED TO THE CLA IM OF DEDUCTION UNDER SECTION 80IA OF THE ACT ON SUCH SALES TAX SUBSIDY. 19. THE PUNE BENCH OF THE TRIBUNAL IN RASIKLAL M. D HARIWAL (HUF) VS. DCIT (SUPRA) HAD CONSIDERED THE SAID SCHEME OF SUBSIDY G RANTED BY THE STATE GOVERNMENT AND HELD THAT THE RECEIPTS ON ACCOUNT OF THE SAID SCHEME WERE REVENUE RECEIPTS CHARGEABLE TO TAX IN THE HANDS OF THE ASSESSEE. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAD FAIR LY ADMITTED THAT THE SCHEME, UNDER WHICH THE ASSESSEE HAD RECEIVED THE SALES TAX SUBSIDY WAS THE SAME AS CONSIDERED BY THE TRIBUNAL IN THE CASE OF RASIKLAL M. DHARIWAL (HUF) VS. DCIT (SUPRA). IN VIEW THEREOF, WE HOLD THAT THE SAID RE CEIPTS OF SALES TAX SUBSIDY IN THE HANDS OF THE ASSESSEE IS A REVENUE RECEIPT, WHICH H AS BEEN SO DECLARED BY THE ASSESSEE IN ITS RETURN OF INCOME. THE SECOND ASPEC T OF THE ISSUE IS WHETHER THE SAID SALES TAX SUBSIDY IS ELIGIBLE FOR THE BENEFIT OF DEDUCTION UNDER SECTION 80IA OF THE ACT. ITA NOS.2225 AND 2226/PN/2013 M/S. PATANKAR WIND FARM PVT. LTD 14 20. SECOND 80IA OF THE ACT PROVIDES THAT DEDUCTION IN RESPECT OF PROFITS AND GAINS DERIVED BY AN UNDERTAKING OR AN ENTERPRISE FR OM ANY BUSINESS REFERRED TO IN SUB-SECTION (4) I.E. ADMITTEDLY, THE ASSESSEE IS ON E SUCH ENTERPRISE CARRYING ON THE BUSINESS OF WIND ENERGY GENERATION TO WHICH, IT HAS BEEN HELD TO BE ENTITLED TO THE DEDUCTION UNDER SECTION 80IA OF THE ACT. TH E TERMS USED IN SECTION 80IA OF THE ACT ARE IN RESPECT OF PROFITS AND GAINS DERIVED FROM THE SPECIFIED BUSINESS OF AN UNDERTAKING. VARIOUS COURTS HAVE INTERPRETED TH E WORD DERIVED FROM AND IT HAS BEEN PROPOUNDED THAT THERE NEEDS TO BE A DIRECT NEXUS BETWEEN UNDERTAKING AND THE RELATED INCOME. EARLIER, THE WORD WAS ATT RIBUTABLE TO IN SECTION 80HH/C OF THE ACT, WHICH HAS BEEN REPLACED WITH WORD DERI VED FROM IN SECTION 80I/80IA OF THE ACT. THE HONBLE SUPREME COURT IN CIT VS. S TERLING FOODS (SUPRA) HAD HELD THAT FOR CLAIMING THE BENEFIT UNDER SECTION 80 IA, THERE NEEDED A DIRECT NEXUS BETWEEN THE UNDERTAKING AND THE RELATED INCOME. TH E RELEVANT PORTION OF THE DECISION OF HONBLE SUPREME COURT IS AS UNDER:- 6. THE QUESTION, THEREFORE, WAS WHETHER THE INCOME DERIVED BY THE ASSESSEE BY THE SALE OF THE IMPORT ENTITLEMENTS WAS PROFIT AND GAIN DERIVED FROM ITS INDUSTRIAL UNDERTAKING OF PROCESSI NG SEA FOOD. THE DIVISION BENCH OF THE COURT CAME TO THE CONCLUSION THAT THE INCOME WHICH THE ASSESSEE HAD MADE BY SELLING THE IMPORT ENTITLE MENTS WAS NOT A PROFIT AND GAIN WHICH IT HAD DERIVED FROM ITS INDUSTRIAL U NDERTAKING. FOR THAT PURPOSE, IT RELIED UPON THE DECISION OF THIS COURT IN CAMBAY ELECTRIC SUPPLY INDUSTRIAL CO. LTD V. CIT [1978] 113 ITR 84 . IT WAS THERE HELD THAT THE EXPRESSION 'ATTRIBUTABLE, WAS WIDER IN IMPORT THAN THE EXPRESSION DERIVED FROM. THE EXPRESSION OF WIDER IMPORT, NA MELY, ATTRIBUTABLE TO, WAS USED WHEN THE LEGISLATURE INTENDED TO COVER REC EIPTS FROM SOURCES OTHER THAN THE ACTUAL CONDUCT OF THE BUSINESS. THE DIVISION BENCH OF THE HIGH COURT OBSERVED THAT TO OBTAIN THE BENEFIT OF S ECTION 80HH THE ASSESSEE HAD TO ESTABLISH THAT THE PROFITS AND GAIN S WERE DERIVED FROM ITS INDUSTRIAL UNDERTAKING AND IT WAS JUST NOT SUFFICIE NT THAT A COMMERCIAL CONNECTION WAS ESTABLISHED BETWEEN THE PROFITS EARE D AND THE INDUSTRIAL UNDERTAKING. THE INDUSTRIAL UNDERTAKING ITSELF HAD TO BE THE SOURCE OF THE PROFIT. THE BUSINESS OF THE INDUSTRIAL UNDERTAKING HAD DIRECTLY TO YIELD THAT PROFIT. THE INDUSTRIAL UNDERTAKING HAD THE DIRECT S OURCE OF THAT PROFIT AND NOT A MEANS TO EARN ANY OTHER PROFIT. R EFERENCE WAS ALSO MADE TO THE MEANING OF THE WORD SOURCE, AND IT WAS HEL D THAT THE IMPORT ENTITLEMENTS THAT THE ASSESSEE HAD EARNED WERE AWAR DED BY THE CENTRAL GOVERNMENT UNDER THE SCHEME TO ENCOURAGE EXPORTS. THE SOURCE REFERABLE TO THE PROFITS AND GAINS ARISING OUT OF T HE SALE PROCEEDS OF THE IMPORT ENTITLEMENT WAS, THEREFORE, THE SCHEME OF TH E CENTRAL GOVERNMENT AND NOT THE INDUSTRIAL UNDERTAKING OF THE ASSESSEE. . ITA NOS.2225 AND 2226/PN/2013 M/S. PATANKAR WIND FARM PVT. LTD 15 12. WE DO NOT THINK THAT THE SOURCE OF THE IMPORT E NTITLEMENTS CAN BE SAID TO BE THE INDUSTRIAL UNDERTAKING OR THE ASSESS EE. THE SOURCE OF THE IMPORT ENTITLEMENTS CAN, IN THE CIRCUMSTANCES, ONLY BE SAID TO BE THE EXPORT PROMOTION SCHEME OF THE CENTRAL GOVERNMENT W HERE UNDER THE EXPORT ENTITLEMENTS BECOME AVAILABLE. THERE MUST BE , FOR THE APPLICATION OF THE WORDS 'DERIVED FROM', A DIRECT NEXUS BETWEEN THE PROFITS AND GAINS AND THE INDUSTRIAL UNDERTAKING. IN THE INSTANT CASE THE NEXUS IS NOT DIRECT BUT ONLY INCIDENTAL. THE INDUSTRIAL UNDERTAKING EXP ORTS PROCESSED SEA FOOD. BY REASON OF SUCH EXPORT, THE EXPORT PROMOTION SCHE ME APPLIES. THERE UNDER, THE ASSESSEE IS ENTITLED TO IMPORT ENTITLEME NTS, WHICH IT CAN SELL. THE SALE CONSIDERATION THERE FROM CANNOT, IN OUR VI EW, BE HELD TO CONSTITUTE A PROFIT AND GAIN DERIVED FROM THE ASSES SEES' INDUSTRIAL UNDERTAKING. 21. THE HONBLE SUPREME COURT IN LIBERTY INDIA VS. CIT (2009) 317 ITR 218 (SC) HAD HELD THAT IMMEDIATE SOURCE OF INCOME IS TO BE LOOKED INTO WHILE ALLOWING DEDUCTION UNDER SECTION 80IA OF THE ACT AND WHERE T HERE IS A FIRST DEGREE OF SOURCE, THEN THE SAME IS TO BE HELD TO INEXTRICABLY LINKED TO THE PROFITS OF THE INDUSTRIAL UNDERTAKING ELIGIBLE FOR BENEFIT UNDER S ECTION 80IA OF THE ACT. 22. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE A SSESSEE ON THE OTHER HAND PLACED RELIANCE ON THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN CIT VS. VALIANT GLASS WORKS (P.) LTD. (SUPRA), WHER EIN THE ISSUE WAS WHETHER THE AMOUNT OF DEEMED CREDIT UNDER CENVAT INCENTIVE SCHE ME WAS A PART OF BUSINESS PROFITS ELIGIBLE FOR DEDUCTION UNDER SECTI ON 80HHC OF THE ACT. THE HONBLE BOMBAY HIGH COURT HELD THAT THE DEEMED CRED IT UNDER CENVAT INCENTIVE SCHEME WOULD REDUCE THE MATERIAL / MANUFA CTURING COST OF THE GOODS EXPORTED BY THE ASSESSEE AND THAT BEING SO, THE ASS ESSEE WOULD BE ENTITLED TO THE DEDUCTION UNDER SECTION 80HHC OF THE ACT TO THE EXTENT OF PROFITS DERIVED BY THE ASSESSEE FROM THE EXPORT OF SUCH GOODS OR MERCH ANDISE. THE SAID DECISION IS NOT RELEVANT TO THE ISSUE RAISED IN THE PRESENT APPEAL BEFORE US, WHICH IS TO ADJUDICATE THE MEANING OF DERIVED FROM THE BUSINESS OF AN UNDERTAKING OR AN ENTERPRISE. 23. ANOTHER RELIANCE PLACED UPON BY THE LEARNED AUT HORIZED REPRESENTATIVE FOR THE ASSESSEE WAS ON THE RATIO LAID DOWN BY THE HONBLE DELHI HIGH COURT IN CIT VS. KOSHIKA TELECOM LTD. (SUPRA), WHERE THE ISS UE WAS WHETHER THE INCOME ITA NOS.2225 AND 2226/PN/2013 M/S. PATANKAR WIND FARM PVT. LTD 16 IN THE NATURE OF INTEREST FROM DEPOSITS WAS FROM BU SINESS INCOME OR OTHER SOURCES. THE HONBLE DELHI HIGH COURT HELD THAT WH ERE THE DEPOSITS MADE BY THE ASSESSEE WERE INEXTRICABLY LINKED TO THE BUSINESS O F THE ASSESSEE, THE INCOME DERIVED ON SUCH DEPOSITS COULD NOT BE TREATED AS IN COME FROM OTHER SOURCES. THE SAID RATIO DOES NOT HELP THE ASSESSEE VIS--VIS THE CLAIM OF DEDUCTION UNDER SECTION 80IA OF THE ACT. 24. ANOTHER RELIANCE PLACED UPON BY THE LEARNED AUT HORIZED REPRESENTATIVE FOR THE ASSESSEE WAS ON THE RATIO LAID DOWN BY HON BLE GAUHATI HIGH COURT IN CIT VS. MEGHALAYA STEELS LTD. (SUPRA), WHEREIN THE HON BLE HIGH COURT HELD THAT THE TRANSPORT SUBSIDY, POWER SUBSIDY, INTEREST SUBSIDY AND INSURANCE SUBSIDY REDUCED THE COST OF PRODUCTION OF AN INDUSTRIAL UND ERTAKING AND SINCE THERE WAS FIRST DEGREE NEXUS BETWEEN THE SAID SUBSIDIES AND T HE PROFITS AND GAINS DERIVED BY AN INDUSTRIAL UNDERTAKING, THEREFORE, IT WAS ENT ITLED TO THE DEDUCTION UNDER SECTION 80IB / 80IC OF THE ACT IN RESPECT OF THE SA ID SUBSIDIES SO RECEIVED. THE PROPOSITION PROPOUNDED BY THE HONBLE GAUHATI HIGH COURT IN THE SAID CASE WAS THAT THE SUBSIDIES RECEIVED BY THE ASSESSEE WERE IN TER-LINKED AND HAD DIRECT NEXUS WITH THE MANUFACTURING ACTIVITIES OF THE INDU STRIAL UNDERTAKING AND HAD REDUCED THE COST OF PRODUCTION OF THE SAID UNDERTAK ING AND HENCE, THERE WAS NEXUS BETWEEN THE SAID SUBSIDIES AND PROFITS AND GA INS DERIVED BY THE INDUSTRIAL UNDERTAKING AND HENCE, THE SAME WERE HELD TO BE ELI GIBLE FOR DEDUCTION UNDER SECTION 80IB / 80IC OF THE ACT. HOWEVER, IN THE FA CTS OF THE CASE BEFORE US, THE ASSESSEE IS IN RECEIPT OF SALES TAX SUBSIDY, WHICH UNDOUBTEDLY, IS A REVENUE RECEIPT IN THE HANDS OF THE ASSESSEE, BUT THE SAID SUBSIDY DOES NOT IN ANY MANNER REDUCE THE COST OF PRODUCTION OF INDUSTRIAL UNDERTAKING. IT IS A BENEFIT GIVEN TO THE INDUSTRIAL UNDERTAKING FOR ESTABLISHIN G THE WIND ENERGY GENERATION UNITS IN THE STATE OF MAHARASHTRA, BUT THE SAME DOE S NOT HAVE A DIRECT NEXUS BETWEEN THE SUBSIDY ON THE ONE HAND AND THE MANUFAC TURING ACTIVITY OF THE INDUSTRIAL UNDERTAKING ON THE OTHER HAND. IN THE A BSENCE OF A DIRECT AND FIRST DEGREE NEXUS BETWEEN THE SUBSIDY ON THE ONE HAND AN D PROFITS OF THE INDUSTRIAL ITA NOS.2225 AND 2226/PN/2013 M/S. PATANKAR WIND FARM PVT. LTD 17 UNDERTAKING ON THE OTHER HAND, WHERE SUCH SUBSIDY D OES NOT REDUCE THE COST OF PRODUCTION, WE HOLD THAT THE SALES TAX SUBSIDY RECE IVED BY THE ASSESSEE IS NOT ELIGIBLE TO THE DEDUCTION UNDER SECTION 80IA OF THE ACT. THE SALES TAX SUBSIDY RECEIVED BY THE ASSESSEE IS AN INCENTIVE SUBSIDY AN D IS NOT AN OPERATIONAL SUBSIDY AND CONSEQUENTLY, DOES NOT AFFECT PROFITS O F THE BUSINESS AND IS NOT LINKED TO THE PROFITS OF INDUSTRIAL UNDERTAKING AND HENCE, IS NOT DEDUCTIBLE IN TERMS OF PROVISIONS OF SECTION 80IA OF THE ACT. 25. WE FURTHER FIND SUPPORT FROM THE RATIO LAID DOW N BY THE PANJI BENCH OF THE TRIBUNAL IN ACIT VS. M/S. SHAIV DISTILLERIES (P) LT D. (SUPRA). IN VIEW OF THE SAME, WE FIND NO MERIT IN THE CLAIM OF ASSESSEE AND REJEC TING THE SAME, WE MODIFY THE ORDER OF CIT(A) TO THE EXTENT THAT THE SALES TAX BE NEFIT IS TO BE TAXED AS BUSINESS RECEIPTS OF THE ASSESSEE, ON WHICH THE ASSESSEE IS NOT ENTITLED TO THE CLAIM OF DEDUCTION UNDER SECTION 80IA OF THE ACT. 26. THE ISSUE IN GROUNDS OF APPEAL NOS.3 TO 5 IS IN RELATION TO INTERPRETATION OF PROVISIONS OF SECTION 80IA(5) OF THE ACT. 27. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE A SSESSEE AT THE OUTSET POINTED OUT THAT THIS ISSUE IS SQUARELY COVERED BY THE ORDER OF TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.2227/PN/2013 RELATING TO ASSESSMENT YEAR 2008- 09, WHEREIN THE TRIBUNAL VIDE ORDER DATED 31.10.201 4 HAD HELD THE ASSESSEE TO BE ENTITLED TO THE CLAIM OF DEDUCTION UNDER SECTION 80IA OF THE ACT AT THE EXERCISE OF AN OPTION OF 10 CONSECUTIVE YEARS. FURTHER, THE TRIBUNAL ALSO HAD HELD THAT WHERE THE LOSSES HAVE BEEN ADJUSTED AGAINST THE ASS ESSABLE INCOME OTHER THAN THE PROFITS OF THE INDUSTRIAL UNDERTAKING, THEN THE SAID LOSSES COULD NOT BE AVAILED TO BE ADJUSTED AGAINST THE INCOME ARISING IN THE YE AR IN WHICH THE ASSESSEE HAD SHOWN PROFITS FROM THE SAID INDUSTRIAL UNDERTAKING. 28. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE PLACED RELIANCE ON THE ORDER OF CIT(A). ITA NOS.2225 AND 2226/PN/2013 M/S. PATANKAR WIND FARM PVT. LTD 18 29. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. WE FIND THAT BOTH THE ISSUES RAISED VIDE GROUNDS OF APPEAL NOS.3 TO 5 WERE CONSIDERED BY THE TRIBUNAL IN ASSESSEES OWN CASE AND IT WAS HELD AS UNDER:- 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. WE FIND THAT THE ISSUE ARISING IN THE PRESENT APPEAL I N RELATION TO THE PROVISIONS OF SECTION 80-IA(5) OF THE ACT. SIMILAR ISSUE AROS E BEFORE THE TRIBUNAL IN THE CASE OF SHRI SANGRAM PATIL VS. ITO IN ITA NO.17 7 & 178/PN/2011 RELATING TO ASSESSMENT YEAR 2006-07 & 2007-08 VIDE DATED 12.12.2012. THE TRIBUNAL CONSIDERED THE PROVISIONS OF SECTION 8 0-IA(5) OF THE ACT AND OBSERVED AS UNDER :- 5. THE BONE OF CONTENTION BETWEEN THE ASSESSEE AND THE REVENUE IS WITH REGARD TO THE PROVISIONS OF SECTION 80-IA(5) OF THE ACT. SECTION 80-IA(5) OF THE ACT CREATES A FICTION THAT FOR THE PURPOSE OF COMPUTING DEDUCTION U/S 80-IA OF THE ACT , IT WAS TO BE PRESUMED THAT THE ELIGIBLE UNIT WAS ONLY THE SOURCE OF INCOME OF THE ASSESSEE DURING THE PREVIOUS YEAR RELEVANT TO INITI AL ASSESSMENT YEAR AND ALSO TO EVERY SUBSEQUENT YEAR UPTO AND INC LUDING THE ASSESSMENT YEAR FOR WHICH THE DETERMINATION IS TO B E MADE. 8. THE TRIBUNAL FURTHER REFERRED TO THE RATIO LAID DOWN BY ANOTHER BENCH OF THE TRIBUNAL IN THE CASE OF SERUM INTERNAT IONAL LTD. VS. ADDL.CIT (SUPRA) IN PARA 6 AND OBSERVED AS UNDER :- 6. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE PUNE BENCH OF THE TRIBUNAL IN TH E CASE OF SERUM INTERNATIONAL LTD. VS. ADDL. CIT RANGE 6, PUNE IN I TA NOS. 290 TO 292/PN/2010 FOR A.Y. 2004-05 TO 2006-07 VIDE ORDER DATED 28-9- 2011 HAS CONSIDERED AN IDENTICAL CONTROVERSY AND AF TER FOLLOWING THE DECISION OF THE HONBLE MADRAS HIGH COURT IN TH E CASE OF VELAYUDHASWAMY SPINNING MILLS (P) LTD. VS. ACIT (20 10) 38 DTR (MAD) 57 DECIDED THE ISSUE IN FAVOUR OF THE ASSESSE E. 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, THE PROFIT FROM THE ELIGIBLE BUSINESS FOR THE PURPO SE OF DEDUCTION U/S. 80IA OF THE ACT HAS TO BE COMPUTED AFTER DEDUCTION OF THE NOTIONAL BROUGHT FORWARD LOSSES AN D DEPRECIATION OF ELIGIBLE BUSINESS EVEN THOUGH THEY HAVE BEEN ALLOWED SET OFF AGAINST OTHER NON-ELIGIBLE BUS INESS INCOME IN EARLIER YEARS. THE SUBMISSION OF THE LD A.R. REMAINED THAT ON THE WIND MILLS SET UP IN THE PR EVIOUS YEAR RELEVANT TO A.Y. 2002-03, THE ASSESSEE 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 SAID A.Y. 2002-03 ITSELF. IN THE A.Y. 2004-05, THE ASSESSEE HAD POSITIVE INCOME FROM THE SAID GENERATI ON ACTIVITY AND THERE WERE NO BROUGHT FORWARD LOSSES/ UNABSORBED DEPRECIATION OF THE PRECEDING YEAR, WHIC H HAD REMAINED TO BE SET OFF IN THE A.Y. 2004-05. THE A. O., NOTIONALLY BROUGHT FORWARD UNABSORBED DEPRECIATION FOR THE A.Y. 2003-04 TO THE IMPUGNED A.Y. 2004-05 AND DENI ED 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. ITA NOS.2225 AND 2226/PN/2013 M/S. PATANKAR WIND FARM PVT. LTD 19 A.R. SUBMITTED THAT SUB-SECTION (2) OF SECTION 80IA PROVIDES AN OPTION TO THE ASSESSEE TO CHOOSE 10 CONSECUTIVE A.YS. OUT OF 15 YEARS FOR CLAIMING THE DEDUCTION. HE SUB MITTED THAT THE TERM INITIAL YEAR IN SUB-SECTION (5) OF 80IA IS NOT DEFINED AND IS USED IN CONTRADICTION TO THE WORDS BEGINNIN G FROM THE YEAR USED IN SUB-SECTION (2). HE SUBMITTED THAT THE ASSESSEE CHOSE A.Y. 2004-05 AS INITIAL A.Y BEING T HE FIRST YEAR IN WHICH IT CLAIMED DEDUCTION U/S. 80IA AND TH EREFORE, LOSSES/DEPRECIATION BEGINNING FROM A.Y. 2004-05 ALO NE COULD ONLY BE BROUGHT FORWARD AND SET OFF. DEPRECIATION OF THE PRECEDING A.Y. 2002-03 COULD NOT HAVE BEEN NOTIONAL LY BROUGHT FORWARD AND SET OFF AGAINST PROFIT FOR THE A.Y. 2004- 05. THE LD. A.R. PLACED HEAVY RELIANCE ON THE DECI SION OF HONBLE MADRAS HIGH COURT IN THE CASE OF VELAYUDHASWAMY SPINNING MILLS (P) LTD VS. ACIT (SUP RA). HE SUBMITTED THAT THE DECISION OF HONBLE MADRAS HI GH COURT WILL PREVAIL UPON THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. GOLDMINE SHARES AN D FINANCE (P) LTD. (SUPRA) FOLLOWED BY THE PUNE BENCH OF THE TRIBUNAL IN ITS RECENT DECISION IN THE CASE OF PRIM A PAPER ENGG (P) LTD. VS. ITO (SUPRA) AND THERE THE ASSESSE E DID NOT DISPUTE THE FACT THAT THE AUTHORITIES BELOW HAV E DECIDED THE ISSUE FOLLOWING THE DECISION OF SPECIAL BENCH O F THE TRIBUNAL IN THE CASE OF ACIT VS. GOLDMINE SHARES.. THE LD. A.R. POINTED OUT THAT DECISION OF HONBLE MADRAS HI GH COURT IN THE CASE OF VELAYUDHASWAMY SPINNING MILLS (P) LT D 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 HOLIDA Y RESORTS (P) LTD., (SUPRA) HOLDING THAT EVEN A DECIS ION OF NON- JURISDICTIONAL HIGH COURT IS A BINDING PRECEDENT FO R THE TRIBUNAL UNTIL A CONTRARY DECISION IS GIVEN BY AN Y OTHER COMPETENT HIGH COURT. SIMILAR VIEW HAS BEEN EXPRESS ED BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF COMMIS SIONER 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, INDUSTRIAL UNDERTAKINGS. THE POWER GENERATIO N 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 80IB, THE DEFINITION OF INITIAL A .Y. DID NOT FIND A MENTION. BUT NOWHERE, IN THE PARLIAMENT SPEECH OF MEMORANDUM EXPLAINING THE FINANCE BILL HAS ANY MENTION THAT THERE WAS ANY INTENTION TO IGNORE LO SSES AND DEPRECIATION FROM FIRST YEAR OF POWER GENERATION/PR ODUCTION AND THAT SUCH LOSSES TILL FIRST YEAR OF CLAIM OF DE DUCTION IS TO BE IGNORED. THE VIEW CANVASSED BY THE ASSESSEE DO ES NOT FIND ANY SUPPORT. HE SUBMITTED THAT THERE IS NO DI SCERNIBLE CHANGE IN LAW OR INTENTION OF PARLIAMENT W.E.F. 1.4 .2000. THE LD. D.R. SUBMITTED THAT THE DECISION OF SPECIAL BEN CH OF THE TRIBUNAL IN THE CASE OF GOLDMINE SHARES AND FINANCE (P) ITA NOS.2225 AND 2226/PN/2013 M/S. PATANKAR WIND FARM PVT. LTD 20 LTD. (SUPRA) IS FULLY APPLICABLE IN THE PRESENT CAS E. HE POINTED OUT THAT IN ITS RECENT DECISION DT. 21 ST JANUARY 2011, THE HYDERABAD BENCH OF THE TRIBUNAL IN THE CASE OF HYDERABAD CHEMICAL SUPPLIES LTD. VS. ACIT (SUPRA) H AS ALSO DECIDED AN IDENTICAL DECISION IN FAVOUR OF THE REVENUE FOLLOWING THE DECISION OF SPECIAL BENCH OF THE TRIB UNAL IN THE CASE OF ACIT VS. GOLDMAN SHARES & FINANCE (P) LTD. (SUPRA). HE SUBMITTED THAT THE HYDERABAD BENCH OF THE TRIBUNAL WHILE DECIDING THE ISSUE HAS ALSO DISCUS SED THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF VELAYUDHASWAMY SPINNING MILLS (P) LTD VS. ACIT (SUP RA). THE LD. D.R. SUBMITTED THAT EVEN IN THE CASE OF LIB ERTY 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 HONB LE SUPREME COURT HAS BEEN PLEASED TO HOLD THAT SUCH P ROFITS ARE TO BE COMPUTED AS IF SUCH ELIGIBLE BUSINESS IS THE ONLY SOURCE OF INCOME OF THE ASSESSEE. THE DEVICES ADOP TED TO REDUCE OR INFLATE THE PROFIT OF ELIGIBLE BUSINESS H AS GOT TO BE REJECTED IN VIEW OF THE OVERRIDING PROVISIONS OF S UB-SECTION (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 WH AT WOULD BE THE INITIAL A.Y FOR THE PURPOSES OF SECTION 80I A(5) OF THE ACT HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY T HE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF POONAWALLA STU D AND AGRO FARM PVT. LTD. VS. ACIT (SUPRA). IN THAT CASE AFTER DISCUSSING THE ISSUE IN DETAIL, THE TRIBUNAL HAS CO ME TO THE CONCLUSION THAT THE INITIAL A.Y FOR THE PURPOSE O F CLAIMING DEDUCTION U/S. 80IA WAS THE FIRST YEAR IN WHICH THE ASSESSEE CLAIMED THE DEDUCTION U/S. 80IA (1) AFTER EXERCISIN G 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 T HE INITIAL A.Y FOR THE PURPOSES OF SECTION 80IA(2) R.W.S. 80I A (5) WAS THE YEAR IN WHICH THE ASSESSEE STARTED GENERATING E LECTRICITY FROM THE WIND MILL ACTIVITY. WE ALSO FIND THAT TH E ISSUE RAISED IN GROUND NO. 2 REGARDING THE ELIGIBILITY OF THE A SSESSEE TO CLAIM DEDUCTION U/S. 80IA UNDIMINISHED BY UNABSORBE D 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 VS. ACIT (SUPRA) HOLDING TH AT AS PER SUB-SECTION (5) OF SECTION 80IA, PROFITS ARE TO BE COMPUTED AS IF SUCH ELIGIBLE BUSINESS IS THE ONLY SOURCE OF INCOME OF THE ASSESSEE. WHEN THE ASSESSEE EXERCISES THE OPTI ON, ONLY THE LOSSES OF THE YEARS BEGINNING FROM THE INI TIAL A.Y. ARE TO BE BROUGHT FORWARD AND NOT THE LOSSES OF THE EARLIER YEARS WHICH HAVE BEEN ALREADY SET OFF AGAINST THE I NCOME OF THE ASSESSEE. THE HONBLE MADRAS HIGH COURT HAS BE EN FURTHER PLEASED TO HOLD THAT REVENUE CANNOT NOTIONA LLY BRING FORWARD ANY LOSS OF EARLIER YEARS WHICH HAD ALREAD Y BEEN SET OFF AGAINST THE OTHER INCOME OF ASSESSEE AND SET O FF AGAINST THE CORRECT INCOME OF THE ELIGIBLE BUSINESS. FICTI ON CREATED BY SUB-SECTION (5) OF SECTION 80IA DOES NOT CONTEMP LATE SUCH NOTIONAL SET OFF, HELD THE HONBLE HIGH COURT. THE HONBLE MADRAS HIGH COURT IN THAT DECISION HAS ALS O REFERRED THE DECISION OF HONBLE SUPREME COURT IN T HE CASE ITA NOS.2225 AND 2226/PN/2013 M/S. PATANKAR WIND FARM PVT. LTD 21 OF LIBERTY INDIA VS. CIT (SUPRA) AND THE DECISION OF SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF GOLDMAN SHARE S & FINANCE (P) LTD. (SUPRA). THERE IS NO DISPUTE THAT EVEN A DECISION OF NON-JURISDICTIONAL HIGH COURT IS A BIND ING PRECEDENT FOR THE TRIBUNAL UNTIL A CONTRARY DECIS ION IS GIVEN BY ANY OTHER COMPETENT HIGH COURT. IN THIS REGARD, WE FIND STRENGTH FROM THE RECENT DECISION OF HONBLE JURISD ICTIONAL BOMBAY HIGH COURT IN THE CASE OF COMMISSIONER OF CE NTRAL EXCISE VS. VALSON DYEING, BLEACHING AND PRINTING WO RKS (SUPRA) WHEREIN THE HONBLE BOMBAY HIGH COURT HAS B EEN PLEASED TO HOLD IN A CASE OF EXCISE MATTER THAT TRI BUNAL IS BOUND BY THE DECISION OF HIGH COURT , EVEN OF A DIF FERENT STATE, SO LONG AS THERE IS NO CONTRARY DECISION OF ANY OTHER HIGH COURT. THE HONBLE BOMBAY HIGH COURT HAS BEEN PLEASED TO HOLD FURTHER THAT THE TRIBUNAL HAD NO OP TION BUT TO FOLLOW THE JUDGMENT OF THE MADRAS HIGH COURT. AN A UTHORITY 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 THERE IS NO CONTRA RY DECISION OF ANY OTHER HIGH COURT ON THAT QUESTION. WE THUS RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY THE H ONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF COMMISSION ER OF CENTRAL EXCISE VS. VAKSON DYEING, BLEACHING AND PRI NTING WORKS (SUPRA) HOLD THAT THE TRIBUNAL IS BOUND BY T HE DECISION OF THE HONBLE MADRAS HIGH COURT ON AN IDE NTICAL ISSUE IN THE CASE OF VELAYUDHASWAMY SPINNING MILLS (P) LTD VS. ACIT (SUPRA). WE THUS RESPECTFULLY FOLLOWING T HE DECISION TAKEN BY THE HONBLE MADRAS HIGH COURT IN THAT CASE ON AN IDENTICAL ISSUE UNDER ALMOST SIMILAR FAC TS, HOLD THAT WHEN THE ASSESSEE EXERCISING THE OPTION, ONLY THE LOSSES OF THE YEAR BEGINNING FROM THE 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 FOR WARD ANY LOSS OF EARLIER YEARS WHICH HAS ALREADY BEEN SET OF F AGAINST ANY OTHER INCOME OF THE ASSESSEE AND SET OFF THE SA ME 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 DEDUCTION U/S. 80IA WIT HOUT BRINGING THE NOTIONALLY BROUGHT FORWARD ANY LOSS OR DEPRECIATION OF EARLIER YEARS WHICH HAS ALREADY BEE N SET OFF AGAINST OTHER INCOME OF THE ASSESSEE. THE DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF PRIMA PAPER ENGINEERING P.LTD. VS. ITO (SUPRA) CITED 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 SPINNING MILLS (P) LTD. VS. ACIT (SU PRA) ON THE ISSUE WAS NOT CITED BEFORE THE BENCH AND SEC ONDLY THE LD. AR FAIRLY AGREED THAT THE ISSUE RAISED WAS COVERED AGAINST THE ASSESSEE BY THE DECISION OF SPECIAL BEN CH IN THE CASE OF ACIT VS. GOLDMINE SHARES & FINANCE (P) LTD. (SUPRA) FOLLOWED BY THE AUTHORITIES BELOW. THE LD. AR THEREIN THUS CONTENDED THAT THOUGH THE ISSUE MAY BE DECIDED AGAINST THE ASSESSEE IN VIEW OF THE SPECIAL BENCH O F 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 L EGAL ITA NOS.2225 AND 2226/PN/2013 M/S. PATANKAR WIND FARM PVT. LTD 22 POSITION ON THE SUBJECT IS YET NOT SETTLED. THE GRO UND NO. 2 IS THUS DECIDED IN FAVOUR OF THE ASSESSEE. 9. THE TRIBUNAL THUS HELD AS UNDER :- 7. OSTENSIBLY, IN THE CASE OF SERUM INTERNATIONAL LTD. (SUPRA), THE TRIBUNAL HAS CONSIDERED AN IDENTICAL CONTROVERS Y. ON BEHALF OF THE ASSESSEE, THE JUDGMENT OF HONBLE MADRAS HIGH C OURT IN THE CASE OF VELAYDHASWAMY SPINNING MILLS (P) LTD. (SUPR A) WAS BEING CITED WHEREAS THE REVENUE HAD RELIED UPON THE DECIS ION OF SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF ASSTT. CIT VS. GOLDMINE SHARES AND FINANCE (P) LTD. (2008) 116 TTJ (AHD) (S B) 705 TO THE CONTRARY. THE TRIBUNAL NOTICED THAT HAVING REGARD TO THE DECISION OF THE HONBLE MADRAS HIGH COURT THE ISSUE WAS TO BE D ECIDED ACCORDINGLY AND NOT ON THE BASIS OF DECISION OF SPE CIAL BENCH OF THE TRIBUNAL IN THE CASE OF GOLDMINE SHARES AND FINANCE (P) LTD. (SUPRA) WHICH WAS TO THE CONTRARY. IN THIS CONTEXT , THE TRIBUNAL CAME TO THE CONCLUSION THAT WHEN THE ASSESSEE EXERC ISED 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 FORW ARD AND SET-OFF WHILE APPLYING THE PROVISIONS OF SECTION 80-IA(5) O F THE ACT AND NOT THE LOSSES OF EARLIER YEARS WHICH OTHERWISE WERE SE T-OFF AGAINST OTHER INCOME OF THE ASSESSEE. 8. AT THE TIME OF HEARING, THE LEARNED DR HAS NOT B ROUGHT TO OUR NOTICE ANY DECISION OF A HIGH COURT CONTRARY TO THA T OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF VELAYDHASWAMY SPIN NING MILLS (P) LTD. (SUPRA) ON THE ISSUE IN QUESTION. THEREFO RE, WE FIND THAT THE CONTROVERSY BEFORE US IS NO LONGER RES INTEGRA AND IS IN FACT COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION O F PUNE BENCH OF THE TRIBUNAL IN THE CASE OF SERUM INTERNATIONAL LD. (SUPRA) WHICH HAS BEEN DECIDED FOLLOWING THE DECISION OF THE HON BLE MADRAS HIGH COURT IN THE CASE OF VELAYDHASWAMY SPINNING MI LLS (P) LTD. (SUPRA). 10. THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE ARE IDENTICAL TO THE FACTS BEFORE THE TRIBUNAL IN THE CASE OF SHRI SANGR AM PATIL VS. ITO (SUPRA). THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HA D CLAIMED DEDUCTION UNDER SECTION 80-IA(5) OF THE ACT. THE ASSESSING O FFICER HAD TABULATED THE NOTIONAL LOSSES FROM YEAR TO YEAR AT PAGE 9 OF THE ASSESSMENT ORDER. HOWEVER, THE SAID LOSSES WERE BEING ADJUSTED AGAINS T THE OTHER INCOME ARISING TO THE ASSESSEE FROM TIME TO TIME. WHERE T HE LOSSES HAVE ALREADY BEEN ADJUSTED AGAINST ASSESSABLE INCOME IN THE PREC EDING YEAR, THE SAID LOSSES CANNOT BE SAID TO BE AVAILABLE TO BE ADJUSTE D AGAINST THE INCOME OF THE ASSESSEE ARISING IN THE YEAR UNDER CONSIDERATIO N. 11. THE SECOND ASPECT OF THE ISSUE IS THE YEAR FROM WHICH THE SAID LOSSES ARE TO BE CONSIDERED. AS HELD BY THE TRIBUN AL IN THE CASE OF SHRI SANGRAM PATIL VS. ITO (SUPRA) THAT, WHERE THE ASSES SEE EXERCISED THE OPTION OF THE TEN CONSECUTIVE YEARS AS CONTAINED IN SECTION 80-IA OF THE ACT, ONLY THE LOSSES BEGINNING FROM SUCH INITIAL AS SESSMENT YEAR ARE TO BE BROUGHT FORWARD AND SET-OFF WHILE APPLYING THE PROV ISIONS OF SECTION 80- IA(5) OF THE ACT AND NOT THE LOSSES OF THE EARLIER YEARS, WHICH HAVE ALREADY BEEN SET-OFF AGAINST THE OTHER INCOME OF THE ASSESS EE. ACCORDINGLY, WE HOLD THAT THE ASSESSEE IS ENTITLED TO CLAIM OF DEDU CTION UNDER SECTION 80- IA(5) OF THE ACT. THE GROUNDS OF APPEAL RAISED BY THE REVENUES ARE DISMISSED. ITA NOS.2225 AND 2226/PN/2013 M/S. PATANKAR WIND FARM PVT. LTD 23 30. FOLLOWING THE SAME PARITY OF REASONING, WE HOLD THAT WHERE THE ASSESSEE HAS EXERCISED THE OPTION OF 10 CONSECUTIVE YEARS AS CONTAINED IN SECTION 80IA OF THE ACT, THEN THE LOSSES BEGINNING FROM SUCH INITIA L YEAR WERE BROUGHT FORWARD AND SET OFF WHILE APPLYING THE PROVISIONS OF SECTIO N 80IA(5) OF THE ACT AND NOT THE LOSSES OF EARLIER YEARS, WHICH HAD BEEN ADJUSTED AG AINST OTHER INCOME OF THE ASSESSEE IN THE RELEVANT YEAR ITSELF. THE GROUNDS OF APPEAL NOS.3 TO 5 ARE THUS, ALLOWED. 31. THE FACTS AND ISSUES IN ITA NO.2225/PN/2013 ARE IDENTICAL TO THE FACTS AND ISSUES IN ITA NO.2226/PN/2013 AND OUR DECISION IN ITA NO.2225/PN/2013 SHALL APPLY MUTATIS MUTANDIS TO ITA NO.2226/PN/2013. 32. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 10 TH DAY OF APRIL, 2015. SD/- SD/- (G.S. PANNU) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 10 TH APRIL, 2015 GCVSR COPY OF THE ORDER IS FORWARDED TO: - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-II, PUNE; 4) THE CIT-II, PUNE; 5) THE DR B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T., PUNE