SHALIMAR VISUALS P.LTD, MUMBAI V. DCIT CIR 8(3), MUMBAI

ITA 2392/MUM/2014

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 8354 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 10-04-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: ARUN G VERMA
• Keywords: Depreciation; Earning of tax free income; Question of law; Unabsorbed depreciation
• Section: 234B; 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'SMC' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT ITA NO. 2391&2392/MUM/2014 (ASSESSMENT YEARS: 2007-08 & 2008-09) M/S. SHALIMAR VISUALS P. LTD. VS. DCIT, CIRCLE 8(3) 39, JUHU BEACH MUMBAI 400049 2ND FLOOR, AAYAKAR BHAVAN M.K. ROAD, MUMBAI 400020 PAN - AABCS1096A APPELLANT RESPONDENT ITA NO. 3065/MUM/2014 (ASSESSMENT YEAR: 2007-08) DCIT, CIRCLE 8(3) VS. M/S. SHALIMAR VISUALS P. LTD. 2ND FLOOR, AAYAKAR BHAVAN M.K. ROAD, MUMBAI 400020 39, JUHU BEACH MUMBAI 400049 PAN - AABCS1096A APPELLANT RESPONDENT ASSESSEE BY: SHRI ARUN G. VERMA REVENUE BY: SHRI RAVINDER SINDHU DATE OF HEARING: 07.08.2014 DATE OF PRONOUNCEMENT: 22.08.2014 O R D E R PER D. MANMOHAN, V.P. THESE APPEALS ARE DIRECTED AGAINST THE COMMON ORDER PASSED BY THE CIT(A)-18, MUMBAI AND THEY PERTAIN TO ASSESSMENT YE ARS 2007-08 AND 2008-09. IN RESPECT OF AY 2007-08 THERE ARE CROSS A PPALS WHEREAS FOR AY 2008-09 THE APPEAL WAS FILED BY THE ASSESSEE COMPAN Y. 2. THE ONLY ISSUE INVOLVED IN THE APPEAL FILED BY THE ASSESSEE FOR AY 2007-08 IS WITH REGARD TO TAXATION OF SALES TAX BEN EFITS RECEIVED UNDER POWER POLICY IN RESPECT OF WINDMILLS. 3. THE CASE OF THE ASSESSEE IS THAT SALES TAX SUBSIDY RECEIVED BY THE ASSESSEE UNDER POWER POLICY OF THE STATE GOVERNMENT WAS IN LIEU OF SETTING UP OF WINDMILLS IN MAHARASHTRA AND THEREFORE IT HAS TO BE TREATED AS CAPITAL IN NATURE WHEREAS THE AO AS WELL AS THE CIT(A) ERRE D IN TREATING THE SAME AS ITA NO. 2391,2392&3065/MUM/2014 M/S. SHALIMAR VISUALS P. LTD. 2 REVENUE RECEIPT. IN RESPECT OF AY 2008-09 ALSO THE FIRST GROUND PERTAINS TO TAXABILITY OF SALES TAX BENEFIT RECEIVED. IT DESERV ES TO BE NOTICED THAT IDENTICAL ISSUE WAS CONSIDERED BY THE ITAT, MUMBAI IN ASSESSE ES OWN CASE FOR EARLIER ASSESSMENT YEARS (ITA NO. 2012&4560/MUM/2009 DATED 08.01.2014) WHEREIN THE TRIBUNAL UPHELD THE VIEW TAKEN BY THE T AX AUTHORITIES. AGAINST THE ORDER PASSED BY THE ITAT THE ASSESSEE PREFERRED AN APPEAL BEFORE THE HON'BLE HIGH COURT OF JUDICATURE (IT APPEAL NO. 866 OF 2014) WHICH IS PENDING BEFORE THE HON'BLE BOMBAY HIGH COURT. UNDER THESE CIRCUMSTANCES THE ASSESSEE FILED A DECLARATION UNDER SECTION 158A OF THE ACT (FORM NO. 8) WITH REGARD TO THE ABOVE MENTIONED ISSUE. 4. SECTION 158A PROVIDES THAT THE APPELLATE AUTHORITY, BEFORE WHOM A DECLARATION IS FURNISHED, SHALL CALL FOR A REPORT F ROM THE AO ON THE CORRECTNESS OF THE CLAIM MADE BY THE ASSESSEE AND, WHERE THE AO MAKES A REQUEST TO THE APPELLATE AUTHORITY TO GIVE HIM AN O PPORTUNITY OF BEING HEARD IN THE MATTER, THE APPELLATE AUTHORITY SHALL ALLOW HIM SUCH OPPORTUNITY. ACCORDINGLY THE DEPARTMENTAL REPRESENTATIVE WAS DIR ECTED TO INFORM THE AO AND TO FURNISH A REPORT IN THIS REGARD. VIDE LETTER DATED 05.08.2014 BY THE AO (DY. COMMISSIONER OF INCOME TAX 8(3), MUMBAI) AD DRESSED TO THE SENIOR AUTHORISED REPRESENTATIVE, OFFICE OF THE CIT-DR, MU MBAI IT IS ADMITTED THAT THE LEGAL ISSUE INVOLVED HEREIN IS IDENTICAL WITH T HE ISSUE THAT WAS CONSIDERED BY THE TRIBUNAL IN THE APPEAL FOR AY 200 5-06 AND THE SAME IS PENDING BEFORE THE HON'BLE BOMBAY HIGH COURT. IT WA S, HOWEVER, STATED THAT EXCEPT THE CHANGE IN THE NAME OF THE PURCHASER THE LEGAL ISSUE IS IDENTICAL. 5. THE LEARNED D.R. ADMITTED THAT THE FACTS ARE NOT IN DISPUTE AND IN THE PARTICULAR FACTUAL MATRIX THE LEGAL CONCLUSIONS THA T NEED TO BE DRAWN SHOULD BE IDENTICAL IN THE ASSESSMENT YEARS UNDER CONSIDER ATION AND THUS THE EARLIER ORDER OF THE TRIBUNAL CAN BE APPLIED MUTATI S MUTANDIS. 6. HAVING REGARD TO THE CIRCUMSTANCES THE BENCH ACCEP TS THE REQUEST MADE BY THE ASSESSEE UNDER SECTION 158A OF THE ACT AND DISPOSE OF THE APPEAL FILED BY THE ASSESSEE FOR AY 2007-08 AND GRO UND NO. 1 IN RESPECT OF AY 2008-09. IN OTHER WORDS, THIS ISSUE STANDS COVER ED BY THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR EARLIER YEAR AN D WHEN THE DECISION ON THE QUESTION OF LAW RAISED BEFORE THE SUPERIOR FORU M BECOMES FINAL IT SHOULD ITA NO. 2391,2392&3065/MUM/2014 M/S. SHALIMAR VISUALS P. LTD. 3 BE APPLIED TO THE RELEVANT CASE AND THE ASSESSEE IS ENTITLED TO THE BENEFIT PROVIDED UNDER SECTION 158A. AS THE THINGS STAND TO DAY, THE APPEAL FILED BY THE ASSESSEE FOR AY 2007-08 IS TREATED AS DISMISSED AND GROUND NO. 1 IN THE APPEAL FOR AY 2008-09 IS REJECTED ON THE SAME TERMS . 7. IN RESPECT OF AY 2008-09 THREE MORE GROUNDS WERE UR GED BEFORE THE TRIBUNAL, WHICH ARE TAKEN UP IN SERIATIM. VIDE GROU ND NO. 2 THE ASSESSEE CONTENDS THAT THE CIT(A) ERRED IN NOT DELETING THE DISALLOWANCE OF ` 16,361/-, MADE BY THE AO UNDER SECTION 14A READ WITH RULE 8D OF THE IT RULES. 8. AS COULD BE NOTICED FROM PAGE NO. 8 OF THE ASSESSME NT ORDER, THE ASSESSEE RECEIVED DIVIDEND INCOME FROM MUTUAL FUNDS AND SHARES, AMOUNTING TO ` 7,79,175/-. THE ASSESSEE HAS NOT VOLUNTARILY DISCLO SED ANY EXPENDITURE PERTAINING TO THE ABOVE EXEMPT INCOME E XCEPT DEMAT CHARGES OF ` 449/-. WHEN CALLED UPON TO EXPLAIN, THE ASSESSEE SU BMITTED THAT THE INCOME FROM MUTUAL FUND AND DIVIDEND INCOME ARE DIR ECTLY CREDITED TO ITS BANK ACCOUNT UNDER ECS AND ACCORDINGLY THERE IS NO NEED TO SPEND ANY EXPENDITURE ON THE SAME. IT WAS ALSO SUBMITTED THAT THE INVESTMENTS IN SHARES AND MUTUAL FUND WERE MADE OUT OF ITS SURPLUS AND INTEREST FREE FUNDS. THEREFORE NO FURTHER DISALLOWANCE CAN BE MAD E UNDER SECTION 14A OF THE ACT. THE AO, WITHOUT ANY FURTHER REASONS AS TO WHY SECTION 14A IS APPLICABLE, MERELY PROCEEDED TO COMPUTE THE AMOUNT DISALLOWABLE UNDER RULE 8D OF I.T. RULES WHICH WORKS OUT TO ` 16,361/-. ON AN APPEAL THE LEARNED CIT(A) MERELY OBSERVED THAT INTEREST PART C AN BE EXCLUDED BECAUSE NO BORROWED FUNDS WERE USED FOR INVESTMENT BUT HE H AS ALSO NOT GIVEN ANY REASONS AS TO WHY SECTION 14A IS MADE APPLICABLE IN THIS CASE. AT THE TIME OF HEARING THE LEARNED COUNSEL ADVERTED OUR ATTENTION TO THE ORDER OF THE ITAT J BENCH, MUMBAI IN THE CASE OF J.K. INVESTORS (BO MBAY) LTD. (ITA NO. 7858 & 5851/MUM/ 2011 DATED 13.03.2013) AND IN PARTICULA R REFERRED TO PAGE NO. 26 OF THE PAPER BOOK TO SUBMIT THAT IN ORDER TO INVOKE RULE 8D THE AO HAS TO RECORD SATISFACTION WITH REGARD TO THE INCOR RECTNESS OF THE CLAIM OF THE ASSESSEE, HAVING REGARD TO THE ACCOUNTS MAINTAINED BY IT. IN AN EVENT WHERE THE AO HAS NOT DOUBTED THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE AND STRAIGHT AWAY EMBARKED UPON COMPUTING THE DISALLOWA NCE UNDER RULE 8D R.W.S. 14A, THE SAME WOULD NOT STAND THE TEST OF LA W. HE FURTHER SUBMITTED ITA NO. 2391,2392&3065/MUM/2014 M/S. SHALIMAR VISUALS P. LTD. 4 THAT THE DEPARTMENT HAS NOT FILED ANY APPEAL AGAINS T THE ORDER PASSED BY THE TRIBUNAL IN THE CASE OF J.K. INVESTORS (BOMBAY) LTD. AND THUS IT HAS ATTAINED FINALITY. IN ASSESSEES CASE ALSO NEITHER THE AO NOR THE CIT(A) FURNISHED ANY REASON AS TO WHY THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE ARE INCORRECT; IN FACT THE ASSESSEES CLAI M WAS THAT NO EXPENDITURE WAS INCURRED IN RELATION TO EXEMPT INCOME AND THE A O HAS NOT RECORDED HIS SATISFACTION TO DISPROVE THE CORRECTNESS OF THE CLA IM IN WHICH EVENT THE DISALLOWANCE UNDER SECTION 14A READ WITH RULE 8D IS NOT TENABLE. 9. ON THE OTHER HAND, THE LEARNED D.R. RELIED UPON THE ORDERS PASSED BY THE AO AS WELL AS THE CIT(A). 10. I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS A ND CAREFULLY PERUSED THE RECORD. THE FACTS ARE NOT IN DISPUTE. T HE CASE OF THE ASSESSEE IS THAT NO EXPENDITURE WAS INCURRED IN EARNING THE EXE MPT INCOME. THERE IS NO FINDING BY THE AO OR THE CIT(A) TO THE EFFECT THAT THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE ARE NOT SUSCEPTIBLE FOR VERIFICATION. UNDER THESE CIRCUMSTANCES I AM OF THE VIEW THAT THE AO WAS NOT JUSTIFIED IN COMPUTING THE DISALLOWANCE UNDER SECTION 14A READ WITH RULE 8 D OF THE I.T. RULES. THE DISALLOWANCE OF ` 16,361/-, WHICH WAS FURTHER REDUCED BY THE CIT(A), IS HEREBY SET ASIDE/CANCELLED. GROUND NO. 2 IS ACCORDI NGLY ALLOWED. 11. VIDE GROUND NO. 3 THE ASSESSEE CONTENDS THAT THE CI T(A) ERRED IN CONFIRMING THE DISALLOWANCE OF DEDUCTION UNDER SECT ION 80IA WITH REFERENCE TO (I) INTEREST INCOME OF ` 18,098/- ON DELAYED PAYMENT OF SALE PROCEEDS AND (II) SUNDRY CREDITS OF ` 1,661/- WRITTEN BACK AS INCOME. 12. AT THE TIME OF HEARING THE LEARNED COUNSEL ADVERTED ATTENTION OF THE BENCH TO PAGE 52 OF THE PAPER BOOK TO SUBMIT THAT I N THE CASE OF GROUP COMPANY, I.E. SUN-N-SAND HOTELS PVT. LTD. (ITA NO. 5645/MUM/2012 DATED 19.05.2014) ITAT E BENCH, MUMBAI HELD THAT INTERE ST ON DELAYED PAYMENT OF SALE PRICE OF ITS PRODUCT CAN BE REGARDED AS BEI NG DERIVED FROM THE INDUSTRIAL UNDERTAKING FOR THE PURPOSE OF SECTION 8 0IB OF THE ACT AND ON THE SAME ANALOGY EVEN FOR THE PURPOSE OF SECTION 80IA T HE INTEREST RECEIVED SHOULD BE TREATED AS PROFIT DERIVED BY AN UNDERTAKI NG. ITA NO. 2391,2392&3065/MUM/2014 M/S. SHALIMAR VISUALS P. LTD. 5 13. THE LEARNED D.R. ADMITTED THAT THE ISSUE STANDS COV ERED BY THE AFORESTATED DECISION. 14. WITH REGARD TO THE EXCESS PROVISION WRITTEN BACK TH E CASE OF THE ASSESSEE IS THAT IN THE IMMEDIATELY PRECEDING YEARS THE TRANSMISSION CHARGES PAYABLE TO MSEB WERE PROVIDED AND WERE CONS IDERED IN COMPUTING DEDUCTION UNDER SECTION 80IA. IN THIS YEAR THIS WAS REVERSED AS THE SAME WAS PROVIDED EXCESSIVELY. THEREFORE IT WAS CREDITED TO THE PROFIT & LOSS ACCOUNT; IT WAS TREATED AS PROFIT UNDER SECTION 41( 1) OF THE ACT. 15. ON THE OTHER HAND, THE LEARNED D.R. RELIED UPON THE ORDERS PASSED BY THE TAX AUTHORITIES BY SUBMITTING THAT IT IS AN EXC ESS PROVISION AND HENCE IT CANNOT BE TREATED AS PROFIT IN THIS YEAR. 16. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS. SECTIO N 41(1) SPEAKS OF THE EXPENDITURE INCURRED BY THE ASSESSEE AND CLAIME D AS DEDUCTION IN AN EARLIER YEAR. IN THE INSTANT CASE THE ASSESSEE CLAI MED TO HAVE DEBITED TRANSMISSION CHARGES PAYABLE TO MSEB WHEREAS IN THI S YEAR IT WAS WRITTEN BACK AND THEREFORE IT HAS TO BE TREATED AS PROFIT O F THE YEAR UNDER CONSIDERATION WHICH IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80IA. I DIRECT THE AO ACCORDINGLY. 17. GROUND NO. 4 IS WITH REGARD TO THE CORRECTNESS OF L EVY OF INTEREST OF ` 17,911/- UNDER SECTION 234C OF THE ACT. IT IS NOT I N DISPUTE THAT THE ASSESSEE PAID SECOND INSTALMENT OF ADVANCE TAX OF ` 8,00,000/- ON 17.09.2007 WHICH WAS DUE ON 15.09.2007. THE INSTALM ENT COULD NOT BE PAID ON 15.09.2009 ON ACCOUNT OF BANK HOLIDAY DUE TO GAN ESH CHATURTHI AND 16.09.2007 BEING A SUNDAY, WHICH WAS A BANK HOLIDAY . THE NEXT AVAILABLE DATE WAS 17.09.2007 ON WHICH DATE THE ASSESSEE PAID THE SECOND INSTALMENT OF ADVANCE TAX WHEREAS ACCORDING TO THE AO THE LAST DATE FOR PAYMENT OF INSTALMENT WAS 15.09.2007 AND FAILURE TO PAY THE IN STALMENT OF ADVANCE TAX WOULD AUTOMATICALLY ATTRACT PROVISIONS OF SECTION 2 34C OF THE ACT. THE AO AS WELL AS THE CIT(A) WERE OF THE VIEW THAT INTEREST I S CHARGEABLE UNDER SECTION 234C OF THE ACT AND THUS THE ASSESSEE PREFERRED AN APPEAL BEFORE THE TRIBUNAL. ITA NO. 2391,2392&3065/MUM/2014 M/S. SHALIMAR VISUALS P. LTD. 6 18. THE LEARNED COUNSEL FOR THE ASSESSEE ADVERTED THE A TTENTION OF THE BENCH TO THE CIRCULAR ISSUED BY CBDT (CIRCULAR NO. 676 DATED 14.01.1994) WHICH CATEGORICALLY SAYS THAT IF THE LAST DATE FOR PAYMENT OF ANY INSTALMENT OF ADVANCE TAX IS A BANK HOLIDAY THE ASSESSEE CAN M AKE THE PAYMENT ON THE IMMEDIATELY FOLLOWING WORKING DAY AND IN SUCH CASES MANDATORY INTEREST LEVIABLE UNDER SECTION 234B AND 234C OF THE ACT WOU LD NOT BE CHARGED. IT WAS THEREFORE SUBMITTED THAT THE CIRCULAR ISSUED BY THE CBDT IS BINDING ON THE TAX AUTHORITIES AND INTEREST IS NOT CHARGEABLE UNDER SECTION 234C. 19. THE LEARNED D.R. HAS NOT DISPUTED THE FACTUAL MATRI X OF THE CASE. 20. UNDER THESE CIRCUMSTANCES I HOLD THAT THE TAX AUTHO RITIES HAVE ERRED IN CHARGING INTEREST UNDER SECTION 234C OF THE ACT WITH REFERENCE TO THE ADVANCE TAX INSTALMENT PAID ON 17.09.2007. ASSESSIN G OFFICER IS DIRECTED ACCORDINGLY. APPEAL IS PARTLY ALLOWED. 21. FOLLOWING GROUNDS WERE URGED IN REVENUES APPEAL: - '(I) ON THE FACTS AND IN THE C I RCUMSTANCES OF THE CASE AND I N LAW , THE LD . CIT(A) ERRED I N DELET I NG THE DISA LL OWANCE OF RS . 41 , 60 , 506 J - MADE U / S. 80IA(4)(IV ) OF THE ACT FOR A . Y. 2007- 08 HOLD I NG THAT THE PROVISIONS OF SECT I ON 80IA ( 5 ) W E R E NO APP LI CAB L E FOR THE LOSS AND UNABSORBED DEPREC I AT I ON FOR THE YEARS PR I OR TO TH E I N I T I A L YEAR OF C L A I M WHI CH HAD A LR EAD Y BEEN SET-OFF AGAINST THE OTHER BUSINESS I NCOME. ' (II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) ERRED I N RELYING ON THE DECISION OF HON'BLE MADRAS HIGH COURT IN THE CASE OF VELAYUDHASWAM Y SPINNING MILLS PVT. LTD. (2012) (340 ITR 477)(MAD), JUDGMENT OF CHENNAI TRIB UNAL IN THE CASE OF MOHAN BREWERIES & DISTILLERIES LTD. (2009) [311 ITR (AT) 346] (CHENNAI). (III) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND I N LAW , THE LD. CIT(A) ERRED IN NOT APPREC I AT I NG THAT THESE JUDIC I AL PRONOUNCEMENTS WERE RENDERED WITHOUT HAVING BEE N I NFORMED ABOUT CERTAIN STATUTORY PROVIS I ONS (SUCH AS THE NON-OBSTANTE CLAUSE OF SECT I O N 80IA ) T HAT ARE DIRECT L Y R E L EVANT. (IV) O N T H E F ACTS AND IN THE C I RCUMS T ANCES OF T H E CASE A N D I N L A W, T HE LD. CIT(A ) E R RED IN I G N O RIN G THE RAT I O LA I D DO W N BY DEC I S I ONS I N T H E CASES OF ACIT VS. GOLD M I NE SHARES & F IN A N C E ( P) LTD. [1 12 ITD 209 (SB) (AHD )] A N D M/ S. H Y DERABAD C H E MI CALS SUPPL I ES LTD. VS . AC I T (I TAT HYDERABAD) IN ITA NO . 352/HYD/2005 DATED 21 . 01 . 20 1 1 , WHEREIN I T I S HELD THA T DESP I T E ABSORPTION IN EAR LI ER YEARS , LOSS OF EL I G I BLE U NI TS WAS TO BE SET OFF AGA I NST THE PRO FITS BEFORE COMPUT I NG DEDUCTION U / S. 80IA(4 ). ITA NO. 2391,2392&3065/MUM/2014 M/S. SHALIMAR VISUALS P. LTD. 7 (V) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) ERRED I N IGNORING THE DECIS I ON OF JURISIDICTIONAL ITAT, MUMBAI IN THE CASE OF HERCULES HOISTS LTD. V S . ACIT [ ITA NOS.7944, 7946, 2255 & 7943/MUM/2011] WHEREIN THE TRIBUNAL HAD ALSO HE L D THAT THE UNABSORBED DEPRECIATION/ BUSINESS LOSS I S TO BE NOTIONALLY CARR I ED FORWARD AND SE T - OFF AGAINST THE PROFITS OF ELIGIBLE UN I TS U/S. 80IA(5) FOR THE PURPOSE OF DEDUCTION U/S. 8 0 IA O F THE INCOME-TAX ACT, 1961 . IN SHORT THE CASE OF THE REVENUE IS THAT THE CIT(A) ERRED IN DELETING THE DISALLOWANCE OF ` 41,60,506/- MADE UNDER SECTION 80IA(4)(IV) OF THE A CT. 22. AT THE TIME OF HEARING THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE CLAIM OF THE ASSESSEE WAS REJECTED BY THE CIT(A) AND HENCE THERE IS NO GRIEVANCE FOR THE REVENUE TO FILE AN APPEAL. 23. IT DESERVES TO BE NOTICED THAT THE CASE OF THE REVE NUE BEFORE THE TRIBUNAL IS THAT THE CIT(A) ERRED IN FOLLOWING THE ORDER OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF VELAYUDHASWAMY SPINNING M ILLS PVT. LTD. 340 ITR 477 AND THE ORDER OF THE ITAT CHENNAI BENCHES IN TH E CASE OF MOHAN BREWERIES & DISTILLERIES LTD. 311 ITR (AT) 346 IGNO RING THE RATIO LAID DOWN BY THE DECISION OF THE ITAT AHMEDABAD SPECIAL BENCH IN THE CASE OF GOLD MINE SHARES & FINANCE P. LTD. 112 ITD 209 WHEREIN IT WAS STATED THAT DESPITE ABSORPTION IN EARLIER YEARS, LOSS OF ELIGIBLE UNITS WAS TO BE SET OFF AGAINST THE PROFITS BEFORE COMPUTING DEDUCTION UNDER SECTION 80 IA(4). IN OTHER WORDS, THE DEPARTMENT IS OF THE VIEW THAT UNABSORBED DEPRE CIATION/BUSINESS LOSS IS TO BE NOTIONALLY CARRIED FORWARD AND SET OFF AGAINS T THE PROFITS OF ELIGIBLE UNITS UNDER SECTION 80IA(5) FOR THE PURPOSE OF DEDU CTION UNDER SECTION 80IA OF THE INCOME TAX ACT. 24. IN PARA 3.1 THE LEARNED CIT(A) OBSERVED AS UNDER: - SUB-SEC (5) PROVIDES THAT NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PR OV I S I ONS OF THE ACT , THE PROFITS AND GA I NS OF AN ELIGIBLE BUSINESS SHOULD HAVE FOR THE PURPOSE OF DETERMIN I NG THE QUANTUM OF DEDUCT I ON UNDER SUB-SEC . (1) FOR THE ASSESSMENT YEAR IMM E DI A T E LY SUCCEEDING THE INITIAL ASSESSMENT YEAR OR ANY SUBSE QU E NT ASSESSMENT YEAR, BE COMPUTED AS IF SUCH E L IGIBLE BUS IN ESS WER E THE ONLY SOURCE OF I NCOME OF THE ASSESSEE D URIN G TH E P R EV I OUS YEAR RELEVANT TO THE INITIAL ASSESSMENT YEAR A ND TO EVERY SUBSEQUENT ASSESSMENT YEAR UP TO AND INCLUDING TH E A SSESSMENT YEAR FOR WHICH ITA NO. 2391,2392&3065/MUM/2014 M/S. SHALIMAR VISUALS P. LTD. 8 THE DETERM I NATION IS TO BE MADE . I N TH E CASE OF THE ASSESSEE, IN THE IN I TIAL ASSESSMENT YEAR I.E . A . Y . 2002- 03 AND SUBSEQUENT YEARS UP TO A . Y . 2006-07 , THE G R OSS T OTAL I NCOME OF THE ELIGIBLE BUSINESS OF WINDM IL L WAS NEGATIVE AFTER TAKING INTO ACCOUNT THE NOT I ONAL BROUGHT FORWARD BUS IN ESS LOSS AND UNABSORBED DEPRECIAT I ON A L LOWANCE AND AFTER SETT I NG OF THE BALANCE OF SUCH NOTIONAL LOSS AND DEPREC I AT I ON , T H I S YEA R THERE WAS A POSIT I VE GROSS TO T AL I NCOME AS PER THE WORKING F I LED AND ACCORDINGLY THE ASSESSEE WIL L BE ENTITLED TO THE DEDUCT I ON U/S 80-IA I N RESPECT OF THE BALANCE PROF IT OF RS . 91 , 45 , 793/- FOR A.Y. 2007-08 , THUS THE REVISED CLA I M OF THE ASSESSEE WAS REJECTED. 25. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THA T THE CIT(A) HAVING DISMISSED THE APPEAL, REVENUE CANNOT BE STATED TO B E AGGRIEVED AND THEREFORE THIS GROUND BECOMES INFRUCTUOUS. IN THE L IGHT OF THE SUBMISSION OF THE LEARNED COUNSEL, WHICH WAS NOT CONTROVERTED BY THE LEARNED D.R., THE GROUNDS OF APPEAL FILED BY THE REVENUE ARE DISMISSE D AS INFRUCTUOUS. 26. IN THE RESULT, ITA NO.2392/MUM/ 2014 IS PARTLY ALLO WED AND ITA NO.2391/MUM/2014 & ITA NO. 3065/MUM/2014 ARE DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND AUGUST, 2014. SD/- (D. MANMOHAN) VICE PRESIDENT MUMBAI, DATED: 22 ND AUGUST, 2014 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 18, MUMBAI 4. THE CIT 8, MUMBAI CITY 5. THE DR, SMC BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.