DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2(1), NAGPUR V. M/S MAHAVIR GLOBAL COAL LIMITED, NAGPUR

ITA 33/NAG/2018

• Counselvise Citation: [2023] 100 COUNSELVISE.COM (IT) 5638 (ITAT-NAGPUR)
• Duration Of Justice: 5 year(s) 8 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-11-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 16-10-2023
• Assessment Year: 2014-2015
• Appeal Filed On: 27-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RASHMI MATHUR
• Section: 80IA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR – VIRTUAL COURT BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI S. S. VISWANETHRA RAVI, JUDICIAL MEMBER आयकर अपील सं. / ITA No.33/NAG/2018 िनधाᭅरण वषᭅ / Assessment Year : 2014-15 DCIT, Central Circle-2(1), Nagpur. Vs. M/s Mahavir Global Coal Limited, 261, Shankar Nagar, 2 nd Lane, Behind Park, Nagpur- 440010. PAN : AADCM4776H Appellant Respondent आदेश / ORDER PER INTURI RAMA RAO, AM: This is an appeal filed by the Revenue directed against the order of ld. Commissioner of Income Tax (Appeals)- 3, Nagpur [‘the CIT(A)’] dated 18.12.2017 for the assessment year 2014-15. 2. The Revenue raised the following grounds of appeal :- “i) On the facts and circumstances of the case and in law, the CIT(A) has erred in deleting the disallowance of claim of deduction u/s 80IA of Rs. 1,71,57,525/- without appreciating the fact that in the Form No. 10CCB filed by the assessee, the initial assessment was mentioned as A.Y. 2007-08 and as such there were no eligible profits available for the current year after taking into consideration the unabsorbed losses of the assessment years 2007-08 onwards. ii) Any other ground that may be urged at the time of hearing.” Revenue by : Smt. Rashmi Mathur Assessee by : Shri Mahavir Atal Date of hearing : 17.10.2023 Date of pronouncement : 03.11.2023 ITA No.33/NAG/2018 2 3. Briefly, the facts of the case are that the respondent-assessee is a company incorporated under the provisions of the Companies Act, 1956. It is engaged in the business of trading and transportation of coal and generation of electricity through windmills. The Return of Income for the assessment year 2014-15 was filed on 19.11.2014 disclosing total income of Rs.5,11,34,330/- after claiming exemption of income of Rs.1,71,57,525/- in respect of generation of electricity through windmills u/s 80IA of the Income Tax Act, 1961 (‘the Act’). Against the said return of income, the assessment was completed by the Asst. Commissioner of Income Tax, Central Circle-2(1), Nagpur (‘the Assessing Officer’) vide order dated 19.12.2016 at total income of Rs.6,82,91,855/-. While doing so, the Assessing Officer disallowed the claim for deduction u/s 80IA of the Act for want of positive profits from the specified activities i.e. profits from generation and sale of electricity through windmills. The Assessing Officer had come to this conclusion based on the information that the initial assessment year for the business of generation of electricity through windmills is 2007-08 as per the audit report in Form No.10CCB and since the assessee had suffered losses from the initial assessment years i.e. 2007-08 to 2011-12 aggregating to Rs.6,42,97,425/- after deduction of brought forward ITA No.33/NAG/2018 3 business losses from the business of generation of electricity through windmills, there was no positive income. 4. Being aggrieved by the above disallowance of deduction 80IA(5), the appellant filed an appeal before the ld. CIT(A), who vide impugned order directed the Assessing Officer to allow the deduction u/s 80IA(5) considering the submissions of the assessee that the initial assessment year was wrongly mentioned as assessment year 2007-08 instead of assessment year 2011-12 and, therefore, losses incurred prior to the initial assessment year need not be set-off against the profits earned during the year under consideration. 5. Being aggrieved by the findings of the ld. CIT(A), the Revenue is in appeal before us in the present appeal. 6. It is contended that the ld. CIT(A) ought not to have accepted the submissions of the assessee that the initial assessment year for the purpose of claiming deduction u/s 80IA was 2011-12 not A.Y. 2007-08 ignoring the return of income filed for the assessment year 2007-08. He further submits that the ld. CIT(A) ought not to have taken cognizance of the revised audit report filed for the assessment year 2011-12 without any supporting material for revision of the audit report. ITA No.33/NAG/2018 4 7. On the other hand, ld. AR submits that the order of the ld. CIT(A) is sound in law and does not require any interference. He further submits that the losses of the earlier years was already absorbed against the profits of other business in the subsequent years and, therefore, the Assessing Officer was not justified in disallowing the claim for deduction u/s 80IA of the Act. 8. We heard the rival submissions and perused the material on record. The issue that arises for consideration in the present appeal is that whether or not the ld. CIT(A) was justified in holding that the initial assessment year for the purpose of claiming deduction u/s 80IA(5) is only from the assessment year 2011-12 not from the assessment year 2007-08. The provisions of section 80IA of the Act w.e.f. 01.01.2000 provides for deduction of an amount equal to 100% of profits and gains derived by an undertaking or enterprise from an eligible business as referred to in sub-section 4 of section 80IA in accordance with the prescribed provisions. The term eligible business had been defined to include the business of generation of electricity through windmills. While prescribing the manner of determining of the quantum of deduction, a reference had been made to the term “initial assessment year” and the assessee shall be entitled for deduction for a period of 10 consecutive assessment years out of 15 years beginning from the year in which ITA No.33/NAG/2018 5 the undertaking commence operations, begins development or starts providing services etc can be claimed by the assessee at his option. The CBDT vide Circular No.1/2016 dated 15.02.2016 had clarified that the term initial assessment year would mean the first year opted for by the assessee for claiming deduction u/s 80IA of the Act, therefore, it means that an assessee, who incurred losses in the earlier years i.e. prior to the initial assessment year, the question of claiming deduction u/s 80IA and set-off of such losses against the profits of current year does not arise for the purpose of computing the quantum of deduction u/s 80IA of the Act in view of the plain provisions of section 80IA of the Act, treating the undertaking a separate source of income. But the fact of the matter here is that the assessee company itself had stated that the initial assessment year is 2007-08 even the audit report in Form No.10CCB was originally filed showing the initial assessment year as 2007-08. It is only during the course of proceedings before the ld. CIT(A), a revised audit report was filed, wherein, the initial assessment year was shown as 2011-12. However, the ld. CIT(A) on verification of the returns of income for the assessment years 2007-08 to 2010-11 had come to the conclusion that it is only from the assessment year 2011-12, the assessee made claim for deduction u/s 80IA and after making reference to the CBDT Circular (supra) allowed the benefit ITA No.33/NAG/2018 6 of deduction u/s 80IA of the Act. The order of the ld. CIT(A) is based on the proper appreciation of material facts and in tune with the CBDT Circular (supra), which had clarified that the initial assessment year means the year in which the deduction was claimed for the first time and also in consonance with the law laid down by the Hon’ble Madras High Court in the case of CIT vs. Best Corporation Ltd., 76 taxmann.com 286 (Madras). Therefore, we do not find any illegality in the findings of the ld. CIT(A) either on the facts or in law. Thus, the order of the ld. CIT(A) is sustained as we see no reason to interfere with the same. Thus, the grounds of appeal filed by the Revenue stand dismissed. 9. In the result, the appeal filed by the Revenue stands dismissed. Order pronounced on this 03 rd day of November, 2023. Sd/- Sd/- (S. S. VISWANETHRA RAVI) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; ᳰदनांक / Dated : 03 rd November, 2023. Sujeet आदेश कᳱ ᮧितिलिप अᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The CIT(A)-3, Nagpur. 4. The CIT (Central), Nagpur. 5. िवभागीय ᮧितिनिध, आयकर अपीलीय अिधकरण, नागपुर / DR, ITAT, Nagpur. 6. गाडᭅ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.