INDIANA GRATING SP.LTD, MUMBAI V. DCIT RG 8(2), MUMBAI

ITA 4311/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88389 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 03-02-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 30-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASGHAR ZAIN
• Keywords: Business income; Depreciation; Unabsorbed depreciation
• Section: 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH I, MUMBAI BEFORE SHRI N. K. BILLAIYA ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA NO. 4311/MUM/2013 ASSESSMENT YEAR: 2009-10 INDIAN GRATINGS PVT. LTD. INDIAN HOUSE, MAKWANA ROAD, OFF. M. VASANJI ROAD, MAROL NAKA, ANDHERI (E), MUMBAI 59 PAN:-AAACI 2546 Q VS. DCIT RG - 8(2) 2 ND FLOOR, AAYAKAR BHAVAN MUMBAI 400 020 (APPELLANT) (RESPON DENT) ASSESSEE BY : SHRI PR AKASH JOTWANI REVENUE BY : SH RI ASGHAR ZAIN DATE OF HEARING : 03.02.2015 DATE OF ORDER : 11 .02.2015 O R D E R PER AMIT SHUKLA, JM: THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE, AG AINST ORDER DATED 16.04.2013, PASSED BY LD. CIT(A)-17, U/S 143( 3) FOR THE A.Y. 2009-10, MAINLY ON THE FOLLOWING GROUNDS:- 1A). THE LD. CIT(A) ERRED IN CONFIRMING DISALLOWAN CE OF DEDUCTION U/S 80IA MADE BY THE AO AND NOT CONSIDERI NG THE FACT THAT DEDUCTION U/S 80IA IS TO BE CLAIMED AND ALLOWE D ON A STAND- ALONE BASIS AS IF THE ELIGIBLE BUSINESS WAS THE ONL Y SOURCE OF INCOME. ITA NO. 4311/MUM/2013 ASSESSMENT YEAR: 2009-10 2 B) THE LD. CIT(A) ERRED IN HOLDING THAT LOSSES OF E ARLIER YEAR HAD TO BE REDUCED BEFORE ALLOWING CLAIM U/S 80 IA AND D ISREGARDING THE FACT THAT THERE WERE NO LOSSES OF EARLIER YEARS AS THEY HAD BEEN SET OFF AGAINST OTHER INCOMES OF THOSE YEARS. 2. THE LD. CIT(A) ERRED IN DENYING DEDUCTION U/S 80 IA BY FOLLOWING TRIBUNAL DECISIONS DEALING WITH POSITION PRIOR TO FINANCE ACT, 1999 AND NOT FOLLOWING THE MADRAS HIGH COURT D ECISION WHICH IS A HIGHER AUTHORITY THAN THE FULL BENCH OF THE TR IBUNAL AND IS BASED ON SIMILAR FACTS/POST FINANCE ACT, 1999 POSIT ION WHEN THE WINDMILLS WERE SET UP. 2. THE BRIEF FACTS QUA THE ISSUE INVOLVED ARE THAT, THE ASSESSEE COMPANY BESIDES ENGAGED IN THE BUSINESS OF MANUFACT URING OF VARIOUS ITEMS IS ALSO ENGAGED IN THE BUSINESS OF GENERATION ELECTRICITY/POWER THROUGH ITS WINDMILL PLANT WHICH WAS SET IN THE PRE VIOUS YEAR, RELEVANT TO THE A.Y. 2006-07. THE ASSESSEE OPTED TO CLAIM DEDUC TION U/S 80IA FOR THE FIRST TIME DURING THE A.Y. 2009-10 BY TREATING IT AS INITIAL ASSESSMENT YEAR. THE RECEIPTS FROM THE WINDMILL WAS DISCLOSED AT RS.1,14,26,601/- AND AFTER CLAIMING DEDUCTION OF EXPENSES UNDER VARI OUS HEADS OF RS.1,00,72,939/- IT HAS SHOWN PROFIT OF RS.13,53,66 2/-, WHICH WAS CLAIMED AS DEDUCTION U/S 80IA BEING 100% OF THE PRO FIT DERIVED FROM THE WINDMILL. THE ASSESSEE HAS ACQUIRED AND COMMISSIONE D THE WINDMILL IN ERODE DISTRICT OF TAMIL NADU IN THE A.Y. 2006-07. E ARLIER IT HAD INCURRED LOSS OF RS.6,06,04,500/-ON ACCOUNT OF DEPRECIATION WHICH WAS SET OFF AGAINST THE NORMAL BUSINESS INCOME IN THE A.Y. 2006 -07. IN THE A.YS. 2007-08 & 2008-09 ALSO, THE ASSESSEE HAD INCURRED L OSSES FROM THE WINDMILL UNIT OF RS.3,95,02,736/- AND RS.45,71,409/ -, RESPECTIVELY, WHICH WAS SET OFF AGAINST THE NORMAL BUSINESS OF TH ESE YEARS. THE ASSESSING OFFICER HELD THAT THE ASSESSEE HAS BEEN A LLOWED DUAL BENEFIT, ONE BY SETTING OFF LOSSES BY WHICH IT HAS NOT PAID TAXES ON OTHER BUSINESS INCOME AND SECONDLY BY CLAIMING DEDUCTION FOR 100% U/S 80IA. ITA NO. 4311/MUM/2013 ASSESSMENT YEAR: 2009-10 3 THIS HAS BEEN DONE BECAUSE THE ASSESSEE HAS CHOSEN THE INITIAL ASSESSMENT YEAR FROM THIS YEAR I.E. ONLY A.Y. 2009 -10. THE ASSESSEE HAS ALREADY BEEN ALLOWED SUFFICIENT BENEFIT AND THE REFORE LOSSES INCURRED IN THE EARLIER YEARS FROM THE SAID UNIT HAS TO BE F IRST SET OF WITH THE PROFIT OF ELIGIBLE BUSINESS I.E. WINDMILL UNIT AND BALANCE PROFIT IF ANY CAN ONLY BE HELD TO BE ELIGIBLE FOR DEDUCTION U/S 80IA. HE R EJECTED THE ASSESSEES EXPLANATION MADE IN THIS REGARD AND COMPUTED THE DE DUCTION U/S 80IA IN THE FOLLOWING MANNER:- PARTICULARS AMOUNT (RS.) LESS PROFIT DERIVED FROM INDUSTRIAL UNDERTAKING DURING THE YEAR 13,53,662 BROUGHT FORWARD LOSS TILL A.Y. 2008-09 10,46,78,645 RESTRICTED TO THE PROFIT AVAILABLE 13,53,662 INCOME ELIGIBLE FOR DEDUCTION U/S 80IA NIL. 3. BEFORE THE LD.CIT(A) THE ASSESSEE HAS RELIED UPO N VARIOUS DECISIONS OF THE TRIBUNAL, HOWEVER, THE LD.CIT(A) R EJECTED THE ASSESSEES SUBMISSIONS AND STRONGLY RELIED UPON THE DECISION OF ITAT MUMBAI BENCH IN THE CASE OF PIDILITE INDUSTRIES LTD . ORDER DATED 10.06.2011 ITA NO. 3355/MUM/2009. 4. BEFORE US, LEARNED COUNSEL, SHRI PRAKASH JOTWANI SUBMITTED THAT THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF VEL AYUDHA SWAMI SPINNING MILL PVT. LTD. VS. ACIT REPORTED IN (2012) 340 ITR 477 HAS DEALT EXACTLY THE SIMILAR ISSUE AND HELD THAT THE ASSESSE E CAN CHOSE THE INITIAL ASSESSMENT YEAR FOR THE PURPOSE OF DEDUCTION AND TH E EARLIER LOSSES CANNOT BE NOTIONALLY BROUGHT FORWARD AND SET OFF AG AINST THE PROFIT OF THE ELIGIBLE BUSINESS. EVEN THE MADRAS HIGH COURT IN TH E CASE OF CIT VS. ITA NO. 4311/MUM/2013 ASSESSMENT YEAR: 2009-10 4 EMERALD JEWEL INDUSTRIES HAS REITERATED THE SAME RA TIO. BESIDES THIS HE ALSO POINTED OUT VARIOUS OTHER DECISIONS OF THE TRI BUNAL INCLUDING THE DECISION OF ITAT MUMBAI BENCH IN THE CASE OF M/S. S HEVIE EXPORTS VS. JCIT ITAT NO. 321/MUM/2012 ORDER DATED 10.04.2013, WHEREIN THIS ISSUE HAS BEEN DISCUSSED IN DETAIL AFTER CONSIDERIN G THE VARIOUS DECISIONS. 5. ON THE OTHER HAND, LD. DR STRONGLY RELIED UPON T HE ORDER OF THE AO AS WELL AS LD. CIT(A). 6. AFTER CAREFUL CONSIDERING THE RIVAL SUBMISSIONS, FA CTS OF THE CASE AND THE ISSUES INVOLVED, WE FIND THAT ONLY ISSUE IN VOLVED IS THAT WHETHER THE EARLIER YEAR LOSSES OF THE ELIGIBLE UNIT CAN BE SET OFF AGAINST THE PROFIT OF THE SAID UNIT IN THIS YEAR, WHEN THE ASSESSEE HA S EXERCISED TO CHOSE THE INITIAL ASSESSMENT YEAR FROM A.Y. 2009-10. EXAC TLY SIMILAR ISSUE WAS INVOLVED IN THE CASE OF M/S. SHEVIE EXPORT (SUPRA) WHEREIN, AFTER DETAILED ANALYSIS OF THE RELEVANT PROVISION AND VAR IOUS JUDICIAL DECISIONS, INCLUDING THAT OF MUMBAI BENCH TRIBUNAL IN THE CASE OF PIDILITE INDUSTRIES (SUPRA) IT WAS OBSERVED AND HELD AS UNDER:- 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RELEVANT MATERIAL PLACED ON RECORD AND VARIOUS CASE LAWS REL IED UPON BY EITHER PARTY. THE ASSESSEE HAD SET-UP A WIND MILL A T DISTRICT DHULE, MAHARASHTRA A COMMENCEMENT OF ITS OPERATION WAS STARTED ON 29TH SEPTEMBER 2006 I.E., ASSESSMENT YEA R 2007-08. IN ASSESSMENT YEAR 2007-08, THE ASSESSEE HAD SHOWN A LOSS OF RS.3,52,47,398 ON ACCOUNT OF DEPRECIATION AND INTER EST FROM WIND MILL UNDERTAKING AND THIS LOSS WAS SET-OFF AGAINST THE EXPORT BUSINESS INCOME (WHICH IN THE PRESENT CASE, CAN BE CONSIDERED AS NON-ELIGIBLE UNIT) IN THE ASSESSMENT YEAR 2007-08. IN THE ASSESSMENT YEAR 2008-09, THE ASSESSEE HAS EARNED PR OFIT OF RS. 7,16,904 AND HAS CLAIMED DEDUCTION UNDER SECTION 80 IA BY TREATING THE ASSESSMENT YEAR 2008-09 AS INITIAL ASS ESSMENT YEAR, THE SOLE GROUND FOR CANCELING THE ASSESSMENT ORDER UNDER SECTION 263 BY THE LEARNED COMMISSIONER IN THIS REGARD IS T HAT IN THE ITA NO. 4311/MUM/2013 ASSESSMENT YEAR: 2009-10 5 SUBSEQUENT YEAR I.E., THE ASSESSMENT YEAR 2009-10, THE CLAIM OF THE ASSESSEE UNDER SECTION 80IA HAS BEEN REJECTED B Y THE ASSESSING OFFICER ON THE GROUND THAT THE SPECIAL BE NCH DECISION OF THE TRIBUNAL, AHMEDABAD BENCH IN GOLDMINE SHARES AND FINANCE PVT. LTD. (SUPRA) DOES NOT SUPPORT SUCH A C LAIM. 9. SECTION 80IA, WHICH HAS BEEN SUBSTITUTED W.E.F. 1ST APRIL 2000, PROVIDES THAT WHERE THE GROSS TOTAL INCOME OF AN AS SESSEE INCLUDES ANY PROFITS AND GAINS DERIVED BY AN UNDERT AKING FROM ANY ELIGIBLE BUSINESS REFERRED TO IN SUB-SECTION 4, THERE SHALL, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF TH IS SECTION, BE ALLOWED IN COMPUTING THE TOTAL INCOME, THE DEDUCTIO N OF AN AMOUNT EQUAL TO 100% OF THE PROFITS AND GAINS DERIV ED FROM SUCH BUSINESS FOR 10 CONSECUTIVE YEARS. SUBSTITUTED SUB- SECTION (2) OF SECTION 80IA, PROVIDES THAT AN OPTION IS GIVEN TO T HE ASSESSEE FOR CLAIMING ANY 10 CONSECUTIVE ASSESSMENT YEAR OUT OF 15 YEARS BEGINNING FROM THE YEAR IN WHICH THE UNDERTAKING OR THE ENTERPRISE DEVELOPS AND BEGIN TO OPERATE. THE 15 YE ARS IS THE OUTER LIMIT WITHIN WHICH THE ASSESSEE CAN CHOOSE TH E PERIOD OF CLAIMING THE DEDUCTION. SUB-SECTION (5) IS A NON-OB STANTE CLAUSE WHICH DEALS WITH THE QUANTUM OF DEDUCTION FOR AN EL IGIBLE BUSINESS. THE RELEVANT PROVISIONS OF SUB-SECTION (5 ) OF SECTION SOIA, READS AS UNDER:- '(5) NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHE R PROVISION OF THIS ACT, THE PROFITS AND GAINS OF AN ELIGIBLE BUSINESS TO WHICH THE PROVISIONS OF SUB-SECTION (1) APPLY SHALL, FOR THE PURPOSES OF DETERMINING THE QUANTUM OF DEDUCTION UNDER THAT SUB-SECTION FOR THE ASSESSMENT YEAR IMMEDIATELY SUCCEEDING THE INITIAL ASSESSMENT YEAR OR ANY SUBSEQUENT ASSESSMENT YEAR, BE COMPUTED AS IF SUCH ELIGIBLE BUSINESS WERE THE ONLY SOURCE OF INCOME OF THE ASSE SSEE DURING THE PREVIOUS YEAR RELEVANT TO THE INITIAL AS SESSMENT YEAR AND TO EVERY SUBSEQUENT ASSESSMENT YEAR UP TO AND INCLUDING THE ASSESSMENT YEAR FOR WHICH THE DETERMI NATION IS TO BE MADE. ' 10. FROM A PLAIN READING OF THE ABOVE, IT CAN BE GA THERED THAT IT IS A NON- OBSTANTE CLAUSE WHICH OVERRIDES THE OTHER PROVISIONS OF THE ACT AND IT IS FOR THE PURPOSE OF DETERMINING TH E QUANTUM OF DEDUCTION UNDER SECTION 80IA, FOR THE ASSESSMENT YE AR IMMEDIATELY SUCCEEDING THE INITIAL ASSESSMENT YEAR OR ANY SUBSEQUENT ASSESSMENT YEAR TO BE COMPUTED AS IF THE ELIGIBLE BUSINESS IS THE ONLY SOURCE OF INCOME. THUS, THE FI CTION CREATED IS ITA NO. 4311/MUM/2013 ASSESSMENT YEAR: 2009-10 6 THAT THE ELIGIBLE BUSINESS IS THE ONLY SOURCE OF IN COME AND THE DEDUCTION WOULD BE ALLOWED FROM THE INITIAL ASSESSM ENT YEAR OR ANY SUBSEQUENT ASSESSMENT YEAR. IT NOWHERE DEFINES AS TO WHAT IS THE INITIAL ASSESSMENT YEAR. PRIOR TO 1ST APRIL 2000, THE INITIAL ASSESSMENT YEAR WAS DEFINED FOR VARIOUS TYPES OF EL IGIBLE ASSESSEES UNDER SECTION 80IA(12). HOWEVER, AFTER TH E AMENDMENT BROUGHT IN STATUTE BY THE FINANCE ACT, 19 99, THE DEFINITION OF 'INITIAL ASSESSMENT YEAR' AS BEEN SPE CIFICALLY TAKEN AWAY. NOW, WHEN THE ASSESSEE EXERCISES THE OPTION O F CHOOSING THE INITIAL ASSESSMENT YEAR AS CULLED OUT IN SUB-SE CTION (2) OF SECTION 80IA FROM WHICH IT CHOOSES ITS 10 YEARS OF DEDUCTION OUT OF IS YEARS, THEN ONLY THE LOSSES OF THE YEARS STAR TING FROM THE INITIAL ASSESSMENT YEAR ALONE ARE TO BE BROUGHT FOR WARD AS STIPULATED IN SECTION 80IA(5). THE LOSS PRIOR TO TH E INITIAL ASSESSMENT YEAR WHICH HAS ALREADY BEEN SET-OFF CANN OT BE BROUGHT FORWARD AND ADJUSTED INTO THE PERIOD OF TEN YEARS FROM THE INITIAL ASSESSMENT YEAR AS CONTEMPLATED OR CHOS EN BY THE ASSESSEE. IT IS ONLY WHEN THE LOSS HAVE BEEN INCURR ED FROM THE INITIAL ASSESSMENT YEAR, THEN THE ASSESSEE HAS TO A DJUST LOSS IN THE SUBSEQUENT ASSESSMENT YEARS AND IT HAS TO BE CO MPUTED AS IF ELIGIBLE BUSINESS IS THE ONLY SOURCE OF INCOME AND THEN ONLY DEDUCTION UNDER SECTION 80IA CAN BE DETERMINED. THI S IS THE TRUE IMPORT OF SECTION 80IA(5). 11. IN THE DECISION OF GOLDMINE SHARES AND FINANCE PVT. LTD. (SUPRA), DECIDED BY THE SPECIAL BENCH OF THE TRIBUN AL, THE CLAIM OF DEDUCTION BY THE ASSESSEE HAD STARTED FROM ASSES SMENT YEAR 1996-97 ONWARDS AND THE ASSESSEE HAD CLAIMED DEDUCT ION UNDER SECTION 80IA STARTING FROM THE FIRST YEAR ITSELF I. E., ASSESSMENT YEAR 1996-97. THUS, THE SPECIAL BENCH WAS DEALING W ITH THE OPERATION OF SECTION 80IA(S) WHERE THE ASSESSEE HAD FIRST CLAIMED THE DEDUCTION IN THE ASSESSMENT YEAR 1996-97 AND FO R SUBSEQUENT ASSESSMENT YEARS. THIS ASPECT OF THE MAT TER HAS BEEN VERY WELL ELABORATED BY THE MADRAS HIGH COURT IN VELAYUDHASWAMY SPINNING MILLS PVT. LTD. (SUPRA) AFT ER CONSIDERING THE SPECIAL BENCH DECISION OF THE TRIBUNAL IN GOLDM INE SHARES AND FINANCE PVT. LTD. (SUPRA) AND RELEVANT PROVISIO NS OF THE ACT I.E., PRE AMENDMENT AND POST AMENDMENT HAVE COME TO THE SAME CONCLUSION:- 'FROM READING OF THE ABOVE, IT IS CLEAR THAT THE EL IGIBLE BUSINESS WERE THE ONLY SOURCE OF INCOME, DURING THE PREVIOUS YEAR RELEVANT TO INITIAL ASSESSMENT YEAR AND EVERY SUBSEQUENT ASS ESSMENT YEARS. WHEN THE ASSESSEE EXERCISES THE OPTION, THE ONLY LOSSES OF ITA NO. 4311/MUM/2013 ASSESSMENT YEAR: 2009-10 7 THE YEARS BEGINNING FROM INITIAL ASSESSMENT YEAR AL ONE ARE TO BE BROUGHT FORWARD AND NO LOSSES OF EARLIER YEARS WHIC H WERE ALREADY SET OFF AGAINST THE INCOME OF THE ASSESSEE. LOOKING FORWARD TO A PERIOD OF TEN YEARS FROM THE INITIAL A SSESSMENT IS CONTEMPLATED. IT DOES NOT ALLOW THE REVENUE TO LOOK BACKWARD AND FIND OUT IF THERE IS ANY LOSS OF EARLIER YEARS AND BRING FORWARD NOTIONALLY EVEN THOUGH THE SAME WERE SET OFF AGAINS T OTHER INCOME OF THE ASSESSEE AND THE SET OFF AGAINST THE CURRENT INCOME OF THE ELIGIBLE BUSINESS. ONCE THE SET OFF I S TAKEN PLACE IN EARLIER YEAR AGAINST THE OTHER INCOME OF THE ASSESS EE, THE REVENUE CANNOT REWORK THE SET OFF AMOUNT AND BRING IT NOTIONALLY. FICTION CREATED IN SUB- SECTION DOES NO T CONTEMPLATES TO BRING SET OFF AMOUNT NOTIONALLY. FICTION IS CREA TED ONLY FOR THE LIMITED PURPOSE AND THE SAME CANNOT BE EXTENDED BEY OND THE PURPOSE FOR WHICH IT IS CREATED. 14. IN THE PRESENT CASES, THERE IS NO DISPUTE THAT LOSSES INCURRED BY THE ASSESSEE WERE ALREADY SET OFF AND ADJUSTED A GAINST THE PROFITS OF THE EARLIER YEARS. DURING THE RELEVANT A SSESSMENT YEAR, THE ASSESSEE EXERCISED THE OPTION UNDER S. 80-IA(2) . IN TAX CASE NOS. 909 OF 2009 AS WELL AS 940 OF 2009, THE ASSESS MENT YEAR WAS 2005-06 AND IN THE TAX CASE NO. 918 OF 2008 THE ASSESSMENT YEAR WAS 2004-05. DURING THE RELEVANT PE RIOD, THERE WERE NO UNABSORBED DEPRECIATION OR LOSS OF THE ELIG IBLE UNDERTAKINGS AND THE SAME WERE ALREADY ABSORBED IN THE EARLIER YEARS. THERE IS A POSITIVE PROFIT DURING THE YEAR. THE UNREPORTED JUDGMENT OF THIS COURT CITED SUPRA CONSIDERED THE S COPE OF SUB-SO (6) OF S. 80-1, WHICH IS THE CORRESPONDING PROVISIO N OF SUB-SO (5) OF S. 80- IA. BOTH ARE SIMILARLY WORDED AND THEREFO RE WE AGREE ENTIRELY WITH THE DIVISION BENCH JUDGMENT OF THIS C OURT CITED SUPRA. IN THE CASE OF CIT VS. MEWAR OIL & GENERAL M ILLS LTD. (2004) 186 CTR (RAJ) 141 : (2004) 271 ITR 311 (RAJ) , THE RAJASTHAN HIGH COURT ALSO CONSIDERED THE SCOPE OF S . 80-1 AND HELD AS FOLLOWS:- 'HAVING CONSIDERED THE RIVAL CONTENTIONS WHICH FOLL OW ON THE LINE NOTICED ABOVE, WE ARE OF THE OPINION THAT ON FINDIN G THE FACT THAT THERE WAS NO CARRY FORWARD LOSSES OF 1983-84, WHICH COULD BE SET OFF AGAINST THE INCOME OF THE CURRENT ASST. YR. 198 4-85, THE RECOMPUTATION OF INCOME FROM THE NEW INDUSTRIAL UND ERTAKING BY SETTING OFF THE CARRY FORWARD OF UNABSORBED DEPRECI ATION OR DEPRECIATION ALLOWANCE FROM PREVIOUS YEAR DID NOT S IMPLY ARISE AND ON THE FINDING OF FACT NOTICED BY THE CIT(A), W HICH HAS NOT BEEN DISTURBED BY THE TRIBUNAL AND CHALLENGED BEFOR E US, THERE WAS NO ERROR MUCH LESS ANY ERROR APPARENT ON THE FA CE OF THE ITA NO. 4311/MUM/2013 ASSESSMENT YEAR: 2009-10 8 RECORD WHICH COULD BE RECTIFIED. THAT QUESTION WOUL D HAVE BEEN GERMANE ONLY IF THERE WOULD HAVE BEEN CARRY FORWARD OF UNABSORBED DEPRECIATION AND UNABSORBED DEVELOPMENT REBATE OR ANY OTHER UNABSORBED LOSSES OF THE PREVIOUS YEAR AR ISING OUT OF THE PRIORITY INDUSTRY AND WHETHER IT WAS REQUIRED T O BE SET OFF AGAINST THE INCOME OF THE CURRENT YEAR. IT IS NOT A T ALL REQUIRED THAT LOSSES OR OTHER DEDUCTIONS WHICH HAVE ALREADY BEEN SET OFF AGAINST THE INCOME OF THE PREVIOUS YEAR SHOULD BE R EOPENED AGAIN FOR COMPUTATION OF CURRENT INCOME UNDER S. 80 -1 FOR THE PURPOSE OF COMPUTING ADMISSIBLE DEDUCTIONS THERE UN DER. IN VIEW THEREOF, WE ARE OF THE OPINION THAT -THE TR IBUNAL HAS NOT ERRED IN HOLDING THAT THERE WAS NO RECTIFICATION PO SSIBLE UNDER S. 80-1 IN THE PRESENT CASE, ALBEIT, FOR REASONS SOMEW HAT DIFFERENT FROM THOSE WHICH PREVAILED WITH THE TRIBUNAL. THERE BEING NO CARRY FORWARD OF ALLOWABLE DEDUCTIONS UNDER THE HEA D DEPRECIATION OR DEVELOPMENT REBATE WHICH NEEDED TO BE ABSORBED AGAINST THE INCOME OF THE CURRENT YEAR AND, THEREFO RE, RECOMPUTATION OF INCOME FOR THE PURPOSE OF COMPUTIN G PERMISSIBLE DEDUCTION UNDER S. 80-1 FOR THE NEW IND USTRIAL UNDERTAKING WAS NOT REQUIRED IN THE PRESENT CASE. A CCORDINGLY, THIS APPEAL FAILS AND IS HEREBY DISMISSED WITH NO O RDER AS TO COSTS. ' FROM READING OF THE ABOVE, THE RAJASTHAN HIGH COURT HELD THAT IT IS NOT AT ALL REQUIRED THAT LOSSES OR OTHER DEDUCTIONS WHICH HAVE ALREADY BEEN SET OFF AGAINST THE INCOME OF THE PREVIOUS YEAR SHOULD BE R EOPENED AGAIN FOR COMPUTATION OF CURRENT INCOME UNDER S. 80-1 FOR THE PURPOSE OF COMPUTING ADMISSIBLE DEDUCTIONS THEREUNDER. WE ALSO AGREE WITH THE SAME. WE SEE NO REASON TO TAKE A DIFFERENT VIEW .' 12. THIS JUDGMENT HAS BEEN FURTHER FOLLOWED BY THE SAME HIGH COURT IN CIT V/S EMERALD JEWEL INDUSTRY (P) LTD. [2 011] 53 DTR 262 (MAD.). FROM THE ABOVE, RATIO OF THE HIGH COURT , IT IS AMPLY CLEAR THAT SUB-SECTION (5) OF SECTION 80IA WILL COM E INTO OPERATION ONLY FROM THE INITIAL ASSESSMENT YEAR OR ANY SUBSEQ UENT ASSESSMENT YEAR. THE OPTION OF CHOOSING THE INITIAL ASSESSMENT YEAR IS WHOLLY UPON THE ASSESSEE IN THE POST AMENDM ENT PERIOD I.E., AFTER 1ST APRIL 2000 BY VIRTUE OF SECTION 80I A(2). 13. NOW COMING TO THE DECISION OF THE MUMBAI BENCH TRIBUNAL IN PIDILITE INDUSTRIES (SUPRA) AS RELIED UPON BY THE L EARNED DEPARTMENTAL REPRESENTATIVE IN THIS CASE, THE TRIBU NAL WAS DEALING WITH REGARD TO TWO ELIGIBLE UNITS ONE GUJAR AT UNIT WHICH WAS SET-UP IN THE YEAR 1995-96 AND SECOND MAHARASHT RA UNIT IN ITA NO. 4311/MUM/2013 ASSESSMENT YEAR: 2009-10 9 THE YEAR 2000-01. WITH REGARD TO GUJARAT UNIT, THE TRIBUNAL HELD THAT PRE-AMENDMENT DEFINITION OF INITIAL ASSESSMENT YEAR WOULD BE APPLICABLE I.E., PROVISIONS WHICH WERE PRIOR TO 1ST APRIL 1999 WILL APPLY BECAUSE THE ASSESSEE HAD STARTED COMMERC IAL PRODUCTION IN THE FINANCIAL YEAR 1996-97. REGARDING SECOND UNIT, THE TRIBUNAL HELD THAT THE JUDGMENT OF MADRAS HIGH COURT IN VELAYUDHASWAMY SPINNING MILLS PVT. LTD. (SUPRA) WIL L NOT BE APPLICABLE BECAUSE THE INCOME FROM NON ELIGIBLE BUS INESS WAS SET-OFF FROM THE LOSS OF ELIGIBLE BUSINESS IN THE Y EAR OF COMMENCEMENT. IN THIS CASE, IT WAS NOT AN ISSUE AS TO WHETHER THE LOSSES PERTAINED TO PRIOR TO INITIAL ASSESSMENT YEAR OR AFTER THE INITIAL ASSESSMENT YEAR. IF THE LOSSES HAVE BEEN IN CURRED IN THE ELIGIBLE UNIT AND HAS BEEN SET-OFF AGAINST THE NON- ELIGIBLE UNIT AFTER THE INITIAL ASSESSMENT YEAR, THEN THE RATIO L AID DOWN BY THE TRIBUNAL IS IN FULL CONSONANCE WITH THE LAW. HOWEVE R, THIS IS NOT THE CASE IN THE INSTANT CASE BECAUSE THE LOSS PERTA INED TO PRIOR TO INITIAL ASSESSMENT YEAR WHICH HAVE BEEN SET-OFF AGA INST THE PROFITS OF NON-ELIGIBLE UNITS. THE BEGINNING OF THE INITIAL ASSESSMENT YEAR AS ADOPTED BY THE ASSESSEE IS ASSESSMENT YEAR 2008- 09 ONLY AND, THEREFORE, THE LOSS OF ASSESSMENT YEAR 2007-08 CANN OT BE NOTIONALLY CARRIED FORWARD WITHIN THE MEANING OF SE CTION 80IA(5). THUS, THE RELIANCE PLACED BY THE LEARNED DEPARTMENT AL REPRESENTATIVE ON THE DECISION OF PIDILITE INDUSTRI ES (SUPRA), WILL NOT BE APPLICABLE IN THE PRESENT CASE. 14. THE OTHER DECISION HEAVILY RELIED UPON BY THE L EARNED DEPARTMENTAL REPRESENTATIVE IN HYDERABAD CHEMICAL S UPPLIES LTD. (SUPRA) WILL ALSO NOT APPLY TO THE FACTS OF TH E PRESENT CASE, AS IN THAT CASE, THE WIND MILL STARTED ITS OPERATION O N 31ST MARCH 1999 AND THE FIRST YEAR OF OPERATION WAS ASSESSMENT YEAR 1999- 2000. THUS, IN THE ASSESSMENT YEAR 1999-2000, THE D EFINITION OF 'INITIAL ASSESSMENT YEAR' WAS ALREADY THERE IN THE ACT AND THERE WAS NO PROVISION THROUGH WHICH THE ASSESSEE COULD H AVE CHOSEN ITS INITIAL ASSESSMENT YEAR. THIS PROVISION WAS BRO UGHT IN STATUTE W.E.F. 1ST APRIL 2000, BY VIRTUE OF SECTION 80IA. T HUS, THIS DECISION ALSO WILL NOT HELP THE CASE OF THE DEPARTMENT. IN A SSESSEE'S CASE, AS SPECIFICALLY STATED IN THE FOREGOING PARAGRAPHS, THE ASSESSEE'S CLAIM FOR INITIAL ASSESSMENT YEAR I.E., ASSESSMENT YEAR 2008-09 AND ITS CLAIM FOR DEDUCTION UNDER SECTION 80IA MADE FOR THE FIRST TIME FROM ASSESSMENT YEAR 2008-09, HAS NOT BEEN DIS PUTED. THUS, THE AFORESAID JUDGMENT RELIED UPON BY THE LEA RNED DEPARTMENTAL REPRESENTATIVE WILL NOT BE APPLICABLE TO THE FACTS OF THE PRESENT CASE. ITA NO. 4311/MUM/2013 ASSESSMENT YEAR: 2009-10 10 THUS, FOLLOWING THE AFORESAID DECISIONS, WE HOLD TH AT THE ASSESSEES CLAIM FOR DEDUCTION U/S 80IA IS ALLOWABLE FROM THE PROFITS DERIVED FROM THE WINDMILL UNIT, STARTING FROM A.Y. 2009-10, WHIC H IS THE INITIAL ASSESSMENT YEAR CHOSEN BY THE ASSESSEE. THE EARLIE R YEAR LOSSES CANNOT BE SET OFF AGAINST THE PROFITS FOR ELIGIBLE UNITS I N THIS YEAR. ACCORDINGLY, GROUNDS RAISED BY THE ASSESSEE IS ALLOWED. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 11 TH DAY OF FEBRUARY, 2015. SD/- SD/- (N.K. BILLAIYA) (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 11.02.2015 *SRIVASTAVA COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR I BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.