DCIT, Jaipur V. SANKALP INTERNATIONAL, Jaipur

ITA 504/JPR/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2140 (ITAT-JAIPUR)
• Duration Of Justice: 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 09-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: P C PARWAL CA DHK
• Keywords: Business income; Depreciation; Source of fund; Reasonable cause; Revised return; Unabsorbed depreciation
• Section: 143(3); 80HHC; 80IB; 12A; 10B; 12; 11

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS [KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YAD AV, AM VK;DJ VIHY LA-@ ITA NO. 504/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2013-14. DY. COMMISSIONER OF INCOME - TAX, CIRCLE-4, JAIPUR. CUKE VS. M/S SANKALP INTERNATIONAL, F-944, ROAD NO. 14,VKI, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAKFS 4376 D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI R.A. VERMA (ADDL.CIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C.PARWAL (CA) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 02.08.2017. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 11/08/2017. VKNS'K@ ORDER PER SHRI KUL BHARAT, JM. THE APPEAL BY THE REVENUE IS DIRECTED AGAINST THE O RDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-2, JAIPUR, DATED 24.03.2017 PERTAINING TO ASSESSMENT YEAR 2013-14. THE REVENUE HAS RAISED THE FOLLOWING GROUND OF APPE AL :- 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND LAW, THE LD. CIT(A) WAS JUSTIFIED IN RESTRICTING THE TRADING ADD ITION OF RS. 5,00,000/- MADE BY THE AO TO RS. 1,00,000/-. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE AS E AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN ALLOWING THE DEDUCTION U/S 80IA AMOUNTING TO RS. 1,62,25,183/-. 3. THE APPELLANT CRAVES ITS RIGHTS TO ADD, AMEND OR ALTER ANY OF THE GROUNDS ON OR BEFORE THE HEARING. 2 ITA NO. 504/JP/2017. M/S SANKALP INTERNATIONAL, JAIPUR. 2. BRIEFLY STATED THE FACTS ARE THAT THE CASE OF T HE ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S 143(3) O F THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VID E ORDER DATED 29/01/2016. WHILE FRAMING THE ASSESSMENT THE ASSESSING OFFICER MADE T RADING ADDITION OF RS. 5 LACS AND DISALLOWED THE CLAIM OF DEDUCTION U/S 80IA OF R S. 1,62,25,183/-. AGGRIEVED BY THIS, THE ASSESSEE PREFERRED AN APPEAL BEFORE LD. C IT(A), WHO AFTER CONSIDERING THE SUBMISSION, PARTLY ALLOWED THE APPEAL. THEREBY, TH E LD. CIT(A) RESTRICTED THE TRADING ADDITION TO THE EXTENT OF RS. 1 LACS AND DE LETED THE DISALLOWANCE U/S 80IA. 3. NOW, THE REVENUE IS IN FURTHER APPEAL. 4. THE FIRST GROUND, IS AGAINST RESTRICTING THE TRADING ADDITION TO THE EXTENT OF RS. 1 LACS OUT OF RS. 5 LACS MADE BY THE AO. 4.1 LD. DEPARTMENTAL REPRESENTATIVES VEHEMENTLY ARG UED THAT LD. CIT(A) WAS NOT JUSTIFIED IN RESTRICTING THE ADDITION. THE ASSESSI NG OFFICER HAS SPECIFICALLY STATED IN THE ORDER THAT THE ASSESSEE IS NOT MAINTAINING STOC K REGISTER. THEREFORE, CONSUMPTION OF RAW MATERIALS WITH FINISHED GOODS CO ULD NOT BE COMPARED AND THE ASSESSEE FAILED TO GET IT VERIFIED FROM THE BOOKS. 4.2 ON THE CONTRARY, LD. COUNSEL FOR THE ASSESSEE S HRI P.C. PARWAL SUPPORTED THE ORDER OF THE LD. CIT(A). HE SUBMITTED THAT THERE I S NO DISPUTE WITH REGARD TO THE FACTS THAT GROSS PROFIT OF THE ASSESSEE COMPANY HAS INCREASED MERELY BECAUSE STOCK REGISTER COULD NOT BE FURNISHED, WOULD NOT BE SUFFI CIENT TO ESTIMATE PROFIT BY 3 ITA NO. 504/JP/2017. M/S SANKALP INTERNATIONAL, JAIPUR. REJECTING THE BOOKS OF ACCOUNTS. IT WAS INCUMBENT UPON THE ASSESSING OFFICER TO BRING ON RECORD THE BASIS OF TRADING ADDITION. 4.3 WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED TH E MATERIAL AVAILABLE ON RECORD. WE FIND THAT ASSESSING OFFICER REJECTED BO OKS OF ACCOUNTS BY OBSERVING AS UNDER:- 3.3 I HAVE CONSIDERED THE SUBMISSION OF ASSESSEE, ALTHO UGH IT IS CORRECT THAT THE GROSS PROFIT RATE OF THE ASSESSEE HAS BEEN BETTER IN COMPARISON TO LAST YER. BUT THIS FACT CANNOT BE IGN ORED THAT THE ASSESSEE IS NOT MAINTAINING STOCK REGISTER WHICH IS A BASIC DOCUMENT TO VERIFY CONSUMPTION OF RAW MATERIAL AND ALSO TO ASCE RTAIN YIELD PERCENTAGE. ON THE BASIS OF ABOVE DISCUSSION I HOL D THAT THE BOOKS OF ACCOUNTS OF ASSESSEE WERE NOT COMPLETE AS CONSUMPTI ON OF RAW MATERIAL WITH FINISHED GOODS CANNOT BE COMPARED AND THE ASSESSEE FAILED TO GET IT VERIFIED FROM THE BOOKS. EVEN THE CONSUMPTION OF RAW MATERIAL ITEM WISE WAS NOT FURNISHED BY THE ASSESSE E. 3.4 CONSIDERING THE ABOVE DISCUSSIONS AND SHORTCOMI NGS FOUND IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE, I INVOKE PROVISI ONS OF SECTION 145(3) AND MAKE A LUMP SUM TRADING ADDITION OF RS. 5 LACS TO THE TOTAL INCOME OF THE ASSESSEE. 4.4 WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO T HE RIVAL CONTENTIONS; THERE IS NO DISPUTE WITH REGARD TO THE GROSS PROFIT. IT IS ALSO NOT UNDISPUTED THAT THE ASSESSEE IS MAINTAINING BOOKS OF ACCOUNTS. MOREOVE R, THE ASSESSING OFFICER HAS NOT GIVEN ANY BASIS FOR MAKING ADDITION AS TO HOW THIS FIGURE OF RS. 5 LACS AS ARRIVED AT WOULD BE SUFFICIENT FOR ESTIMATING THE PROFIT. IN THE ABSENCE OF SUCH FINDING, WE DO 4 ITA NO. 504/JP/2017. M/S SANKALP INTERNATIONAL, JAIPUR. NOT SEE ANY REASON TO INTERFERE INTO THE FINDING OF THE LD. CIT(A), SAME IS HEREBY AFFIRMED. THIS GROUND IS REJECTED. 5. GROUND NO. 2, IS AGAINST DELETING THE DISALLOWANCE OF DEDUCTION CLAIMED U/S 80IA OF THE ACT. 5.1 LD. DEPARTMENTAL REPRESENTATIVES SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND SUBMITTED THAT IT IS OBSERVED BY THE AS SESSING OFFICER THAT EVEN IF WE CONSIDER A SINGLE UNIT AS A SEPARATE BUSINESS THEN ALSO THE UNIT HAS NOT EARNED PROFIT SINCE INSTALLATION TILL DATE. 5.2 LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUB MISSIONS AS MADE IN THE WRITTEN BRIEF. THE SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSESSEE ARE AS UNDER:- SUBMISSION:- 1. THE PROVISION OF SUB SECTION (5) OF SECTION 80IA RE AD AS UNDER:- 'NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PR OVISION OF THIS ACT, THE PROFITS AND GAINS OF AN ELIGIBLE BUSINESS TO WHICH THE PROVISIONS OF SUB SECTION (1) APPLY SHALL, FOR THE PURPOSE OF DETERMINING THE QUANTUM OF DEDUCTION UNDER THAT SUB SECTION FOR THE ASSESSMENT YEAR IMMEDIATEL Y SUCCEEDING THE INITIAL ASSESSMENT YEAR OR ANY SUBSEQUENT 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 ASSESSMENT YE AR AND TO EVERY SUBSEQUENT ASSESSMENT YEAR UPTO AND INCLUDING THE ASSESSMENT YEAR FOR WHICH THE DETERMINATION TO BE MADE.' FROM THE READING OF ABOVE PROVISION, IT IS VERY MUC H CLEAR THAT FOR THE PURPOSE OF DETERMINATION OF QUANTUM OF DEDUCTION U/S 80IA, INC OME OF THE ELIGIBLE BUSINESS IS TO BE COMPUTED AS IF SUCH ELIGIBLE BUSI NESS WERE THE ONLY SOURCE OF 5 ITA NO. 504/JP/2017. M/S SANKALP INTERNATIONAL, JAIPUR. INCOME OF THE ASSESSEE DURING THE PREVIOUS YEAR REL EVANT TO INITIAL ASSESSMENT YEAR AND TO EVERY SUBSEQUENT ASSESSMENT YEAR. THUS, LOSSES OR DEPRECIATION FROM ELIGIBLE BUSINESS INCURRED PRIOR TO INITIAL YE AR ALREADY ABSORBED IS NOT TO BE CONSIDERED FOR DETERMINATION OF THE ELIGIBLE PROFIT. THIS ISSUE IS ALSO SETTLED BY VARIOUS JUDICIAL PRONOUNCEMENTS AS UNDER :- CIT VS. BEST CORPORATION LTD. (2017) 244 TAXMAN 151 (SC) WHERE TRIBUNAL HELD THAT ASSESSEE WAS ENTITLED TO D EDUCTION U/S 80-IA WITHOUT SETTING OFF LOSSES/UNABSORBED DEPRECIATION PERTAINI NG TO WINDMILL WHICH WERE SET OFF IN EARLIER YEAR AGAINST OTHER BUSINESS INCOME, INITIAL ASSESSMENT YEAR IN SEC.80-IA(5) WOULD ONLY MEAN YEAR OF CLAIM OF DEDUC TION U/S 80-IA & NOT YEAR OF COMMENCEMENT OF ELIGIBLE BUSINESS AND ASSESSEE HAD OPTION TO CHOOSE FIRST/INITIAL ASSESSMENT YEAR OF CLAIM FOR DEDUCTIO N U/S 80-IA AND HIGH COURT UPHELD ORDER OF TRIBUNAL, SLP WAS TO DISMISSED AGAI NST ORDER OF HIGH COURT. CIT VS. DEFREE ENGINEERING PVT. LTD. (2017) 244 TAX MAN 196/ 244 TAXMAN 217 (SC) SLP DISMISSED AGAINST HIGH COURTS RULING THAT IN C ASE OF ASSESSEE ENGAGED IN GENERATION OF POWER THROUGH WINDMILLS, INITIAL ASSE SSMENT YEAR IN SEC.80-IA(5) WOULD ONLY MEAN YEAR OF CLAIM OF DEDUCTION U/S 80-I A AND NOT YEAR OF COMMENCEMENT OF ELIGIBLE BUSINESS. ASSESSEE HAD OPT ION TO CHOOSE FIRST/INITIAL ASSESSMENT YEAR OF CLAIM FOR DEDUCTION U/S 80-IA AN D ASSESSEE WOULD BE ENTITLED TO DEDUCTION U/S 80-IA WITHOUT SETTING OFF LOSSES/U NABSORBED DEPRECIATION PERTAINING TO WINDMILL, WHICH WERE SET OFF IN EARLI ER YEAR AGAINST OTHER BUSINESS INCOME OF ASSESSEE. 2. IT MAY BE FURTHER POINTED OUT THAT THE ISSUE OF IN ITIAL ASSESSMENT YEAR IS ALSO CLARIFIED BY CBDT CIRCULAR NO.1/2016 DATED 15 TH FEBRUARY 2016. AS PER THIS CIRCULAR, ASSESSEE HAS AN OPTION TO CHOOSE INITIAL/ FIRST YEAR FROM WHICH HE MAY DESIRE TO CLAIM DEDUCTION FOR 10 CONSECUTIVE ASSESS MENT YEARS OUT OF FIFTEEN. 6 ITA NO. 504/JP/2017. M/S SANKALP INTERNATIONAL, JAIPUR. 3. SO FAR AS FILING OF AUDIT REPORT IN FORM NO. 10CCB IS CONCERNED, THERE IS NO DISPUTE AS TO THE FACT THAT ASSESSEE HAS FILED THE SAME MAN UALLY ON 30/09/2013. THE ASSESSEE HAS ALSO FILED ONE AUDIT REPORT IN FORM 10 CCB ELECTRONICALLY ON 30/09/2013. HOWEVER, THERE WAS NO OPTION TO FILE MO RE THAN ONE REPORT ONLINE AND THEREFORE, ASSESSEE COULD NOT FILE THE REMAININ G REPORTS ELECTRONICALLY. THE LD. CIT(A) HAS THEREFORE, RIGHTLY HELD THAT THERE W AS A REASONABLE CAUSE FOR NON E-FILING OF THE REPORTS. 4. IT IS A SETTLED LAW THAT FILING OF AUDIT REPORT TO CLAIM EXEMPTION/ DEDUCTION IS A MANDATORY REQUIREMENT BUT THE CONDITION THAT IT SHO ULD BE SUBMITTED ONLINE OR MANUALLY IS A PROCEDURAL REQUIREMENT AND THEREFORE, EVEN IF SUCH REPORT IS FILED MANUALLY INSTEAD OF ELECTRONICALLY, THE CONDITION O F SECTION SHOULD BE TAKEN AS COMPLIED WITH. FOR THIS PROPOSITION RELIANCE IS PLA CED ON THE FOLLOWING CASES:- CIT VS. G.M. KNITTING INDUSTRIES PVT. LTD. &ANR. (2 015) 125 DTR 38(SC) IT WAS HELD THAT ASSESSEE IS ENTITLED TO DEDUCTION U/S 80-IB EVEN THOUGH IT HAS NOT FILED THE AUDIT REPORT IN FORM NO. 10CCB ALONG WITH THE RETURN BUT HAS FILED THE SAME BEFORE THE COMPLETION OF ASSESSMENT. CIT VS. GODHA CHEMICALS (P.) LTD. 83 DTR 190 (RAJ.) THE EXPRESSION ALONG WITH RETURN OF INCOME AS OCC URRING IN SUB-SECTION (4) OF SECTION 80HHC IS DIRECTORY IN NATURE IN SO FAR AS I T RELATES TO THE TIME FOR FURNISHING OF THE REPORT OF AN ACCOUNTANT BY THE AS SESSEE IN THE PRESCRIBED FORM & EVEN IF SUCH A REPORT IN THE PRESCRIBED FORM IS N OT FURNISHED ALONG WITH THE ROI BUT IS FURNISHED DURING THE COURSE OF ASSESSMEN T PROCEEDINGS, IT CANNOT BE REMOVED OUT OF CONSIDERATION ONLY FOR THE REASON OF THE SAME HAVING NOT BEEN FILED AT THE INITIAL STAGE OF FILING THE RETURN. TH EREFORE, ASSESSEE COULD NOT BE DENIED THE BENEFIT OF DEDUCTION U/S 80HHC BECAUSE T HE AUDIT REPORT IN FORM NO. 10CCAC HAD BEEN FILED DURING THE COURSE OF ASSESSME NT PROCEEDINGS. 7 ITA NO. 504/JP/2017. M/S SANKALP INTERNATIONAL, JAIPUR. CIT VS. RAI BAHADUR BISSESSWARLAL MOTILAL MALWASIE TRUST 195 ITR 825 (CAL.) THE ASSESSEE HAS BEEN DENIED THE BENEFIT OF EXEMPTI ON U/S 11 AS THE AUDIT REPORT IN FORM NO.10B WAS NOT FILED ALONGWITH THE R ETURN OF INCOME AND THE FILING OF SAID REPORT LATER DID NOT SATISFY THE CON DITION STATED IN SECTION 12A. THE DENIAL OF EXEMPTION IS SUPPORTED ON THE GROUND THAT THE PROVISIONS OF SECTION 12A ARE MANDATORY. THERE IS NO DOUBT THAT SEC.12A S PECIFICALLY STATES THAT THE PROVISIONS OF SEC 11 & 12 SHALL NOT APPLY IN RELATI ON TO INCOME OF ANY TRUST IF CONDITIONS STATED THEREIN ARE NOT FULFILLED AND IN THE CONDITIONS, IT IS PROVIDED THAT THE ACCOUNTS OF THE TRUST SHOULD BE AUDITED AND THE REPORT OF THE AUDITOR IN FORM 10B SHOULD BE FURNISHED ALONGWITH THE RETURN. IF SE C 12A IS READ IN ISOLATION AND THE RULE OF STRICT AND LITERAL CONSTRUCTION IS APPL IED, THE APPROACH OF THE REVENUE IN THIS CASE HAS TO BE HELD AS CORRECT. BUT THERE I S NO JUSTIFICATION FOR APPLYING THE RULE OF STRICT CONSTRUCTION OR FOR CONSIDERING THE PROVISIONS OF SECTION 12A IN ISOLATION. HAVING REGARD TO THE OTHER PROVISIONS OF THE ACT RE GARDING FILING OF THE RETURN OR REVISED RETURN OR RECTIFYING THE DEFECTS IN THE RET URN, THE PROVISIONS OF SECTION 12A ARE DIRECTORY IN THE SENSE THAT THE AO IS NOT P OWERLESS TO ALLOW AN ASSESSEE TO FILE THE AUDIT REPORT, IF NOT FILED ALONG WITH T HE RETURN, ANY TIME BEFORE THE COMPLETION OF THE ASSESSMENT. ONE HAS TO LOOK AT TH E PURPOSE OF THE PROVISIONS. ONE HAS TO CONSTRUE THE PROVISION TO ENSURE COHEREN CE AND CONSISTENCY TO AVOID UNDESIRABLE CONSEQUENCES. WHERE THE AUDIT REPORT WA S MADE READY AFTER THE RETURN WAS FILED, THERE WAS NO REASON WHY SUCH AUDI T REPORT SHOULD NOT BE ALLOWED TO BE FILED BEFORE THE COMPLETION OF THE AS SESSMENT. NO CASE HAS BEEN MADE OUT THAT THE DELAY IN GETTING THE ACCOUNTS AUD ITED AND IN FILING OF THE REPORT IN FORM NO. 10B DEFEATED ANY OBJECT OF THE A CT OR THE ASSESSEES ACTION WAS IN SUBSTANCE NOT IN CONFORMITY WITH THE INTENT AND PURPOSE OF THE ACT. THE IT AUTHORITIES FELL INTO ERROR IN DENYING THE CLAIM OF EXEMPTION U/S 11. 8 ITA NO. 504/JP/2017. M/S SANKALP INTERNATIONAL, JAIPUR. 5.3 IT IS CONTENDED THAT THE LD. COUNSEL FOR THE AS SESSEE, THAT A BARE READING OF PROVISION OF SECTION 80IA(5) FOR THE PURPOSE OF DET ERMINATION OF QUANTUM OF DEDUCTION U/S 80IA, INCOME OF ELIGIBLE BUSINESS TO BE COMPUTED AS IF SUCH ELIGIBLE BUSINESS WAS THE ONLY SOURCE OF INCOME OF THE ASSES SEE DURING THE PREVIOUS YEAR RELEVANT TO INITIAL ASSESSMENT YEAR AND TO EVERY SU BSEQUENTLY ASSESSMENT YEARS. THUS, LOSSES AND DEPRECIATION FROM ELIGIBLE BUSINES S INCURRED PRIOR TO INITIAL YEAR ALREADY ABSORBED IS NOT TO BE CONSIDERED FOR DETERM INATION OF THE ELIGIBLE PROFIT. 5.4 WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED TH E MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDER OF THE AUTHORITIES BELOW . THE OBJECTION OF THE ASSESSING OFFICER DISALLOWING THE CLAIM ARE THAT GENERATION O F POWER HAS TO BE CONSIDERED AS A SEPARATE BUSINESS AND SINGLE UNIT CAN NOT CONSIDERE D AS A SEPARATE UNIT. EVEN IF EACH UNIT IS CONSIDERED SEPARATELY THEN ALSO THE IN DIVIDUAL UNIT HAS NOT EARNED PROFIT SINCE INSTALLATIONS, FROM ASSESSMENT YEAR 2013-14, E-FILING OF AUDIT REPORT OF U/S 80IB IN FORM 10CCB HAVE BECOME MANDATORY AND THE ASSESSE E HAS NOT E-FILED THE FORM NO. 10CCB EITHER BEFORE THE DUE DATE OR EVEN AFTER THE DUE DATE. THE ASSESSEE HAS FILED FORM 10CCB IN PAPER FORM ON 30/9/2013. THE C BDT CIRCULAR EXTENDED THE DATE OF FILING OF AUDIT REPORT TO 31/10/2013 SUBJECT TO THE CONDITIONS THAT THE ASSESEE SHOULD FILE THE AUDIT REPORT ALONG WITH COPY OF RET URN IN THE PAPER FORM BEFORE THE AO BEFORE 30/9/2013 AND THEREAFTER MANDATORY E-FILI NG THE AUDIT REPORT BEFORE 31/10/2013. HOWEVER, THE ASSESSEE HAS ONLY FILED F ORM 10CCB IN PAPER FORM BEFORE 30/9/2013 BUT FAILED TO FILE COPY OF RETURN ALONG W ITH IT. EVEN FORM 10CCB WAS NOT 9 ITA NO. 504/JP/2017. M/S SANKALP INTERNATIONAL, JAIPUR. E-FILED TILL THE DATE OF ASSESSMENT PROCEEDINGS ALT HOUGH IT WAS MANDATORY TO FILE UPTO 31/10/2013. 6. HOWEVER, LD. CIT(A) ALLOWED THE CLAIM BY OBSERVI NG AS UNDER:- 3.3 I HAVE PERUSED THE FACTS OF THE CASE, THE ASSESSME NT ORDER AND THE SUBMISSIONS OF THE APPELLANT. THE ASSESSEE HAS CLA IMED DEDUCTION UNDER SECTION 80IA OF THE IT ACT, 1961 AMOUNTING TO RS. 1,62,25,183/-. THE ASSESSEE HAS INSTALLED 8 WIND POWER TURBINES IN DIFFERENT LOCATIONS AND FOR PURPOSE OF CLAIMING DEDUCTION EACH HAS BEEN CONSIDERED AS A SEPARATE BUSINESS. THE ASSESSING OFFICER DID NOT A GREE WITH THE SAME AND AFTER EXAMINING THE CHART OF PRODUCTION YEAR WI SE (AT PAGE 4 IN HIS ORDER) CONCLUDED THAT EVEN IF EACH SINGLE UNITS IS CONSIDERED AS A SEPARATE BUSINESS, THE UNIT HAS NOT EARNED PROFIT S INCE INSTALLATION IF ALL THE DIRECT AND INDIRECT EXPENSES, DEPRECIATION FOR CURRENT YEAR, UNABSORBED BUSINESS LOSS OF EARLIER YEAR AND UNABSO RBED DEPRECIATION OF EARLIER YEARS, IS CONSIDERED. FURTHER THE ASSES SING OFFICER NOTICED THAT THE ASSESSEE HAD NOT E-FILED THE AUDIT REPORT UNDER SECTION 10CCB AND HENCE THE DEDUCTION COULD NOT BE GRANTED. IN THE PRESENT PROCEEDINGS, THE AUTHORIZED REPRESEN TATIVE PLACED RELIANCE ON THE SUBSECTION (5) OF 80IA WHICH READS AS UNDER: 'NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PR OVISION OF THIS ACT, THE PROFIT AND GAINS OF AN ELIGIBLE BUSINESS T O WHICH THE PROVISIONS OF SUB SECTION (1) APPLY SHALL, FOR THE PURPOSE OF DETERMINING THE QUANTUM OF DEDUCTION UNDER THAT SUB SECTION OR THE ASSESSMENT YEAR IMMEDIATELY SUCCEEDING THE INITIAL ASSESSMENT YEAR OR ANY SUBSEQUENT YEAR BE COMPUTED AS IF SUCH ELIGIBLE BUSINESS WERE THE ONLY SOURCE OF INCOME OF THE ASSESSEE DURING THE PREVIOUS YEAR RE LEVANT TO THE INITIAL ASSESSMENT YEAR AND TO EVERY SUBSEQUENT ASSESSMENT YEAR UPTO AND INCLUDING THE ASSESSMENT YEAR FOR WHICH THE DETERMI NATION TO BE MADE.' 10 ITA NO. 504/JP/2017. M/S SANKALP INTERNATIONAL, JAIPUR. IT WAS REITERATED THAT INCOME OF THE ELIGIBLE BUSIN ESS IS TO BE COMPUTED AS IF SUCH ELIGIBLE BUSINESS WERE THE ONLY SOURCE O F INCOME OF THE ASSESSEE DURING THE PREVIOUS YEAR RELEVANT TO THE I NITIAL ASSESSMENT YEAR AND TO EVERY SUBSEQUENT ASSESSMENT YEAR. IT WAS THUS PLEADED THAT LOSSES ON DEPRECIATION INC URRED IN ELIGIBLE BUSINESS FROM INITIAL YEAR IS TO BE SET OFF WHILE C OMPUTING ELIGIBLE AMOUNT OF DEDUCTION OF SUBSEQUENT ASSESSMENT YEAR I .E THE LOSS OR DEPRECIATION FROM ELIGIBLE BUSINESS INCURRED PRIOR TO INITIAL YEAR AND ALREADY ABSORBED HAS NO RELEVANCE. RELIANCE WAS PL ACED ON DECISIONS OF VELAYUDHASWAMY SPINNING MILLS (P) LTD. VS. ACIT, (2012) 21 TAXMANN COM 95 (MADRAS), CIT VS. MEWAR OIL & GEN. MILLS LTD. 271 ITR 311. SOURABH AGROTECH PVT. LTD. ITA NO. 786 & 8 26/JP/2011. IT WAS FURTHER CLAIMED THAT THE ISSUE OF INITIAL ASSES SMENT YEAR, IS ALSO CLARIFIED BY CBDT CIRCULAR NO. 1/2016 DATED 5/FEB, 2016 AS PER WHICH THE ASSESSEE HAS AN OPTION TO CHOOSE THE INITIAL/FI RST YEAR FROM WHICH HE MAY DESIRE TO CLAIM DEDUCTION FOR 10 CONSECUTIVE ASSESSMENT YEARS. AS REGARDS FILING OF AUDIT REPORT IT WAS STATED THA T THE FORM NO. 10CCB WAS FILED MANUALLY ON 30.09.2013 AND ONE AUDIT REPO RT WAS FILED ELECTRONICALLY ON 30.09.2013. IT WAS CLAIMED THAT THERE WAS NO OPTION TO FILE MORE THAN ONE AUDIT REPORT ONLINE AND THERE FORE THE BALANCE REPORTS COULD NOT BE FILED ELECTRONICALLY. IT IS SEEN THAT OUT OF THE 8 WIND POWER TURBINE UNI TS, DURING THE YEAR THE DEDUCTION IS CLAIMED IN RESPECT OF 4 UNITS BY T REATING EACH WIND TURBINE UNIT AS A SEPARATE UNIT. IN THE CASE OF TH ESE FOUR UNITS LOCATED AT BHU, JAISALMER, SADIYA, JETTUAI AND NV JAISALMER THE DATE OF PRODUCTION IS 29.03.2006, 31.03.2008, 27.09.2009 AN D 31.03.2010. IN THE CASE OF UNIT AT BHU THE INITIAL YEAR HAS BEEN T AKEN AS 2011-12 WHILE FOR THE OTHER THREE IT IS 2013-14. THE AUDIT REPOR T OF ALL FOUR UNITS HAVE BEEN FILED AND ALL THE UNITS ARE SHOWING PROFIT. T HE ASSESSING OFFICER'S 11 ITA NO. 504/JP/2017. M/S SANKALP INTERNATIONAL, JAIPUR. STAND WAS THAT ALL EARLIER BROUGHT FORWARD LOSSES A ND DEPRECIATION SHOULD BE NATIONALLY TAKEN TO THE YEAR OF CONSIDERA TION AND DEDUCTION GRANTED IF THERE IS PROFIT AFTER THE SET OFF OF THE SE LOSSES. IT IS SEEN THAT THESE LOSSES HAVE ALREADY BEEN ADJUSTED FROM T HE OTHER SOURCES OF INCOME OF THE ASSESSEE IN THE PREVIOUS YEARS. IN T HE CASE OF VELAYUDHASWAMY SPINNING MILLS (P) LTD. VS. ACIT, (2 012) 21 TAXMANN.COM 95 (MADRAS), THIS ISSUE HAS BEEN ELABOR ATELY DISCUSSED AND DECIDED AS FOLLOWS: 'WHEN THE ASSESSEE EXERCISES THE OPTION, THE ONLY L OSSES OF THE YEARS BEGINNING FROM INITIAL ASSESSMENT YEAR ALONE ARE TO BE BROUGHT FORWARD AND NOT THE LOSSES OF EARLIER YEARS WHICH W ERE ALREADY SET OFF AGAINST THE INCOME OF THE ASSESSEE. LOOKING FORWAR D TO A PERIOD OF TEN YEARS FROM THE INITIAL ASSESSMENT IS CONTEMPLAT ED. IT DOES NOT ALLOW THE REVENUE TO LOOK BACKWARD AND FIND OUT IF THERE IS ANY LOSS OF EARLIER YEARS AND BRING FORWARD NATIONALLY EVEN THO UGH THE SAME WERE SET OFF AGAINST OTHER INCOME OF THE ASSESSEE AND TH E SET OFF AGAINST THE CURRENT INCOME OF THE ELIGIBLE BUSINESS. ONCE THE SET OFF IS TAKEN PLACE IN EARLIER YEAR AGAINST THE OTHER INCOME OF T HE ASSESSEE, THE REVENUE CANNOT REWORK THE SET OFF AMOUNT AND BRING IT NATIONALLY. FICTION CREATED IN SUB-SECTION DOES NOT CONTEMPLATE S TO BEING SET OFF AMOUNT NATIONALLY. FICTION IS CREATED ONLY FOR THE LIMITED PURPOSE AND THE SAME CANNOT BE EXTENDED BEYOND THE PURPOSE FOR WHICH IT IS CREATED. THUS, LOSS IN THE YEAR EARLIER TO INITIAL ASSESSMEN T YEAR ALREADY ABSORBED AGAINST THE PROFIT OF OTHER BUSINESS CANNO T BE NATIONALLY BROUGHT FORWARD AND SET OFF AGAINST THE PROFITS OF THE ELIGIBLE BUSINESS, AS NO SUCH MANDATE IS PROVIDED IN SECTION 80-IA(5)' VIDE DECISION DATED 05.09.2016 IN ACIT V. VELAYUDHA SWAMY SPINNING MILLS (P) LTD. (2016) 76 TAXMANN.COM 176 (SC), THE SLP FILED IN THE CASE HAS BEEN DISMISSED BY THE APEX COURT AND THE S AME HAS ATTAINED FINALITY. FURTHER, THE CONCEPT OF INITIAL YEAR HAS BEEN CLARIFIED BY THE 12 ITA NO. 504/JP/2017. M/S SANKALP INTERNATIONAL, JAIPUR. CBDT, CIRCULAR NO. 1/2016 ISSUED ON 15TH FEBRUARY, 2016. THE RELEVANT PORTION OF THE SAME IS REPRODUCED BELOW: 'SUBJECT' CLARIFICATION OF THE TERM ' INITIAL ASSES SMENT YEAR IN SECTION 80IA (5) OF THE INCOME TAX ACT, 1961. IN THE ABOVE SUB-SECTION, WHICH PRESCRIBES THE MANN ER OF DETERMINING THE QUANTUM OF DEDUCTION, A REFERENCE HAS BEEN MADE TO THE TERM 'INITIAL ASSESSMENT YEAR' AS THE YEAR IN WHICH THE ELIGIBLE BUSINESS/MANUFACTURING ACTIVITY HAD COMMENCED AND A RE CONSIDERING SUCH FIRST YEAR OF COMMENCEMENT/OPERATION ETC. ITSE LF AS THE FIRST YEAR FOR GRANTING DEDUCTION, IGNORING THE CLEAR MANDATE PROVIDED UNDER SUB-SECTION (2) WHICH ALLOWS A CHOICE TO THE ASSESS EE FOR DECIDING THE YEAR FROM WHICH IT DESIRES TO CLAIM DEDUCTION OUT O F THE APPLICABLE SLAB OF FIFTEEN (OR TWENTY) YEARS. THE MATTER HAS BEEN EXAMINED BY THE BOARD. IT IS ABUNDANTLY CLEAR FROM SUB-SECTION (2) THAT ASSESSEE MAY DESIRE THE CLAIM OF DEDUCTION FOR TEN CONSECUTI VE YEARS. OUT OF A SLAB OF FIFTEEN (OR TWENTY) YEARS, AS PRESCRIBED UN DER THAT SUB-SECTION. IT IS HEREBY CLARIFIED THAT ONCE SUCH INITIAL ASSES SMENT YEAR HAS BEEN OPTED FOR BY THE ASSESSEE, HE SHALL BE ENTITLED TO CLAIM DEDUCTION U/S 80IA FOR TEN CONSECUTIVE YEARS BEGINNING FROM THE Y EAR IN RESPECT OF WHICH HE HAS EXERCISED SUCH OPTION SUBJECT TO THE F ULFILMENT OF CONDITIONS PRESCRIBED IN THE SECTION. HENCE, THE T ERM 'INITIAL ASSESSMENT YEAR' WOULD MEAN THE FIRST YEAR OPTED FO R BY THE ASSESSEE FOR CLAIMING DEDUCTION U/S 80IA. HOWEVER, THE TOTA L NUMBER OF YEAR FOR CLAIMING DEDUCTION SHOULD NOT TRANSGRESS THE PR ESCRIBED SLAB OF FIFTEEN OR TWENTY YEARS, AS THE CASE MAY BE AND THE PERIOD OF CLAIM SHOULD BE AVAILED IN CONTINUITY. THE ASSESSING OFFICER ARE, THEREFORE, DIRECTED TO A LLOW DEDUCTION U/S 80IA IN ACCORDANCE WITH THIS CLARIFICATION AND AFTE R BEING SATISFIED THAT ALL THE PRESCRIBED CONDITIONS APPLICABLE IN A PARTI CULAR CASE ARE DULY SATISFIED. PENDING LITIGATION ON ALLOW ABILITY OF DEDUCTION U/S 80IA SHALL ALSO NOT BE PURSUED TO THE EXTENT IT RELATES TO INTERPRETING 'INITIAL ASSESSMENT YEAR' AS MENTIONED IN SUB-SECTION (5) OF THAT SECTION FOR WHICH THE STANDING COUNSELS/DR. R. S. BE SUITABLY I NSTRUCTED.' THUS THE ASSESSEE HAS THE OPTION OF CHOOSING THE 'I NITIAL YEAR' AND THE SAME CAN BE DIFFERENT FROM THE FIRST YEAR OF PRODUC TION. HOWEVER, 13 ITA NO. 504/JP/2017. M/S SANKALP INTERNATIONAL, JAIPUR. ONCE AN INITIAL YEAR IS OPTED FOR THE DEDUCTION IS AVAILABLE FOR 10 CONSECUTIVE ASSESSMENT YEARS. IN VIEW OF THE CASE LAWS ABOVE, THE BROUGHT FORWARD LOSSES AND DEPRECIATION EARLIER ADJ USTED CANNOT BE AGAIN NOTIONALLY BROUGHT FORWARD FOR ADJUSTMENT. I N VIEW OF THE ABOVE, THE DEDUCTION IS ALLOWABLE TO THE ASSESSEE. NOW COMING TO THE ISSUE OF E-FILING OF THE AUDIT RE PORT THE ASSESSEE STATED THAT EFFORTS WERE MADE ON 29.09.2013 TO FILE THE REPORTS IN FORM NO. 10CCB ELECTRONICALLY, HOWEVER, THE SAME COULD N OT BE UPLOADED. IN SUPPORT OF THE ELECTRONIC FILING A COPY OF THE S NAP SHOT OF E-FILING WAS SUBMITTED WHICH SHOWS THAT THE ASSESSEE HAS REG ISTERED ON E-FILING PORTAL FOR ONLINE FILING. IT WAS FURTHER STATED TH AT DUE TO TECHNICAL PROBLEM THE SAME COULD NOT BE UPLOADED AND THE ASSE SSEE HAS IMMEDIATELY FILED ALL THE REPORTS MANUALLY BEFORE T HE DUE DATE FOR FILING THE SAME. RELIANCE WAS ALSO PLACED ON RAJ KUMARI B AFNA V. ITO (2016) 48 CCH 0244 (JAIPUR TRIB.) AND HARISHBHAI BA BUBHAI V. ITO IN ITA NO. 646/AHD2016 (AHD. TRIB). THE REPORTS IN TH E FORM NO. 10CCB HAVE BEEN FILED MANUALLY WITHIN THE DUE DATE BEFORE THE ASSESSING OFFICER WHICH COULD NOT BE UPLOADED ELECTRONICALLY. FURTHER, EVIDENCE HAS BEEN FILED IN SUPPORT OF THE FACT THAT THERE WA S A TECHNICAL ISSUE IN FILING THE REPORT WHILE THE ASSESSEE HAD REGISTERED ON THE PORTAL ON 29.03.2013 ITSELF AS EVIDENCED FROM THE SNAP SHOT, YET THE SAME COULD NOT BE UPLOADED. IN VIEW OF THE ABOVE AND THE CASE LAWS RELIED ON BY THE AUTHORIZED REPRESENTATIVE, THERE HAS BEEN A REA SONABLE CAUSE FOR NON E-FILING OF THE REPORTS AND IN VIEW OF THE FACT THAT THE MANUAL REPORTS WERE FILED IN TIME, IN MY VIEW THE DEDUCTIO N IS ALLOWABLE. THE GROUND OF APPEAL IS ALLOWED. 7. WE FIND THAT LD. CIT(A) HAS EXAMINED THE ISSUE E LABORATELY AND DULY CONSIDERED THE OBJECTIONS OF THE AO. LD. CIT(A) HA S FOLLOWED THE BINDING 14 ITA NO. 504/JP/2017. M/S SANKALP INTERNATIONAL, JAIPUR. PRECEDENTS. THE REVENUE HAS NOT BROUGHT TO OUR NOT ICE ANY CONTRARY BINDING PRECEDENTS. THEREFORE, WE DO NOT SEE ANY REASON TO INTERFERE INTO THE FINDING OF THE LD. CIT(A), SAME IS HEREBY AFFIRMED. THIS GROUND O F REVENUES APPEAL IS DISMISSED. 8. GROUND NO. 3, IS GENERAL IN NATURE AND NEEDS NO SEPARATE ADJUDIC ATION. 9. IN THE RESULT, APPEAL OF THE REVENUE IN ITA NO. 504/JP/2017 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON FRIDAY, THE 11 TH DAY OF AUGUST 2017. SD/- SD/- FOE FLAG ;KNO ( DQY HKKJR ) (VIKRAM SINGH YADAV) ( KUL BHARAT ) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 11/08/2017. POOJA/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- DCIT, CIRCLE-4, JAIPUR. 2. THE RESPONDENT- M/S SANKALP INTERNATIONAL, F-944 , ROAD NO. 14, VKI, JAIPUR. 3. THE CIT, 4. THE CIT (A) 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 504/JP/2017) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR 15 ITA NO. 504/JP/2017. M/S SANKALP INTERNATIONAL, JAIPUR.