ACIT (OSD) 8(2), MUMBAI V. JAYANT AGRO ORGANICS LTD, MUMBAI

ITA 5056/MUM/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3832 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Assessment Year: 2010-2011
• Appeal Filed On: 04-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K MOHANDA S
• Keywords: Business income; Depreciation; Capital receipt; Unabsorbed depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH J, MUMBAI BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO.5056/M/2014 ASSESSMENT YEAR: 2010-11 DCIT (OSD)-8(2), ROOM NO.218, 2 ND FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 VS. M/S. JAYANT AGRO ORGANICS LTD., 38, MAROL CO-OP INDUSTRIAL ESTATE, OFF. M.V. ROAD, SAKINAKA, ANDHERI (E), MUMBAI 59 PAN: AAACJ 7581Q (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI MADHUR AGARWAL, A.R. REVENUE BY : SHRI K. MOHANDAS, D.R. DATE OF HEARING : 17.02.2016 DATE OF PRONOUNCEMENT : 24.02.2016 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVEN UE AGAINST THE ORDER DATED 16.05.2014 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT Y EAR 2010-11. 2. THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS OF A PPEAL: 'I. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN TREATING THE AMOUNT RET AINED BY THE ASSESSEE COMPANY OR FORFEITURE OF SHARE WARRANTS, AS CAPITAL RECEIPT NOT LIABLE TO TAX, WITHOUT APPRECIATING THE FACT THAT THE AMOUNT FORFE ITED BY THE ASSESSEE IS THE OPTION PREMIUM RECEIVED BY THE ASSESSEE AT THE TIME OF ENTERING INTO OPTION CONTRACT IN THE FORM OF SHARE WARRANTS AND THESE OP TIONS WERE ULTIMATELY SETTLED WITHOUT THE ACTUAL DELIVERY OF SHARES AND T HEREFORE, THE ENTIRE PREMIUM FORFEITED AND RETAINED BY THE ASSESSEE CONS TITUTES SPECULATION GAINS LIABLE FOR TAX.? II. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN TREATING THE AMOUNT FOR FEITED BY THE ASSESSEE ITA NO.5056/M/2014 M/S. JAYANT AGRO ORGANICS LTD. 2 COMPANY ON SHARE WARRANTS AS CAPITAL RECEIPT AND TH US NOT TAXABLE WITHOUT APPRECIATING THE FACT THAT FORFEITED SHARES ARE AVA ILABLE FOR REISSUE AND THUS, FORFEITED AMOUNT IS A WINDFALL FOR COMPANY..? II. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN TREATING THE AMOUNT FOR FEITED BY THE ASSESSEE COMPANY ON SHARE WARRANTS AS CAPITAL RECEIPT AND TH US NOT TAXABLE WITHOUT APPRECIATING THE FACT THAT THE AMOUNT FORFEITED BY THE ASSESSEE IN THE FORM OF OPTION PREMIUM IS A SPECULATION GAIN RECEIVED BY THE COMPANY AS THE ALLOTTEES DID NOT EXERCISE THE OPTION WITHIN THE ST IPULATED PERIOD OF 18 MONTHS TO PURCHASE EQUITY SHARES OF THE ASSESSEE CO MPANY. IV. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN DELETING THE DISALLOWAN CE OF DEDUCTION OF RS. 1,11,14,473/- U/S 80IA STATING THAT 'INITIAL ASSESS MENT YEAR' WILL BE THE YEAR IN WHICH CLAIM OF DEDUCTION WAS MADE FOR THE FIRST TIME WITHOUT APPRECIATING THAT THE OBSERVATIONS OF MUMBAI ITAT A T PARA 25 IN THE CASE OF HERCULES HOIST LTD (2013) 022 ITR (TRIB) 0527 WHERE IN THE HON'BLE ITAT HAS HELD THAT THE 'INITIAL ASSESSMENT YEAR' WILL BE THE YEAR IN WHICH THE OPERATIONS HAVE BEEN COMMENCED. ? V. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN DELETING THE DISALLOWAN CE OF RS. 1,11,14,473/- U/S 80IA WITHOUT APPRECIATING THAT IN THE ASSESSEE'S CA SE ONLY FOR AY 2009-10, ON THE IDENTICAL ISSUE, LD CIT(A) HAS CONFIRMED THE DISALL OWANCE.? THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE A.O. BE RESTORED. 3. A PERUSAL OF THE ABOVE GROUNDS OF APPEAL REVEALS THAT THE REVENUE HAS TAKEN ONLY TWO EFFECTIVE GROUNDS THROUGH THE ABOVE GROUNDS OF APPEAL. THE FIRST ISSUE IS RELATING TO THE NATURE OF THE RECEIP TS RECEIVED ON ACCOUNT OF FORFEITURE OF WARRANT/SHARE APPLICATION MONEY AS TO WHETHER THE SAME IS TO BE TREATED AS CAPITAL IN NATURE OR THE REVENUE INCOME OF THE ASSESSEE. THE SECOND ISSUE RAISED BY THE REVENUE IS RELATING TO THE CARR Y FORWARD OF NOTIONAL LOSS UNDER SECTION 80IA OF THE ACT FOR THE PURPOSE OF CO MPUTATION OF ELIGIBLE CLAIM/DEDUCTION TO THE ASSESSEE UNDER SECTION 80IA OF THE ACT. 4. SO FAR AS THE FIRST ISSUE IS CONCERNED, THE LD. A.R. OF THE ASSESSEE, AT THE OUTSET, HAS STATED THAT THE ISSUE IS SQUARELY COVER ED IN FAVOUR OF THE ASSESSEE BY VARIOUS DECISIONS OF THE TRIBUNAL. HE, IN THIS RES PECT, HAS RELIED UPON THE DECISION OF THE KOLKATA BENCH OF THE TRIBUNAL IN TH E CASE OF ASIATIC OXYGEN ITA NO.5056/M/2014 M/S. JAYANT AGRO ORGANICS LTD. 3 LTD. VS DY. COMMISSIONER OF INCOME TAX (1994) 49 I TD 0355 WHEREIN, THE TRIBUNAL HAS HELD THAT THE AMOUNT FORFEITED FROM SH AREHOLDERS FOR DEFAULT IN PAYMENT OF CALL MONEYS IS A CAPITAL RECEIPT AND FUR THER THAT THE AMOUNT RECEIVED ON REISSUE OF FORFEITED SHARES CREDITED TO SHARE PREMIUM ACCOUNT IS ALSO CAPITAL RECEIPT. FURTHER, THE LD. A.R. HAS RE LIED UPON THE DECISION OF THE AHMEDABAD BENCH OF THE TRIBUNAL IN THE CASE OF DCI T VS. BRIJLAXMI LEASING & FINANCE LTD. (2009) 118 ITD 0546 WHEREIN THE TR IBUNAL AFTER CONSIDERING THE NATURE OF SUCH RECEIPTS HAS HELD THAT FORFEITUR E OF SHARE APPLICATION MONEY WHICH IS CREDITED TO CAPITAL RESERVE ACCOUNT IS CAP ITAL RECEIPT AND IS NOT CHARGEABLE TO TAX. THAT THE ISSUE OF SHARES NOT BE ING BUSINESS OF THE ASSESSEE, THE AMOUNT CANNOT BE TREATED AS RECEIPT IN THE NORM AL COURSE OF BUSINESS. THE RELEVANT FINDINGS OF THE TRIBUNAL IN THE SAID CASE ARE REPRODUCED AS UNDER: 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSEE WAS TO RECEIVE CALL MONEY IN RESPECT OF SHARES AS P ER THE TERMS OF PROSPECTUS AND THE ALLOTMENT LETTERS, BUT THE SAME WERE NOT RECEIVED FROM SOME OF THE SHAREHOLDERS. IN THIS CASE, THE SH ARE APPLICATION MONEY WAS FORFEITED AS PER THE TERMS OF THE PROSPEC TUS. THE ABOVE FACTS ARE NOT IN DISPUTE. THE SHORT QUESTION WHICH FALLS FOR OUR CONSIDERATION IS WHETHER THE ABOVE FORFEITURE AMOUN T IS TAXABLE UNDER THE PROVISIONS OF IT ACT, 1961 OR NOT. THE LEARNED DEPA RTMENTAL REPRESENTATIVE VEHEMENTLY PLACED RELIANCE ON THE DECISION OF THE H ON'BLE SUPREME COURT IN THE CASE OF CIT VS. T.V. SUNDARAM IYENGAR & SONS LTD. ( SUPRA) FOR HIS CONTENTION THAT FORFEITED AMOUNT IS TAXABLE AS REVENUE RECEIPT. HOW EVER, WE FIND THAT THE FACTS OF THE CASE THAT WERE BEFORE THE HON'BLE SUPREME COURT ARE DISTINGUISHABLE FROM THE FACTS BEFORE US. IN THE INSTANT CASE NO SECURITY DE POSIT OR ADVANCE RECEIVED FOR PERFORMANCE OF THE CONTRACT WAS FORFEITED. IN FACT, THE AMOUNT RECEIVED WAS AGAINST ISSUE OF SHARES AND ISSUE OF SHARES IS NOT THE BUSI NESS OF THE ASSESSEE. THE SAME CANNOT BE TREATED AS RECEIPT IN THE NORMAL COURSE O F THE BUSINESS OF THE ASSESSEE WHICH IS ENGAGED IN FINANCING AND LEASING BUSINESS. FURTHER, THE ASSESSEE HAS ALSO NOT CREDITED THE FORFEITED AMOUNT IN ITS P&L A/C BU T IN CONTRADISTINCTION TO THAT IT HAS CREDITED THE SAME IN CAPITAL RESERVE ACCOUNT. I N THE ABOVE FACTS, IN OUR CONSIDERED OPINION THE DECISION OF THE TRIBUNAL IN THE CASE OF PRISM CEMENTS LTD. VS. JT. CIT (SUPRA) IS MORE APPLICABLE WHICH WAS RE NDERED BY THE TRIBUNAL AFTER DULY CONSIDERING THE AFORESAID DECISION OF THE HON'BLE S UPREME COURT IN THE CASE OF T.V. SUNDARAM IYENGAR & SONS LTD. (SUPRA). THE TRIBUNAL IN THE SAID CASE HAS HELD AS UNDER: '15. THUS, THE EARNEST MONEY OR AN ADVANCE AMOUNT R ECEIVED ON ACCOUNT OF ISSUANCE OF NCDS, IF FORFEITED ON ACCOUNT OF NON-PA YMENT OF CALL MONEY, THE LOAN LIABILITY WOULD ONLY CONVERT INTO A CAPITAL RE CEIPT. IT WOULD NOT ASSUME A CHARACTER OF REVENUE RECEIPT OR BUSINESS RECEIPT BE CAUSE NCDS WERE NOT ITA NO.5056/M/2014 M/S. JAYANT AGRO ORGANICS LTD. 4 ISSUED IN THE COURSE OF REGULAR BUSINESS OF THE ASS ESSEE AS EVIDENT FROM THE FACTS OF THE CASE. ASSESSEE'S MAIN BUSINESS IS OF C EMENT AND IT WAS IN THE PROCESS OF SET UP OF CEMENT MANUFACTURING PLANT AT SATNA DURING THE IMPUGNED ASSESSMENT YEAR. IN THESE CIRCUMSTANCES, W E ARE CONSTRAINED TO HOLD THAT THE AMOUNT RECEIVED BY THE ASSESSEE IN LI EU OF ISSUANCE OF NCDS WHICH WERE FORFEITED LATER, ON ACCOUNT OF NON-PAYME NT OF CALL MONEY ASSUMES A CHARACTER OF CAPITAL RECEIPT WHICH EARLIE R WAS SHOWN AS A LOAN LIABILITY IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. IF WE CONSIDER THIS RECEIPT TO BE A BUSINESS RECEIPT EVEN THEN IT WOULD NOT BE TAXABLE TO TAX UNDER THE PROVISIONS OF S. 41(1) OF THE ACT, INASMUCH AS THER E WAS NO ALLOWANCE OR DEDUCTION OF THIS LIABILITY IN THE EARLIER YEARS.' IN VIEW OF THE ABOVE, RESPECTFULLY FOLLOWING THE AF ORESAID DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL, WE FIND NO REASON TO INTERFE RE WITH THE ORDER OF THE LEARNED CIT(A). IT IS CONFIRMED AND THE GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. 5. THE LD. A.R. HAS FURTHER RELIED UPON THE DECISIO N OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF PRISM LT. VS. JCIT (2006) 101 ITD 103 (MUM.) WHEREIN THE TRIBUNAL HAS HELD THAT THE AMOUN T RECEIVED ON ACCOUNT OF FORFEITURE OF NCDS FOR NON PAYMENT OF CALL MONEY WA S TO BE TREATED AS CAPITAL IN NATURE AS THE ISSUANCE OF NCDS (NON CONVERTIBLE DEBENTURES) WAS NOT A BUSINESS OF THE ASSESSEE AND HENCE SUCH AMOUNT CANN OT BE CHARGED TO TAX EVEN UNDER SECTION 41(1) OF THE ACT. 6. WE FIND THAT THE ISSUE IN THE CASE IN HAND IS ID ENTICAL TO THE ISSUE INVOLVED IN THE ABOVE CITED DECISIONS BY THE LD. A. R. IN THE CASE IN HAND ALSO, THE ASSESSEE HAD FORFEITED THE ADVANCE/APPLICATION MONEY OF RS.1,78,50,000/- RECEIVED FROM THE WARRANT HOLDERS AFTER THE EXPIRY OF THE DATE FOR CONVERTING THE SAME INTO THE SHARES AND THE SAME HAD BEEN CREDITED TO THE CAPITAL RESERVE ACCOUNT IN THE BALANCE SHEET. THE ISSUE, THUS, IS SQUARELY COVERED BY THE ABOVE DECISIONS CITED BY THE LD. A.R. THE LD. D.R. HAS ALSO FAIRLY AGREED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE ABOVE DECISIONS (SUPR A) CITED BY THE LD. A.R. ITA NO.5056/M/2014 M/S. JAYANT AGRO ORGANICS LTD. 5 7. SO THE ISSUE RAISED VIDE GROUND NOS.1 TO 3 OF TH E REVENUES APPEAL IS DECIDED IN FAVOUR OF THE ASSESSEE. 8. SO FAR AS THE SECOND ISSUE IS CONCERNED, THE FAC TS RELATING TO THE ISSUE ARE THAT THE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS THE AO) OBSERVED THAT THE ASSESSEE HAS BEEN PERMITTED BY THE GUJARAT ENERGY D EVELOPMENT AGENCY TO SET UP A WIND FARM OF CAPACITY 1.6 MW (2 NO. WTG OF 800 KW= 1.6 MW) AT VILLAGE NAVADRA OF TALUKA KALYANPUR, IN DISTRICT OF JAMNAGAR, GUJARAT. ASSESSEE ACQUIRED TWO WINDMILLS IN THE FY 2005-06 F ROM M/S. ENERCON INDIA LTD. FOR A SUM OF RS.7.4 CRORES AND ENTERED INTO AN AGREEMENT WITH GUJARAT ENERGY TRANSMISSION CORPORATION LTD. ON 21.04.2006 FOR SALE OF POWER. DURING THE FY RELEVANT TO AY 2010-11, THE ASSESSEE GENERATED INCOME OF RS.1,33,71,946/- AND AFTER DEDUCTING EXPENSES UNDER VARIOUS HEADS AND DEPRECIATION, PROFIT HAD BEEN ARRIVED AT RS.1,11,14 ,473/-. THIS PROFIT DERIVED FROM WIND MILL UNIT HAD BEEN CLAIMED EXEMPT U/S. 80 IA(4)(IV)(A) BEING 100% OF ITS PROFIT DERIVED FROM THE WIND MILL PROJECT. T HE AO NOTED THAT THOUGH THE PROJECT WAS STARTED IN AY 2006-07, THE ASSESSEE HAD CLAIMED DEDUCTION U/S. 80IA(4)(IV)(A) FOR THE FIRST TIME IN AY 2009-10 AND THE YEAR UNDER CONSIDERATION WAS THE SECOND YEAR OF SUCH CLAIM OF DEDUCTION U/S. 80IA(4)(IV)(A) OF THE ACT. THE AO OBSERVED THAT AS PER THE PROVISION OF SECTION 80IA(5), WHILE QUANTIFYING THE AMOUNT OF DE DUCTION UNDER SECTION 80IA, IT HAS TO BE PRESUMED THAT THE ELIGIBLE BUSIN ESS IS THE ONLY SOURCE OF INCOME AND HENCE THE LOSSES INCURRED IN EARLIER YEA R HAS TO BE FIRST SET OFF WITH THE PROFITS OF ELIGIBLE BUSINESS AND BALANCE PROFIT , IF ANY IS ONLY ELIGIBLE FOR DEDUCTION UNDER SECTION 80IA. HE ALSO FURTHER OBSE RVED THAT SINCE THE ASSESSEE HAD INCURRED HUGE LOSSES IN EARLIER YEAR, IF THE SA ME ARE SET-OFF FROM THE INCOME OF THE WINDMILL OF THIS YEAR, DEDUCTION UNDER SECTI ON 80IA WOULD NOT BE AVAILABLE. HE FURTHER OBSERVED THAT AS PER THE PRO VISIONS OF SECTION 80IA(5), A TAXPAYER HAS THE OPTION TO CLAIM DEDUCTION FOR A PE RIOD OF 10 CONSECUTIVE ASSESSMENT YEARS OUT OF 15 YEARS AND ALSO SUCH PROV ISIONS MANDATE THAT THE ITA NO.5056/M/2014 M/S. JAYANT AGRO ORGANICS LTD. 6 ELIGIBLE BUSINESS SHOULD BE FICTIONALLY TREATED AS THE ONLY SOURCE OF INCOME OF THE TAXPAYER. THE AO HELD THAT THEREFORE LOSSES IN CURRED IN EARLIER YEAR HAVE TO BE FIRST SET OFF AND BALANCE PROFIT, IF ANY IS ONLY ELIGIBLE FOR DEDUCTION UNDER SECTION 80IA. HE FURTHER HELD THAT THE PROFIT FROM THE ELIGIBLE BUSINESS FOR THE PURPOSE OF DETERMINATION OF THE QUANTUM OF DEDUCTIO N UNDER SECTION 80IA OF THE ACT HAS TO BE COMPUTED AFTER DEDUCTION OF NOTIO NAL BROUGHT FORWARD LOSSES AND DEPRECIATIONS OF ELIGIBLE UNITS, EVEN THOUGH TH EY HAVE BEEN ALLOWED SET OFF AGAINST OTHER INCOME IN EARLIER YEARS. HE OBSERVED THAT IT IS THE MANDATE OF LAW THAT LOSSES OF EARLIER YEARS THOUGH ALREADY ADJUSTE D AGAINST INCOME FROM OTHER SOURCES, THE SAME ARE ONCE AGAIN TO BE NOTIONALLY B ROUGHT FORWARD AND SET OFF AGAINST PROFITS OF THE ELIGIBLE UNIT TO COMPUTE ELI GIBLE DEDUCTION. 9. THE LD. CIT(A) HOWEVER ALLOWED THE CLAIM OF THE ASSESSEE. THE REVENUE IS THUS IN APPEAL BEFORE US. 10. AT THE OUTSET, THE LD. A.R. OF THE ASSESSEE SUB MITTED THAT ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 80IA OF THE ACT IN RESPE CT OF THE PROFITS OUT OF THE GENERATION OF ELECTRICITY OUT OF WINDMILL ACTIVITY AND THE UNABSORBED DEPRECIATION AND LOSSES OF THE EARLIER YEARS TO THE INITIAL YEAR IN WHICH THE ASSESSEE STARTED TO CLAIM THE BENEFIT UNDER SECTION 80IA, SINCE ALREADY SET OFF WITH THE INELIGIBLE PROFITS OF THE ASSESSEE FROM OT HER BUSINESS, COULD NOT BE REDUCED FROM PROFITS OF ELIGIBLE BUSINESS FOR COMPU TING DEDUCTION U/S 80IA OF THE ACT. THE LD. A.R. OF THE ASSESSEE HAS FURTHER S TATED THAT THIS ISSUE IS SQUARELY IN FAVOUR OF THE ASSESSEE BY A SERIES OF D ECISIONS AS MENTIONED BELOW: (A ) VELAYUDHASWAMY SPINNING MILLS PVT. LTD. VS. ACIT (2010) 231 CTR (MAD) :[2012] 340 ITR 477 (MAD) (HIGH COURT) (AFTER CONSIDERING SPECIAL BENCH DECISION). (B) CIT VS. EMRALD JEWEL INDUSTRY P. LTD. [2011] 53 DTR 263 (MAD) (HIGH COURT) (AFTER CONSIDERING THE ABOVE DECISION) (C) M/S PRASHANT CATERERS VS. ITO ITA NO. 4226/M/20 11 DECIDED ON 6.02.2013 (MUMBAI TRIBUNAL) ITA NO.5056/M/2014 M/S. JAYANT AGRO ORGANICS LTD. 7 11. FURTHER, THE LD AR HAS MENTIONED THAT IN THE D ECISIONS OF HON'BLE MADRAS HIGH COURT, THE SPECIAL BENCH DECISION IN TH E CASE OF ACIT VS. GOLD MINE SHARES AND FINANCE (P) LTD. 113 ITD 209 (SB), HAS ALSO BEEN CONSIDERED. THE LD. DR ON THE OTHER HAND HAS RELIED UPON THE FI NDINGS OF THE AO ON THIS ISSUE. 12. WE HAVE CONSIDERED THE RIVAL CONTENTIONS. WE FIND THAT THE HON'BLE MADRAS HIGH COURT IN THE CASE OF VELAYUDHASWAMY SP INNING MILLS (P) LTD. VS. ACIT (2010) 231 CTR (MAD) 368 (BCAJ) HAS HELD THAT THE ASSESSEE IS ENTITLED TO CLAIM DEDUCTION U/S 80IA FOR 10 CONSECU TIVE YEARS OUT OF 15 YEARS AND THAT INITIAL YEAR OF BENEFIT CAN BE OPTED BY TH E ASSESSEE. LOSSES AND DEPRECIATION OF THE YEARS EARLIER TO THE INITIAL AS SESSMENT YEAR WHICH HAVE ALREADY BEEN ABSORBED AGAINST PROFITS OF OTHER BUSI NESSES CANNOT BE NOTIONALLY BROUGHT FORWARD AND SET OFF AGAINST THE PROFITS OF THE ELIGIBLE BUSINESS FOR COMPUTING THE DEDUCTION U/S.80IA. SIMILAR VIEW HAS BEEN TAKEN IN THE DECISION OF HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS . EMERALD JEWEL INDUSTRY P. LTD. (SUPRA) AND BY THE MUMBAI TRIBUNAL IN THE CASE OF M/S PRASHANT CATERERS VS. ITO (SUPRA). RESPECTFULLY FOLLOWING T HE SAME, THIS ISSUE IS ACCORDINGLY DECIDED IN FAVOUR OF THE ASSESSEE. THE AO IS DIRECTED TO ALLOW THE CLAIM OF DEDUCTION IN THE LIGHT OF THE ABOVE STATED DECISIONS. 13. IN VIEW OF THE ABOVE, THERE IS NO MERIT IN THE APPEAL OF THE REVENUE AND THE SAME IS ACCORDINGLY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24.02.2016. SD/- SD/- (ASHWANI TANEJA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 24.02.2016. * KISHORE, SR. P.S. ITA NO.5056/M/2014 M/S. JAYANT AGRO ORGANICS LTD. 8 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.