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

ITA 5621/MUM/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3383 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Assessment Year: 2011-2012
• Appeal Filed On: 05-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHISH HELIWALDR
• Assessee Lawyers: INDIRA G ANAND
• Keywords: Business income; Depreciation; Capital receipt; Unabsorbed depreciation

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES J, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI RAJENDRA, ACCOUNTANT MEMBER ITA NO.5621/MUM/2014 ASSESSMENT YEAR-2011-12 ACIT - 8(2)(OSD), R. NO.218, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020 / VS. M/S JAYANT AGRO ORGANICS LTD. AKHANDANAND, 38, MAROK CO-OP. INDUSTRIAL ESTATE, OFF. M.V. ROAD, SAKINAKA, ANDHERI (EAST), MUMBAI-400059 PAN NO.AAACJ7581Q ( / REVENUE) ( / ASSESSEE) / REVENUE BY SHRI ASHISH HELIWAL-DR / ASSESSEE BY MS. INDIRA G. ANAND / DATE OF HEARING : 30/03/2016 / DATE OF ORDER: 30/03/2016 ITA NO.5621/MUM/2014 M/S JAYANT AGRO ORGANICS LTD. 2 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DATED 27/06/2014 OF THE LD. FIRST APPELLATE AUTHORI TY, MUMBAI. THE ONLY GROUND RAISED IN THIS APPEAL PERT AINS TO DELETING THE DISALLOWANCE OF DEDUCTION OF RS.1,02,8 5,478/-, CLAIMED U/S 80IA OF THE ACT, STATING THAT INITIAL A SSESSMENT YEAR WILL BE THE FIRST IN WHICH DEDUCTION WAS CLAIM ED FOR THE FIRST TIME, WITHOUT APPRECIATING THE DECISION IN HE RCULES HOIST LTD. (2013) 22 ITR (TRIB.) 527. 2. DURING HEARING OF THIS APPEAL, SHRI ASHISH HELIWAL, LD. DR, ADVANCED ARGUMENTS, WHICH ARE IDEN TICAL TO THE GROUND RAISED. ON THE OTHER HAND, THE LD. COUN SEL FOR THE ASSESSEE, MS. INDIRA G. ANAND, CONTENDED THAT T HE IMPUGNED ISSUE IS COVERED BY THE DECISION OF THE TR IBUNAL DATED 24/02/2016 FOR A.Y. 2010-11, THAT TO IN THE C ASE OF ASSESSEE ITSELF. THE LD. COUNSEL FURNISHED THE COPY OF THE AFORESAID ORDER ITA NO.5056/MUM/2014. THIS ASSERTIO N OF THE LD. COUNSEL FOR THE ASSESSEE WAS NOT CONTROVERT ED BY THE LD. DR. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN VIEW O F THE ABOVE, WE ARE REPRODUCING HEREUNDER THE RELEVANT PO RTION FROM THE AFORESAID ORDER DATED 24/02/2016 FOR READY REFERENCE AND ANALYSIS:- ITA NO.5621/MUM/2014 M/S JAYANT AGRO ORGANICS LTD. 3 THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVEN UE AGAINST THE ORDER DATED 16.05.2014 OF THE COMMISSIONER OF INCOM E TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] R ELEVANT TO ASSESSMENT YEAR 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 TH E AMOUNT RETAINED BY THE ASSESSEE COMPANY OR FORFEITURE OF S HARE WARRANTS, AS CAPITAL RECEIPT NOT LIABLE TO TAX, WIT HOUT APPRECIATING THE FACT THAT THE AMOUNT FORFEITED BY THE ASSESSEE IS THE OPTION PREMIUM RECEIVED BY THE ASSESSEE AT T HE TIME OF ENTERING INTO OPTION CONTRACT IN THE FORM OF SHARE WARRANTS AND THESE OPTIONS WERE ULTIMATELY SETTLED WITHOUT THE A CTUAL DELIVERY OF SHARES AND THEREFORE, THE ENTIRE PREMIU M FORFEITED AND RETAINED BY THE ASSESSEE CONSTITUTES SPECULATIO N 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 TH E AMOUNT FORFEITED BY THE ASSESSEE COMPANY ON SHARE WARRANTS AS CAPITAL RECEIPT AND THUS NOT TAXABLE WITHOUT APPREC IATING THE FACT THAT FORFEITED SHARES ARE AVAILABLE FOR REISSU E 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 TH E AMOUNT FORFEITED BY THE ASSESSEE COMPANY ON SHARE WARRANTS AS CAPITAL RECEIPT AND THUS NOT TAXABLE WITHOUT APPREC IATING THE FACT THAT THE AMOUNT FORFEITED BY THE ASSESSEE IN T HE FORM OF OPTION PREMIUM IS A SPECULATION GAIN RECEIVED BY TH E COMPANY AS THE ALLOTTEES DID NOT EXERCISE THE OPTIO N WITHIN THE STIPULATED PERIOD OF 18 MONTHS TO PURCHASE EQUI TY SHARES OF THE ASSESSEE COMPANY. IV. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN DELETING TH E DISALLOWANCE OF DEDUCTION OF RS. 1,11,14,473/- U/S 80IA STATING THAT 'INITIAL ASSESSMENT YEAR' WILL BE THE YEAR IN WHICH CLAIM OF ITA NO.5621/MUM/2014 M/S JAYANT AGRO ORGANICS LTD. 4 DEDUCTION WAS MADE FOR THE FIRST TIME WITHOUT APPRE CIATING THAT THE OBSERVATIONS OF MUMBAI ITAT AT 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 TH E DISALLOWANCE OF RS. 1,11,14,473/- U/S 80IA WITHOUT APPRECIATING THAT IN THE ASSESSEE'S CASE ONLY FOR AY 2009-10, ON THE IDENTICAL ISSUE, LD CIT(A) HAS CONFIRMED THE DISALLOWANCE.? THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE A.O. BE RESTORE D. 3. A PERUSAL OF THE ABOVE GROUNDS OF APPEAL REVEALS THAT THE REVENUE HAS TAKEN ONLY TWO EFFECTIVE GROUNDS THROUGH THE AB OVE GROUNDS OF APPEAL. THE FIRST ISSUE IS RELATING TO THE NATURE OF THE RECEIPTS 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 R AISED BY THE REVENUE IS RELATING TO THE CARRY FORWARD OF NOTIONA L LOSS UNDER SECTION 80IA OF THE ACT FOR THE PURPOSE OF COMPUTAT ION 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 SQUAREL Y COVERED IN FAVOUR OF THE ASSESSEE BY VARIOUS DECISIONS OF THE TRIBUNAL. HE, IN THIS RESPECT, HAS RELIED UPON THE DECISION OF THE KOLKATA BENCH O F THE TRIBUNAL IN THE CASE OF ASIATIC OXYGEN LTD. VS DY. COMMISSIONE R OF INCOME TAX (1994) 49 ITD 0355 WHEREIN, THE TRIBUNAL HAS H ELD THAT THE AMOUNT FORFEITED FROM SHAREHOLDERS FOR DEFAULT IN P AYMENT OF CALL MONEYS IS A CAPITAL RECEIPT AND FURTHER THAT THE AM OUNT RECEIVED ON REISSUE OF FORFEITED SHARES CREDITED TO SHARE PREMI UM ACCOUNT IS ALSO ITA NO.5621/MUM/2014 M/S JAYANT AGRO ORGANICS LTD. 5 CAPITAL RECEIPT. FURTHER, THE LD. A.R. HAS RELIED UPON THE DECISION OF THE AHMEDABAD BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. BRIJLAXMI LEASING & FINANCE LTD. (2009) 118 ITD 0 546 WHEREIN THE TRIBUNAL AFTER CONSIDERING THE NATURE OF SUCH R ECEIPTS HAS HELD THAT FORFEITURE OF SHARE APPLICATION MONEY WHICH IS CREDITED TO CAPITAL RESERVE ACCOUNT IS CAPITAL RECEIPT AND IS NOT CHARG EABLE TO TAX. THAT THE ISSUE OF SHARES NOT BEING BUSINESS OF THE ASSES SEE, THE AMOUNT CANNOT BE TREATED AS RECEIPT IN THE NORMAL COURSE O F 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 AV AILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSEE WAS TO RECEIVE CA LL MONEY IN RESPECT OF SHARES AS PER THE TERMS OF PROSPECTUS AN D THE ALLOTMENT LETTERS, BUT THE SAME WERE NOT RECEIVED F ROM SOME OF THE SHAREHOLDERS. IN THIS CASE, THE SHARE APPLICATION MONEY WAS FORFEITED AS PER THE TERMS OF THE PROSPECTUS. THE ABOVE FACTS ARE NOT IN DISPUTE. THE SHORT QUESTION WHICH FALLS FOR OUR CONSIDERATION IS WHETH ER THE ABOVE FORFEITURE AMOUNT IS TAXABLE UNDER THE PROVISIONS O F IT ACT, 1961 OR NOT. THE LEARNED DEPARTMENTAL REPRESENTATIVE VEHEME NTLY PLACED RELIANCE ON THE DECISION OF THE HON'BLE SUPREME COU RT IN THE CASE OF CIT VS. T.V. SUNDARAM IYENGAR & SONS LTD. (SUPRA) F OR HIS CONTENTION THAT FORFEITED AMOUNT IS TAXABLE AS REVENUE RECEIPT . HOWEVER, WE FIND THAT THE FACTS OF THE CASE THAT WERE BEFORE TH E HON'BLE SUPREME COURT ARE DISTINGUISHABLE FROM THE FACTS BE FORE US. IN THE INSTANT CASE NO SECURITY DEPOSIT OR ADVANCE RECEIVE D FOR PERFORMANCE OF THE CONTRACT WAS FORFEITED. IN FACT, THE AMOUNT RECEIVED WAS AGAINST ISSUE OF SHARES AND ISSUE OF S HARES IS NOT THE BUSINESS OF THE ASSESSEE. THE SAME CANNOT BE TREATE D AS RECEIPT IN THE NORMAL COURSE OF THE BUSINESS OF THE ASSESSEE W HICH IS ENGAGED IN FINANCING AND LEASING BUSINESS. FURTHER, THE ASS ESSEE HAS ALSO NOT CREDITED THE FORFEITED AMOUNT IN ITS P&L A/C BUT IN CONTRADISTINCTION TO THAT IT HAS CREDITED THE SAME IN CAPITAL RESERVE ACCOUNT. IN THE ABOVE FACTS, IN OUR CONSIDERED OPINION THE DECISION OF THE TRIBUNAL IN THE CASE OF PRISM CEMENTS LTD. VS. JT. CIT (SUPR A) IS MORE APPLICABLE WHICH WAS RENDERED BY THE TRIBUNAL AFTER DULY ITA NO.5621/MUM/2014 M/S JAYANT AGRO ORGANICS LTD. 6 CONSIDERING THE AFORESAID DECISION OF THE HON'BLE S UPREME COURT IN THE CASE OF T.V. SUNDARAM IYENGAR & SONS LTD. (SUPR A). 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 ACCOUN T OF NON-PAYMENT OF CALL MONEY, THE LOAN LIABILITY WOULD ONLY CONVER T INTO A CAPITAL RECEIPT. IT WOULD NOT ASSUME A CHARACTER OF REVENUE RECEIPT OR BUSINESS RECEIPT BECAUSE NCDS WERE NOT ISSUED IN TH E COURSE OF REGULAR BUSINESS OF THE ASSESSEE AS EVIDENT FROM TH E FACTS OF THE CASE. ASSESSEE'S MAIN BUSINESS IS OF CEMENT 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 LIEU OF ISSUANCE OF NCDS WHICH WERE FORFEITED LATER, ON ACCOUNT OF NON- PAYMENT OF CALL MONEY ASSUMES A CHARACTER OF CAPITA L RECEIPT WHICH EARLIER WAS SHOWN AS A LOAN LIABILITY IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. IF WE CONSIDER THIS RECEIPT TO BE A BUSIN ESS RECEIPT EVEN THEN IT WOULD NOT BE TAXABLE TO TAX UNDER THE PROVI SIONS OF S. 41(1) OF THE ACT, INASMUCH AS THERE WAS NO ALLOWANCE OR D EDUCTION 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 INTERFERE WITH THE ORDER OF THE LEARNED CIT(A). IT IS CONFIRM ED 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 PRIS M LT. VS. JCIT (2006) 101 ITD 103 (MUM.) WHEREIN THE TRIBUNAL HAS HELD THAT THE AMOUNT RECEIVED ON ACCOUNT OF FORFEITURE OF NCDS FO R NON PAYMENT OF CALL MONEY WAS TO BE TREATED AS CAPITAL IN NATUR E AS THE ISSUANCE OF NCDS (NON CONVERTIBLE DEBENTURES) WAS NOT A BUSINES S OF THE ASSESSEE AND HENCE SUCH AMOUNT CANNOT BE CHARGED TO TAX EVEN UNDER SECTION 41(1) OF THE ACT. ITA NO.5621/MUM/2014 M/S JAYANT AGRO ORGANICS LTD. 7 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/A PPLICATION MONEY OF RS.1,78,50,000/- RECEIVED FROM THE WARRANT HOLDE RS AFTER THE EXPIRY OF THE DATE FOR CONVERTING THE SAME INTO THE SHARES AND THE SAME HAD BEEN CREDITED TO THE CAPITAL RESERVE ACCOU NT 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 DECI SIONS (SUPRA) CITED BY THE LD. A.R. 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 R EFERRED TO AS THE AO) OBSERVED THAT THE ASSESSEE HAS BEEN PERMITTED B Y THE GUJARAT ENERGY DEVELOPMENT 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 FROM 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 DEDU CTING EXPENSES UNDER VARIOUS HEADS AND DEPRECIATION, PROFIT HAD BE EN ARRIVED AT RS.1,11,14,473/-. THIS PROFIT DERIVED FROM WIND MIL L UNIT HAD BEEN CLAIMED EXEMPT U/S. 80IA(4)(IV)(A) BEING 100% OF IT S PROFIT DERIVED FROM THE WIND MILL PROJECT. THE AO NOTED THAT THOUG H THE PROJECT ITA NO.5621/MUM/2014 M/S JAYANT AGRO ORGANICS LTD. 8 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 DEDUCTION UNDER SECTION 80IA, IT HAS TO BE PRESUMED THAT THE ELIGIB LE BUSINESS IS THE ONLY SOURCE OF INCOME AND HENCE THE LOSSES INCURRED IN EARLIER YEAR HAS TO BE FIRST SET OFF WITH THE PROFITS OF ELIGIBL E BUSINESS AND BALANCE PROFIT, IF ANY IS ONLY ELIGIBLE FOR DEDUCTION UNDER SECTION 80IA. HE ALSO FURTHER OBSERVED THAT SINCE THE ASSESSEE HAD I NCURRED HUGE LOSSES IN EARLIER YEAR, IF THE SAME ARE SET-OFF FROM THE I NCOME OF THE WINDMILL OF THIS YEAR, DEDUCTION UNDER SECTION 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 DEDUCTI ON FOR A PERIOD OF 10 CONSECUTIVE ASSESSMENT YEARS OUT OF 15 YEARS AND ALSO SUCH PROVISIONS MANDATE THAT THE ELIGIBLE BUSINESS SHOUL D BE FICTIONALLY TREATED AS THE ONLY SOURCE OF INCOME OF THE TAXPAYE R. THE AO HELD THAT THEREFORE LOSSES INCURRED IN EARLIER YEAR HAVE TO BE FIRST SET OFF AND BALANCE PROFIT, IF ANY IS ONLY ELIGIBLE FOR DED UCTION UNDER SECTION 80IA. HE FURTHER HELD THAT THE PROFIT FROM THE ELI GIBLE BUSINESS FOR THE PURPOSE OF DETERMINATION OF THE QUANTUM OF DEDU CTION UNDER SECTION 80IA OF THE ACT HAS TO BE COMPUTED AFTER DE DUCTION OF NOTIONAL BROUGHT FORWARD LOSSES AND DEPRECIATIONS O F ELIGIBLE UNITS, EVEN THOUGH THEY 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 ADJUSTED AGAINST INCOM E 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 ELIGIBLE DEDUCTION. ITA NO.5621/MUM/2014 M/S JAYANT AGRO ORGANICS LTD. 9 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 RESPECT OF THE PROFITS OUT OF THE GENERATION OF ELECTRICITY OUT OF WINDMILL ACTIVITY AND THE UNABSORBED DEPRECIATION AND LOSSES OF THE E ARLIER YEARS TO THE INITIAL YEAR IN WHICH THE ASSESSEE STARTED TO CLAIM THE BENEFIT UNDER SECTION 80IA, SINCE ALREADY SET OFF WITH THE INELIG IBLE PROFITS OF THE ASSESSEE FROM OTHER BUSINESS, COULD NOT BE REDUCED FROM PROFITS OF ELIGIBLE BUSINESS FOR COMPUTING DEDUCTION U/S 80IA OF THE ACT. THE LD. A.R. OF THE ASSESSEE HAS FURTHER STATED THAT TH IS ISSUE IS SQUARELY IN FAVOUR OF THE ASSESSEE BY A SERIES OF DECISIONS AS MENTIONED BELOW: (A ) VELAYUDHASWAMY SPINNING MILLS PVT. LTD. VS. ACIT (2010) 231 CTR (MAD) :[2012] 340 ITR 477 (MAD) (HIGH COURT) (A FTER 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) 11. FURTHER, THE LD AR HAS MENTIONED THAT IN THE D ECISIONS OF HON'BLE MADRAS HIGH COURT, THE SPECIAL BENCH DECISI ON IN THE 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. ITA NO.5621/MUM/2014 M/S JAYANT AGRO ORGANICS LTD. 10 12. WE HAVE CONSIDERED THE RIVAL CONTENTIONS. WE FIND THAT THE HON'BLE MADRAS HIGH COURT IN THE CASE OF VELAYUDHA SWAMY SPINNING MILLS (P) LTD. VS. ACIT (2010) 231 CTR (M AD) 368 (BCAJ) HAS HELD THAT THE ASSESSEE IS ENTITLED TO CL AIM DEDUCTION U/S 80IA FOR 10 CONSECUTIVE YEARS OUT OF 15 YEARS AND T HAT INITIAL YEAR OF BENEFIT CAN BE OPTED BY THE ASSESSEE. LOSSES AND DE PRECIATION OF THE YEARS EARLIER TO THE INITIAL ASSESSMENT YEAR WHICH HAVE ALREADY BEEN ABSORBED AGAINST PROFITS OF OTHER BUSINESSES CANNOT BE NOTIONALLY BROUGHT FORWARD AND SET OFF AGAINST THE PROFITS OF THE ELIGIBLE BUSINESS FOR COMPUTING THE DEDUCTION U/S.80IA. SIM ILAR VIEW HAS BEEN TAKEN IN THE DECISION OF HON'BLE MADRAS HIGH C OURT IN THE CASE OF CIT VS. EMERALD JEWEL INDUSTRY P. LTD. (SUPRA) AND BY THE MUMBAI TRIBUNAL IN THE CASE OF M/S PRASHANT CATERE RS VS. ITO (SUPRA). RESPECTFULLY FOLLOWING THE SAME, THIS ISSU E IS ACCORDINGLY DECIDED IN FAVOUR OF THE ASSESSEE. THE AO IS DIRECT ED 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. 2.2. WE FIND THAT THE TRIBUNAL HAS DISCUSSED THE ISSUE IN PARA-8 OF THE ORDER DATED 24/02/2016 AND FOLLOWING VARIOUS DECISIONS INCLUDING FROM HONBLE MADRAS HIGH COURT, WHEREIN, THE DECISION OF THE SPECIAL BE NCH IN THE CASE OF ACIT VS GOLDMINE SHARES AND FINANCE PVT . LTD. (113 ITD 209)(SB) WAS ALSO CONSIDERED. THE TRIBUNA L ALSO CONSIDERED ANOTHER DECISION IN M/S PRASHAN CATERERS VS ITO (ITA NO.4226/MUM/2011) ORDER DATED 06/02/2013 AND THE ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE , ITA NO.5621/MUM/2014 M/S JAYANT AGRO ORGANICS LTD. 11 DIRECTING THE ASSESSING OFFICER TO ALLOW THE CLAIME D DEDUCTION U/S 80IA OF THE ACT. FOLLOWING THE AFORES AID DECISION AND IN THE ABSENCE OF ANY CONTRARY DECISIO N/FACTS, BY THE REVENUE, WE FIND NO INFIRMITY IN THE CONCLUS ION DRAWN BY THE LD. CIT(A). THUS, THE APPEAL OF THE RE VENUE IS DISMISSED. FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 30/03/2016. SD/- SD/- (RAJENDRA) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER MUMBAI; # DATED : 30/03/2016 F{X~{T? P.S/. . . %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. %& '( / THE APPELLANT (RESPECTIVE ASSESSEE) 2. )*'( / THE RESPONDENT. 3. + + , ( %& ) / THE CIT, MUMBAI. 4. + + , / CIT(A)- , MUMBAI, 5. /01 )2 , + %& %23 , / DR, ITAT, MUMBAI 6. 14 5 / GUARD FILE. / BY ORDER, */& ) //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI