DCIT, Yamunanagar V. M/s Yamuna Power & Infrastructure Ltd., Jagadhari

ITA 57/CHANDI/2016

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0144 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-04-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 01-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Question of law; Unabsorbed depreciation
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. RANO JAIN, ACCOUNTANT MEMBER ITA NO.57/CHD/2016 (ASSESSMENT YEAR : 2012-13) THE D.C.I.T., VS. M/S YAMUNA POWER & YAMUNA NAGAR CIRCLE, INFRASTRUCTURE LTD. YAMUNA NAGAR. SARDANA NAGAR, AMBALA ROAD, JAGADHRI. PAN: AAACY0554A (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUSHIL KUMAR, CIT DR RESPONDENT BY : SHRI SUDHIR SEHGAL DATE OF HEARING : 31.03.2016 DATE OF PRONOUNCEMENT : 06.04.2016 O R D E R PER RANO JAIN, A.M . : THE APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS), PANCHKULA DATED 26.11.2015, RELATING TO ASSESSMENT YEAR 2012-13, PASSED UNDER SECTION 250(6 ) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSESSEE ESTABLISHED TWO WIND MILLS IN DISTRICT JAI SALMER, RAJASTHAN A 20 MEGA WATT (MW) AT VILLAGE GORERA AND 25 MW AT VILLAGE SODA MADA ON 30.3.2004 AND 24.1.2004 2 RESPECTIVELY. THE ASSESSEE CLAIMED DEDUCTION UNDER SECTION 80IA OF THE ACT OF RS.95,00,547/- @ 100% ON THE INCOME EARNED FROM THE BUSINESS OF WIND POWER GENER ATION PROJECTS. THE ASSESSING OFFICER NOTED THAT ON ALL THESE WIND POWER PLANTS, THE ASSESSEE HAD INCURRED LOSSES FOR ASSESSMENT YEARS 2004-05 TO 2006-07. THESE LOSSES WERE SET OFF BY THE ASSESSEE COMPANY AGAINST THE INCOME DERIVED FROM THE BUSINESS OF CABLE JOINTING ETC., W HICH DOES NOT QUALIFY FOR DEDUCTION UNDER SECTION 80IA O F THE ACT. THE ASSESSEE ALSO EARNED AND DECLARED INCOME FROM THE BUSINESS OF WIND POWER PROJECT FOR THE ASSESSME NT YEARS 2007-08 TO 2012-13.REFERRING TO THE PROVISION S OF SECTION 80IA(5) OF THE ACT, THE ASSESSING OFFICER O BSERVED THAT THE BROUGHT FORWARD LOSSES OF THE ELIGIBLE BUS INESS NEED NOT TO BE SET OFF AGAINST THE INCOME FROM THE ELIGIBLE BUSINESS, EVEN THOUGH IF THEY WERE SET OFF AGAINST THE NON- ELIGIBLE BUSINESS IN THE RESPECTIVE YEARS. THE ASS ESSING OFFICER FURTHER NOTED THAT AFTER SETTING OFF OF THE LOSSES FOR ASSESSMENT YEARS 2004-05 TO 2006-07 AGAINST THE INC OME FOR ASSESSMENT YEARS 2007-08 TO 2012-13, THERE WERE STILL BROUGHT FORWARD LOSSES OF RS.390.36 LACS, WHICH WER E TO BE SET OFF AGAINST THE INCOME FROM THE WIND MILL PR OJECTS. THIS EXERCISE RENDERS THE INCOME FROM THE ELIGIBLE BUSINESS AT NIL AND, THEREFORE, EXEMPTION CLAIMED B Y THE ASSESSEE AT RS.95,00,547/- WAS NOT ALLOWABLE. 3. BEFORE THE LEARNED CIT (APPEALS), THE ASSESSEE STATED THAT AS PER SECTION 80IA(2), THE DEDUCTION A T THE 3 OPTION OF THE ASSESSEE CAN BE CLAIMED BY HIM FOR AN Y TEN CONSECUTIVE ASSESSMENT YEARS OUT OF FIFTEEN YEARS BEGINNING FROM THE YEAR IN WHICH THE UNDERTAKING OR THE ENTERPRISE DEVELOPS AND BEINGS TO OPERATE ANY INFRASTRUCTURE FACILITY. AS PER SECTION 80IA(2), T HE FIRST PREVIOUS YEAR FOR THE PURPOSE WORKS OUT TO ASSESSME NT YEAR 2004-05 AND END YEAR WORKS OUT TO ASSESSMENT Y EAR 2019-2020. THE ASSESSEE HAD OPTION TO START CLAIMI NG DEDUCTION FROM ANY OF THE ASSESSMENT YEARS WITHIN T HIS TIME FRAME. ONCE THE ASSESSEE EXERCISES THIS OPTIO N, THEN IT BECOMES ELIGIBLE TO CLAIM THE DEDUCTION CONTINUO USLY FOR TEN YEARS BUT THESE TEN YEARS CANNOT GO BEYOND THE PERIOD OF FIFTEEN YEARS. THE YEAR IN WHICH THE ASSESSEE E XERCISES OPTION BECOMES THE INITIAL ASSESSMENT YEAR. IN THI S CASE, THE INITIAL ASSESSMENT YEAR IS ASSESSMENT YEAR 2008 -09. THEREFORE, THE PROVISIONS OF SECTION 80IA(5) ARE AP PLICABLE FROM INITIAL ASSESSMENT YEAR I.E. ASSESSMENT YEAR 2 008-09 AND NOT ASSESSMENT YEAR 2004-05. THE ASSESSING OFF ICER MADE THE DISALLOWANCE BY HOLDING THAT ASSESSMENT YE AR 2004-05 IS THE INITIAL ASSESSMENT YEAR. THE CONTEN TION OF THE ASSESSEE WAS THAT THIS DISALLOWANCE IS LEGALLY AND FACTUALLY NOT CORRECT. 4. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE LEARNED CIT (APPEALS) NOTED THAT SAME ISSUE WAS DECIDED BY HIM IN ASSESSEES OWN CASE FOR ASSES SMENT YEAR 2010-11 ALSO. AFTER INTENSIVELY QUOTING HIS F INDINGS 4 FOR ASSESSMENT YEAR 2010-11, THE LEARNED CIT (APPEA LS) ALLOWED THE APPEAL OF THE ASSESSEE ON THIS GROUND. 5. AGGRIEVED BY THIS, THE DEPARTMENT HAS COME IN APPEAL BEFORE US, RAISING FOLLOWING GROUNDS OF APPE AL : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE: LD. C!T(A) HAS ERRED IN LAW THAT DELETED THE ADDITION MADE ON ACCOUNT OF DISALLOWANCES OF RS.95,00,547/- CLAIMED U/S 801'A OF THE I.T. ACT. 2. IT IS PRAYED THAT THE ORDER .OF THE LD. CIT (APP EAL) BE SET- ASIDE AND THAT OF THE A.O. BE RESTORED. 3. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND THE GR OUNDS OF APPEAL BEFORE THE APPEAL IS HEARD AND DISPOSED OFF. 6. THE LEARNED D.R. WHILE ARGUING BEFORE US, RELIE D ON THE ORDER OF THE ASSESSING OFFICER SUBMITTING TH AT BY NOT CONSIDERING THE YEAR OF START OF MANUFACTURING AS THE INITIAL YEAR, THE ASSESSEE GETS AN UNDUE BENEFIT IN THE FORM OF CLAIMING EXCESS DEDUCTION UNDER SECTION 80I A OF THE ACT AT ITS OWN OPTION. 7. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE US THAT SIMILAR ISSUE WAS INVOLVED IN THE EA RLIER ASSESSMENT YEAR I.E. ASSESSMENT YEAR 2010-11, WHERE BY THE CIT (APPEALS) HAD DELETED THE ADDITION SO MADE BY THE ASSESSING OFFICER, AGAINST WHICH THE DEPARTMENT PRE FERRED AN APPEAL BEFORE THE I.T.A.T. AND I.T.A.T., CHANDIG ARH BENCH IN ITA NO.1062/CHD/2014 HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. HIS CONTENTION WAS THAT SINCE THE CIT (APPEALS) 5 HAS ALSO RELIED ON HIS ORDER FOR ASSESSMENT YEAR 20 10-11, THE CLAIM OF THE ASSESSEE IN THIS YEAR MAY ALSO BE ALLOWED. FURTHER A CIRCULAR OF CBDT NO.I/2016 DATED 15.2.201 6 WAS ALSO BROUGHT TO OUR NOTICE BY THE LEARNED COUNS EL FOR THE ASSESSEE. IN THIS CIRCULAR, THE CBDT HAD CLARI FIED THAT AN ASSESSEE WHO IS ELIGIBLE TO CLAIM DEDUCTION UNDER SECTION 80IA OF THE ACT HAS THE OPTION TO CHOOSE TH E INITIAL YEAR FROM WHICH IT MAY DESIRE TO CLAIM DEDUCTION FO R TEN CONSECUTIVE YEARS OUT OF A SLAB OF FIFTEEN YEARS AS PRESCRIBED UNDER SUB-SECTION (2) OF SECTION 80IA OF THE ACT. THEREFORE, THE TERM INITIAL ASSESSMENT YEAR WOULD MEAN THE FIRST YEAR OPTED FOR BY THE ASSESSEE FOR C LAIMING DEDUCTION UNDER SECTION 80IA OF THE ACT. IN VIEW O F THIS, THE OFFICERS OF THE DEPARTMENT WERE DIRECTED TO ALL OW THE DEDUCTION UNDER SECTION 80IA OF THE ACT AFTER DULY SATISFYING AS TO THE COMPLIANCE OF THE ELIGIBILITY CONDITION. IT WAS ALSO INSTRUCTED THAT THE PENDING LITIGATION OF ALLOWABILITY OF DEDUCTION UNDER SECTION 80IA OF THE ACT WAS ALSO NOT TO BE PURSUED TO THE EXTENT WHICH RELA TES TO INTERPRETING INITIAL ASSESSMENT YEAR AS MENTIONED I N SUB- SECTION (5) TO SECTION 80IA OF THE ACT. 8. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE FINDINGS OF THE AUTHO RITIES BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECO RD. FROM THE PERUSAL OF THE ORDER OF THE I.T.A.T., CHAN DIGARH BENCH IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 20 10-11 IN ITA NO.1062/CHD/2014 DATED 10.2.2016, WE OBSERVE 6 THAT EXACTLY THE SIMILAR ISSUE AROSE IN ASSESSEES CASE IN AND THE CIT (APPEALS) IN THE PRESENT YEAR HAS RELIE D ON HIS OWN ORDER FOR ASSESSMENT YEAR 2010-11. THE ISSUE W AS DECIDED BY THE I.T.A.T. IN FAVOUR OF THE ASSESSEE I N THE FOLLOWING TERMS : 8. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECORD. ON PERUSAL OF THE ORDER OF THE LEARNED CIT (APPEALS) WE SEE THAT HE HAS GIVEN VERY DETAILED FINDINGS ON THE ISSUE AS FOLLOWS : 4.10 AFTER CONSIDERING THE AO'S OBSERVATIONS, APPELLANT SUBMISSION AND THE PROVISIONS OF SECTION 80IA(2) AND (5) OF THE ACT, IT IS NOTED THAT THE INITIAL ASSESSMENT YEAR FOR SECTION 80IA MEANS THE ASSESSMENT YEAR SPECIFIED BY THE ASSESSEE AT HIS OPTION TO BE THE INITIAL YEAR. THE INITIAL YEAR FALLS IN ANY OF THE 15 ASSESSMENT YEARS AT THE OPTION OF THE ASSESSEE STARTING FROM THE PREVIOUS YEAR IN WHICH TH E ENTERPRISE BEGINS OPERATING AND MAINTAINING THE INFRASTRUCTURE FACILITY. UNDER SECTION 80IB AND ALSO U/S 80IC, 80ID AND 80IE, THE FIRST YEAR IN WHICH THE PRODUCTION IS STARTED IS TAKEN AS INITIAL PREVIOUS Y EAR WHEREAS, AFTER THE AMENDMENT IN PROVISIONS OF SECTION 80IA W.E.F. 01.04.2000 THE INITIAL ASSESSMENT YEAR IS A T THE OPTION OF THE ASSESSEE. IT MAY BE FIRST YEAR OF T HE COMMENCEMENT OF ACTIVITY OR A SUBSEQUENT YEAR AS SELECTED BY THE ASSESSEE FOR THE PURPOSE OF CLAIMIN G DEDUCTION U/S 801 A OF THE ACT. IN THE APPELLANT'S C ASE, THE FIRST YEAR OF COMMENCEMENT OF ACTIVITY WAS A.Y. 2004-05 BUT AS SECTION 80IA(2) PERMITS THE APPELLANT HAS OPTED A.Y. 2008-09 AS THE INITIAL ASSESSMENT YEAR 7 FOR AVAILING DEDUCTION FOR 10 CONSECUTIVE ASSESSMENT YEARS STARTING FROM A.Y. 2008-09. 4.11 NOW COMING TO THE COMPUTATION OF DEDUCTION, THE APPLICABLE SECTION IS 801 A(5) WHICH PROVIDES DEDUCTIO N FOR THE ASSESSMENT YEAR IMMEDIATELY SUCCEEDING THE INITIAL ASSESSMENT YEAR OR ANY SUBSEQUENT ASSESSMENT YEAR ON THE PROFIT AND GAIN FROM THE ELI GIBLE BUSINESS AS IF SUCH ELIGIBLE BUSINESS WAS THE ONLY SOURCE OF INCOME OF THE ASSESSEE DURING THE PREVIOUS YEAR RELEVANT TO THE INITIAL ASSESSMENT YEAR OR TO E VERY SUBSEQUENT ASSESSMENT YEAR UPTO AND INCLUDING THE ASSESSMENT YEAR FOR WHICH THE DETERMINATION IS TO BE MADE. IN THE INSTANT CASE, THE PROVISIONS OF SECTION 80IA(5) WOULD BE APPLICABLE FROM PREVIOUS YEAR RELEVAN T TO A. Y. 2008-09. ANY PROFIT OR LOSS ARISING FROM THE WIND MILLS BUSINESS WOULD BE CONSIDERED FOR THE COMPUTATION FROM A.Y. 2008-09 TO SUBSEQUENT CONSECUTIVE 10 ASSESSMENT YEARS. THEREFORE, THE LOSSE S PERTAINING TO PREVIOUS YEARS PRIOR TO A.Y. 2008-09 W ILL NOT BE TAKEN INTO CONSIDERATION FOR CALCULATING THE AMOUNT OF DEDUCTION U/S 80IA OF THE ACT. THIS VIEW I S ALSO SUPPORTED BY THE DECISIONS OF HON 'BLE MADRAS HIGH COURT IN THE CASE OF VELAYUDHASWAMY SPINNING MILLS (SUPRA ) AND HON 'BLE KARNATAKA HIGH COURT IN THE CASE OF AN IL H LAD (SUPRA). 4.12 THEREFORE, IN VIEW OF ABOVE DISCUSSIONS ON THE APPLICABILITY OF PROVISIONS OF SECTION 80IA(2) AND ( 5) AND JUDICIAL PRONOUNCEMENTS, THE AO WAS NOT JUSTIFIED I N DISALLOWANCE OF CLAIM OF DEDUCTION OF RS. 1,09,82,4 71/- U/S 801 A OF THE ACT. THE AO IS DIRECTED TO DELETE THE ADDITION MADE ON THIS ACCOUNT. THIS GROUND OF APPEA L IS ALLOWED. ' 9. ON PERUSAL OF THE ABOVE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED CIT (APPEALS) AS THE ONLY CONTROVERSY TO BE DECIDED IS 8 WHETHER FOR CLAIMING DEDUCTION UNDER SECTION 80IA OF THE ACT, THE LOSSES WHICH WERE INCURRED BY THE ELIGIBLE BUSINESS IN THE PERIOD EARLIER TO THE INITIAL YEAR ARE TO BE NOTIONALLY CARRIED FORWARD TO THE INITIAL ASSESSMENT YEAR AND BE ADJUSTED BEFORE CLAIMING DEDUCTION UNDER SECTION 80IA OF THE ACT. WE HAVE ALSO PERUSED THE JUDGMENT OF THE KARNATAKA HIGH COURT IN THE CASE OF ANIL H. LAD. (SUPRA), WHEREBY ADJUDICATING THE SAME ISSUE, THE HON'BLE COURT HAS ANALYZED THE JUDGMENT OF THE MADRAS HIGH COURT IN CASE OF SRI VELAYUDHASWAMY SPINNING MILLS (P) LTD. (SUPRA), WHICH HAS BEEN RELIED VERY HEAVILY BY THE ASSESSEE. THE FINDINGS OF THE HON'BLE COURT ARE AT PARAS 9 AND 10 OF THE JUDGMENT, WHICH READS AS UNDER : 9. THE MADRAS HIGH COURT IN THE AFORESAID VELAYUDHASWAMY'S CASE INTERPRETING THE VERY PROVISI ON HELD, FROM A READING OF SUB-SECTION (1) SECTION 80-IA , IT IS CLEAR THAT IT PROVIDES THAT WHERE THE GROSS TOTAL INCOME OF AN ASSESSEE INCLUDES ANY PROFITS AND GAINS DERIVED BY AN UNDERTAKING OR AN ENTERPRISE FROM ANY BUSINESS REFERRED TO IN SUB-SECTION (4) I.E. REFERRED TO AS THE ELIGIBLE BUSINESS, THERE SHALL, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THE SECTION, BE ALLOW ED, IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE, A DEDUCTION OF AN AMOUNT EQUAL TO 100 PER CENT OF THE PROFITS AND GAINS DERIVED FROM SUCH BUSINESS FOR TE N CONSECUTIVE ASSESSMENT YEARS. DEDUCTION IS GIVEN TO ELIGIBLE BUSINESS AND THE SAME IS DEFINED IN SUB-SECT ION (4). SUB-SECTION (2) PROVIDES OPTION TO THE ASSESSEE TO CHOOSE 10 CONSECUTIVE ASSESSMENT YEARS OUT OF 15 YEARS. OPTION HAS TO BE EXERCISED. IF IT IS NOT EXERC ISED, THE ASSESSEE WILL NOT BE GETTING THE BENEFIT. FIFTEEN YEARS IS OUTER LIMIT AND THE SAME IS BEGINNING FROM TH E YEAR IN WHICH THE UNDERTAKING OR THE ENTERPRISE DEVELOPS AND BEGINS TO OPERATE ANY INFRASTRUCTURE 9 ACTIVITY ETC. SUB- SECTION (5) DEALS WITH QUANTUM OF DEDUCTION FOR AN ELIGIBLE BUSINESS. THE WORDS 'INITIAL ASSESSMENT YEAR' ARE USED IN SUB-SECTION (5) AND THE SAME IS NOT DEFINED UNDER THE PROVISIONS. IT IS TO B E NOTED THAT 'INITIAL ASSESSMENT YEAR' EMPLOYED IN SUB- SECTION (5) IS DIFFERENT FROM THE WORDS 'BEGINNING F ROM THE YEAR' REFERRED TO IN SUB-SECTION (2). SUB-SECTION (5 ) STARTS WITH NON OBSTANTE CLAUSE WHICH MEANS IT OVERRIDES ALL THE PROVISIONS OF THE ACT AND OTHER PROVISIONS ARE TO BE IGNORED; FOR THE PURPOSE OF DETERMINING THE QUANTUM OF DEDUCTION; FOR THE ASSESSMENT YEAR IMMEDIATELY SUCCEEDING THE INITIAL ASSESSMENT YEAR, THEREBY A FICTION IS CREATED BY INTRODUCING A DEEMING PROVISION AND THEREFORE, IT IS CLE AR THAT THE ELIGIBLE BUSINESS WERE THE ONLY SOURCE OF INCOME, DURING THE PREVIOUS YEAR RELEVANT TO INITIAL ASSESSMENT YEAR AND EVERY SUBSEQUENT ASSESSMENT YEARS. WHEN THE ASSESSEE EXERCISES THE OPTION, THE ON LY LOSSES OF THE YEARS BEGINNING FROM INITIAL ASSESSMENT YEAR ALONE ARE TO BE BROUGHT FORWARD AND NO LOSSES OF EARLIER YEARS WHICH WERE ALREADY SET OFF AGAINST THE INCOME OF THE ASSESSEE. LOOKING FORWARD TO A PERIOD OF TEN YEARS FROM THE INITIAL ASSESSMENT 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 AGAINST OTHER INCOME OF THE ASSESSEE AND THE SET OF F AGAINST THE CURRENT INCOME OF THE ELIGIBLE BUSINESS. O NCE THE SET OFF IS TAKEN PLACE IN EARLIER YEAR AGAINST THE OTHER INCOME OF THE ASSESSEE, THE REVENUE CANNOT REWORK THE SET OFF AMOUNT AND BRING IT NOTIONALLY. FICTION CREATED IN SUB- SECTION DOES NOT CONTEMPLATES TO BRIN G SET OFF AMOUNT NOTIONALLY. FICTION IS CREATED ONLY FOR THE LIMITED PURPOSE AND THE SAME CANNOT BE EXTENDED BEYOND THE PURPOSE FOR WHICH IT IS CREATED. 10. THEREFORE, KEEPING IN MIND THE OBJECT WITH WHICH THESE PROVISIONS ARE INTRODUCED, IT IS CLEAR THAT AN 10 ASSESSEE IS GIVEN THE BENEFIT OF 100% DEDUCTION OF THE PROFITS AND GAINS FROM THE ELIGIBLE BUSINESS. THE QUANTUM OF DEDUCTION IS TO BE CALCULATED WHEN THE CLAIM FOR DEDUCTION IS MADE. IF BEFORE CLAIMING DEDUCTION, TH E LOSS AND DEPRECIATION CLAIMED BY THE ASSESSEE EVEN IN RESPECT OF ELIGIBLE BUSINESS IS SETOFF AGAINST INCOM E OF THE ASSESSEE OR OTHER SOURCE, THE SAID LOSS OR DEPRECIATION IS ALREADY ABSOLVED, IT DOES NOT EXIST. FOR THE PURPOSE OF DETERMINING THE QUANTUM OF DEDUCTION UNDER SUB-SECTION (5) OF SECTION 80IA , THE REVENUE CANNOT TAKE INTO CONSIDERATION THE LOSS AND DEPRECIA TION WHICH IS ALREADY SETOFF AGAINST THE INCOME OF THE ASSESSEE FROM OTHER SOURCE AND COMPUTE THE PROFIT UNDER SECTION 80IA . THEREFORE, THE APPROACH OF THE TRIBUNAL IS IN ACCORDANCE WITH LAW. THE ASSESSING AUTHORITY AND THE COMMISSIONER COMMITTED A SERIOUS ERROR IN SETTING OFF THE PROFIT EARNED BY THE ASSES SEE UNDER SECTION 80IA AGAINST THE LOSSES AND DEPRECIATION OF THE ELIGIBLE BUSINESS WHICH IS ALREADY SETOFF FROM OTHER SOURCE BEFORE SUCH A CLAIM IS PUTFORTH. THUS, T HERE IS NO ERROR COMMITTED BY THE TRIBUNAL IN SETTING ASI DE THE ORDER PASSED BY THE ASSESSING AUTHORITY AS WELL A S THE LOWER APPELLATE AUTHORITY. THE SUBSTANTIAL QUESTION OF LAW IS ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 10. THIS VIEW HAS ALSO BEEN UPHELD BY THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF SHEVIE EXPORTS (SUPRA), WHEREBY ALL THE JUDGMENTS RELIED ON BY THE ASSESSEE AS WELL AS THE REVENUE HAVE BEEN CONSIDERED AND THE BENCH HAS GIVEN FINDINGS AT PARAS 9 TO 12, WHICH READS AS UNDER : 9. SECTION 80IA, WHICH HAS BEEN SUBSTITUTED W.E.F. 1 ST APRIL 2000, PROVIDES THAT WHERE THE GROSS TOTAL INCOME OF AN ASSESSEE INCLUDES ANY PROFITS AND GAINS DERIVED BY AN UNDERTAKING FROM ANY ELIGIBLE BUSINESS 11 REFERRED TO IN SUBSECTION 4, THERE SHALL, IN ACCORDANC E WITH AND SUBJECT TO THE PROVISIONS OF THIS SECTION, BE ALLOWED IN COMPUTING THE TOTAL INCOME, THE DEDUCTION OF AN AMOUNT EQUAL TO 100% OF THE PROFITS AND GAINS DERIVED FROM SUCH BUSINESS FOR 10 CONSECUTIVE YEARS . SUBSTITUTED SUBSECTION (2) OF SECTION 80IA, PROVIDES THAT AN OPTION IS GIVEN TO THE 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 YEAR S IS THE OUTER LIMIT WITHIN WHICH THE ASSESSEE CAN CHOOS E THE PERIOD OF CLAIMING THE DEDUCTION. SUBSECTION (5) I S A NONOBSTANTE CLAUSE WHICH DEALS WITH THE QUANTUM OF DEDUCTION FOR AN ELIGIBLE BUSINESS. THE RELEVANT PROVISIONS OF SUBSECTION (5) OF SECTION 80IA, READS AS UNDER: (5) NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISION OF THIS ACT, THE PROFITS AND GAINS O F 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 ASSESSEE DURING THE PREVIOUS YEAR RELEVANT TO THE INITIAL ASSESSMENT YEAR AND TO EVERY SUBSEQUENT ASSESSMENT YEAR UP TO AND INCLUDING THE ASSESSMENT YEAR FOR WHICH THE DETERMINATION IS TO BE MADE. 10. FROM A PLAIN READING OF THE ABOVE, IT CAN BE GATHERED THAT IT IS A NONOBSTANTE CLAUSE WHICH OVERRIDES THE OTHER PROVISIONS OF THE ACT AND IT IS FOR THE PURPOSE OF DETERMINING THE QUANTUM OF DEDUCTION UNDE R SECTION 80IA, FOR THE ASSESSMENT YEAR IMMEDIATELY SUCCEEDING THE INITIAL ASSESSMENT YEAR OR ANY 12 SUBSEQUENT ASSESSMENT YEAR TO BE COMPUTED AS IF THE ELIGIBLE BUSINESS IS THE ONLY SOURCE OF INCOME. THUS, T HE FICTION CREATED IS THAT THE ELIGIBLE BUSINESS IS THE ONLY SOURCE OF INCOME AND THE DEDUCTION WOULD BE ALLOWED FROM THE INITIAL ASSESSMENT YEAR OR ANY SUBSEQUENT ASSESSMENT YEAR. IT NOWHERE DEFINES AS TO WHAT IS TH E INITIAL ASSESSMENT YEAR. PRIOR TO 1 ST APRIL 2000, THE INITIAL ASSESSMENT YEAR WAS DEFINED FOR VARIOUS TYPES OF ELIGIBLE ASSESSEES UNDER SECTION 80IA(12). HOWEVER, AFTER THE AMENDMENT BROUGHT IN STATUTE BY THE FINAN CE ACT, 1999, THE DEFINITION OF INITIAL ASSESSMENT YEAR HAS BEEN SPECIFICALLY TAKEN AWAY. NOW, WHEN THE ASSESSEE EXERCISES THE OPTION OF CHOOSING THE INITIAL ASSESSMENT YEAR AS CULLED OUT IN SUBSECTION (2) OF SECTION 80IA FROM WHICH IT CHOOSES ITS 10 YEARS OF DEDUCTION OUT OF 15 YEARS, THEN ONLY THE LOSSES OF THE YEARS STARTING FROM THE INITIAL ASSESSMENT YEAR ALONE ARE TO BE BROUGHT FORWARD AS STIPULATED IN SECTION 80IA(5). THE LOSS PRIOR TO THE INITIAL ASSESSMENT YEAR WHICH HAS ALREADY BEEN SETOFF CANNOT BE BROUGHT FORWARD AND ADJUSTED INTO THE PERIOD OF TEN YEARS F ROM THE INITIAL ASSESSMENT YEAR AS CONTEMPLATED OR CHOSEN BY THE ASSESSEE. IT IS ONLY WHEN THE LOSS HAVE BEEN INCURRED FROM THE INITIAL ASSESSMENT YEAR, THEN THE ASSESSEE HAS TO ADJUST LOSS IN THE SUBSEQUENT ASSESSMENT YEARS AND IT HAS TO BE COMPUTED AS IF ELIGIBLE BUSINESS IS THE ONLY SOURCE OF INCOME AND TH EN ONLY DEDUCTION UNDER SECTION 80IA CAN BE DETERMINED. THIS 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 TRIBUNAL, THE CLAIM OF DEDUCTION BY THE ASSESSEE HAD STARTED FROM ASSESSMENT YEAR 199697 ONWARDS AND THE ASSESSEE HAD CLAIMED DEDUCTION UNDER SECTION 80I A STARTING FROM THE FIRST YEAR ITSELF I.E., ASSESSMENT YE AR 199697. THUS, THE SPECIAL BENCH WAS DEALING WITH THE OPERATION OF SECTION 80IA(5) WHERE THE ASSESSEE HAD 13 FIRST CLAIMED THE DEDUCTION IN THE ASSESSMENT YEAR 199697 AND FOR SUBSEQUENT ASSESSMENT YEARS. THIS ASPECT OF THE MATTER HAS BEEN VERY WELL ELABORATED B Y THE MADRAS HIGH COURT IN VELAYUDHASWAMY SPINNING MILLS PVT. LTD. (SUPRA) AFTER CONSIDERING THE SPECIAL BENCH DECISION OF THE TRIBUNAL IN GOLDMINE SHARES AND FINANCE PVT. LTD. (SUPRA) AND RELEVANT PROVISIONS OF T HE ACT I.E., PRE AMENDMENT AND POST AMENDMENT HAVE COME TO THE SAME CONCLUSION: FROM READING OF THE ABOVE, IT IS CLEAR THAT THE ELIGIBLE BUSINESS WERE THE ONLY SOURCE OF INCOME, DURING THE PREVIOUS YEAR RELEVANT TO INITIAL ASSESSMENT YEAR AND EVERY SUBSEQUENT ASSESSMENT YEARS. WHEN THE ASSESSEE EXERCISES THE OPTION, THE ONLY LOSSES OF THE YEARS BEGINNING FROM INITIAL ASSESSMENT YEAR ALONE ARE TO BE BROUGHT FORWARD AND NO LOSSES OF EARLIER YEARS WHICH WERE ALREADY SET OFF AGAINST THE INCOME OF THE ASSESSEE. LOOKING FORWARD TO A PERIOD OF TEN YE ARS FROM THE INITIAL ASSESSMENT 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 AGAINST OTHER INCOME OF THE ASSESSEE AND THE SET OFF AGAINS T THE CURRENT INCOME OF THE ELIGIBLE BUSINESS. ONCE THE SET OFF IS TAKEN PLACE IN EARLIER YEAR AGAINST THE OTHER INCOME OF THE ASSESSEE, THE REVENUE CANNOT REWORK THE SET OFF AMOUNT AND BRING IT NOTIONALLY. FICTION CREATED IN SUB-SECTION DOES NOT CONTEMPLATES TO BRIN G SET OFF AMOUNT NOTIONALLY. FICTION IS CREATED ONLY FOR THE LIMITED PURPOSE AND THE SAME CANNOT BE EXTENDED BEYOND THE PURPOSE FOR WHICH IT IS CREATED. 14. IN THE PRESENT CASES, THERE IS NO DISPUTE THAT LOSS ES INCURRED BY THE ASSESSEE WERE ALREADY SET OFF AND AD JUSTED AGAINST THE PROFITS OF THE EARLIER YEARS. DURING TH E RELEVANT ASSESSMENT YEAR, THE ASSESSEE EXERCISED THE OPTION U NDER S. 80-IA(2). IN TAX CASE NOS. 909 OF 2009 AS WELL AS 940 OF 14 2009, THE ASSESSMENT YEAR WAS 2005-06 AND IN THE TAX CASE NO. 918 OF 2008 THE ASSESSMENT YEAR WAS 2004-05. DURING THE RELEVANT PERIOD, THERE WERE NO UNABSORBED DEPRECIATION OR LOSS OF THE ELIGIBLE UNDERTAKINGS AND THE SAME WERE ALREADY ABSORBED IN THE EARLIER YEARS. THER E IS A POSITIVE PROFIT DURING THE YEAR. THE UNREPORTED JUDG MENT OF THIS COURT CITED SUPRA CONSIDERED THE SCOPE OF SUB-S. (6) OF S.80-I, WHICH IS THE CORRESPONDING PROVISION OF SUB-S. (5) OF S. 80-IA. BOTH ARE SIMILARLY WORDED AND THEREFORE WE AGREE ENTIRELY WITH THE DIVISION BENCH JUDGMENT OF THIS COURT C ITED SUPRA. IN THE CASE OF CIT VS. MEWAR OIL & GENERAL MILLS LTD. (2004) 186 CTR (RAJ) 141 : (2004) 271 ITR 311 (RAJ), THE RAJASTHAN HIGH COURT ALSO CONSIDERED THE SCOPE OF S. 80-I AND HELD AS FOLLOWS: 'HAVING CONSIDERED THE RIVAL CONTENTIONS WHICH FOLLOW ON THE LINE NOTICED ABOVE, WE ARE OF THE OPINION THAT O N FINDING THE FACT THAT THERE WAS NO CARRY FORWARD LOS SES OF 1983-84, WHICH COULD BE SET OFF AGAINST THE INCOME OF THE CURRENT ASST. YR. 1984-85, THE RECOMPUTATION OF INCOME FROM THE NEW INDUSTRIAL UNDERTAKING BY SETTING OFF TH E CARRY FORWARD OF UNABSORBED DEPRECIATION OR DEPRECI ATION ALLOWANCE FROM PREVIOUS YEAR DID NOT SIMPLY ARISE AND ON THE FINDING OF FACT NOTICED BY THE CIT(A), WHICH HAS NOT BEEN DISTURBED BY THE TRIBUNAL AND CHALLENGED BEFORE U S, THERE WAS NO ERROR MUCH LESS ANY ERROR APPARENT ON T HE FACE OF THE RECORD WHICH COULD BE RECTIFIED. THAT QUE STION WOULD HAVE BEEN GERMANE ONLY IF THERE WOULD HAVE BEEN CARRY FORWARD OF UNABSORBED DEPRECIATION AND UNABSORBED DEVELOPMENT REBATE OR ANY OTHER UNABSORBE D LOSSES OF THE PREVIOUS YEAR ARISING OUT OF THE PRIOR ITY INDUSTRY AND WHETHER IT WAS REQUIRED TO 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 PREVI OUS YEAR SHOULD BE REOPENED AGAIN FOR COMPUTATION OF CUR RENT INCOME UNDER S. 80-I FOR THE PURPOSE OF COMPUTING ADMISSIBLE DEDUCTIONS THEREUNDER. 15 IN VIEW THEREOF, WE ARE OF THE OPINION THAT THE TRIB UNAL HAS NOT ERRED IN HOLDING THAT THERE WAS NO RECTIFIC ATION POSSIBLE UNDER S. 80-I IN THE PRESENT CASE, ALBEIT, FOR REASONS SOMEWHAT DIFFERENT FROM THOSE WHICH PREVAILE D WITH THE TRIBUNAL. THERE BEING NO CARRY FORWARD OF ALLOWABLE DEDUCTIONS UNDER THE HEAD DEPRECIATION OR DEVELOPMENT REBATE WHICH NEEDED TO BE ABSORBED AGAINST THE INCOME OF THE CURRENT YEAR AND, THEREFOR E, RECOMPUTATION OF INCOME FOR THE PURPOSE OF COMPUTIN G PERMISSIBLE DEDUCTION UNDER S. 80-I FOR THE NEW INDUST RIAL UNDERTAKING WAS NOT REQUIRED IN THE PRESENT CASE. ACCORDINGLY, THIS APPEAL FAILS AND IS HEREBY DISMISSED WITH NO ORDER AS TO COSTS.' FROM READING OF THE ABOVE, THE RAJASTHAN HIGH COURT HELD THAT IT IS NOT AT ALL REQUIRED THAT LOSSES OR OTHER DE DUCTIONS WHICH HAVE ALREADY BEEN SET OFF AGAINST THE INCOME O F THE PREVIOUS YEAR SHOULD BE REOPENED AGAIN FOR COMPUTATI ON OF CURRENT INCOME UNDER S. 80-I FOR THE PURPOSE OF COMPU TING ADMISSIBLE DEDUCTIONS THEREUNDER. WE ALSO AGREE WITH TH E SAME. WE SEE NO REASON TO TAKE A DIFFERENT VIEW. 12. THIS JUDGMENT HAS BEEN FURTHER FOLLOWED BY THE SA ME HIGH COURT IN CIT V/S EMERALD JEWEL INDUSTRY (P) LTD. [ 2011] 53 DTR 262 (MAD.). FROM THE ABOVE, RATIO OF THE HIGH CO URT, IT IS AMPLY CLEAR THAT SUBSECTION (5) OF SECTION 80IA WILL COME INTO OPERATION ONLY FROM THE INITIAL ASSESSMENT YEAR OR ANY SUBSEQUENT ASSESSMENT YEAR. THE OPTION OF CHOOSING T HE INITIAL ASSESSMENT YEAR IS WHOLLY UPON THE ASSESSEE IN THE POST AMENDMENT PERIOD I.E., AFTER 1 ST APRIL 2000 BY VIRTUE OF SECTION 80IA(2). 11. IN VIEW OF THE JUDGMENT OF THE KARNATAKA HIGH COURT, WHICH HAS ALSO BEEN RELIED ON BY THE MUMBAI BENCH OF THE TRIBUNAL AND IN THE BACKGROUND THAT NO JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT HAS BEEN CITED BEFORE US, WE HOLD THAT CHOOSING OF INITIAL ASSESSMENT YEAR FOR CLAIMING DEDUCTION UNDER 16 SECTION 80IA OF THE ACT IN A BLOCK OF TEN YEARS OUT OF FIFTEEN YEARS IS WITH THE ASSESSEE I.E. IT IS TH E OPTION OF THE ASSESSEE TO CHOOSE THE INITIAL ASSESSMENT YEAR FOR CLAIMING DEDUCTION UNDER SECTION 80IA OF THE ACT. FURTHER, THE LOSS CLAIMED BY THE ASSESSEE IN RESPECT OF ELIGIBLE BUSINESS IS TO BE SET OFF AGAINST THE INCOME OF THE ASSESSEE FROM OTHER INELIGIBLE BUSINESS AS IN RESPECT OF ASSESSMENT YEARS AND THERE IS NOT NEED TO NOTIONALLY CARRY FORWARD THESE LOSSES UP TO THE INITIAL ASSESSMENT YEAR AND WRITE OFF THE SAME OUT OF THE PROFITS OF ELIGIBLE BUSINESS. 12. THE APPEAL OF THE REVENUE IN ITA NO.1062/CHD/2014 IS DISMISSED. 9. IN VIEW OF THE ABOVE, SINCE NO DISTINGUISHING FACTS WERE BROUGHT TO OUR NOTICE, RESPECTFULLY FOLL OWING THE ORDER OF THE COORDINATE BENCH, WE DISMISS THE GROUN DS OF APPEAL RAISED BY THE REVENUE. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 6 TH DAY OF APRIL, 2016. SD/- SD/- (BHAVENESH SIANI) (RANO JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 6 TH APRIL, 2016 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/THE CIT/THE D R. ASSISTANT REGISTRAR, ITAT, CHANDIGARH