ASST CIR 18(1), MUMBAI V. CHOUDHARY EXPORTS, MUMBAI

ITA 6266/MUM/2012

• Counselvise Citation: 626619914 RSA 2012
• Duration Of Justice: 2 year(s) 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 01-01-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 11-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIPS
• Keywords: Depreciation; Unabsorbed depreciation

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE HONBLE S/SHRI H.L. KARWA, PRESIDENT AND B. R.BASKARAN (AM) . . , . . , ./ I.T.A. NO.6266/MUM/2012 ( / ASSESSMENT YEAR :2009-10) ASSTT.COMMISSIONER OF INCOME TAX-18(1), ROOM NO.116, PIRAMAL CHAMBERS, LALBAUG, PAREL, MUMBAI-400012 / VS. M/S CHAUDHARY EXPORTS, A-BLOCK (BASEMENT) SHIV SAGAR ESTATE, DR.A B ROAD, WORLI, MUMBAI. ( / APPELLANT) .. ( ! / RESPONDENT) ./ #$ ./ PAN/GIRNO.:AACFC6677E % / APPELLANT BY : SHRI NEIL PHILIPS ! & % / RESPONDENT BY SHRI NIKHIL TIWARI ' ( & ) * / DATE OF HEARING : 1.1.2015 +, & ) * /DATE OF PRONOUNCEMENT : 16.01.2015 / O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE REVENUE HAS FILED THIS APPEAL CHALLENGING THE O RDER DATED 16.07.2012 PASSED BY LD CIT(A)-29, MUMBAI AND IT RE LATES TO THE ASSESSMENT YEAR 2009-10. THE ONLY ISSUE URGED BY T HE REVENUE RELATES TO THE DEDUCTION ALLOWED BY LD CIT(A) U/S 80IA OF THE ACT. 2. WE HEARD THE PARTIES AND PERUSED THE RECORD. TH E ASSESSEE CLAIMED DEDUCTION U/S 80IA OF THE ACT IN RESPECT OF WIND MI LL GENERATING POWER. THE ASSESSEE HAD SET UP THE WIND MILL DURING THE YE AR RELEVANT TO THE ASSESSMENT YEAR 2006-07. HOWEVER, IT STARTED CLAIM ING DEDUCTION ONLY FROM AY 2009-10 AS PER THE OPTION PROVIDED IN SEC. 80IA(2). THE AO ITA NO6266 /MUM/2012 2 NOTICED THAT THE ASSESSEE HAD INCURRED LOSSES FROM WIND MILL OPERATION IN ASSESSMENT YEARS 2006-07 AND 2007-08 AND THE ASSESS EE HAD SET OFF THOSE LOSSES AGAINST INCOME GENERATED FROM NON-ELIG IBLE BUSINESSES. IN ASSESSMENT YEAR 2008-09, EVEN THOUGH THE ASSESSEE M ADE PROFIT, IT DID NOT CLAIM DEDUCTION U/S 80IA. 3. AS PER THE PROVISIONS OF SEC. 80IA(2), THE DEDUCTION SPECIFIED IN SUB- SECTION (1) MAY, AT THE OPTION OF THE ASSESSEE, BE CLAIMED BY HIM FOR ANY TEN CONSECUTIVE ASSESSMENT YEARS OUT OF FIFTEEN YEA RS BEGINNING FROM THE YEAR IN WHICH THE UNDERTAKING OR ENTERPRISE GENE RATES POWER OR COMMENCES TRANSMISSION OR DISTRIBUTION OF POWER. THOUGH THE ASSESSEE HAS STARTED GENERATING POWER IN AY 2006-07, IT STAR TED CLAIMING DEDUCTION U/S 80IA FROM AY 2009-10. THUS THE PRESENT ASSESSM ENT YEAR IS THE INITIAL YEAR IN WHICH THE ASSESSEE STARTED CLAIMING DEDUCTI ON U/S 80IA OF THE ACT. 4. THE PROVISIONS OF SEC. 80IA(5) STATES THAT, FO R THE PURPOSES OF DETERMINING THE QUANTUM OF DEDUCTION UNDER SUB-SECT ION (1) FOR THE ASSESSMENT YEAR IMMEDIATELY SUCCEEDING THE INITIAL ASSESSMENT YEAR OR ANY SUBSEQUENT ASSESSMENT YEAR, THE PROFITS OF ELIG IBLE BUSINESS SHALL BE COMPUTED AS IF SUCH ELIGIBLE BUSINESS WERE THE ONLY SOURCE OF INCOME OF THE ASSESSEE DURING THE PREVIOUS YEAR RELEVANT TO T HE INITIAL ASSESSMENT YEAR AND TO EVERY SUBSEQUENT ASSESSMENT YEAR UP TO AND INCLUDING THE ASSESSMENT YEAR FOR WHICH THE DETERMINATION IS MADE . THE AO TOOK THE VIEW THAT THE LOSSES INCURRED BY THE ASSESSEE FROM GENERATION OF POWER IN AY 2006-07 AND 2007-08 IS REQUIRED TO BE ADJUSTED A GAINST THE PROFIT EARNED DURING THE YEAR UNDER CONSIDERATION IN TERMS OF SEC. 80IA(5) OF THE ACT. ACCORDINGLY, HE ADJUSTED THE SAID LOSSES AND THUS DENIED THE DEDUCTION CLAIMED BY THE ASSESSEE U/S 80IA(5) OF TH E ACT, SINCE NO PROFIT WAS REMAINING AFTER SUCH ADJUSTMENT. ITA NO6266 /MUM/2012 3 5. THE LD CIT(A), HOWEVER, FOLLOWED THE DECISION RENDERED BY HONBLE MADRAS HIGH COURT IN THE CASE OF VELAYUDHASWAMY SPI NNING MILLS (P) LTD VS. ACIT (2010)(38 DTR (MAD) 57, WHEREIN THE HONBL E HIGH COURT HAD HELD AS UNDER:- 6. ADVERTING TO THE FACTS OF THE CASE, THE INITI AL ASSESSMENT YEAR IN THIS CASE STARTS FROM 2004-05 SINCE THE ASSESSEE HAS OPTED TO CLAIM THIS DEDUCTION ONLY IN THIS ASSESSMENT YEAR, THE INITIAL ASSESSMENT YEAR CANNOT BE THE YEAR IN WHICH THE UND ERTAKING COMMENCED ITS OPERATIONS AND IN THIS CASE, THE INIT IAL ASSESSMENT YEAR IS THE ASSESSMENT YEAR IN WHICH ASSESSEE HAS C HOSEN TO CLAIM DEDUCTION UNDER S. 80-IA. HENCE, THE PROVISIONS OF S. 80-IA(5) TREATING UNDERTAKING AS A SEPARATE SOLE SOURCE OF I NCOME CANNOT BE APPLIED TO A YEAR PRIOR TO THE YEAR IN WHICH ASSESS EE OPTED TO CLAIM RELIEF UNDER S. 80-IA FOR THE FIRST TIME. DEPRECIAT ION AND CARRY FORWARD LOSS RELIEF TO THE UNIT WHICH CLAIMS DEDUCT ION UNDER S. 80-IA, CANNOT BE NOTIONALLY CARRIED FORWARD AND SET OFF AG AINST THE INCOME FROM THE YEAR IN WHICH THE ASSESSEE STARTED CLAIMIN G DEDUCTION UNDER S. 80-IA. AT THE COST OF REPETITION, WE MAKE IT CLEAR THAT THE CASE LAWS RELIED ON BY THE DEPARTMENTAL REPRESENTAT IVE ARE DELIVERED BEFORE THE AMENDMENT TO SECTION BY FINANC E ACT, 1999. BEFORE THE AMENDMENT, THE INITIAL ASSESSMENT YEAR W AS DEFINED IN THE ACT BUT AFTER THE AMENDMENT THERE IS NO DEFINIT ION FOR INITIAL ASSESSMENT YEAR IN THE ACT AND THERE IS OPTION TO T HE ASSESSEE IN SELECTING THE YEAR OF CLAIMING RELIEF UNDER S. 80-I A. IN VIEW OF THIS, WE ARE OF THE OPINION THAT THERE IS NO QUESTION OF SETTING OFF NOTIONALLY CARRIED FORWARD UNABSORBED DEPRECIATION OR LOSS AGAINST THE PROFITS OF THE UNITS AND ASSESSEE IS ENTITLED T O CLAIM DEDUCTION UNDER S. 80-IA ON CURRENT ASSESSMENT YEAR ON THE CU RRENT YEAR PROFIT. ACCORDINGLY, WE ALLOW THE CLAIM OF THE ASSE SSEE.' BY FOLLOWING THE ABOVE SAID DECISION, THE LD CIT(A ) HELD THAT THE PROVISIONS OF SEC. 80IA(5) TREATING THE UNDERTAKIN G AS A SEPARATE SOURCE OF INCOME CANNOT BE APPLIED TO A YEAR PRIOR TO THE YEAR IN WHICH THE ASSESSEE OPTED TO CLAIM RELIEF U/S 80IA FOR THE FIR ST TIME. ACCORDINGLY THE LD CIT(A) HELD THAT THE LOSSES OF EARLIER YEARS CAN NOT BE NOTIONALLY BROUGHT FORWARD TO BE SET OFF AGAINST CURRENT YEARS INCOME , SINCE THE CURRENT YEAR IS THE INITIAL ASSESSMENT YEAR IN WHICH DEDUCTION U /S 80IA WAS CLAIMED. ITA NO6266 /MUM/2012 4 6. AT THE TIME OF HEARING, THE LD A.R SUBMITTED THAT THE VIEW TAKEN BY THE LD CIT(A) IS ALSO SUPPORTED BY THE FOLLOWING DE CISIONS:- (A) EXCEL CROP CARE (ITA NO.3100/MUM/2010) DATED 25-07-2014 (B) CIT VS. ANIL H LAD (102 DTR (KAR) 241) (C) EMERALD JEWEL INDUSTRY PVT LTD (53 DTR 262)(M AD) (D) SHEVIE EXPORTS VS. JCIT (2013)( 156 TTJ (MUM) 525) 7. SINCE THE LD CIT(A) HAS FOLLOWED THE DECISION RENDERED BY HONBLE MADRAS HIGH COURT AND IDENTICAL VIEW HAS BEEN EXPRE SSED IN THE ABOVE CITED CASES ALSO, WE DO NOT FIND ANY REASON TO INTE RFERE WITH HIS ORDER ON THIS ISSUE. 8. IN THE RESULT, THE APPEAL FILED BY THE REVEN UE IS DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 16TH JAN,2015. +, ' - ./ 0 1 16 TH JAN 2015 , & 2( 3 SD S D ( . . / H.L. KARWA) ( . . , / B.R. BASKARAN ) / PRESIDENT / ACCOUNTANT MEMBER . ' ( MUMBAI: 16 TH JAN, 2015. . . ./ SRL , SR. PS ! ' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. ! / THE RESPONDENT. 3. ' 7) ( ) / THE CIT(A)- CONCERNED 4. ' 7) / CIT CONCERNED 5. 6. 89 2 ): , * : , . ' ( / DR, ITAT, MUMBAI CONCERNED 2 ; < ( / GUARD FILE. = ' / BY ORDER, TRUE COPY > # (ASSTT. REGISTRAR) * : , . ' ( /ITAT, MUMBAI