Dy.CIT, Circle-1(1), Hyderabad V. M/s Aquamall Water Solutions Private Limited, Hyderabad

ITA 700/HYD/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5933 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 7 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2016
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 29-11-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 09-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K J RAO
• Assessee Lawyers: A V RAGHURAM
• Keywords: Depreciation; Revised return
• Section: 143(3)

Judgement Text

ITA NOS 613 AND 700 OF 2013 AQUAMALL WATER SOLUTION S P LTD HYDERABAD PAGE 1 OF 10 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO.613/HYD/2013 (ASSESSMENT YEAR:2009-10) M/S. AQUAMALL WATER SOLUTIONS P LTD HYDERABAD PAN: AADCA 6241 M VS DY. COMMISSIONER OF INCOME TAX, CIRCLE 1(1) HYDERABAD ITA NO.700/HYD/2013 (ASSESSMENT YEAR:2009-10) DY. COMMISSIONER OF INCOME TAX, CIRCLE 1(1), HYDERABAD VS M/S. AQUAMALL WATER SOLUTIONS P LTD, HYDERABAD PAN: AADCA 6241 M FOR ASSESSEE : SHRI A.V. RAGHURAM FOR REVENUE : SHRI K.J. RAO, DR O R D E R PER SMT. P. MADHAVI DEVI, J.M. BOTH ARE CROSS APPEALS FOR THE A.Y 2009-10 AGAINST T HE ORDER OF THE CIT (A)-II, HYDERABAD, DATED 05.02.201 3. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY, WHICH IS ENGAGED IN THE BUSINESS OF MANUFACTURING O F WATER PURIFIERS CUM DE-POLLUTING EQUIPMENTS UNDER THE BRA ND NAME OF AQUAGUARD, FILED ITS RETURN OF INCOME FOR THE A.Y 2009-10 ON 30.03.2011 ADMITTING A TAXABLE INCOME OF RS.8,50,86 ,446 AFTER DATE OF HEARING : 08.12.2016 DATE OF PRONOUNCEMENT : 21.12.2016 ITA NOS 613 AND 700 OF 2013 AQUAMALL WATER SOLUTION S P LTD HYDERABAD PAGE 2 OF 10 CLAIMING RS.13,87,08,677 AS A DEDUCTION U/S 80IC OF THE ACT. DURING THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT, THE AO OBSERVED THAT THE ASSESSEE COMPANYS PRODUCTS INCLU DE WATER PURIFIERS AND RELATED COMPONENTS AND THE ASSESSEE I S HAVING 4 UNITS AT DIFFERENT LOCATIONS, 3 OF WHICH ARE ELIGIB LE FOR DEDUCTION U/S 80IC AND ONE UNIT LOCATED AT BOMMASANDRA (BANGA LORE) DOES NOT ENJOY ANY TAX BENEFIT. FURTHER, HE ALSO OBSERVED THAT THE ASSESSEE HAS FILED THE ORIGINAL RETURN OF INCOME ON 30.03.2011 ONLY AND AS PER THE PROVISIONS OF SECTION 80AC OF T HE ACT, THE ASSESSEE HAS TO FILE THE RETURN OF INCOME WITHIN TH E PRESCRIBED TIME LIMIT U/S 139(1) OF THE ACT, WHICH IN THIS CAS E HAPPENS TO BE 13.09.2009 IF IT WANTS TO AVAIL THE BENEFIT OF DEDU CTION U/S 80IC OF THE ACT. OBSERVING THAT THE ASSESSEE HAS FILED THE RETURN OF INCOME ONLY ON 30.03.2011, THE ASSESSEE WAS ASKED T O EXPLAIN AS TO HOW IT WAS ELIGIBLE FOR THE BENEFIT OF DEDUCTION . THE ASSESSEE STATED THAT IT HAS FILED THE ORIGINAL RETURN WITHIN THE PRESCRIBED TIME LIMIT U/S 139(1) AND THAT THE REVISED RETURN W AS FILED ON 30.03.2011. HOWEVER, ON VERIFICATION OF THE COMPUTE RIZED DATA, THE AO FOUND THAT THERE WAS NO SUCH ORIGINAL RETURN FILED, AS CLAIMED. THEREFORE, HE HELD THAT THE ASSESSEE IS NO T ELIGIBLE FOR DEDUCTION U/S 80IC OF THE ACT. 3. WITHOUT PREJUDICE TO THE ABOVE FINDING, THE AO A LSO OBSERVED THAT FOR BEING ELIGIBLE FOR DEDUCTION U/S 80IC OF THE ACT, THE ASSESSEE SHOULD MANUFACTURE ANY ARTICLE OR THIN G. HE ALSO OBSERVED THAT SIMILAR ISSUE WAS THE SUBJECT MATTER OF THE ASSESSMENT IN THE A.Y 2008-09, WHEREIN THE AO HELD T HAT THERE WAS NO MANUFACTURE OF ANY ARTICLE OR THING BUT IT I S MERE ASSEMBLING OF VARIOUS PARTS. DURING THE PENDENCY OF THE ITA NOS 613 AND 700 OF 2013 AQUAMALL WATER SOLUTION S P LTD HYDERABAD PAGE 3 OF 10 ASSESSMENT PROCEEDINGS, THE ASSESSEE COMPANY APPROA CHED THE ADD. CIT, RANGE-1, HYDERABAD SEEKING DIRECTION U/S 144A OF THE ACT WITH REGARD TO ITS ELIGIBILITY FOR DEDUCTION U/ S 80IC OF THE ACT. VIDE PROCEEDINGS DATED 8.12.2011, THE ADD. CIT GAVE CERTAIN DIRECTIONS WHICH ARE REPRODUCED AT PARA 3.1 OF THE ASSESSMENT ORDER. IN ACCORDANCE WITH THE DIRECTIONS OF THE ADD . CIT, THE AO EXAMINED THE ACTIVITIES OF THE ASSESSEE AND FOUND T HAT THE ASSESSEE ITSELF HAS CONFIRMED THAT SOME OF ITS SMAL LER COMPONENTS WHICH WERE PART OF SALES KIT ARE NOT ELIGIBLE FOR D EDUCTION AS PER THE DIRECTION OF THE ADD. CIT. ACCORDINGLY, THE ASS ESSEE HAD COMPUTED THE PROFIT ATTRIBUTABLE TO SUCH COMPONENTS AT RS.81.00 LAKHS AND THEREAFTER BIFURCATED THE SAME AMONGST TH REE ELIGIBLE UNITS. THE AO, HOWEVER, HELD THAT SINCE THE RETURN OF INCOME HAS NOT BEEN FILED WITHIN THE TIME LIMIT U/S 139(1) OF THE ACT, HE HELD THAT THE SAME IS NOT ALLOWABLE. 4. FURTHER, THE AO OBSERVED THAT THE ASSESSEE HAD NO T PROPERLY ALLOCATED THE COMMON EXPENDITURE BETWEEN T HE TAXABLE AND EXEMPT UNITS. HE OBSERVED THAT THERE WAS LOSS O F RS.71,96,460 OF THE HEAD OFFICE. THE AO HELD THAT T HE SAID LOSS HAS TO BE ALLOCATED AMONGST ALL THE FOUR NITS IN PR OPORTION OF THEIR TURNOVER. AS NO DEDUCTION WAS BEING ALLOWED U/S 80I C, THE AO DID NOT MAKE ANY ADJUSTMENT OF THIS LOSS ALSO. 5. FURTHER, AS PER THE PROVISIONS OF SUB SECTION V O F SECTION 80IA, THE AO OBSERVED THAT FOR THE PURPOSE OF DEDUCTION U/S 80IC, THE DEDUCTION HAS TO BE COMPUTED AS IF TH E ELIGIBLE UNIT WAS E. HE OBSERVED THAT EVEN IF THE LOSSES OF THE E ARLIER YEARS WERE ALREADY SET OFF AGAINST OTHER INCOME, IN THE EARLIE R YEARS, FOR THE ITA NOS 613 AND 700 OF 2013 AQUAMALL WATER SOLUTION S P LTD HYDERABAD PAGE 4 OF 10 LIMITED PURPOSE OF DEDUCTION U/S 80IC, SUCH LOSS HA S TO BE NOTIONALLY BROUGHT FORWARD TO THE CURRENT YEAR AND AFTER GIVING SET-OFF OF THE SAME FROM THE INCOME OF THE ELIGIBLE UNITS, THE BALANCE PROFIT ALONE IS ELIGIBLE FOR DEDUCTION. HE , THEREFORE, HELD THAT THE LOSS OF THE DEHRADUN UNIT FOR THE A.Y 2008- 09 WHICH HAS BEEN SET OFF AGAINST OTHER INCOME FOR THE A.Y 2008-0 9, HAS TO BE CARRIED FORWARD TO THIS YEAR NOTIONALLY AND SET OFF FROM THE PROFIT OF THE CURRENT YEAR WHICH THE ASSESSEE HAS FAILED TO D O. BEFORE THE AO, THE ASSESSEE HAD PLACED RELIANCE UPON THE DECIS ION OF THE TRIBUNAL AT BANGALORE IN THE CASE OF SHRI ANIL H LA D VS. DCIT IN ITA NO.1262/BANG/2010 DATED 7.01.2011 ON THE GROUND THAT THERE IS NO NEED FOR SUCH SET OFF. THE AO HOWEVER, HELD THAT THE CASE IS COVERED BY THE DECISION OF THE TRIBUNAL AT HYDERABAD IN THE CASE OF HYDERABAD CHEMICAL SUPPLIES PVT LTD AND THEREFORE, HE HELD THAT THE LOSS OF THE EARLIER YEARS IS TO BE REDUCED FROM THE PROFIT OF THE CURRENT YEAR BEFORE ALLOWING THE DEDU CTION U/S 80IC. 6. AGGRIEVED BY THESE FINDINGS OF THE AO, THE ASSES SEE FILED AN APPEAL BEFORE THE CIT (A) ALONG WITH THE E VIDENCE THAT THE ORIGINAL RETURN OF INCOME WAS FILED WITHIN THE STIP ULATED TIME U/S 139(1) OF THE ACT. THE CIT (A) CALLED FOR A REMAND REPORT FROM THE AO AND VIDE REPORT DATED 21.01.2013, THE AO ACCEPTE D THAT THE ASSESSEE HAS PRODUCED NECESSARY EVIDENCE THAT IT HA S FILED THE RETURN OF INCOME ON 30.09.2009 AND THAT THE SAME IS WITHIN THE TIME AND THAT THE REVISED RETURN FILED ON 31.03.201 1 MAY BE ACCEPTED. THE CIT (A), THEREAFTER, ACCEPTED THAT AL LOCATION OF THE PROFIT ATTRIBUTABLE TO SMALLER COMPONENTS WHICH WER E PART OF SALES KIT WERE NOT ELIGIBLE FOR DEDUCTION U/S 80IC. THE C IT (A) HOWEVER, DIRECTED THE AO TO BIFURCATE THE COMMON EXPENDITURE AMONGST ALL ITA NOS 613 AND 700 OF 2013 AQUAMALL WATER SOLUTION S P LTD HYDERABAD PAGE 5 OF 10 THE 4 UNITS IN PROPORTION OF THEIR TURNOVER. AS REG ARDS THE SET OF THE LOSS OF EARLIER YEARS NOTIONALLY BEING BROUGHT FORWARD TO BE SET OFF AGAINST THE CURRENT YEARS INCOME BEFORE ALLOWI NG DEDUCTION U/S 80IC, THE CIT (A) CONFIRMED THE ASSESSMENT ORDE R. AGAINST THE RELIEF GRANTED BY THE CIT (A), THE REVENUE IS IN AP PEAL BEFORE US BY RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE CI(A) IS ERRONEOUS IN LAW AND ON FACTS OF THE CASE. 2. THE LEARNED CI(A) ERRED IN GIVING RELIEF TO THE ASSESSEE BY DIRECTING THE AO TO COMPUTE THE DEDUCTION CLAIMED U/S 80IC OF THE ACT ON THE BASIS OF INFORMATION FILED AS PER THE DIRECTIONS GIVEN U/S 144A, WITHOUT AFFORDING AN OPPORTUNITY TO THE ASSESSING OFFICER FOR VERIFYING THE CORRECTNESS OF THE SAME. 3. THE LEARNED CI(A) OUGHT TO HAVE GIVEN AN OPPORTUNITY TO THE AO FOR VERIFYING THE CORRECTNESS OF THE WORKING GIVEN BY THE ASSESSEE UNDER RULE 46A OF THE IT RULES. 4. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE RETURN FILED IS VALID RETURN U/S 139(1) OF THE ACT AS THE ASSESSEE HAS NOT PRODUCED SATISFACTORY EVIDENCE THAT THE RETURN IS FILED IN TIME. 5. ANY OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING 7. AGAINST THE ORDER OF THE CIT (A), CONFIRMING PAR T OF THE ASSESSMENT ORDER, THE ASSESSEE HAS RAISED THE FOLLO WING GROUNDS OF APPEAL: 1. THE ORDER OF THE LD. CIT(A) IS ERRONEOUS BOTH ON FACTS AND IN LAW IN SO FAR AS IT IS PREJUDICIAL TO THE ASSESSEE. ITA NOS 613 AND 700 OF 2013 AQUAMALL WATER SOLUTION S P LTD HYDERABAD PAGE 6 OF 10 2. THE LD. CT(A) ERRED IN HOLDING THAT WHILE ALLOWING DEDUCTION U/S.80-IC, LOSSES OF EARLIER YEARS THAT ARE ALREADY SET OFF SHALL BE NOTIONALLY SET OFF, FOLLOWING DECISION OF HYDERABAD BENCH OF ITAT IN M/S. HYDERABAD CHEMICALS, INSTEAD OF FOLLOWING THE DECISION OF MADRAS HIGH COURT IN VELAYUDHA SWAMY SPINNING MILLS (38 DTR 57), IN SPITE OF SPECIAL BENCH, VIZAG DECISION IN RAJAHMAHENDRY SHIPPING THAT HIGH COURT DECISION PREVAILS OVER SPECIAL BENCH DECISION OF ITAT. 3. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF HEARING. 8. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT THE CIT (A) HAD CALLED FOR A REMAND REPORT AND ON THE BASIS OF THE REMAND REPORT HAS ACCEPTED THAT THE ASSESSEE HAS FILED THE ORIGINAL RETURN OF INCOME ON 30.09.2011 AND THEREAFTER THE RETURN FILED ON 30.03.2011 IS TH E REVISED THE RETURN OF INCOME AND HENCE THE ASSESSEE HAS SATISFI ED THE CONDITION FOR CLAIMING DEDUCTION U/S 80IC. THEREFOR E, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE FINDINGS OF TH E CIT (A) ON THIS ISSUE AND THE REVENUES GROUND OF APPEAL NO.4 IS RE JECTED. 9. FURTHER, AS REGARDS THE COMPUTATION OF DEDUCTION U/S 80IC OF THE ACT, WE FIND THAT THE ASSESSEE HAS ACCE PTED THAT THE PROFIT ATTRIBUTABLE TO SMALLER COMPONENTS OF THE SA LE KIT IS NOT ELIGIBLE FOR DEDUCTION U/S 80IC OF THE ACT AND HAS WORKED OUT THE DISALLOWANCE AT RS.80.00 LAKHS AND ACCORDINGLY APPO RTIONED IT AMONGST THE THREE ELIGIBLE UNITS. THE REVENUE IS C HALLENGING THE SAID ALLOCATION ON THE GROUND THAT THE AO HAS NOT B EEN GIVEN AN OPPORTUNITY TO VERIFY THE SAID ALLOCATION. WE FIND THAT DURING THE ASSESSMENT PROCEEDINGS ITSELF, THE ASSESSEE HAD GIV EN THE ITA NOS 613 AND 700 OF 2013 AQUAMALL WATER SOLUTION S P LTD HYDERABAD PAGE 7 OF 10 COMPUTATION, BUT THE AO HAS NOT GONE INTO THE SAID COMPUTATION AND THE ALLOCATION ON THE GROUND THAT THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S 80IC AS IT HAS FILED THE RETURN A FTER THE STIPULATED TIME U/S 139(1). THEREFORE, WE REMIT THE ISSUE OF COMPUTATION OF ALLOCATION OF BOTH THE COMMON EXPEND ITURE AND ALSO THE PROFIT ATTRIBUTABLE TO THE SMALLER COMPONE NTS OF THE ELIGIBLE UNIT TO THE AO FOR VERIFICATION AND ALLOWA NCE THEREAFTER IN ACCORDANCE WITH LAW. THUS, GROUNDS OF APPEAL NO.2 & 3 OF THE REVENUES APPEAL, ARE ALLOWED FOR STATISTICAL PURPO SES. 10. COMING TO THE ASSESSEES APPEAL, THE LEARNED CO UNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD B EEN INCURRING LOSSES IN THE EARLIER YEARS AND IT HAD SET OFF THE SAID LOSS AGAINST THE OTHER INCOMES AND THIS IS THE FIRST YEAR IN WHI CH THE ASSESSEE HAS CLAIMED THE DEDUCTION U/S 80IC OF THE ACT. HE S UBMITTED THAT THIS ISSUE AS TO WHETHER THE LOSSES OF THE EARLIER YEARS WHICH HAS ALREADY BEEN SET OFF AGAINST THE OTHER INCOMES CAN BE NOTIONALLY BROUGHT FORWARD AND SET OFF FROM THE INCOME OF THE ELIGIBLE UNIT BEFORE ALLOWING THE DEDUCTION U/S 80IA IS COVERED I N FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF VELAYUDHASWAMY SPINNING MILLS PRIVATE LIMIT ED VS. ACIT, REPORTED IN [2012] 340 ITR 477 (MAD.). IT IS SUBMIT TED THAT THIS TRIBUNAL IN THE CASE OF HYDERABAD CHEMICALS SUPPLY LTD VS. ACIT, HYDERABAD IN ITA NO.352/HYD/2005, DATED 21.01.2011 FOR THE A.YS 2008-09 AND 2010-11 HAS TAKEN NOTE OF THE CBDT CIRCULAR DATED 15.2.2016 TO HOLD THAT THE INCOME OF THE ASSE SSEE FROM THE ELIGIBLE UNIT IS TO BE CONSIDERED FROM THAT YEAR AL ONE ON A STANDALONE BASIS. THE COPIES OF THE ORDERS OF THE T RIBUNAL ARE PLACED BEFORE US. FURTHER, IT IS ALSO BROUGHT TO OUR NOTICE THAT THE ITA NOS 613 AND 700 OF 2013 AQUAMALL WATER SOLUTION S P LTD HYDERABAD PAGE 8 OF 10 SLP FILED BY THE REVENUE AGAINST THE JUDGMENT DATED 11.03.2010 BY THE HON'BLE MADRAS HIGH COURT IN THE CASE OF VEL AYUDHASWAMY SPINNING MILLS PVT LTD HAS BEEN REJECTED BY THE HON 'BLE SUPREME COURT VIDE SLP NO.33475/2012 DATED 5.9.2016. THEREF ORE, ACCORDING TO HIM, HIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE. 11. THE LEARNED DR HOWEVER, RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 12. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT THIS ISSUE IS COVERED IN FA VOUR OF THE ASSESSEE BY THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF HYDERABAD CHEMICALS SUPPLY LTD VS. A CIT IN ITA NO.352/HYD/2005 FOR THE A.YS 2008-09 AND 2010-11 RES PECTIVELY. THE RELEVANT PORTION OF THE SAID ORDERS IS REPRODUC ED BELOW FOR READY REFERENCE: 15. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN OUR OPINION, THE ISSUE RELATING TO COMPUTATION OF 80IA DEDUCTION THAT IT H AS TO BE COMPUTED AFTER DEDUCTION OF THE NOTIONAL BROUGHT FORWARD LOSSES AND DEPRECIATION OF BUSINESS EVEN TH OUGH THEY HAVE BEEN ALLOWED SET OFF AGAINST OTHER INCOME IN EARLIER YEARS HAS BEEN DEALT BY THE SPECIAL BENCH I N THE CASE OF ACIT VS. GOLD MINE SHARES & FINANCE (P) LTD . (113 ITD 209) (SB) (AHMADABAD) AND DECIDE THE ISSUE AGAI NST THE ASSESSEE. WHILE DELIVERING THIS ORDER, THE SPEC IAL BENCH CONSIDERED ALL THE ARGUMENTS WHAT THE ASSESSE E HAS PLACED BEFORE US. THE TRIBUNAL ALSO CONSIDERED THE JUDGMENT IN THE CASE OF MEWAR OIL & GENERAL MILLS L TD. (SUPRA ) AND OBSERVED THAT THIS CASE HAS NOT NOTICE D THE NON OBSTANTE PROVISIONS OF SECTION 80I(6)/80IA(5) A ND, THEREFORE, THERE IS NO DISCUSSION ON THIS POINT IN THAT DECISION. IT WOULD SIMILARLY, THEREFORE, BE NOT OF ANY HELP TO US. THE TRIBUNAL ALSO CONSIDERED THE DECISION CI TED BY THE ASSESSEE IN THE CASE OF MOHAN BREWERIES & DISTI LLERIES LTD. (116 ITD 241) (CHENNAI) (SUPRA) AND OBSERVED T HAT ITA NOS 613 AND 700 OF 2013 AQUAMALL WATER SOLUTION S P LTD HYDERABAD PAGE 9 OF 10 WHAT IT DECIDED IN THAT CASE IS THAT THE DEDUCTION IS ALLOWED U/S 80IA FOR 10 OUT OF 15 YEARS AT THE OPTI ON OF THE ASSESSEE WHICH MEANS ANY TEN YEARS NOT NECESSAR ILY THE BEGINNING OF 10 YEARS. FINALLY IT WAS OBSERVED THAT THIS CASE HAS NO RELEVANCE IN DECIDING THE ISSUE IN THIS CASE OF THE ASSESSEE BECAUSE THE ASSESSEE ITSELF HAD CLAIME D DEDUCTION IN THE RETURN STARTING FROM 1ST YEAR. THE SAME IS APPLICABLE IN THE CASE OF RANGAMMA STEELS & MALLEAB LES VS. ACIT (132 TTJ 365) (CHENNAI) AND VELAYUDHASWAMY SPINNING MILLS (P) LTD. VS. ACIT (38 DTR 57) (MDS. ) (HC). FURTHER, JUDGMENT OF HIGH COURT THOUGH NOT OF THE JURISDICTIONAL HIGH COURT, PREVAILS OVER AN ORDER O F THE SPECIAL BENCH EVEN THOUGH IT IS FROM THE JURISDICTI ONAL BENCH OF THE TRIBUNAL, HOWEVER, WHERE THE JUDGMENT OF THE NON JURISDICTIONAL HIGH COURT, THOUGH THE ONLY JUDGMENT ON THE POINT, HAS BEEN RENDERED WITHOUT HA VING BEEN INFORMED ABOUT CERTAIN STATUTORY PROVISIONS TH AT ARE DIRECTLY RELEVANT, IT IS NOT TO BE FOLLOWED. IN OUR OPINION, JUDGMENT OF SPECIAL BENCH IN THE CASE OF GOLD MINE SHARES & FINANCE (P) LTD. (113 ITD 209) (SB) (AHMADABAD) SQUARELY APPLICABLE TO THE FACTS OF THE PRESENT CAS E AND APPLYING THE RATIO LAID DOWN BY THIS ORDER OF THE S PECIAL BENCH OF THIS TRIBUNAL, WE INCLINED TO DECIDE THE I SSUE AGAINST THE ASSESSEE RELATING TO ALLOWABILITY OF DE DUCTION U/S 80IA THAT IN TERMS OF PROVISIONS OF U/S 80IA(5) OF THE IT ACT, THE PROFIT FROM THE ELIGIBLE BUSINESS FOR THE PURPOSE OF DETERMINATION OF THE QUANTUM OF DEDUCTION U/S 80IA OF THE ACT HAS TO BE COMPUTED AFTER DEDUCTION OF THE NOTIONAL BROUGHT FORWARD LOSSES AND DEPRECIATION OF ELIGIBLE BUSINESS EVEN THOUGH THEY HAVE BEEN ALLOWE D SET OFF AGAINST OTHER INCOME IN EARLIER YEARS. 13. FURTHER, WE ALSO FIND THAT THE HON'BLE SUPREME C OURT HAS CONFIRMED THE ORDER OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF VELAYUDHASWAMY SPINNING MILLS P LTD (CITED SUPRA) BY DISMISSING THE SLP FILED BY THE REVENUE VIDE ORDERS 016 (SUPRA). IN VIEW OF THE SAME, THE ASSESSEES APPEAL IS ALLOW ED. ITA NOS 613 AND 700 OF 2013 AQUAMALL WATER SOLUTION S P LTD HYDERABAD PAGE 10 OF 10 14. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED AND REVENUES APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST DECEMBER, 2016. SD/- SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 21 ST DECEMBER, 2016. VINODAN/SPS COPY TO: 1 SRI K. VASANT KUMAR, A.V.RAGHU RAM & P.VINOD, AD VOCATES, 610 BABUKHAN ESTATE, BASHEERBAGH, HYDERABAD-01 2 DCIT, CIRCLE-1(1) HYDERABAD 3 CIT (A)-II HYDERABAD 4 CIT 1 HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER