Jivraj Tea & Industries Ltd., Surat V. The Dy.CIT.,Cent.Circle-2, Surat

ITA 865/AHD/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9740 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 26-11-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 19-04-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Keywords: Depreciation; Earning of tax free income; Capital receipt; Unabsorbed depreciation
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH BEFORE: S H RI PRAMOD KUMAR , ACCOUNTANT MEMBER AND SHR I S. S. GODARA , JUDICIAL MEMBER JIVRAJ TEA & INSTRIES LTD, 3 RD FLOOR, DR. MANSUKHLAL TOWER, OPP. DHIRAJ SONS, ATHWALINES, SURAT - 395001 PAN: AAACJ5957E (APPELLANT) VS DCIT, CIRCLE - 1, SURAT (RESPONDENT) REVENUE BY : S H RI DINESH SINGH , SR. D . R. ASSESSEE BY: S H RI S.N. SOPARKAR WITH URVASHI SODHAN, A.R. DATE OF HEARING : 26 - 11 - 2 015 DATE OF PRONOUNCEMENT : 20 - 01 - 2 016 / ORDER P ER : S. S. GODARA , JUDICIAL MEMBER : - THIS ASSESSEE S APPEAL FOR A.Y. 200 8 - 09 , AR ISES FROM ORDER OF THE CIT(A) - I, SURAT DATED 14 - 02 - 2012 IN APPEAL NO. CAS - I/255/20 10 - 11 , IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHO RT THE ACT . I T A NO . 865 / A HD/20 12 A SSESSMENT YEAR 200 8 - 09 I.T.A NO. 865 /AHD/20 12 A.Y. 2008 - 09 PAGE NO JIVRAJ TEA & INDUSTRIES LTD VS. DCIT 2 2. THE ASSESSEE RAISED THREE SUBSTANTIVE GROUNDS IN THE INSTANT APPEAL INTER ALIA CHALLENGING THE CIT(A) S ORDER CONFIRMING ASSESSING OFFICER S ACTION IN EXCLUDING SALE PROCEED OF SALE TAX ENTITLEMENT OF RS. 69,16,667/ - FROM PROFITS DERIVED FROM ITS WIND MILL INSTALLED AT AHMADNAGAR (MAHARASTRA) FOR THE PURPOSE OF CLAIMING SECTION 80IA THEREBY PLACING RELIANCE HON BLE SUPREME COURT DECISION IN LIBERTY INDIA VS. CIT 293 ITR 520(SC), DISALLOWING SECTION 80IA DEDUCTION OF RS. 1,13,94,998/ - CLAI MED QUA PROFITS DERIVED FROM ELECTRICITY GENERATION FROM AHMA DNAGAR WIND MILL AND ANOTHER DISALLOWANCE OF RS. 86,223/ - OUT OF VARIOUS EXPENSES U/S. 14A OF THE ACT; AS MADE IN ASSESSMENT ORDER DATED 29 - 11 - 2010. WE FIND FROM THE CASE FILE THAT IT HAS ALSO F ILED AN ADDITIONAL GROUND TO ITS FIRST SUBSTANTIVE PLEA THAT THE CIT(A) OUGHT TO HAVE TREATED THE AMOUNT RECEIVED ON SALE OF SALES TAX ENTITLEMENTS AS CAPITAL RECEIPT S NOT LIABLE TO BE TAXED . 3. WE HAVE HEARD BOTH THE PARTIES. THE ASSESSEE FILES A TAB ULATION CHA RT AND COPY OF VARIOUS TRIBUNAL ORDERS IN ITS OWN CASE IN SUPPORT OF THE ABOVE STATED GROUNDS. THE REVENUE IS FAIR ENOUGH IN NOT DISPUTING CORRECTNESS THEREOF. IT IS TO BE SEEN FROM THE CASE RECORD THAT A CO - ORDINATE BENCH IN ASSESSEE S OWN CA SE ITA 3012/AHD/2010 (ASSESSMENT YEAR 2007 - 08) DECIDED ON 19 - 12 - 2013 HAS REMITTED THE FIRST ISSUE OF SALES TAX SALE PROCEEDS BACK TO THE ASSESSING OFFICER FOR FRESH ADJUDICATION. WE FEEL THAT THE INSTANT GROUND DESERVES TO FOLLOW SUIT IN ABSENCE OF ANY DI STINCTION ON FACTS OF LAW. THE ASSESSEE S ADDITIONAL GROUND (SUPRA) IS FOUND TO BE A I.T.A NO. 865 /AHD/20 12 A.Y. 2008 - 09 PAGE NO JIVRAJ TEA & INDUSTRIES LTD VS. DCIT 3 SUPPLEMENTARY PLEA ONLY. WE ACCORDINGLY FOLLOW CO - ORDINATE BENCH DECISION REMITTING THE ISSUE BACK TO ASSESSING OFFICER AFTER CONSIDERING THE SCHEME SALES TAX ENTITLEMEN T OF THE MAHARASTRA GOVT. UNDER WHICH THE ASSESSEE HAS RECEIVED ITS ENTITLEMENT AFTER TAKING INTO CONSIDERATION OF HON BLE JURISDICTIONAL HIGH COURT IN CASE OF CIT VS. BIRLA VXL LTD (2013) 32 TAXMAN.COM 330 (GUJ) AFTER AFFORDING ADEQUATE OPPORTUNITY OF HEA RING. THIS FIRST SUBSTANTIVE GROUND ALONG WITH ADDITIONAL GROUND IS TREATED AS ALLOWED FOR STATIS TI CAL PURPOSES. 4 . WE COME TO ASSESSEE S SECOND SUBSTANTIVE GROUND CHALLENGING SECTION 80IA DEDUCTION DISALLOWANCE OF RS. 1,13,94,998/ - FOR PROFITS DERIVED FROM ELECTRICITY GENERATION FROM ITS WIND MILL INSTALLED AT AHMADNAGAR, MAHARASTRA. THE PARTIES ARE UNANIMOUS BEFORE US THAT THE TRIBUNAL IN ASSESSEE S OWN APPEAL FOR AY 2007 - 08 HAS ACCEPTED THE VERY CONTENTION AS FOLLOWS: - 17. WE HAVE HEARD THE RIVAL S UBMISSIONS AND PERUSED THE ORDER OF THE LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. IN THE CASE OF JIVRAJ TEA LTD., THE ASSESSEE CLAIMED DEDUCTION U/S. 80IA(4) OF THE ACT ON 100% PROFIT DERIVED FROM GENERATION OF ELECTRICITY FROM WINDMILL SITUATED AT AHMEDNAGAR MAHARASHTRA, JODHA RAJASTHAN AND CHITRADURGA KARNATAKA. THE ASSESSING OFFICER OBSERVING THAT SINCE THE ASSESSEE HAD CARRIED FORWARD LOSSES OF EARLIER YEARS, THEREFORE, THE ASSESSEE WAS NOT ENTITLED TO DEDUCTION U/S.80IA(4) AS AFTER THE ADJUST MENT OF THE BROUGHT FORWARD LOSSES THERE WAS NO POSITIVE PROFIT FOR ALLOWING DEDUCTION U/S. 80IA. THE SAME WAS CONFIRMED IN APPEAL BY THE LEARNED CIT(A). THE CASE OF THE REVENUE IS THAT IN VIEW OF THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL RENDERED IN THE CASE OF GOLDMINE SHARES AND PRIVATE LIMITED (SUPRA) BROUGHT FORWARD LOSSES AND DEPRECIATION OF EARLIER YEARS HAS TO BE DEDUCTED FROM THE PROFITS OF THE YEARS UNDER CONSIDERATION BEFORE ALLOWING DEDUCTION U/S. 80IA OF THE ACT. ON THE OTHER HAND, THE CONTENTION OF THE AR OF THE ASSESSEE IS THAT AFTER THE AMENDMENT MADE BY THE FINANCE ACT, I.T.A NO. 865 /AHD/20 12 A.Y. 2008 - 09 PAGE NO JIVRAJ TEA & INDUSTRIES LTD VS. DCIT 4 1999 IN SECTION 80IA WHEREBY U/S. 80IA(2) THE ASSESSEE HAS THE OPTION TO CHOOSE THE INITIAL YEAR FOR CLAIMING THE DEDUCTION U/S. 80IA FOR 10 CONSECUTIVE YEARS WITHIN 15 CONSECUTIVE YEARS FROM THE DATE OF THE COMMENCEMENT OF THE ELIGIBLE UNIT. BY PLACING RELIANCE ON THE DECISION OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF VELAYUDHASWAMY SPINNING MILLS PVT. LTD. (SUPRA) IT WAS THE SUBMISSION OF THE LEARNED DR THAT ON CE THE ASSESSEE SELECTS THE INITIAL YEAR FOR CLAIMING DEDUCTION UNDER SECTION 80 IA (4) THEN THE EARLIER YEARS BROUGHT FORWARD LOSSES AND DEPRECIATIONS NEED NOT BE ADJUSTED AGAINST THE PROFITS OF INITIAL YEAR FROM THE ELIGIBLE UNIT FOR ALLOWING DEDUCTION U NDER SECTION 80IA TO THE ASSESSEE. THE PROVISIONS OF SECTION 80 IA (5) SHALL APPLY FOR THE YEARS AFTER THE INITIAL YEAR FOR COMPUTING THE DEDUCTION ALLOWABLE TO THE ASSESSEE UNDER SECTION 80IA OF THE ACT. 18. WE FIND FORCE IN THE SUBMISSION OF THE LEARNED AR OF THE ASSESSEE. WE ALSO FIND THAT IT IS AN UNDISPUTED FACT THAT IN ALL THE APPEALS UNDER CONSIDERATION THE INITIAL YEAR CHOSEN BY THE ASSESSEE FOR CLAIMING DEDUCTION IS AFTER 1 - 4 - 2000 WHEN THE AMENDED PROVISION OF SECTION 80IA WAS APPLICABLE. 19. SEC TION 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 REFERRED TO IN SUB - SECTION 4, THERE SHALL, IN ACCORDA NCE WITH AND SUBJECT TO THE PROVISIONS OF THIS SECTION, BE ALLOWED IN COMPUTING THE DEDUCTION OF AN AMOUNT EQUAL TO 100% OF THE PROFITS AND GAINS DERIVED FROM SUCH BUSINESS FOR 10 CONSECUTIVE YEARS. SUBSTITUTED SUB - SECTION (2) OF SECTION 80IA, PROVIDES THA T 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 YEARS IS THE OUTER LIMIT WITHIN WHICH THE ASSESSEE CAN CHOOSE THE PERIOD OF CLAIMING THE DEDUCTION. SUB - SECTION (5) IS A NON - OBSTANTE CLAUSE WHICH DEALS WITH THE QUANTUM OF DEDUCTION FOR AN ELIGIBLE BUSINESS. THE RELEVANT PROVISION OF SUB - SECTION (5) OF SECTION 80IA, READS AS UNDER: - '(5) NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISION OF THIS ACT, THE PROFITS AND GAINS OF AN ELIGIBLE BUSINESS TO WHICH THE PROVISIONS OF SUB - SECTION (1) APPLY SHALL, FOR THE PURPOSES OF DETERMINING THE INITIAL ASSESSMENT YEAR OR ANY SUBSEQUENT ASSESSMENT YEAR, BE COMPUTED AS IF SUCH ELIGIBLE BUSINESS WERE THE I.T.A NO. 865 /AHD/20 12 A.Y. 2008 - 09 PAGE NO JIVRAJ TEA & INDUSTRIES LTD VS. DCIT 5 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 DETERMINATIO N IS TO BE MADE.' 20. FROM A PLAIN READING OF THE ABOVE, IT CAN BE GATHERED THAT IT IS A NON - OBSTANTE CLAUSE WHICH OVERRIDES THE OTHER PROVISIONS OF THE ACT AND IT IS FOR THE PURPOSE OF DETERMINING THE QUANTUM OF DEDUCTION UNDER SECTION 80IA, FOR THE ASS ESSMENT YEAR IMMEDIATELY SUCCEEDING THE INITIAL ASSESSMENT YEAR OR ANY SUBSEQUENT ASSESSMENT YEAR TO BE COMPUTED AS IF THE ELIGIBLE BUSINESS IS THE ONLY SOURCE OF INCOME. THUS, THE 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 THE INITIAL ASSESSMENT YEAR. PRIOR TO 1 S1 APRIL 2000, THE INITIAL ASSESSMENT YEAR WAS DEFINED FOR VARIOUS TYPES OF ELIGI BLE ASSESSEES UNDER SECTION 801A(12). HOWEVER, AFTER THE AMENDMENT BROUGHT IN STATUTE BY THE FINANCE ACT, 1999, THE DEFINITION OF 'INITIAL ASSESSMENT YEAR' HAS BEEN SPECIFICALLY TAKEN AWAY. NOW, WHEN THE ASSESSEE EXERCISES THE OPTION OF CHOOSING THE INITIA L ASSESSMENT YEAR AS CULLED OUT IN SUB - SECTION (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 SET - OFF CANNOT BE BROUGHT FORWARD AND ADJUSTED INTO THE PERIOD OF TEN YEARS FROM THE INITIAL ASSESSMENT YEAR AS CONTEMPLATED OR CHOSEN BY THE ASSESSEE. IT IS ONLY WHEN T HE 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 THEN ONLY DEDUCTION UNDER SECTION 80IA C AN BE DETERMINED. THIS IS THE TRUE IMPORT OF SECTION 80IA(5). 21. 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 1996 - 97 ONWARDS AND THE ASSESSEE HAD CLAIMED DEDUCTION UNDER SECTION 80IA STARTING FROM THE FIRST YEAR ITSELF I.E., ASSESSMENT YEAR 1996 - 97. THUS, THE SPECIAL BENCH WAS DEALING WITH THE OPERATION OF SECTION 80IA(5) WHERE THE ASSESSEE HAD FIRST CLAIMED THE DEDUC TION IN THE ASSESSMENT YEAR 1996 - 97 AND FOR SUBSEQUENT ASSESSMENT YEARS. I.T.A NO. 865 /AHD/20 12 A.Y. 2008 - 09 PAGE NO JIVRAJ TEA & INDUSTRIES LTD VS. DCIT 6 THIS ASPECT OF THE MATTER HAS BEEN VERY WELL ELABORATED BY 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 THE 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 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 OFF AGAINST THE CURRENT INCOME OF THE ELIGIBLE BUSINESS. ONCE THE SET OFF IS TAKEN PLACE IN EARLIER YEAR AGAINST THE OTHER INC OME OF THE ASSESSEE, THE REVENUE CANNOT REWORK THE SET OFF AMOUNT AND BRING IT NOTIONALLY. FICTION CREATED IN SUB - SECTION DOES NOT CONTEMPLATES TO BRING SET OFF AMOUNT NOTIONAL LY. FICTION IS CREATED ONLY FOR THE LIMITED PURPOSE AND THE SAME CANNOT BE EXTE NDED BEYOND THE PURPOSE FOR WHICH IT IS CREATED. 22. IN THE PRESENT CASES, THERE IS NO DISPUTE THAT LOSSES INCURRED BY THE ASSESSEE WERE ALREADY SET OFF AND ADJUSTED AGAINST THE PROFITS OF THE EARLIER YEARS. DURING THE RELEVANT ASSESSMENT YEAR, THE ASSESS EE EXERCISED THE OPTION UNDER S. 80 - IA(2). IN TAX CASE NOS. 909 OF 2009 AS WELL AS 940 OF 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 DEPREC IATION OR LOSS OF THE ELIGIBLE UNDERTAKINGS AND THE SAME WERE ALREADY ABSORBED IN THE EARLIER YEARS. THERE IS A POSITIVE PROFIT DURING THE YEAR. THE UNREPORTED JUDGMENT OF THIS COURT CITED SUPRA CONSIDERED THE SCOPE OF SUB - S. (6) OF S. 8O - 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 CITED SUPRA. IN THE CASE OF CIT VS. MEWAR OIL & GENERAL MILLS LTD. (2004) I.T.A NO. 865 /AHD/20 12 A.Y. 2008 - 09 PAGE NO JIVRAJ TEA & INDUSTRIES LTD VS. DCIT 7 186 CTR (RAJ) 141: (2004) 271ITR 311 (RAJ), THE RAJASTHAN HIGH COURT ALSO CONSIDERED THE SCOPE OF S. 80 - 1 AND HELD AS FOLLOWS: - 'HAVING CONSIDERED THE RIVAL CONTENTIONS WHICH FOLLOW ON THE LINE NOTICED ABOVE, WE ARE OF THE OPINION THAT ON FINDING THE FACT THAT THERE WAS NO CARRY FORWARD LOSSES 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 THE CARRY FORWARD OF UNABSORBED DEPRECIATION OR DEPRECIATION ALLOWANCE FRO M 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 US, THERE WAS NO ERROR MUCH LESS ANY ERROR APPARENT ON THE FACE OF THE RECORD WHICH COULD BE RECTIFIED . THAT QUESTION WOULD HAVE BEEN GERMANE ONLY IF THERE WOULD HAVE BEEN CARRY FORWARD OF UNABSORBED DEPRECIATION AND UNABSORBED DEVELOPMENT REBATE OR ANY OTHER UNABSORBED LOSSES OF THE PREVIOUS YEAR ARISING OUT OF THE PRIORITY INDUSTRY AND WHETHER IT WAS REQ UIRED TO BE SET OFF AGAINST THE INCOME OF THE CURRENT YEAR. IT IS NOT AT ALL REQUIRED THAT LOSSES OR OTHER DEDUCTIONS WHICH HAVE ALREADY BEEN SET OFF AGAINST THE INCOME OF THE PREVIOUS YEAR SHOULD BE REOPENED AGAIN FOR COMPUTATION OF CURRENT INCOME UNDER S .80 - 1 FOR THE PURPOSE OF COMPUTING ADMISSIBLE DEDUCTIONS THEREUNDER. 23. IN VIEW THEREOF, WE ARE OF THE OPINION THAT THE TRIBUNAL HAS NOT ERRED IN HOLDING THAT THERE WAS NO RECTIFICATION POSSIBLE UNDER S. 8O - I IN THE PRESENT CASE, ALBEIT, FOR REASONS SOME WHAT DIFFERENT FROM THOSE WHICH PREVAILED 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, THEREFORE, RECOMPUTA TION OF INCOME FOR THE PURPOSE OF COMPUTING PERMISSIBLE DEDUCTION UNDER S. 8O - I FOR THE NEW INDUSTRIAL UNDERTAKING WAS NOT REQUIRED IN THE PRESENT CASE. ACCORDINGLY, THIS APPEAL FAILS AND IS HEREBY DISMISSED WITH NO ORDER AS TO COSTS.' 24. FROM READING OF THE ABOVE, THE RAJASTHAN HIGH COURT HELD THAT IT IS NOT AT ALL REQUIRED THAT LOSSES OR OTHER DEDUCTIONS WHICH HAVE ALREADY BEEN SET OFF AGAINST THE INCOME OF THE PREVIOUS YEAR SHOULD BE REOPENED AGAIN FOR COMPUTATION OF CURRENT INCOME UNDER SECTION 80 - 1 F OR THE PURPOSE OF COMPUTING ADMISSIBLE DEDUCTIONS I.T.A NO. 865 /AHD/20 12 A.Y. 2008 - 09 PAGE NO JIVRAJ TEA & INDUSTRIES LTD VS. DCIT 8 THEREUNDER. WE ALSO AGREE WITH THE SAME. WE SEE NO REASON TO TAKE A DIFFERENT VIEW.' 25. THIS JUDGMENT HAS BEEN FURTHER FOLLOWED BY THE SAME HIGH COURT IN CIT V/S EMERALD JEWEL INDUSTRY (P) LTD. [2011] 53 DTK 262 (MAD.). FROM THE ABOVE, RATIO OF THE HIGH COURT, IT IS AMPLY CLEAR THAT SUB - SECTION (5) OF SECTION 8OIA WILL COME INTO OPERATION ONLY FROM THE INITIAL ASSESSMENT YEAR OR ANY SUBSEQUENT ASSESSMENT YEAR. THE OPTION OF CHOOSING THE INITIAL ASSESSMENT YEAR IS WHOLLY UPON THE ASSESSEE IN THE POST AMENDMENT PERIOD I.E., AFTER 1ST APRIL 2000 BY VIRTUE OF SECTION 80IA(2). 26. NOW COMING TO THE DECISION OF THE MUMBAI BENCH TRIBUNAL IN PIDILITE INDUSTRIES (SUPRA) AS RELIED UPON BY THE LEARNED DEPARTMENTAL RE PRESENTATIVE IN THIS CASE, THE TRIBUNAL WAS DEALING WITH REGARD TO TWO ELIGIBLE UNITS ONE GUJARAT UNIT WHICH WAS SET - UP IN THE YEAR 1995 - 96 AND SECOND MAHARASHTRA UNIT IN THE YEAR 2000 - 01. WITH REGARD TO GUJARAT UNIT, THE TRIBUNAL HELD THAT PRE - AMENDMENT D EFINITION OF INITIAL ASSESSMENT YEAR WOULD BE APPLICABLE I.E., PROVISIONS WHICH WERE PRIOR TO 1ST APRIL 1999 WILL APPLY BECAUSE THE ASSESSEE HAD STARTED COMMERCIAL PRODUCTION IN THE FINANCIAL YEAR 1996 - 97. REGARDING SECOND UNIT, THE TRIBUNAL HELD THAT THE JUDGMENT OF MADRAS HIGH COURT IN VELAYUDHASWAMY SPINNING MILLS PVT. LTD. (SUPRA) WILL NOT BE APPLICABLE BECAUSE THE INCOME FROM NON ELIGIBLE BUSINESS WAS SET - OFF FROM THE LOSS OF ELIGIBLE BUSINESS IN THE YEAR OF COMMENCEMENT. IN THIS CASE, IT WAS NOT AN IS SUE AS TO WHETHER THE LOSSES PERTAINED TO PRIOR TO INITIAL ASSESSMENT YEAR OR AFTER THE INITIAL ASSESSMENT YEAR. IF THE LOSSES HAVE BEEN INCURRED IN THE ELIGIBLE UNIT AND HAS BEEN SET - OFF AGAINST THE NON - ELIGIBLE UNIT AFTER THE INITIAL ASSESSMENT YEAR, TH EN THE RATIO LAID DOWN BY THE TRIBUNAL IS IN FULL CONSONANCE WITH THE LAW. HOWEVER, THIS IS NOT THE CASE IN THE INSTANT CASE BECAUSE THE LOSS PERTAINED TO PRIOR TO INITIAL ASSESSMENT YEAR WHICH HAVE BEEN SET - OFF AGAINST THE PROFITS OF NON - ELIGIBLE UNITS. T HE BEGINNING OF THE INITIAL ASSESSMENT YEAR AS ADOPTED BY THE ASSESSEE IS ASSESSMENT YEAR 2008 - 09 ONLY AND, THEREFORE, THE LOSS OF ASSESSMENT YEAR 2007 - 08 CANNOT BE NOTIONALLY CARRIED FORWARD WITHIN THE MEANING OF SECTION 80IA(5). THUS, THE RELIANCE PLACED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE DECISION OF PIDILITE INDUSTRIES (SUPRA), WILL NOT BE APPLICABLE IN THE PRESENT CASE. 27. THE OT HER DECISION HEAVILY RELIED UPON BY THE LEARNED DEPARTMENTAL REPRESENTATIVE IN HYDERABAD CHEMICAL SUPPLIES LTD. I.T.A NO. 865 /AHD/20 12 A.Y. 2008 - 09 PAGE NO JIVRAJ TEA & INDUSTRIES LTD VS. DCIT 9 (SUPRA) WILL ALSO NOT APPLY TO THE FACTS OF THE PRESENT CASE, AS IN THAT CASE, THE WIND MILL STARTED ITS OPERATION ON 3IST MARCH 1999 AND THE FIRST YEAR OF OPERATION WAS ASSESSMENT YEAR 1999 - 2000. THUS, IN THE ASSESSMENT YEAR 1999 - 2000, THE DEFINITION OF 'INITIAL ASSESSMENT YEAR' WAS ALREADY THERE IN THE ACT AND THERE WAS NO PROVISION THROUGH WHICH THE ASSESSEE COULD HAVE CHOSEN ITS INITIAL ASSESSMENT YEAR. THIS PROVISION WAS BROUGHT IN STATUTE W.E.F. IST APRIL 2000, BY VIRTUE OF SECTION 8OIA. THUS, TH IS DECISION ALSO WILL NOT HELP THE CASE OF THE M/S. SHEVIE EXPORTS DEPARTMENT. IN ASSEESSEE'S CASE, AS SPECIFICALLY STATED IN THE FOREGOING PARAGRAPHS, THE ASSESSEE'S CLAIM FOR INITIAL ASSESSMENT YEAR I.E., ASSESSMENT YEAR 2008 - 09 AND ITS CLAIM FOR DEDUCTI ON UNDER SECTION 80A MADE FOR THE FIRST TIME FROM ASSESSMENT YEAR 2008 - 09, HAS NOT BEEN DISPUTED. THUS, THE AFORESAID JUDGMENT RELIED UPON BY THE LEARNED DEPARTMENTAL REPRESENTATIVE WILL NOT BE APPLICABLE TO THE FACTS OF THE PRESENT CASE. 28. WE REITERATE IN THE INSTANT CASE, IT IS NOT IN DISPUTE THAT THE INITIAL ASSESSMENT YEAR IN THE CASE OF JIVRAJ TEA & INDUSTRIES LTD. IS THE ASSESSMENT YEAR 2004 - 05 AND IN THE CASE OF JIVRAJ TEA LTD. IS ASSESSMENT YEAR 2007 - 08 AND IT IS ALSO NOT IN DISPUTE THAT THE ASSE SSEE HAS NOT SUFFERED ANY LOSS IN THE SAID YEAR, THEREFORE, IN OUR CONSIDERED OPINION NO BROUGHT FORWARD LOSS OR DEPRECIATION COULD BE REDUCED FOR DETERMINING THE AMOUNT IN WHICH THE DEDUCTION IS TO BE ALLOWED U/S. 80IA OF THE ACT. WE, THEREFORE, SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES ON THIS ISSUE AND ALLOW THE GROUND OF APPEAL OF THE ASSESSEE. WE DRAW SUPPORT FROM THE ABOVE EXTRACTED FINDING S OF THE LD. CO - ORDINATE BENCH AND DELETE THE IMPUGNED DISALLOWANCE. THIS SECOND SUBSTANTIVE IS ACCEPTED . 5 . THIS LEAVES US WITH THE THIRD AND FINAL ASSESSEE S GROUND CHALLENGING SECTION 14A DISALLOWANCE OF RS. 86,223/ - QUA ITS EXEMPT INCOME OF RS. 9,207/ - . WE FIND THAT YET ANOTHER CO - ORDINATE BENCH IN ASSESSEE S OWN CASE IN ASSESSMENT YEAR 2008 - 09 HAS RESTRICTED THE I.T.A NO. 865 /AHD/20 12 A.Y. 2008 - 09 PAGE NO JIVRAJ TEA & INDUSTRIES LTD VS. DCIT 10 VERY DISALLOWANCE TO THE EXTENT OF EXEMPT INCOME. WE PROCEED ON THE SAME REASONING HERE AND RESTRICT THE IMPUGNED DISALLOWANCE OF RS. 86 , 223/ - TO THE EXTENT OF ASSESSEE S EXEMPT INCOME ONLY. THIS GROUND IS TREATED AS PARTLY ACCEPTED. 6 TH IS ASSESSEE S APPEAL IS PARTLY ALLOWED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 20 - 01 - 201 6 SD/ - SD/ - ( PRAMOD KUMAR ) ( S. S. GODARA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD : DATED 20 /01/2016 AK / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,