The DCIT, Circle-4, Ahmedabad V. M/s. Gopal Glass Works Ltd., Ahmedabad

ITA 996/AHD/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7944 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 20-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VILAS SHINDE
• Assessee Lawyers: PAMIL H SHAH
• Keywords: Depreciation; Source of fund; Unabsorbed depreciation
• Section: 80C

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD , , BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ./ I.T.A. NO.996/AHD/2015 ( / ASSESSMENT YEAR : 2011-12) THE DCIT CIRCLE-2(1)(1) AHMEDABAD / VS. M/S.GOPAL GLASS WORKS LTD. 182, GAGAN VIHAR CO-OPERATIVE HOUSING SOCIETY KHANPUR AHMEDABAD 380 001 # ./ ./ PAN/GIR NO. : AAACG 5599 H ( #% / APPELLANT ) .. ( &#% / RESPONDENT ) #%' / APPELLANT BY : SHRI VILAS SHINDE, SR.DR &#%(' / RESPONDENT BY : SHRI PAMIL H. SHAH, AR )*(+ / DATE OF HEARING 18/12/2017 ,-./(+ / DATE OF PRONOUNCEMENT 20/12/2017 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTA NCE OF THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-2, AHMEDABAD [CIT(A) IN SHORT] DATED 30/01/2015 ARISING IN THE MATTER OF ASSESSMENT ORDER PASSED UNDER S.143(3) OF THE INCOM E TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT') DATED 21/02 /2014 RELEVANT TO ASSESSMENT YEAR (AY) 2010-11. ITA NO.996/AHD/ 2015 DCIT VS. M/S.GOPAL GLASS WORKS LTD. ASST.YEAR 2011-12 - 2 - 2. THE GROUND OF APPEAL RAISED BY THE REVENUE REA DS AS UNDER:- 1. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN RES TRICTING THE DEDUCTION U/S.80IA TO RS.48,00,536/- OUT OF THE TOT AL DEDUCTION OF RS.49,18,557/- CLAIMED BY ASSESSEE, AND SUBSEQUENTL Y DELETING THE TOTAL DISALLOWANCE OF RS.48,00,536/- MADE BY THE AO U/S.80IA OF THE IT ACT CONSIDERING THAT THE ASSESSEE SHOULD HAVE TA KEN THE INITIAL ASSESSMENT YEAR AS THE YEAR IN WHICH THE BUSINESS H AS COMMENCED FOR CLAIMING THE DEDUCTION. 3. BRIEFLY STATED, THE ASSESSEE HAS CLAIMED DEDUCTI ON OF RS.49,18,557/- UNDER S.80IA(4) OF THE INCOME TAX A CT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT') IN RESPECT OF WIND POWER GENERATION INCOME WHICH WAS DISALLOWED BY THE ASSESSING OFFICER (AO) BY INVOKING PROVISIONS OF SECTION 80IA(5) OF THE ACT BY ADJUSTM ENT ON ACCOUNT OF NOTIONAL CARRY FORWARD OF THE LOSS OF EARLIER YEARS . IT IS THE CASE OF THE ASSESSEE THAT BUSINESS OPERATIONS OF THE ELIGIBLE U NIT COMMENCED IN FINANCIAL YEAR (FY) 2007-08 (RELEVANT TO AY 2008-09 ) AND HENCE AY 2011-12 IS THE FOURTH YEAR OF ITS OPERATION. THE A SSESSEE CLAIMED THAT FY 2010-11 IS MARKED AS INITIAL ASSESSMENT YEAR. THE AO NOTED THAT ASSESSEE HAD INCURRED AGGREGATE LOSS OF RS.9,03,73, 303/- IN AYS 2008-09 AND 2009-10. SUCH LOSS WAS SET OFF BY THE AO AGAIN ST THE EDIBLE PROFITS OF RS.49,18,577/- CLAIMED AS DEDUCTION UNDER S.80IA (4) OF THE ACT DURING THE YEAR UNDER CONSIDERATION. THE ASSESSEE WAS THUS DENIED THE CLAIM OF DEDUCTION UNDER S.80IA. ITA NO.996/AHD/ 2015 DCIT VS. M/S.GOPAL GLASS WORKS LTD. ASST.YEAR 2011-12 - 3 - 4. IT IS THE CASE ON BEHALF OF THE ASSESSEE THAT LO SSES OF THE ELIGIBLE UNIT PRIOR TO EXERCISING OPTION TOWARDS INITIAL AS SESSMENT YEAR IS ALREADY SET OFF AND ADJUSTED AGAINST OTHER STREAMS OF INCOM E OF THE ASSESSEE AND NO RESIDUAL LOSS REMAINS TO BE CARRIED FORWARD FOR SET OFF. THE AO HAS WRONGLY SEPARATED THE LOSS OF ELIGIBLE BUSINESS TO BE NOTIONALLY CARRY FORWARD FOR SET OFF AGAINST THE ELIGIBLE PROFITS. IT IS FURTHER CASE OF ASSESSEE THAT IT HAS MARKED FY 2010-11 RELEVANT TO AY 2011-12 AS THE INITIAL ASSESSMENT YEAR FOR THE PURPOSES OF S.80I A(4) R.W.S. 80IA(5) OF THE ACT. IT IS THUS CLAIMED THAT ONLY THE LOSSES O F THE YEARS STARTING FROM THE INITIAL ASSESSMENT YEAR ARE TO BE BROUGHT FORWA RD AS STIPULATED IN S.80IA(5) OF THE ACT. THE LOSSES PRIOR TO THE INI TIAL ASSESSMENT YEAR WHICH HAS ALREADY BEEN SET OFF CANNOT BE BROUGHT BA CK AND ADJUSTED WITH ELIGIBLE PROFIT OF THE PERIOD OF 10 YEARS BEGINNING FROM INITIAL ASSESSMENT YEAR AS CHOSEN BY ASSESSEE. THE STAND OF THE ASSES SEE IS THAT IT HAS NO ACTUAL BROUGHT FORWARD LOSS IN AY 2011-12 FOR SET O FF. THE ASSESSEE HAS SOUGHT TO RELY UPON THE CBDT CIRCULAR NO.1/2016 DAT ED 15/02/2016 WHICH IS STATED TO CLARIFY THE ISSUE IN FAVOUR OF A SSESSEE. 5. THE CORE ISSUE IN SHORT THAT ARISES IN THE PRES ENT CASE IS ON INTERPRETATION ON TERM INITIAL ASSESSMENT YEAR FO R THE PURPOSES OF CLAIM OF DEDUCTION UNDER S.80IA(4) OF THE ACT. IN ESSENC E, IT IS THE CASE OF AO THAT AS PER PROVISIONS OF S.80IA(5) OF THE ACT, COM PUTATION OF DEDUCTION ITA NO.996/AHD/ 2015 DCIT VS. M/S.GOPAL GLASS WORKS LTD. ASST.YEAR 2011-12 - 4 - UNDER S.80IA(4) IS TO BE DONE AFTER SETTING OFF LOS SES OF ELIGIBLE BUSINESS NOTIONALLY BROUGHT FORWARD AGAINST RESPECTIVE ELIGI BLE INCOME. ON THE OTHER HAND, IT IS THE CASE OF THE ASSESSEE THAT DED UCTION UNDER S.80IA OF THE ACT IS TO BE ALLOWED WITHOUT ADJUSTING THE NOTI ONAL BROUGHT FORWARD LOSSES AND DEPRECIATION OF EARLIER YEARS ARISING PR IOR TO FIXATION OF INITIAL ASSESSMENT YEAR. THE ASSESSEE CLAIMS THAT IT HAS C HOSEN FY 2010-11 (AY 2011-12) IS THE INITIAL ASSESSMENT YEAR FOR THE PUR POSES OF DEDUCTION UNDER S.80IA(4) OF THE ACT. SUB-SECTION(2) OF SECTI ON 80IA OF THE ACT PROVIDES AN OPTION TO THE ASSESSEE TO CLAIM DEDUCTI ON UNDER S.80IA FOR ANY 10 CONSECUTIVE ASSESSMENT YEARS OUT OF 15 YEARS BEGINNING FROM YEAR IN WHICH THE ELIGIBLE UNDERTAKING BEGINS TO OPERATE . IN VIEW OF THE ASSERTIONS MADE ON BEHALF OF THE ASSESSEE THAT THE ELIGIBLE UNIT HAS BEEN SET-UP IN FY 2007-08 (AY 2008-09), SUCH BLOCK OF 15 YEARS STARTS FROM AY 2007-08. IN THIS REGARD, SUB-SECTION (5) OF SE CTION 80IA DEALS WITH QUANTUM OF DEDUCTION AND USES THE EXPRESSION INITI AL ASSESSMENT YEAR WHICH HAS NOT BEEN DEFINED UNDER THE ACT. TO ADDRE SS THE RAGING CONTROVERSY ARISING ON INTERPRETATION OF THIS EXPRE SSION, THE CBDT HAS COME OUT WITH A CIRCULAR NO.1/2016 DATED 15/02/2016 WHEREBY THE AFORESAID EXPRESSION HAS BEEN CLARIFIED. ACCORDING TO THE AFORESAID CIRCULAR INITIAL ASSESSMENT YEAR MEANS THE YEAR F ROM WHICH AN ASSESSEE EXERCISES AT HIS OPTION TO CLAIM DEDUCTION UNDER S. 80IA OF THE ACT. ACCORDINGLY, WHILE COMPUTING DEDUCTION UNDER S.80IA , LOSSES OF ELIGIBLE BUSINESS FROM YEARS STARTING FROM THE INITIAL ASSE SSMENT YEAR ALONE NEED ITA NO.996/AHD/ 2015 DCIT VS. M/S.GOPAL GLASS WORKS LTD. ASST.YEAR 2011-12 - 5 - TO BE CONSIDERED AND LOSSES IF ANY, INCURRED IN TH E EARLIER YEARS AND ALREADY SET OFF AGAINST THE OTHER STREAMS OF INCOME OF THE ASSESSEE PRIOR TO INITIAL ASSESSMENT YEAR NEED TO BE IGNORED AND CANNOT BE NOTIONALLY BROUGHT FORWARD FOR SET OFF AGAINST RESPECTIVE ELIG IBLE INCOME. 6. SIMILAR VIEW HAS BEEN TAKEN BY THE COORDINATE B ENCH OF THE TRIBUNAL IN DCIT VS. SUZLON TOWERS & STRUCTURES LTD. IN ITA NO.2174/AHD/2013 FOR AY 2010-11 DATED 21/11/2016. THE RELEVANT OPE RATIVE PARA OF THE IMPUGNED ORDER OF THE COORDINATE BENCH(SUPRA) IS RE PRODUCED HEREUNDER FOR READY REFERENCE: 6. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND G ONE THROUGH THE RECORD CAREFULLY. WE FIND THAT THE LD.CIT(A) HAS MADE A L UCID ANALYSIS OF THE LAW AS WELL AS OF FACTS ON THIS ISSUE. WE DEEM IT APPROPR IATE TO TAKE NOTE OF THE FINDING RECORDED BY THE LD.CIT(A) AS UNDER: 2.3 DECISION: I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE A ND THE SUBMISSIONS MADE BY MADE BY THE APPELLANT.LT IS UNCONTROVERTED FACT THA T THOUGH RAJASTHAN UNDERTAKING WAS ESTABLISHED IN A.Y.2003-04, THE APP ELLANT HAS CHOSEN A.Y.2008-09 AS INITIAL ASSESSMENT YEAR TO CLAIM DED UCTION U/S 80IA(4)(IV) OF THE ACT. THE ASSESSING OFFICER HAS MAINLY RELIED UP ON THE SPECIAL BENCH ORDER IN THE CASE OF GOLDMINE (SUPRA) AND HAS HELD THAT T HE PROVISIONS OF S.80IA(5) OF THE ACT IS APPLICABLE FROM THE YEAR OF COMMENCEM ENT OF GENERATION OF POWER I.E A.Y.2003-04 AND NOT FROM THE INITIAL YEAR A.Y.2008-09, WHEREIN THE FOR THE DEDUCTION U/S. 80IA(4)(IV) HAS BEEN MADE FO R THE FIRST TIME. ACCORDINGLY, THE ASSESSING OFFICER HAS NATIONALLY B ROUGHT FORWARD LOSSES OF THE YEARS PRIOR TO THE INITIAL YEAR; NATIONALLY SET -OFF THE SAME AGAINST THE CURRENT YEAR'S INCOME AND DENIED DEDUCTION OF RS.85 ,71,651/- AS CLAIMED BY THE APPELLANT U/S 80IA(4)(IV) OF THE ACT. ITA NO.996/AHD/ 2015 DCIT VS. M/S.GOPAL GLASS WORKS LTD. ASST.YEAR 2011-12 - 6 - THE APPELLANT HAS ARGUED, THAT ITS CASE IS SQUARELY COVERED BY THE MADRAS HIGH COURT DECISION IN THE CASE OF VELAYUDHASWAMY ( SUPRA), WHEREIN AFTER TAKING INTO COGNIZANCE OF THE SPECIAL BENCH DECISIO N OF GOLDMINE (SUPRA), IT HAS BEEN HELD THAT WHEN THE ASSESSEE EXERCISES THE OPTION, THE ONLY LOSSES OF THE YEARS BEGINNING FROM INITIAL ASSESSMENT YEAR AL ONE ARE TO BE BROUGHT FORWARD AND NO LOSSES OF EARLIER YEARS WHICH WERE A LREADY SET OFF AGAINST THE INCOME OF THE ASSESSEE. BEFORE GIVING FINDING, I WOULD LIKE TO NARRATE THE LAW OF DEDUCTION AS LAID DOWN IN S. 80-IA IN CONJUNCTION WITH S. 80-IA(5) OF THE ACT. THE SCHEME OF THE IT ACT, 1961 AS CONTAINED IN ITS VARIOUS CHAPTERS I S THAT CHAPTER II DETAILS THE BASIS OF CHARGE OF INCOME-TAX. IN CHAPTER III CERTA IN INCOMES ARE DEFINED WHICH DO NOT FORM PART OF INCOME. IN CHAPTER IV ELA BORATE METHOD OF COMPUTATION OF TOTAL INCOME FROM DIFFERENT SOURCES OF INCOME AND THE SOURCES OF INCOME INCLUDEINCOMES FROM SALARY, FROM HOUSE P ROPERTY, FROM PROFITS AND GAINS OF BUSINESS OR PROFESSION, FROM CAPITAL G AINS AND FROM OTHER SOURCES. IN CHAPTER V, INCOMES OF OTHER PERSONS, HO W AND WHEN IS TO BE 'INCLUDED IN APPELLANT'S HANDS IS DESCRIBED. CHAPTE RS VI AND VI-A ARE IMPORTANT AS THEY PROVIDE FOR THE MODE OF AGGREGATI ON OF INCOME AND SET OFF OR CARRY FORWARD OF LOSS AND PROVIDE FOR DEDUCTION TO BE MADE IN COMPUTING TOTAL INCOME. WE ARE CONCERNED WITH CHAPTER VI-A, E SPECIALLY ITS PORTION C, WHICH DEALS WITH DEDUCTION IN RESPECT OF CERTAIN IN COMES. SEC. 80-IA IS THE SECTION WHICH DEALS WITH DEDUCTION IN RESPECT OF PR OFITS AND GAINS FROM INDUSTRIAL UNDERTAKINGS OR ENTERPRISES ENGAGED IN I NFRASTRUCTURE DEVELOPMENT ETC. SEC. 80-IA AS AMENDED BY THE FINANCE ACT, 1999 READS AS UNDER: '80-IA DEDUCTION IN RESPECT OF PROFITS AND GAINS FR OM INDUSTRIAL UNDERTAKINGS OR ENTERPRISES ENGAGED IN INFRASTRUCTU RE DEVELOPMENT, ETC. (1) WHERE THE GROSS TOTAL INCOME OF AN ASSESSEE INC LUDES ANY PROFITS AND GAINS DERIVED BY AN UNDERTAKING OR AN ENTERPRIS E FROM ANY BUSINESS REFERRED TO IN SUB-S. (4) (SUCH BUSINESS B EING HEREINAFTER REFERRED TO AS THE ELIGIBLE BUSINESS), THERE SHALL, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THIS SECTION, BE A LLOWED, IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE, A DEDUCTION OF AN AMOUNT EQUAL TO HUNDRED PER CENT OF THE PROFITS AND GAINS DERIVED F ROM SUCH BUSINESS FOR TEN CONSECUTIVE ASSESSMENT YEARS.' (2) THE DEDUCTION SPECIFIED IN SUB-S. (1) MAY, AT T HE OPTION OF THE ASSESSEE, BE CLAIMED BY HIM FOR ANY TEN CONSECUTIVE ASSESSMENT YEARS ITA NO.996/AHD/ 2015 DCIT VS. M/S.GOPAL GLASS WORKS LTD. ASST.YEAR 2011-12 - 7 - OUT OF FIFTEEN YEARS BEGINNING FROM THE YEAR IN WHI CH THE UNDERTAKING OR THE ENTERPRISE DEVELOPS AND BEGINS TO OPERATE AN Y INFRASTRUCTURE FACILITY OR STARTS PROVIDING TELECOMMUNICATION SERV ICE OR DEVELOPS AN INDUSTRIAL PARK [OR DEVELOPS (***) A SPECIAL ECONOM IC ZONE REFERRED TO IN CL. (IN) OF SUB-S. (4)] OR GENERATES POWER OR CO MMENCES TRANSMISSION OR DISTRIBUTION OF POWER OR UNDERTAKES SUBSTANTIAL RENOVATION AND MODERNISATION OF THE EXISTING TRANSM ISSION OR DISTRIBUTION LINES OR LAYS AND BEGINS TO OPERATE A CROSS-COUNTRY NATURAL GAS DISTRIBUTION NETWORK: PROVIDED THAT WHERE THE A SSESSEE DEVELOPS OR OPERATES AND MAINTAINS OR DEVELOPS, OPERATES AND MAINTAINS ANY INFRASTRUCTURE FACILITY REFERRED TO IN CL. (A) OR C L. (B) OR CL. (C) OF THE EXPLANATION TO CL. (I) OF SUB-S. (4), THE PROVISION S OF THIS SUB-SECTION SHALL HAVE EFFECT AS IF FOR THE WORDS 'FIFTEEN YEAR S', THE WORDS 'TWENTY YEARS' HAD BEEN SUBSTITUTED. (2A) NOTWITHSTANDING ANYTHING CONTAINED IN SUB-S. ( 1) OR SUB-S. (2), THE DEDUCTION IN COMPUTING THE TOTAL INCOME OF AN U NDERTAKING PROVIDING TELECOMMUNICATION SERVICES, SPECIFIED IN CL. (II) OF SUB-S. (4), SHALL BE HUNDRED PER CENT OF THE PROFITS AND GAINS OF THE ELIGIBLE BUSINESS FOR THE FIRST FIVE ASSESSMENT YEARS COMMEN CING AT ANY TIME DURING THE PERIODS AS SPECIFIED IN SUB-S. (2) AND T HEREAFTER, THIRTY PER CENT OF SUCH PROFITS AND GAINS FOR FURTHER FIV E ASSESSMENT YEARS. (3) THIS SECTION APPLIES TO AN UNDERTAKING REFERRED TO IN C/. (II) OR CL. (II) OR CL. (IV) OF SUB-S. (4) WHICH FULFILS ALL THE FOLLOWING CONDITIONS, NAMELY: (I) IT IS NOT FORMED BY SPLITTING UP, OR THE RECONS TRUCTION, OF A BUSINESS ALREADY IN EXISTENCE : PROVIDED THAT THIS CONDITION SHALL NOT APPLY IN RES PECT OF AN UNDERTAKING WHICH IS FORMED AS A RESULT- OF THE RE-ESTABLISHMEN T, RECONSTRUCTION OR REVIVAL BY THE ASSESSEE OF THE BUSINESS OF ANY SUCH UNDERTA KING AS IS REFERRED TO IN S.33B, IN THE CIRCUMSTANCES AND WITHIN THE PERIOD SPECIFIED IN THAT SECTION; (II) IT IS NOT FORMED BY THE TRANSFER TO A NEW BUSI NESS OF MACHINERY OR PLANT PREVIOUSLY USED FOR ANY PURPOSE : PROVIDED THAT NOTHING CONTAINED IN THIS SUB-SECTION SHALL APPLY IN THE CASE OF TRANSFER, EITHER IN WHOLE OR IN PART, OF MACHINERY OR PLANT PREVIOUSLY USED BY A ITA NO.996/AHD/ 2015 DCIT VS. M/S.GOPAL GLASS WORKS LTD. ASST.YEAR 2011-12 - 8 - STATE ELECTRICITY BOARD REFERRED TO IN CL. (7) OF S . 2 OF THE ELECTRICITY ACT, 2003 (36 OF 2003), WHETHER OR NOT SUCH TRANSFER IS IN PU RSUANCE OF THE SPLITTING UP OR RECONSTRUCTION OR REORGANIZATION OF THE BOARD UNDER PART XIII OF THAT ACT, EXPLANATION .............. EXPLANATION 2. (4) THIS SECTION APPLIES TO (I) ANY ENTERPRISE CARRYING ON THE BUSINESS OF (I) DEVELOPING OR (II) OPERATING AND MAINTAINING OR (HI) DEVELOPING, OPERATING AND M AINTAINING ANY INFRASTRUCTURE FACILITY WHICH FULFILS ALL THE FOLLO WING CONDITIONS, NAMELY: (A) IT IS OWNED BY A COMPANY REGISTERED IN INDIA OR BY A CONSORTIUM OF SUCH COMPANIES OR BY AN AUTHORITY OR A BOARD OR A CORPOR ATION OR ANY OTHER BODY ESTABLISHED OR CONSTITUTED UNDER ANY CENTRAL OR STA TE ACT; (B)IT HAS ENTERED INTO AN AGREEMENT WITH THE CENTRA L GOVERNMENT OR A STATE GOVERNMENT OR A LOCAL AUTHORITY OR ANY OTHER STATUT ORY BODY FOR (I) DEVELOPING OR (II) OPERATING AND MAINTAINING OR (HI) DEVELOPIN G, OPERATING AND MAINTAINING A NEW INFRASTRUCTURE FACILITY; (C)IT HAS STARTED OR STARTS OPERATING AND MAINTAINI NG THE INFRASTRUCTURE FACILITY ON OR AFTER THE 1ST DAY OF APRIL, 1995: PROVIDED THAT WHERE AN INFRASTRUCTURE FACILITY IS TRANSFERRED ON OR A FTER THE 1ST DAY OF APRIL, 1999 BY AN ENTERPRISE WHICH DEVELOPED SUCH INFRASTRUCTUR E FACILITY (HEREAFTER REFERRED TO IN THIS SECTION AS THE TRANSFEROR ENTER PRISE) TO ANOTHER ENTERPRISE (HEREAFTER IN THIS SECTION REFERRED TO AS THE TRANS FEREE ENTERPRISE) FOR THE PURPOSE OF OPERATING AND MAINTAINING THE INFRASTRUC TURE FACILITY ON ITS BEHALF IN ACCORDANCE WITH THE AGREEMENT WITH THE CENTRAL G OVERNMENT, STATE GOVERNMENT, LOCAL AUTHORITY OR STATUTORY BODY, THE PROVISIONS OF THIS SECTION SHALL APPLY TO THE TRANSFEREE ENTERPRISE AS IF IT W ERE THE ENTERPRISE TO WHICH THIS CLAUSE APPLIES AND THE DEDUCTION FROM PROFITS AND GAINS WOULD BE AVAILABLE TO SUCH TRANSFEREE ENTERPRISE FOR T HE UNEXPIRED PERIOD DURING WHICH THE TRANSFEROR ENTERPRISE WOULD HAVE BEEN ENT ITLED TO THE DEDUCTION, IF THE TRANSFER HAD NOT TAKEN PLACE. EXPLANATION.......... PROVIDED THAT IN A CASE WHERE AN UNDERTAKING DEVELO PS AN INDUSTRIAL PARK ON OR AFTER THE 1ST DAY OF APRIL, 1999 OR A SPECIAL EC ONOMIC ZONE ON OR AFTER THE 1ST DAY OF APRIL, 2001 AND TRANSFERS THE OPERATION AND MAINTENANCE OF SUCH INDUSTRIAL PARK OR SUCH SPECIAL ECONOMIC ZONE, AS T HE CASE MAY BE, TO ANOTHER UNDERTAKING (HEREAFTER IN THIS SECTION REFERRED TO AS THE TRANSFEREE ITA NO.996/AHD/ 2015 DCIT VS. M/S.GOPAL GLASS WORKS LTD. ASST.YEAR 2011-12 - 9 - UNDERTAKING), THE DEDUCTION UNDER SUB-S. (1) SHALL BE ALLOWED TO SUCH TRANSFEREE UNDERTAKING FOR THE REMAINING PERIOD IN THE TEN CONSECUTIVE ASSESSMENT YEARS AS IF THE OPERATION AND MAINTENANC E WERE NOT SO TRANSFERRED TO THE TRANSFEREE UNDERTAKING: PROVIDED FURTHER THAT IN THE CASE OF ANY UNDERTAKIN G WHICH DEVELOPS, DEVELOPS AND OPERATES OR MAINTAINS AND OPERATES AN INDUSTRIA L PARK, THE PROVISIONS OF THIS CLAUSE SHALL HAVE EFFECT AS IF FOR THE FIGURES , LETTERS AND WORDS 31ST DAY OF MARCH, 2006', THE FIGURES, LETTERS AND WORDS '31ST DAY OF MARCH, (2011)' HAD BEEN SUBSTITUTED; (IV) AN UNDERTAKING WHICH, (A)IS SET UP IN ANY PART OF INDIA FOR THE GENERATIO N OR GENERATION AND DISTRIBUTION OF POWER IF IT BEGINS TO GENERATE POWE R AT ANY TIME DURING THE PERIOD BEGINNING ON THE 1ST DAY OF APRIL, 1993 AND ENDING ON THE 31ST DAY OF MARCH, 2011; (B)STARTS TRANSMISSION OR DISTRIBUTION BY LAYING A NETWORK OF NEW TRANSMISSION OR DISTRIBUTION LINES AT ANY TIME DURING THE PERIOD BEGINNING ON THE 1ST DAY OF APRIL, 1999 AND ENDING ON THE 31ST DAY OF MARCH, 20 11 : PROVIDED THAT THE DEDUCTION UNDER THIS SECTION TO A N UNDERTAKING UNDER SUB-CL. (B) SHALL BE ALLOWED ONLY IN RELATION TO THE PROFIT S DERIVED FROM LAYING OF SUCH NETWORK OF NEW LINES FOR TRANSMISSION OR DISTRIBUTI ON; (C)UNDERTAKES SUBSTANTIAL RENOVATION AND MODERNIZAT ION OF THE EXISTING NETWORK OF TRANSMISSION OR DISTRIBUTION LINES AT AN Y TIME DURING THE PERIOD BEGINNING ON THE 1ST DAY OF APRIL, 2004 AND ENDING ON THE 31ST DAY OF MARCH, 2011. EXPLANATION ............. (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-S. (1) APPLY SHALL, FOR THE PURPOSES OF DETERMINING THE QU ANTUM OF DEDUCTION UNDER THAT SUB-SECTION FOR THE ASSESSMENT YEAR IMMEDIATEL Y 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 YE AR AND TO EVERY SUBSEQUENT ASSESSMENT YEAR UPTO AND INCLUDING THE ASSESSMENT Y EAR FOR WHICH THE DETERMINATION IS TO BE MADE.' IN NUTSHELL, IN COMPUTING THE TOTAL INCOME OF THE A SSESSEE, DERIVED FROM PROFITS AND GAINS FROM AN ELIGIBLE BUSINESS, WHICH ARE DETA ILED IN SUB-S. (4) OF SECTION 80IA, 100 PER CENT DEDUCTION IS ALLOWED FOR TEN CON SECUTIVE ASSESSMENT YEARS. SUB-S. (2) OF S. 80-IA GIVES OPTION TO THE ASSESSEE TO CHOOSE THE 10 CONSECUTIVE ITA NO.996/AHD/ 2015 DCIT VS. M/S.GOPAL GLASS WORKS LTD. ASST.YEAR 2011-12 - 10 - ASSESSMENT YEARS OUT OF 15 YEARS BEGINNING FROM THE YEAR IN WHICH THE UNDERTAKING OR THE ENTERPRISE DEVELOPS AND BEGINS T O OPERATE ANY INFRASTRUCTURE FACILITY OR STARTS PROVIDING 1 TELECOMMUNICATION SERVICE OR .DEVELOPS AN INDUSTRIAL PARKS..... ETC. BY WAY OF A PROVISO, THIS FIFTEEN YEARS HAS BEEN EXTENDED TO 20 YEARS IN RESPECT OF CERTAIN BUSINESS. LIKEWISE SUB-S. (2A) RESTRICTS THIS DEDUCTION IN RESPECT OF UNDERTA KINGS PROVIDING TELECOMMUNICATION SERVICES. SEC. 80-IA(3) IMPOSES C ERTAIN RESTRICTIONS WHERE- UNDER, THIS DEDUCTION IS NOT ALLOWED TO UNDERTAKING S IF IT IS FORMED BY SPLITTING UP OR RECONSTRUCTION OF AN ALREADY EXISTING BUSINES S BUT RECONSTRUCTION, RE- ESTABLISHMENT OR REVIVAL OF THE BUSINESS SUBJECT TO S. 33B HAVE BEEN EXCLUDED, ETC., ETC. WITH WHICH WE ARE NOT CONCERNED FOR DECI DING THE PRESENT APPEAL. BUT WE ARE CONCERNED MAINLY WITH S. 80-IA(5). SUB-S ECTION (5.) OF S. 80-1A QUALIFIES DEDUCTION OF SUB-S. (1) OF S. 80A WITH AN ON OBSTANTE CLAUSE AND OVERRIDES EVERY OTHER PROVISION IN THIS ACT PROVIDI NG MECHANISM BY WAY OF ASSUMPTION THAT FOR DETERMINING THE QUANTUM OF DEDU CTION FOR THE ASSESSMENT YEAR IMMEDIATELY SUCCEEDING THE INITIAL ASSESSMENT YEAR OR ANY SUBSEQUENT ASSESSMENT YEAR, IT WOULD BE DEEMED AS IF SUCH ELIG IBLE BUSINESS WERE THE ONLY SOURCE OF INCOME OF THE ASSESSEE DURING THE PREVIOU S YEAR RELEVANT TO THE INITIAL ASSESSMENT YEAR AND TO EVERY ASSESSMENT YEA R UPTO AND INCLUDING THE ASSESSMENT YEAR FOR WHICH THE DETERMINATION IS TO B E MADE. THE ABOVE PROVISIONS ARE VERY CLEAR, PLAIN AND DIR ECT IN MEANING. BUT ONLY DIFFICULTY IS CAST BY THE TERM 'INITIAL YEAR' WHICH HAS NOWHERE BEEN DEFINED IN THE ACT, YET BY SUB-SECTION (2) IT IS OBVIOUS TH AT IT IS REFERRING TO THE OPTION VESTED IN THE ASSESSEE TO CHOOSE ANY 10 YEARS OUT O F 15 OR 20 YEARS, PERIOD PROVIDED, AS THE CASE MAY BE. THE YEAR FROM WHICH O PTION HAS BEEN EXERCISED IS TO BE TREATED AS THE INITIAL ASSESSMENT YEAR, BU T AFTER THAT THE 10 YEARS HAVE IN CONTINUITY. HENCE, SUB-SECTION (5) OF S. 80-IA W OULD COME INTO OPERATION ONLY FROM THE YEAR IN WHICH THE APPELLANT STARTED C LAIMING DEDUCTION UNDER SECTION 80-IA I.E., FROM THE INITIAL YEAR AND THE D EPRECIATION RELATING TO THE YEARS PRIOR TO THE INITIAL ASSESSMENT YEAR CANNOT B E BROUGHT BACK NATIONALLY TO BE ADJUSTED AGAINST THE INCOME OF THE INITIAL OR SU BSEQUENT ASSESSMENT YEARS. THE FACTS OF THE CASE ARE SQUARELY COVERED BY THE D ECISION OF THE MADRAS HIGH COURT IN VE/AYUDHASWAMY (SUPRA)AND THE SPECIAL BENCH DECISION OF GOLDMINE (SUPRA) RELIED BY AO HAS BEEN TAKEN INTO ACCOUNT BY THE MADRAS HIGH COURT. THE QUESTIONS RAISED IN TAX APPE AL NO.909 OF 2009 AND 940 OF 2009 BEFORE THE MADRAS HIGH COURT WERE AS UN DER: ITA NO.996/AHD/ 2015 DCIT VS. M/S.GOPAL GLASS WORKS LTD. ASST.YEAR 2011-12 - 11 - '(A)WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL IS RIGHT IN LAW IN HOLDING THAT THE APPELLANT IS NOT E NTITLED TO CLAIM DEDUCTION UNDER SECTION 80-1A ? (B)WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE TRIBUNAL IS RIGHT IN LAW IN HOLDING THAT INITIAL ASSESSMENT YEA R IN SECTION 80-1 A(5) WOULD ONLY MEAN THE YEAR OF COMMENCEMENT AND NOT THE YEAR OF CLAIM (C)WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL IS RIGHT IN LAW IN SAYING THAT UNABSORBED DEPRECIATION OF EARLIER YEARS BEFORE THE FIRST YEAR OF CLAIM, WHICH HAS ALREADY BEEN ABSORBE D, COULD BE NATIONALLY CARRIED FORWARD AND TAKEN INTO CONSIDERATION FOR CO MPUTATION OF DEDUCTION UNDER SECTION 80-1A ? (D)WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE TRIBUNAL IS RIGHT IN LAW IN FOLLOWING THE DECISION OF THE SPECI AL BENCH IN THE CASE OF GOLDMINE SHARES .._.._. AND FINANCE (P) LTD. [2008 ] 302 ITR (AT) 208 (AHD.) WHEN ADMITTEDLY THE SAID DECISION WAS RENDER ED PRIOR TO THE AMENDMENT TO SECTION 80-1A BY THE FINANCE ACT, 1999 IT IS SEEN THAT AFTER CONSIDERING VARIOUS ARGUMENTS OF COUNSELS OF BOTH THE SIDES, THEIR LORDSHIP HAS HELD AS UNDER: 14. ................... IN THE PRESENT CASE, WE ARE CONCERNED WITH THE PROVISION OF SECTION 80-IA. THE SAID PROVISION WAS INTRODUCED BY THE FINANCE ACT, 1999, WITH EFFECT FROM APRIL ], 2000. THE PROVISIONS OF S ECTIONS 80-1 AND 80-IA ARE ALSO MORE OR LESS IDENTICALLY WORDED. SECTIONS 80-1 AND 80-IA COME IN CHAPTER VI-A OF THE INCOME-TAX ACT. CHAPTER VI-A DE ALS WITH DEDUCTIONS TO BE MADE IN COMPUTING TOTAL INCOME. THERE ARE TWO TAX I NCENTIVES CONTEMPLATED IN , CHAPTER VI-A. ONE IS INVESTMENT INCENTIVE AND THE OTHER ONE IS PROFIT-LINKED INVESTMENT. CHAPTER VI-A WAS INTRODUCED BY THE FINA NCE ACT, 1965, WITH EFFECT FROM APRIL 1, 1965, AND IT CONSISTS OF FOUR HEADINGS. THEY ARE A, B, C AND D. HEADING 'A' ;S GENERAL AND IT ALSO CONTAINS DEFINITION. IT CONSISTS OF SECTIONS 80A, 80AA, 80AB, 80AC AND 808. SECTION 80AB DEALS WITH ' DEDUCTIONS TO BE MADE WITH REFERENCE TO THE INCOME INCLUDED IN THE GROSS TOTAL INCOME', WHICH READS AS FOLLOWS: ITA NO.996/AHD/ 2015 DCIT VS. M/S.GOPAL GLASS WORKS LTD. ASST.YEAR 2011-12 - 12 - 'WHERE ANY DEDUCTION IS REQUIRED TO BE MADE OR ALLO WED UNDER ANY SECTION INCLUDED IN THIS CHAPTER UNDER THE HEADING 'C-DEDUC TIONS IN RESPECT OF CERTAIN INCOMES' IN RESPECT OF ANY INCOME OF THE NA TURE SPECIFIED IN THAT SECTION WHICH IS INCLUDED IN THE GROSS TOTAL INCOME OF THE ASSESSEE, THEN, NOTWITHSTANDING ANYTHING CONTAINED IN THAT SECTION, FOR THE PURPOSE OF COMPUTING THE DEDUCTION UNDER THAT SECTION, THE AMO UNT OF INCOME OF THAT NATURE AS COMPUTED IN ACCORDANCE WITH THE PROVISION S OF THIS ACT (BEFORE MAKING ANY DEDUCTION UNDER THIS CHAPTER) SHALL ALON E BE DEEMED TO BE THE AMOUNT OF INCOME OF THAT NATURE WHICH IS DERIVED OR RECEIVED BY THE ASSESSEE AND WHICH IS INCLUDED IN HIS GROSS TOTAL INCOME.' 15. A MERE READING OF THE ABOVE PROVISION MAKES IT CLEAR THAT ANY INCOME OF THE NATURE SPECIFIED IN THAT SECTION, WHICH IS INCL UDED IN THE GROSS TOTAL INCOME OF THE ASSESSEE FOR THE PURPOSE OF COMPUTING THE DE DUCTION UNDER THAT SECTION, THE AMOUNT OF INCOME OF THAT NATURE AS COMPUTED IN ACCORDANCE WITH THE PROVISION OF THIS ACT SHALL ALONE BE DEEMED TO BE T HE AMOUNT OF INCOME OF THAT NATURE WHICH IS DERIVED OR RECEIVED BY THE ASSESSEE AND WHICH IS INCLUDED IN THE GROSS TOTAL INCOME. SECTION 80AB DEFINES 'GROSS TOTAL INCOME' WHICH MEANS THE TOTAL INCOME HAS TO BE COMPUTED IN ACCORD ANCE WITH THE ACT BEFORE MAKING DEDUCTION UNDER THIS CHAPTER. HEADING 'B' DE ALS WITH 'DEDUCTIONS IN RESPECT OF CERTAIN PAYMENTS' WHICH CONSISTS OF SECT IONS 80C TO 80GGC. HEADING 'C' DEALS WITH 'DEDUCTIONS IN RESPECT OF CE RTAIN INCOMES', WHICH CONSISTS OF SECTIONS 80H TO 8017. THE LAST HEADING 'D' DEALS WITH 'OTHER DEDUCTIONS' WHICH CONSISTS OF SECTIONS 80U TO 80V. HEADING 'C' IS RELEVANT FOR CONSIDERING THE ISSUE IN THESE APPEALS. THE REL EVANT PROVISIONS THAT ARE TO BE CONSIDERED ARE SECTIONS 80-1, 80-1A AND 80-IB. I N THE CASE , OF LIBERTY INDIA V. C IT [2009] 317 ITR 218 (SC) ; [2009] 225 CTR (SC) 233; [2009] 28 DTR (SC) 73, THE APEX COURT CONSIDERED THE SCOPE OF SECTIONS 80-1, 80-IA AND ALSO SECTION 80-IB OF THE ACT, WHEREIN, IT HAS BEEN HELD THAT CHAPTER VI-A PROVIDES FOR INCENTIVES IN THE FORM OF TAX DEDUCTIO NS ESSENTIALLY BELONG TO THE CATEGORY OF 'PROFIT-LINKED INCENTIVES'. THEREFORE, WHEN SECTION 80-IA/80-IB REFERS TO PROFITS DERIVED FROM ELIGIBLE BUSINESS, I T IS NOT THE OWNERSHIP OF THAT BUSINESS WHICH ATTRACTS THE INCENTIVES. FURTHER, IT HAS BEEN HELD THAT SECTIONS 80-IB/80-IA ARE THE CODE BY THEMSELVES AS THEY CONT AIN BOTH SUBSTANTIVE AS WELL AS PROCEDURAL PROVISIONS. THE SUPREME COURT FU RTHER OBSERVED IN THE SAID JUDGMENT THAT SUB-SECTION (5) OF SECTION 80-IA PROVIDES FOR MANNER OF COMPUTATION OF PROFITS OF AN ELIGIBLE BUSINESS. ACC ORDINGLY SUCH PROFITS ARE TO BE COMPUTED AS IF SUCH ELIGIBLE BUSINESS IS THE ONL Y SOURCE OF INCOME OF THE ASSESSEE. - ITA NO.996/AHD/ 2015 DCIT VS. M/S.GOPAL GLASS WORKS LTD. ASST.YEAR 2011-12 - 13 - 16. SECTION 80-IA READS AS FOLLOWS : '80-IA. (1) WHERE THE GROSS TOTAL INCOME OF AN ASSE SSEE INCLUDES ANY PROFITS AND GAINS DERIVED BY AN UNDERTAKING OR AN ENTERPRIS E FROM ANY BUSINESS REFERRED TO IN SUBSECTION (4) (SUCH BUSINESS BEING HEREINAFTER REFERRED TO AS THE ELIGIBLE BUSINESS) THERE SHALL, IN ACCORDANCE W ITH AND SUBJECT TO THE PROVISIONS OF THIS SECTION, BE ALLOWED IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE, A DEDUCTION OF AN AMOUNT EQUAL TO HUNDRED PER CENT, OF THE PROFITS AND GAINS DERIVED FROM SUCH BUSINESS FOR TEN CONSEC UTIVE ASSESSMENT YEARS. (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 YEARS BEGINNING FROM THE YEAR IN WHICH THE UNDERTAKING OR THE ENTERPRISE DEVELOPS AND BEGINS TO OPERATE ANY INFRA STRUCTURE FACILITY OR STARTS PROVIDING TELECOMMUNICATION SERVICE OR DEVELOPS AN INDUSTRIAL PARK OR DEVELOPS A SPECIAL ECONOMIC ZONE REFERRED TO IN CLA USE (HI) OF SUB-SECTION (4) OR GENERATES POWER OR COMMENCES TRANSMISSION OR DIS TRIBUTION OR POWER OR UNDERTAKES SUBSTANTIAL RENOVATION AND MODERNIZATION OF THE EXISTING TRANSMISSION OR DISTRIBUTION LINES. (4) THIS SECTION APPLIES TO- (I) ANY ENTERPRISE CARRYING ON THE BUSINESS OF (I) DEVELOPING, OR (II) OPERATING AND MAINTAINING, OR (HI) DEVELOPING, OPERATING AND MAINTAINING ANY INFRASTRUCTURE FACILITY WHICH FULFILS ALL THE FOLLO WING CONDITIONS, NAMELY :- (A) IT IS OWNED BY A COMPANY REGISTERED IN INDIA OR BY A CONSORTIUM OF SUCH COMPANIES (OR BY AN AUTHORITY OR A BOARD OR A CORPO RATION OR ANY OTHER BODY ESTABLISHED OR CONSTITUTED UNDER ANY CENTRAL OR STA TE ACT); (B)IT HAS ENTERED INTO AN AGREEMENT WITH THE CENTRA L GOVERNMENT OR A STATE GOVERNMENT OR A LOCAL AUTHORITY OR ANY OTHER STATUT ORY BODY FOR (I) DEVELOPING, OR (II) OPERATING AND MAINTAINING, OR ( HI)DEVELOPING, OPERATING AND MAINTAINING A NEW INFRASTRUCTURE FACILITY; (C)IT HAS STARTED OR STARTS OPERATING AND MAINTAINI NG THE INFRASTRUCTURE FACILITY ON OR AFTER THE 1ST APRIL, 1995. (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 TH E QUANTUM OF DEDUCTION UNDER THAT SUB-SECTION FOR THE ASSESSMENT YEAR IMME DIATELY SUCCEEDING THE INITIAL ASSESSMENT YEAR OR ANY SUBSEQUENT ASSESSMEN T YEAR, BE COMPUTED AS IF SUCH ELIGIBLE BUSINESS WERE THE ONLY SOURCE OF INCO ME OF THE ASSESSEE DURING ITA NO.996/AHD/ 2015 DCIT VS. M/S.GOPAL GLASS WORKS LTD. ASST.YEAR 2011-12 - 14 - THE PREVIOUS YEAR RELEVANT TO THE INITIAL ASSESSMEN T YEAR AND TO EVERY SUBSEQUENT ASSESSMENT YEAR UP TO AND INCLUDING THE ASSESSMENT YEAR FOR WHICH THE DETERMINATION IS TO BE MADE.' 17. FROM A READING OF SUB-SECTION (1), 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 BUSINES S REFERRED TO IN SUB- SECTION (4), I.E., REFERRED TO AS THE ELIGIBLE BUSI NESS, THERE SHALL, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THE SECTION, BE ALLOWED, IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE, A DEDUCTION OF AN AMO UNT EQUAL TO 100 PER CENT, OF THE PROFITS AND GAINS DERIVED FROM SUCH BUSINESS FOR TEN CONSECUTIVE ASSESSMENT YEARS. DEDUCTION IS GIVEN TO ELIGIBLE BU SINESS AND THE SAME IS DEFINED IN SUB-SECTION (4). SUBSECTION (2) PROVIDES OPTION TO THE ASSESSEE TO CHOOSE 10 CONSECUTIVE ASSESSMENT YEARS OUT OF 15 YE ARS. OPTION HAS TO BE EXERCISED, IF IT IS NOT EXERCISED, THE ASSESSEE WIL L NOT BE GETTING THE BENEFIT. FIFTEEN YEARS IS OUTER LIMIT AND THE SAME IS BEGINN ING FROM THE YEAR IN WHICH THE UNDERTAKING OR THE ENTERPRISE DEVELOPS AND BEGI NS TO OPERATE ANY INFRASTRUCTURE ACTIVITY, ETC. SUB-SECTION (5) DEALS WITH QUANTUM OF DEDUCTION FOR AN ELIGIBLE BUSINESS. THE WORDS 'INITIAL ASSESS MENT YEAR' ARE USED IN SUB- SECTION (5) AND THE SAME IS NOT DEFINED UNDER THE P ROVISIONS. IT IS TO BE NOTED THAT 'INITIAL ASSESSMENT YEAR' EMPLOYED IN SUB-SECT ION (5) IS DIFFERENT FROM THE WORDS 'BEGINNING FROM THE YEAR' REFERRED TO IN SUB- SECTION (2). THE IMPORTANT FACTORS ARE TO BE NOTED IN SUB-SECTION (5) AND THEY ARE AS UNDER: '(L)LT STARTS WITH A NON OBSTANTE CLAUSE WHICH MEAN S IT OVERRIDES ALL THE PROVISIONS OF THE ACT AND OTHER PROVISIONS ARE TO B E IGNORED; (2)LT IS FOR THE PURPOSE OF DETERMINING THE QUANTUM OF DEDUCTION; (3)FOR THE ASSESSMENT YEAR IMMEDIATELY SUCCEEDING T HE INITIAL ASSESSMENT YEAR; (4)LT IS A DEEMING PROVISION ; : (5)FICTION CREATED THAT THE ELIGIBLE BUSINESS IS TH E ONLY SOURCE OF INCOME ; AND ; ; (6)DURING THE PREVIOUS YEAR RELEVANT TO THE INITI AL ASSESSMENT YEAR AND EVERY SUBSEQUENT ASSESSMENT YEAR.' 18. FROM A READING OF THE ABOVE, IT IS DEAR THAT TH E ELIGIBLE BUSINESS WERE THE ONLY SOURCE OF INCOME, DURING THE PREVIOUS YEAR REL EVANT TO THE INITIAL ASSESSMENT YEAR AND EVERY SUBSEQUENT ASSESSMENT YEA RS. 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 ITA NO.996/AHD/ 2015 DCIT VS. M/S.GOPAL GLASS WORKS LTD. ASST.YEAR 2011-12 - 15 - YEARS WHICH WERE ALREADY SET OFF AGAINST THE INCOME OF THE ASSESSEE. LOOKING FORWARD TO A PERIOD OF TEN YEARS FROM THE INITIAL A SSESSMENT IS CONTEMPLATED. IT DOES NOT ALLOW THE REVENUE TO LOOK BACKWARD AND FIN D OUT IF THERE IS ANY LOSS OF EARLIER YEARS AND BRING FORWARD NATIONALLY EVEN THOUGH THE SAME WERE SET OFF AGAINST OTHER INCOME OF THE ASSESSEE AND THE SE T OFF AGAINST THE CURRENT INCOME OF THE ELIGIBLE BUSINESS. ONCE THE SET OFF I S TAKEN PLACE IN EARLIER YEAR AGAINST THE OTHER INCOME OF THE ASSESSEE, THE REVEN UE CANNOT REWORK THE SET OFF AMOUNT AND BRING IT NATIONALLY. A FICTION CREAT ED IN SUB-SECTION DOES NOT CONTEMPLATES TO BRING SET OFF AMOUNT NATIONALLY. TH E FICTION IS CREATED ONLY FOR THE LIMITED PURPOSE AND THE SAME CANNOT BE EXTENDED BEYOND THE PURPOSE FOR WHICH IT IS CREATED. 19. 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 ASS ESSEE EXERCISED THE OPTION UNDER SECTION 80-1 A(2). IN TAX CASE NOS. 909 OF 20 09 AS WELL AS 940 OF 2009, THE ASSESSMENT YEAR WAS 2005-06 AND IN TAX CASE NO. 9/8 OF 2008 THE ASSESSMENT YEAR WAS 2004-05. DURING THE RELEVANT PE RIOD, THERE WERE NO UNABSORBED DEPRECIATION OR LOSS OF THE ELIGIBLE UND ERTAKINGS AND THE SAME WERE ALREADY ABSORBED IN THE EARLIER YEARS. THERE I S A POSITIVE PROFIT DURING THE YEAR. THE UNREPORTED JUDGMENT OF THIS COURT CIT ED SUPRA CONSIDERED THE SCOPE OF SUB-SECTION (6) OF SECTION 80-1, WHICH IS THE CORRESPONDING PROVISION OF SUB-SECTION (5) OF SECTION 80-IA. BOTH ARE SIMIL ARLY WORDED AND, THEREFORE, WE AGREE ENTIRELY WITH THE DIVISION BENCH JUDGMENT OF THIS COURT CITED SUPRA. IN THE CASE OF CIT V. MEWAR OIL AND GENERAL MILLS L TD. (NO. 1) [2004] 271 ITR 311 (RAJ) ; [2004] 186 CTR (RAJ) 141, THE RAJAS THAN HIGH COURT ALSO CONSIDERED THE SCOPE OF SECTION 80-1 AND HELD AS FO LLOWS (PAGE 314 OF 271 ITR) : 'HAVING CONSIDERED THE RIVAL CONTENTIONS WHICH FOLL OW ON THE LINE NOTICED ABOVE, WE ARE OF THE OPINION THAT ON FINDIN G THE FACT THAT THERE WAS NO CARRY FORWARD LOSSES OF 1983-84, WHICH COULD BE SET OFF AGAINST THE INCOME OF THE CURRENT ASSESSMENT YEAR 1984-85, THE RECOMPUTATION OF INCOME FROM THE NEW INDUSTRIAL UNDERTAKING BY SE TTING OFF THE CARRY FORWARD OF UNABSORBED DEPRECIATION OR DEPRECIATION ALLOWANCE FROM PREVIOUS YEAR DID NOT SIMPLY ARISE AND ON THE FINDI NG OF FACT NOTICED BY THE COMMISSIONER OF INCOME-TAX (APPEALS), 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 T HE RECORD WHICH COULD BE RECTIFIED. THAT QUESTION WOULD HAVE BEEN G ERMANE ONLY IF ITA NO.996/AHD/ 2015 DCIT VS. M/S.GOPAL GLASS WORKS LTD. ASST.YEAR 2011-12 - 16 - THERE WOULD HAVE BEEN CARRY FORWARD OF UNABSORBED D EPRECIATION AND UNABSORBED DEVELOPMENT REBATE OR ANY OTHER UNABSORB ED LOSSES OF THE PREVIOUS YEAR ARISING OUT OF THE PRIORITY INDUSTRY AND WHETHER IT WAS REQUIRED TO BE SET OFF AGAINST THE INCOME OF THE CU RRENT 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 SHO ULD BE REOPENED AGAIN FOR COMPUTATION OF CURRENT INCOME UNDER SECTI ON 80-1 FOR THE PURPOSE OF COMPUTING ADMISSIBLE DEDUCTIONS THEREUND ER. IN VIEW THEREOF, WE ARE OF THE OPINION THAT THE TRI BUNAL HAS NOT ERRED IN HOLDING THAT THERE WAS NO RECTIFICATION POSSIBLE UNDER SECTION 80-1 IN THE PRESENT CASE, ALBEIT, FOR REASONS SOMEWHAT D IFFERENT FROM THOSE WHICH PREVAILED WITH THE TRIBUNAL. THERE BEING NO C ARRY FORWARD OF ALLOWABLE DEDUCTIONS UNDER THE HEAD DEPRECIATION OR DEVELOPMENT REBATE WHICH NEEDED TO BE ABSORBED AGAINST THE INCO ME OF THE CURRENT YEAR AND, THEREFORE, RECOMPUTATION OF INCOME FOR TH E PURPOSE OF COMPUTING PERMISSIBLE DEDUCTION UNDER SECTION 80-1 FOR THE NEW INDUSTRIAL UNDERTAKING WAS NOT REQUIRED IN THE PRES ENT CASE. ACCORDINGLY, THIS APPEAL FAILS AND IS HEREBY DISMIS SED WITH NO ORDER AS TO COSTS.' 20. FROM A READING OF THE ABOVE, THE RAJASTHAN HIGH COURT HELD THAT IT IS NOT AT ALL REQUIRED THAT LOSSES OR OTHER DEDUCTIONS WHI CH HAVE ALREADY BEEN SET OFF AGAINST THE INCOME OF THE PREVIOUS YEAR SHOULD BE R EOPENED AGAIN FOR COMPUTATION OF CURRENT INCOME UNDER SECTION 80-1 FO R THE PURPOSE OF COMPUTING ADMISSIBLE DEDUCTIONS THEREUNDER. WE ALSO AGREE WITH THE SAME. WE SEE NO REASON TO TAKE A DIFFERENT VIEW. 21. THE STANDING COUNSEL APPEARING FOR THE REVENUE IS UNABLE TO BRING TO OUR NOTICE ANY RELEVANT MATERIAL OR ANY COMPELLING REAS ON OR ANY CONTRA JUDGMENT OF OTHER COURTS TO FAKE A DIFFERENT VIEW. HE ONLY RELIED HEAVILY ON THE MEMORANDUM EXPLAINING THE PROVISIONS IN THE FIN ANCE (NO. ; : 2) BILL, 1980, 11980] 123 ITR (ST.) 154 TO SUPPORT THI S CASE AND THE SAME READS AS FOLLOWS ; 'CLAUSE 30(III). IN COMPUTING THE QUANTUM OF 'TAX H OLIDAY' PROFITS IN ALL CASES, TAXABLE INCOME DERIVED FROM THE NEW INDUSTRI AL UNITS, ETC., WILL BE DETERMINED AS IF SUCH UNITS WERE AN INDEPENDENT UNIT OWNED BY A TAXPAYER WHO DOES NOT HAVE ANY OTHER SOURCE OF INCO ME. IN THE RESULT, ITA NO.996/AHD/ 2015 DCIT VS. M/S.GOPAL GLASS WORKS LTD. ASST.YEAR 2011-12 - 17 - THE LOSSES, DEPRECIATION AND INVESTMENT ALLOWANCE O F EARLIER YEARS IN RESPECT OF THE NEW INDUSTRIAL UNDERTAKING, SHIP OR APPROVED HOTEL WILL BE TAKEN INTO ACCOUNT IN DETERMINING THE QUANTUM OF DEDUCTION ADMISSIBLE UNDER THE NEW SECTION 80-1 EVEN THOUGH T HEY MAY HAVE BEEN SET OFF AGAINST THE PROFITS OF THE TAXPAYER FR OM OTHER SOURCES.' 22. WE ARE NOT AGREEING WITH THE COUNSEL FOR THE RE VENUE. WE ARE, THEREFORE, OF THE VIEW THAT LOSS IN THE YEAR EARLIER TO THE IN ITIAL ASSESSMENT YEAR ALREADY ABSORBED AGAINST THE PROFIT OF OTHER BUSINESS CANNO T BE NATIONALLY BROUGHT FORWARD AND SET OFF AGAINST THE PROFITS OF THE ELIG IBLE BUSINESS AS NO SUCH MANDATE IS PROVIDED IN SECTION 80-IA(5). 23. UNDER THESE CIRCUMSTANCES, WE SET ASIDE THE ORD ER OF THE TRIBUNAL AND ANSWER ALL THE QUESTIONS IN FAVOUR OF THE APPELLANT /ASSESSEE AND AGAINST THE REVENUE IN TAX CASE NOS. 909 AND 940 OF 2009 RESPEC TIVELY. ACCORDINGLY, TAX CASES ARE ALLOWED.' HAVING REGARD TO ABOVE DISCUSSION AND RESPECTFULLY FOLLOWING THE DECISION OF MADRAS HIGH COURT IN THE CASE OF VELAYUDHASWAMY (SU PRA), I HEREBY ALLOW THE CLAIM OF THE APPELLANT U/S 80IA(4)(IV) OF THE A CT AND ADDITION AS MADE BY THE AO IS DIRECTED TO BE DELETED. THESE GROUNDS OF APPEAL ARE ACCORDINGLY ALLOWED. 7. A PERUSAL OF THE ABOVE FINDING WOULD INDICATE T HAT IT IS BASED PRIMARILY ON THE DECISION OF THE HONBLE MADRAS HIGH COURT AN D THAT DECISION HAS BEEN UPHELD BY THE HONBLE SUPREME COURT ALSO. AS FAR A S SELECTION OF INITIAL YEAR IS CONCERNED, THE BOARD HAS ALREADY CLARIFIED THIS ISSUE IN CIRCULAR NO.1/2016. THIS DISCRETION IS WITH THE ASSESSEE TO SELECT ANY INITIAL YEAR. THE APPROACH OF THE AO TO CONSTRUE THAT INITIAL YEAR OUGHT TO BE SE LECTED FROM THE YEAR OF MANUFACTURING, WAS NOT APPROVED BY THE BOARD. CONS IDERING ALL THESE ASPECTS, WE DO NOT SEE ANY REASON TO INTERFERE IN THE ORDER OF THE LD.CIT(A). ACCORDINGLY, THE APPEAL OF THE REVENUE IS DISMISSED . 7. THE CBDT CIRCULAR GIVES LIBERTY TO THE ASSESSEE IN THE MATTER OF CHOICE OF INITIAL ASSESSMENT YEAR. IN CONSONANCE WITH THE BENEFICIAL VIEW UNEQUIVOCALLY EXPRESSED BY THE CBDT AS WELL A S THE DECISION OF ITA NO.996/AHD/ 2015 DCIT VS. M/S.GOPAL GLASS WORKS LTD. ASST.YEAR 2011-12 - 18 - THE COORDINATE BENCH, WE FIND THE CIT(A) WAS CORRE CT IN HOLDING THAT PROVISIONS OF SECTION 80IA(5) WOULD APPLY ONLY FOR ASSESSMENT YEARS IMMEDIATELY SUCCEEDING THE INITIAL ASSESSMENT YEARS SO OPTED BY THE ASSESSEE. HENCE, WE DO NOT FIND MERIT IN THE APPE AL OF THE REVENUE. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. THIS ORDER PRONOUNCED IN OPEN COURT ON 20 / 12 /2017 SD/- SD/- () ( ) (RAJPAL YADAV) ( PRADIP KUMAR KEDIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 20/ 12 /2017 3..),.)../ T.C. NAIR, SR. PS !'#$%$' / COPY OF THE ORDER FORWARDED TO : 1. #% / THE APPELLANT 2. &#% / THE RESPONDENT. 3. 456+ 7+ / CONCERNED CIT 4. 7+ ( ) / THE CIT(A)-2, AHMEDABAD 5. 89:+)56 , 56/ , 4 / DR, ITAT, AHMEDABAD 6. :<* / GUARD FILE. / BY ORDER, &8++ //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION ..18.12.17(DICTATION-PAD 7- PAG ES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 18.12.17 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.21.12.17 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 21.12.17 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER