KIRLOSKAR INDUSTRIES LTD,,PUNE vs. PR. COMMISSIONER OF INCOME-TAX -6,, PUNE

The assessee raised two grounds challenging the action of Pr. Commissioner of Income Tax u/s. 263 of the Act in setting aside the order of Assessing Officer passed u/s. 143(3) of the Act ignoring the assessment proceedings conducted in detail in relating to the issue in hand in the facts and circumstances of the case.

Heard both parties and perused the materials available on record. The assessee is a company and engaged in the business of generation of power from non-conventional resources. The assessee filed return of income declaring a total income of Rs.19,18,73,400/-. Notices u/s. 143(2) and 142(1) of the Act were issued. In response to which the authorized representative on behalf of assessee attended from time to time and produced supporting/details called for in scrutiny assessment proceedings. The Assessing Officer made disallowances on account of legal expenses, expenses relating to exempt income u/s. 14A of the Act and security and garden. Thus, the Assessing Officer assessed total income of the assessee at Rs.23,01,97,210/-vide this order dated 18-03-2016 passed u/s. 143(3) of the Act.

The Pr. CIT on verification of assessment record was of the opinion that the Assessing Officer disallowed the deduction u/s. 80IA of the Act for the earlier assessment year as well as subsequent assessment year for non-availability of profit. The same was confirmed by the CIT(A). According to him it is a recurring issue and the Assessing Officer without proper verification and application of mind allowed claimed u/s. 80IA of the Act for the year under consideration. The Pr. CIT show caused the

It was explained, the assessee started claiming deduction u/s. 80IA of the Act from assessment year 2009-10 being initial year and the year under consideration is the fifth year of the claim. The losses prior to the initial assessment year (A.Y. 2009-10) were set off against the other business income of assessee and placed reliance on the decision of Hon’ble High Court of Bombay in the case of CIT Vs. Hercules Hoists Ltd. in Income Tax Appeal No. 707 of 2014 vide order dated 14-06-2017. Further, contended that the Assessing Officer has taken one of the two views permissible under law which cannot be treated as erroneous order and prejudicial to the interest of Revenue and such view of Assessing Officer was now settled in favour of the assessee by the decision of Hon’ble High Court of Bombay in the case of Hercules Hoists Ltd. (supra). The Pr. CIT found the submissions of the assessee not acceptable and proceeded to set aside the order of Assessing Officer by holding it is erroneous and prejudicial to the interest of Revenue for the reasons stated hereunder. i. As per section 80IA(5) of the Act neither the income nor the losses of eligible business can be set off or carry forward against any other source of business. ii. Granting of setting off of losses of eligible business against other income is tantamount to granting double benefit when eligible business incurs losses against other income and claiming deduction u/s. 80IA when eligible business incurs profit. iii. Disallowance of claim u/s. 80IA for earlier and subsequent years for non-availability of profit which was confirmed by the CIT(A).

Shri C.H. Naniwadekar, the ld. AR has placed reliance on the order of this Tribunal in the case of Kirloskar Oil Engines Limited in consolidated order dated 17-07-2019 and referred para 16 of the said order and submitted that this Tribunal consistently following the law laid down by the Hon’ble High Court of Madras on similar issues in assessee’s own case.

Smt. Nandita Kanchan, the ld. DR submits that the issue in hand is highly debatable issue and the Assessing Officer has not made any enquiries relating to claim u/s. 80IA of the Act. The idea of Pr. CIT in remanding the matter to the file of Assessing Officer only to examine the issue view of decisions referred by Pr. CIT in his impugned order. She further submitted that the Assessing Officer failed to examine the said issue, being original authority all the details has to be examined by the Assessing Officer. Pr. CIT is correct in treating the said assessment order is erroneous and prejudicial to the interest of Revenue and prayed to dismiss appeal of the assessee.

Considering the submissions of ld. AR and ld. DR and the decisions referred above, we find that the Hon’ble High Court of Bombay in the case

In this regard, we find that this Tribunal in assessee’s own case vide order dated 17-07-2019 for assessment year 2009-10 by placing reliance in the case of Hercules Hoist Ltd. (supra) of Hon’ble Bombay High Court held losses in the year earlier to initial assessment year already absorbed against the profit of other business cannot be notionally brought forward and set off against the profits of eligible business in the year under consideration. There is no dispute the Tribunal has been consistently following the law laid down by the Hon’ble High Court of Madras on similar issues relating to other assessees and the Hon’ble High Court of Bombay is being Jurisdictional High Court and the decision rendered therein are binding on us. Therefore respectfully following the decision of Hon’ble High Court of Bombay in the case of Hercules Hoist Ltd. (supra), we hold that the assessee is entitled to claim deduction u/s. 80IA of the Act for the year under consideration without deducting any losses that have been already absorbed in the earlier years to initial assessment year. Therefore, the

In the result, the appeal of assessee is allowed.