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Income Tax Appellate Tribunal, DELHI BENCH ‘C’ : NEW DELHI
Before: SHRI B.P. JAIN & SHRI KULDIP SINGH
PER KULDIP SINGH, JUDICIAL MEMBER : Appellant, Assistant Commissioner of Income-tax, Circle 46 (1), New Delhi (hereinafter referred to as ‘the Revenue’), by filing the present appeal sought to set aside the impugned order dated 24.08.2015 passed by the Commissioner of Income-tax (Appeals)- 16, New Delhi, for the Assessment Years 2011-12 on the grounds inter alia that :-
“On the facts and the circumstances of the case the Ld.CIT(A) has erred in allowing deduction u/s 80IA of the Act amounting to Rs.36,15,103/- as claimed by the assessee because the assessee was having brought forward business losses from the four Wind Electricity Generation units which should have also been set off against the profit derived from the said units.” 2. Briefly stated the facts necessary for adjudication of the controversy at hand are : During the scrutiny proceedings, Assessing Officer noticed that assessee has claimed deduction of Rs.36,15,103/- under section 80IA of the Income-tax Act, 1961 (for short ‘the Act’) qua four wind electricity generation units located in Tamil Nadu. On query raised by the AO, the assessee provided details of specific amount claimed as deduction u/s 80IA qua four units as under :-
Sr.No. Unit No. Profits derived in rupees 1. 1512 2,46,737/- 2. 1513 39,186/- 3. 1733 27,22,109/- 4. 375 6,07,071/- TOTAL 36,15,103/-
AO called upon the assessee company to explain as to why the losses of unit in respect of earlier years be not set off before deriving the profits eligible for deduction in view of section 80IA (5) of the Act. AO being dissatisfied with the reply filed by the assessee company proceeded to hold that since there are losses in each of the unit and the same are brought forward by the assessee itself and adjusted in the current year’s profit but the same has not been considered by the assessee for 80IA and computed the eligible profit u/s 80IA(5) after adjusting the losses as nil and thereby disallowed the amount of Rs.36,15,103/- claimed by the assessee u/s 80IA.
Assessee carried the matter by way of filing appeal before the ld. CIT (A) who has deleted the disallowance of Rs.36,15,103/- by allowing the appeal. Feeling aggrieved, the Revenue has come up before the Tribunal by way of challenging the impugned order passed by ld. CIT (A).
Assessee has not preferred to put in appearance despite issuance of the notice and consequently, we proceeded to decide the present appeal with the assistance of the ld. DR as well as on the basis of documents available on the file.
We have heard the ld. Departmental Representative for the revenue to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case.
The ld. DR for the Revenue challenging the impugned order relied upon the order passed by the AO in disallowing the deduction claimed by the assessee u/s 80IA of the Act.
The ld. CIT (A) deleted the addition of Rs.36,15,103/- made by the AO after disallowing the deduction claimed by the assessee with the following findings :-
“4. Findings :- The identical issue has arisen in assessment year 2010-11 on account of similar disallowance by the Assessing Officer. However my Ld predecessor vide his order dated 09/05/2014 in appeal No.71/2013-14 had deleted the addition while observing as under:-
"Following the ratio of the decisions in the above cases, the inevitable conclusion is that the Ld AO was not warranted in denying the claim of section 80IA of the Act as the statute does not contemplate carry forward of notional losses incurred in the earlier year for set off of losses for the purpose of computing profits of eligible business for claiming deduction u/s 80IA (4). If the losses incurred in the eligible unit are set off against the non = eligible unit after the initial assessment year than the ratio laid down by the Tribunal and the High Court as sought to be relied on by the Department would apply. Similarly the "initial assessment year i.e. assessment year 2010-11 opted by the appellant was in congruence with the amended provisions of section 80IA(2) of the Act. Hence the action of the Ld AO in assailing the option exercise by the appellant in regard to the claim of deduction u/s 80IA(1) was unjustified and uncalled for. In the aforesaid premises, the addition of Rs.34,50,412/- is deleted and grounds of appeal 1, 2, 2.1 and 2.2 are allowed."
Fully agreeing and respectfully following the order of my predecessor In the assessment year
2010-11, as mentioned above the addition of Rs.36,15,103/- is deleted.” 9. When undisputedly the identical issue has been decided by the Revenue in AY 2010-11 & 2011-12 by deleting the addition made by the AO by disallowing the deduction u/s 80IA and both the decision for AY 2010-11 and 2011-12 are stated to be not further challenged, no issue left before the Bench to be decided afresh particularly when there is no change in the facts and eligibility of the assessee to claim benefit of section 80IA. Even otherwise, when rule of consistency is being followed by the Revenue itself in assessee’s own case for the last two years, the present appeal appears to have been filed for the sake of appeal only.
Not only this identical issue has been decided by the Hon’ble Madras High Court in case cited as Velayudhaswamy Spinning Mills (P) Ltd. vs. ACIT – 340 ITR 477 (Mad.) wherein it is held as under :-
“Held, allowing the appeal, that there was 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 assessee exercised the option under section 80-IA(2). During the relevant period, there was no unabsorbed depreciation or loss of the eligible undertaking and these were already absorbed in the earlier years. There was a positive profit during the year. The loss in the year earlier to the initial assessment year already absorbed against the profit of other business could not be notionally brought forward and set off against the profits of the eligible business as no such mandate was provided in section 80-IA(S). The order of the Tribunal was to be set aside.”
So, the Revenue itself by following the law laid down by Hon’ble Madras High Court in case of Velayudhaswamy Spinning Mills (P) Ltd. (supra) deleted the similar addition made by the AO on the ground that the loss in the year earlier to initial assessment year already absorbed cannot be notionally brought forward and set off against the profits of eligible business. Since there is no dispute that the assessee company is otherwise eligible for deduction u/s 80IA, the same cannot be disallowed on the ground that the assessee has not considered the losses in the year earlier to the initial assessment year. So, finding no illegality or perversity in the impugned order, we hereby dismiss the appeal filed by the Revenue. Order pronounced in open court on this 18th day of September, 2017.