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Income Tax Appellate Tribunal, “I” BENCH, MUMBAI
Before: SHRI D.T. GARASIA, JM & SHRI MANOJ KUMAR AGGARWAL, AM
Per Manoj Kumar Aggarwal (Accountant Member) 1. The captioned appeal by revenue for Assessment Year [AY] 2011-12 contest the order of the Ld. Commissioner of Income-Tax (Appeals)-17 [CIT(A)], Mumbai, Appeal No.CIT(A)-17/IT-59/14-15 dated 31/12/2015 by raising the following grounds of appeal:-
1. Whether on the facts and circumstances of the case and in the law the Ld. CIT(A) is right in law in holding that initial assessment year in section 80-IA-(5) would only mean the year of commencement and not the year of claim?
ITA.No.999/Mum/2016 Indiana Engineering Works(Bombay)Private Limited Assessment Year-2011-12 2. Whether on the facts and circumstances of the case and in the law the Ld. CIT(A) is right in law in holding that the assessee is entitled to claim deduction under section 80IA of the IT Act? 3. Whether on the facts and circumstances of the case and in the law the CIT(A) is right in saying that unabsorbed depreciation of earlier years before the first year of claim, which has already been absorbed, could not be notionally carried forward and taken into consideration for computation of deduction under section 80IA? 4. Whether on the facts and in the circumstances of the case, the Hon’ble CIT(A) was right in deciding the issue to the effect that the assessee is not obliged to make its claim of deduction u/s.80IA in the initial year of the book profit and but in any ten years out of the fifteen year since it develops? The assessment for impugned AY was framed by Ld. Deputy Commissioner of Income Tax-OSD, Range-8(2), Mumbai [AO] u/s 143(3) of the Income Tax Act, 1961 on 28/02/2014. 2.1 Briefly stated, the assessee being resident corporate assessee engaged in manufacturing of engineering goods and fabrication works was assessed for impugned AY at Rs.350.86 Lacs as against revised returned income of Rs.256.12 Lacs e-filed by the assessee. 2.2 During assessment proceedings it was noted that the assessee earned income from generation of power through its windmill units which were eligible for deduction u/s 80-IA. It was noted that the assessee commissioned three windmills i.e. one unit in Erode District during AY 2005-06 & two units in Maharashtra during AY 2007-08. The assessee opted to claim the deduction u/s 80-IA against three units for the first time during AY 2010-11 and accordingly, the impugned AY was second year of the claim. The income from the three units aggregating to Rs.73.37 Lacs was claimed as deduction u/s 80-IA during impugned AY. However, it was noted that the assessee incurred losses from these units during AY 2005-06 to 2009-10 which were set-off against normal business income of those years. Hence, the assessee, in the opinion of ITA.No.999/Mum/2016 Indiana Engineering Works(Bombay)Private Limited Assessment Year-2011-12 Ld. AO, was first required to adjust the notional losses of earlier years from the income of eligible units in the impugned AY in terms of the provisions of Section 80-IA(5). The assessee contended that it has chosen the impugned AY as the initial assessment year of claiming the deduction as per option granted in Section 80-IA(2) and hence the provisions of Section 80-IA(5) were not applicable for earlier assessment years. However, not convinced, Ld. AO denied deduction u/s 80-IA to the assessee and completed the assessment.
Aggrieved, the assessee contested the same with success before Ld.CIT(A) vide impugned order dated 31/12/2015 where Ld. CIT(A) primarily relying upon the decision of Tribunal in assessee’s own case for AY 2010-11, allowed assessee’s appeal. Aggrieved, the revenue is in further appeal before us.
The Ld. Departmental Representative pleaded that the action of Ld. AO was justified in terms of the provisions of Section 80-IA(5) whereas Ld. Counsel for Assessee [AR] drew our attention to the fact that the issue is already settled in assessee’s favor by the Tribunal in assessee’s own case for AY 2010-11.
We have heard the rival contentions and perused relevant material on record. We concur with the stand of Ld. AR that the issue, at present, stands in assessee’s favor by the order of Tribunal for AY 2010-11 vide dated 04/11/2015. We also find that Ld. CIT(A) relied on the judgment of this Tribunal in Hercules Hoists Ltd. Vs. ACIT & Indiana Gratings Pvt. Ltd. Vs DCIT. Both these decisions were contested by the revenue without any success before Hon’ble Bombay High Court vide ITA Nos. 2485 of 2013 dated 07/05/2015 and ITA No. ITA.No.999/Mum/2016 Indiana Engineering Works(Bombay)Private Limited Assessment Year-2011-12 1339 of 2015 05/12/2017. Therefore, the issue stood squarely in assessee’s favor by the stand of our jurisdictional High Court.
For the sake of completeness, we find that CBDT Circular No. 1/2016 dated 15/02/2016 has accepted this settled legal position and clarified the meaning of expression ‘initial assessment year’ for the purpose of Section 80-IA(5). As per the said circular, the said expression would mean the first year opted for by the assessee for claiming deduction u/s 80-IA and not the first years of commencement of operations of the eligible unit.
In view of the same, we dismiss revenue’s appeal. Order pronounced in the open court on 17th January,2018