DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2(1), NAGPUR vs. M/S MAHAVIR GLOBAL COAL LIMITED, NAGPUR

Date of Hearing – 03/12/2024 Date of Order – 12/12/2024

O R D E R PER V. DURGA RAO, J.M.

This appeal by the Revenue is directed against the impugned order dated 16/03/2018, passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, [“learned CIT(A)”], for the assessment year 2012–13.

“1) On the facts and circumstances of the case and in law, the CIT(A) has erred in deleting the disallowance of claim of deduction u/s 80IA of Rs. 64,70,325/- without appreciating the fact that in the Form No. 10CCB filed by the assessee, the initial assessment was mentioned as A.Y. 2007-08 and as 2 M/s. Mahavir Global Coal Ltd. A.Y. 2012–13 such there were no eligible profits available for the current year after taking into consideration the unabsorbed losses of the assessment years 2007-08 onwards. 2) Any other ground that may be urged at the time of hearing. 3) It is prayed that order of the CIT(A) may be set aside and order of A.O. may be restored.”

“8. We heard the rival submissions and perused the material on record. The issue that arises for consideration in the present appeal is that whether or not the ld. CIT(A) was justified in holding that the initial assessment year for the purpose of claiming deduction u/s 80IA(5) is only from the assessment year 2011-12 not from the assessment year 2007-08. The provisions of section 801A of the Act w.e.f. 01.01.2000 provides for deduction of an amount equal to 100% of profits and gains derived by an undertaking or enterprise from an eligible business as referred to in sub-section 4 of section 801A in accordance with the prescribed provisions. The term eligible business had been defined to include the business of generation of electricity through windmills. While prescribing the manner of determining of the quantum of deduction, a reference had been made to the term "initial assessment year" and the assessee shall be entitled for deduction for a period of 10 consecutive assessment years out of 15 years beginning from the year in which the undertaking commence operations, begins development or starts providing services ete can be claimed by the assessee at his option. The CBDT vide Circular No. 1/2016 dated 15.02.2016 had clarified that the term initial assessment year would mean the first year opted for by the assessee for claiming deduction u/s 80IA of the Act, therefore, it means that an assessee, who incurred losses in the earlier years ie. prior to the initial assessment year, the question of claiming deduction u/s 80IA and set-off of such losses against the profits of current year does not arise for the purpose of computing the quantum of deduction u/s 801A of the Act in view of the plain provisions of section 801A of the Act, treating the undertaking a separate

3 M/s. Mahavir Global Coal Ltd. A.Y. 2012–13 source of income. But the fact of the matter here is that the assessee company itself had stated that the initial assessment year is 2007-08 even the audit report in Form No.10CCB was originally filed showing the initial assessment year as 2007-08. It is only during the course of proceedings before the Id. CIT(A), a revised audit report was filed, wherein, the initial assessment year was shown as 2011-12. However, the ld. CIT(A) on verification of the returns of income for the assessment years 2007-08 to 2010-11 had come to the conclusion that it is only from the assessment year 2011-12, the assessee made claim for deduction u/s 801A and after making reference to the CBDT Circular (supra) allowed the benefit of deduction u/s 80IA of the Act. The order of the Id. CIT(A) is based on the proper appreciation of material facts and in tune with the CBDT Circular (supra), which had clarified that the initial assessment year means the year in which the deduction was claimed for the first time and also in consonance with the law laid down by the Hon'ble Madras High Court in the case of CIT vs. Best Corporation Ltd., 76 taxmann.com 286 (Madras). Therefore, we do not find any illegality in the findings of the ld. CIT(A) either on the facts or in law. Thus, the order of the ld. CIT(A) is sustained as we see no reason to interfere with the same. Thus, the grounds of appeal filed by the Revenue stand dismissed.”

5. The related facts and circumstances of the issue raised by the Revenue in this appeal, except variation in numerical figures, is materially identical to the issue decided by the Co–ordinate Bench cited supra, consistent with the view taken therein and respectfully following the findings given therein, we see no legal infirmity in the impugned order passed by the learned CIT(A) warranting interference at the instance of the Revenue and hold that the learned CIT(A) was indeed justified in directing to delete the disallowance made by the Assessing Officer under section 80IA for ` 64,70,325. Thus, grounds raised by the Revenue are dismissed.