Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2016 (3) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (3) TMI 1309 - HC - Income TaxEntitled to deduction under Section 80IA - initial assessment year - Held that - It is hereby clarified that once such initial assessment year has been opted for by the assessee, he shall be entitled to claim deduction u/s 80IA for ten consecutive years beginning from the year in respect of which he has exercised such option subject to the fulfillment of conditions prescribed in the section. Hence, the term initial assessment year would mean the first year opted for by the assessee for claiming deduction u/s 80IA. However, the total number of years for claiming deduction should not transgress the prescribed slab of fifteen or twenty years, as the case may be and the period of claim should be availed in continuity. The Assessing Officers are, therefore, directed to allow deduction u/s 80IA in accordance with this clarification and after being satisfied that all the prescribed conditions applicable in a particular case are duly satisfied. Pending litigation on allowability of deduction u/s 80 IA shall also not be pursued to the extent it relates to interpreting initial assessment year as mentioned in Sub- Section (5) of that section for which the Standing Counsel/DRs be suitably instructed.
Issues:
1. Whether the assessee is entitled to deduction under Section 80IA without setting off losses/unabsorbed depreciation from a windmill against other business income? 2. Whether the initial assessment year in Section 80IA(5) refers to the year of claim of deduction or the year of commencement of eligible business? Analysis: 1. The first issue revolves around the entitlement of the assessee to claim deduction under Section 80IA without setting off losses/unabsorbed depreciation from a windmill against other business income. The Income Tax Appellate Tribunal (ITAT) allowed the deduction, which was challenged. The High Court noted that despite the Supreme Court ordering notice, the decision in M/s.Velayudhaswamy Spinning Mills (340 ITR 477) was consistently followed. The Central Board of Direct Taxes issued Circular No.1/2016 clarifying the term 'initial assessment year' in Section 80IA(5), which impacted this issue. The High Court observed that the second question of law was addressed by the circular, leading to the dismissal of the appeals. 2. The second issue concerns the interpretation of the term 'initial assessment year' in Section 80IA(5) of the Income Tax Act. The circular clarified that the initial assessment year is the first year opted for by the assessee to claim deduction under Section 80IA, allowing for ten consecutive years of deduction within a prescribed period. The High Court emphasized that Assessing Officers should adhere to this clarification and allow deductions accordingly. The Court highlighted the importance of settling legal matters through proper channels, urging the Department to seek clarity at higher levels rather than filing repeated appeals on settled issues. In conclusion, the judgment addressed the issues of deduction entitlement under Section 80IA and the interpretation of the initial assessment year. The decision was influenced by the circular issued by the Central Board of Direct Taxes, emphasizing adherence to prescribed guidelines. The Court also stressed the significance of seeking legal clarity through appropriate channels to avoid unnecessary litigation.
|