2015 (9) TMI 1460 - HC - Income Tax

Deduction under section 80-IA - Held that - Assessee is entitled to deduction under section 80-IA without setting off the losses/unabsorbed depreciation pertaining to the windmill. See Velayudhaswamy Spinning Mills P. Ltd. v. Asst. CIT 2010 (3) TMI 860 - Madras High Court

Summary

Issues:
1. Appellate Tribunal's reliance on earlier order without verifying the nature of the issue.
2. Tribunal's failure to consider previous judgments against the order.
3. Entitlement to deduction under section 80-IA without setting off losses/unabsorbed depreciation.

Analysis:

Issue 1:
The Revenue filed appeals under section 260A of the Income-tax Act, 1961, questioning the correctness of the Appellate Tribunal's decision to follow a previous order without verifying the nature of the issue. The High Court noted that the Tribunal's decision in the assessee's case was erroneously linked to a different matter related to the method of accounting, which had already been decided in favor of the assessee in a previous judgment. Therefore, the High Court found the Tribunal's finding on this aspect to be incorrect.

Issue 2:
The second issue raised was whether the Tribunal erred in not considering previous judgments against its order. The High Court pointed out that the Tribunal failed to take into account a reported decision related to the same assessee, which should have been considered in the context of the present case. This failure to consider relevant precedents was highlighted as a flaw in the Tribunal's approach.

Issue 3:
Regarding the entitlement to deduction under section 80-IA without setting off losses/unabsorbed depreciation, the High Court referred to a previous judgment in CIT v. R. Yuvaraj, where it was held that the assessee is indeed entitled to such deduction as per the provisions of the law. The High Court further cited the decision in Velayudhaswamy Spinning Mills P. Ltd. v. Asst. CIT and the Supreme Court's decision in Liberty India v. CIT to support the Tribunal's decision on this matter. Despite being inclined to rule in favor of the Revenue on the first two issues, the High Court dismissed the appeal based on the outcome of the third issue, which led to the same result.

In conclusion, the High Court addressed each substantial question of law raised by the Revenue, finding in their favor on the first two issues but ultimately dismissing the appeal due to the outcome of the third issue regarding the entitlement to deduction under section 80-IA without setting off losses/unabsorbed depreciation.