2015 (11) TMI 985 - AT - Income Tax

Deduction under section 80-IA - CIT(A) allowed the claim - Held that - The business undertaking of the assessee is wind mill power generation/hosiery goods, etc., and it has claimed the benefit of deduction under Section 80IA of the Income Tax Act for the assessment year in question and for the subsequent years as well. Having exercised its option and its losses have been set off already against other income of the business enterprise, the assessee in this appeal falls within the parameters of Section 80IA of the Income Tax Act. There appears to be no distinction on facts in relation to the decision reported in Velayudhaswamy Spinning Mills case (2010 (3) TMI 860 - Madras High Court). - Decided in favour of the assessee

Summary

Issues involved:
Appeals filed by Revenue against CIT(A) order allowing deduction under section 80-IA of the Act, Disallowance of deduction under section 80-IA by AO, Interpretation of High Court judgment on deduction eligibility.

Analysis:

1. Appeals by Revenue against CIT(A) order:
The Revenue filed two appeals against the separate orders of the CIT(A) for the assessment years 2005-06 and 2006-07. The core issue was the allowance of deduction under section 80-IA of the Income Tax Act. The Revenue contended that the CIT(A) erred in allowing the deduction based on the decision of the jurisdictional High Court. The appeals were clubbed and heard together for convenience.

2. Disallowance of deduction under section 80-IA by AO:
The AO disallowed the deduction claimed by the assessee under section 80-IA for the windmill division at the Palladam unit. The AO justified this disallowance by citing the pendency of the Revenue's appeal before the apex court against the High Court's decision. The disallowed amounts were &8377; 58,35,842 for 2005-06 and &8377; 52,30,118 for 2006-07.

3. Interpretation of High Court judgment on deduction eligibility:
The CIT(A) ruled in favor of the assessee, following the High Court's decision in a similar case and a Tribunal decision in the assessee's favor for the assessment year 2005-06. The Tribunal noted that the AO's cautious approach due to the pending appeal before the apex court was not justified. The Tribunal emphasized that the absence of a stay by the apex court meant lower authorities were bound by the High Court's decision. As the CIT(A) correctly applied the High Court's decision, the Tribunal upheld the CIT(A) orders, dismissing the Revenue's appeals for both assessment years.

In conclusion, the Tribunal confirmed the CIT(A) orders, emphasizing the binding nature of the High Court's decision and the lack of a stay by the apex court. The appeals by the Revenue were dismissed for both assessment years, affirming the allowance of deduction under section 80-IA for the assessee.