2017 (10) TMI 1643 - AT - Income Tax

Deduction u/s 80IA(5) - generation of power through windmill - As per AO it is not available as per provisions of section 80IA (5) as the loss of power unit in initial year was to be carry forward and setoff against the current year s profit of power unit. As there is no profit available from power unit in the current year after set-off claim u/s 80IA would be nil - HELD THAT - The issue is squarely covered in assessee s own case in the A.Y. 2010- 11 of Tribunal in which it was held as under In our considered opinion the lower authorities have grossly erred in setting off notional losses with the profit of the eligible unit in the current year. The Hon ble High Court of Madras in the case of Velayudhaswamy Spinning Mills (P) Ltd 2010 (3) TMI 860 - MADRAS HIGH COURT held as under we are therefore of the view that loss in the year earlier to the initial assessment year already absorbed against the profit of the other business cannot be notionally brought forward and set-off against the profits of the eligible business as no such mandate is provided in section 80IA (5) of the Act. We therefore do not find any merits in the findings of the first appellate authority. We accordingly direct the Assessing Officer to allow the claim of deduction u/s 80IA of the Act to the assessee as claimed by it - Decided in favour of assessee.

Summary

Issues involved:
1. Disallowance of deduction under section 80IA(5) of the Act.
2. Not allowing credit of seized cash and interest u/s. 234B and 234C.

Analysis:

Issue 1: Disallowance of deduction under section 80IA(5) of the Act:
The appeal was filed against the order confirming the disallowance of deduction of Rs. 1,24,93,596 under section 80IA(5) of the Act for the Assessment Year 2011-12. The assessee, engaged in various business activities including power generation through windmill, claimed the deduction. However, the Assessing Officer (AO) disallowed the deduction stating that there was no profit available from the power unit in the current year after setting off losses from previous years. The assessee argued that as per section 80IA(5), the income or loss of an undertaking should be treated as a separate unit from the initial year chosen for deduction. The assessee contended that since the losses were already set off against income from other divisions in earlier years, the entire income of the power division for the assessment year 2008-09 should be eligible for deduction. The CIT(A) relied on precedents and held that the assessee was not eligible for the deduction. However, the Tribunal, considering its own previous decision in a similar case, directed the AO to allow the claim of deduction under section 80IA(5) for the current year as well.

Issue 2: Not allowing credit of seized cash and interest u/s. 234B and 234C:
The third ground of appeal related to the non-allowance of credit for seized cash and interest under sections 234B and 234C. This ground was not pressed by the assessee and was treated as dismissed. Therefore, the Tribunal did not provide any further analysis on this issue.

In conclusion, the Tribunal partly allowed the appeal of the assessee concerning the disallowance of deduction under section 80IA(5) of the Act, based on its previous decision in a similar case. The issue regarding the credit of seized cash and interest u/s. 234B and 234C was not pursued by the assessee and was dismissed.