2017 (12) TMI 1257 - AT - Income Tax

Deduction u/s 80IA - allowance of claim undertaking wise or on a consolidated basis - Held that - The assessee had shown profits from its windmill at Satara and had worked out the deduction under section 80IA(4) of the Act in respect of said windmill at ₹ 2.42 crores. The assessee was entitled to claim the said deduction undertaking wise. The losses suffered from the other windmill established by the assessee in Karnataka and Gujarat were not to be set off against the profit of Satara windmill, on the proposition that each windmill was a separate undertaking. Such view was upheld by the Pune Bench of the Tribunal in the case of M/s. J-Sons Foundry Pvt. Ltd. (2013 (1) TMI 778 - ITAT PUNE) and in the case of M/s. D.J. Malpani Vs. ACIT (2015 (12) TMI 896 - ITAT PUNE). Coming to the adjustment of losses of other windmill, which have been set off against the profits of another business carried on by the assessee i.e. manufacture of Zarda. The assessee pointed out that after adjusting the said losses return of income was offered at ₹ 19.69 crores. In view thereof, the proposition laid down by the Hon ble Gujarat High Court in the case of Sintex Industries Ltd. Vs. Assistant Commissioner of Income Tax (OSD) (2013 (7) TMI 979 - GUJARAT HIGH COURT) is at variance where the income after adjustment of losses was Nil and hence, the said proposition is not to be applied to the facts of the present case. Accordingly, we hold that the assessee is entitled to claim the deduction under section 80IA(4) of the Act undertaking wise and the loss having been adjusted against business income, cannot curtail the deduction claimed under section 80IA(4) of the Act. Accordingly, we dismiss the grounds of appeal raised by the Revenue.

Summary

Issues:
- Allowance of deduction under section 80IA of the Income Tax Act undertaking wise and not on a consolidated basis.

Analysis:
1. The Revenue appealed against the CIT(A)'s order regarding the allowance of deduction under section 80IA of the Act undertaking wise and not on a consolidated basis for the assessment year 2011-12.

2. The assessee claimed deduction under section 80IA(4)(iv)(a) for profit earned from wind power generation from its windmills. The Assessing Officer questioned the claim being undertaking wise and not business wise. The assessee argued each unit was a separate undertaking eligible for deduction for 10 out of 15 years. The Assessing Officer disagreed, curtailing the deduction to &8377; 1,69,30,553 based on the previous year's issue.

3. The CIT(A) upheld the deduction being allowed undertaking wise, citing precedents. The Revenue contested this decision.

4. The Revenue relied on legal judgments emphasizing adjusting losses against profits for deduction calculations. The assessee cited Tribunal decisions supporting separate windmills as distinct undertakings for deduction purposes.

5. The Tribunal noted each windmill was treated as a separate undertaking, as established in previous cases. The assessee's profits from one windmill were not to be offset by losses from others, in line with the Tribunal's interpretation.

6. The Tribunal differentiated the present case from a Gujarat High Court ruling where income after loss adjustment was Nil, unlike the assessee's situation. Therefore, the deduction under section 80IA(4) was upheld undertaking wise, dismissing the Revenue's appeal.

7. The Tribunal dismissed the Revenue's appeal, affirming the allowance of deduction under section 80IA of the Act undertaking wise.