2013 (2) TMI 525 - AT - Income Tax

Deduction u/s 80IA - Initial Assessment Year - Assessee runs a spinning mill and has installed three wind mills first in A/Y 2003-04, second in A/Y 2005- 06 and the third in A/Y 2006-07 A/Y 2007-08 was opted as initial Assessment Year for the purpose of claiming deduction u/s 80IA - Initially the loss from windmills was set off against profit of spinning mill division - Deduction u/s 80IA was not claimed during those years when it resulted in loss As per AO the initial year should be taken as the year of commencement of business. Held that - Respectfully, following the decision of the Hon ble Jurisdictional High Court in the case of M/s Sri Velayudhasamy Spinning Mills P Ltd 2010 (3) TMI 860 - MADRAS HIGH COURT the AO is directed to compute the profits u/s 80IA(5) of the Act as if such eligible business is the only sources of income of the assessee and only the losses of the years beginning from the initial Assessment Year are to be brought forward and not losses of earlier years which have been already set off against the income of the assessee. - Appeal of the Revenue is dismissed Against the revenue.

Summary

Issues involved:
Appeals filed by Revenue against orders of Commissioner of Income Tax (Appeals) for Assessment Years 2007-08 and 2008-09; Delay in filing appeals; Justification for condonation of delay; Common grounds of appeal by Revenue; Entitlement to deduction u/s 80IA of the Act on windmills.

Analysis:
The appeals filed by the Revenue were delayed by 10 days in the Assessment Year 2007-08 and by 19 days in the Assessment Year 2008-09. Condonation petitions were filed by the Revenue, and the delay was condoned based on reasonable cause for not filing the appeals in time. The appeals were admitted for hearing. The facts and issues in both appeals were deemed identical, and hence, both were disposed of by a common order for convenience.

The Revenue raised common grounds of appeal challenging the orders of the Commissioner of Income Tax (Appeals). The main issue in both appeals was the entitlement of the assessee to deduction u/s 80IA of the Act on windmills. The ld. CIT(A) had allowed the deduction, which was contested by the Revenue.

The Assessing Officer held that the initial year should be considered as the year of commencement of business for claiming the deduction u/s 80IA of the Act, and unabsorbed depreciation from earlier years already absorbed cannot be carried forward for computing the deduction. However, the ld. CIT(A) directed the computation of profits u/s 80IA(5) as if the eligible business was the only source of income, following a decision of the Hon'ble Jurisdictional High Court.

The departmental representative failed to point out any specific error in the order of the ld. CIT(A) or provide material to show that the High Court's decision was varied by the Supreme Court. As a result, the order of the ld. CIT(A) was upheld, and the grounds of appeal by the Revenue were dismissed. Consequently, both appeals of the Revenue were dismissed.

In conclusion, the judgment focused on the issue of entitlement to deduction u/s 80IA of the Act on windmills, with the decision favoring the assessee based on the High Court's ruling. The delay in filing the appeals was condoned, and the grounds of appeal by the Revenue were not upheld due to the absence of substantial reasons to interfere with the ld. CIT(A)'s order.