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2015 (3) TMI 1017 - AT - Income TaxDeduction under section 80-IA on windmills - assessee's income being in the negative after set-off of the losses of other units - CIT(A) allowed the claim - Held that - In view of decisions of CIT v. Macmillan India Ltd. 2007 (2) TMI 128 - HIGH COURT, MADRAS , CIT v. Rathore Brothers 2001 (10) TMI 72 - MADRAS High Court , CIT v. Suresh B. Mehta 2007 (1) TMI 134 - MADRAS High Court and CIT v. M. Gani and Co. 2008 (2) TMI 129 - MADRAS HIGH COURT each of the unit had to be separately considered for working out deduction under section 80-IA or 80-IB or 80HHC of the Act, once separate accounts were being maintained and there was no interlacing and interdependence. In the given case before us, the assessee had positive gross total income. Therefore, each undertaking had to be considered separately for working out deduction under section 80-IA of the Act, since the gross total income was positive. We are of the opinion that the Commissioner of Income-tax (Appeals) was justified in giving such directions. The Commissioner of Income-tax (Appeals) had directed the Assessing Officer to treat the windmills as a separate undertaking for the purpose of calculating deduction under section 80-IA of the Act though the power generated was captively consumed. The question of set-off of notional losses prior to the initial year of claim does not arise in view of Velayudhaswamy Spinning Mills P. Ltd. v. Asst. CIT 2010 (3) TMI 860 - Madras High Court . The Commissioner of Income-tax (Appeals) had rightly relied on this decision for taking a view in favor of the assessee. The learned Departmental representative was unable to produce order of any higher authority which could disturb the view taken by the hon'ble jurisdictional High Court. - Decided in favour of assessee. Levy of interest under section 234D - Held that - The assessee's grievance regarding levy of interest under section 234D cannot be accepted in view of the hon'ble jurisdictional High Court's decision in the case of CIT v. Infrastructure Development Finance Co. Ltd. 2011 (9) TMI 591 - Madras High Court assessments having been completed after first of June, 2003. - Decided against assessee. Disallowance under section 14A - Held that - Disallowance under section 14A might still be required depending on the facts and circumstances. However, we do not find any discussion on any claim made by the assessee with regard to expenses incurred or not incurred by it for earning the dividend income, in the assessment order. The Assessing Officer had simply made a disallowance taking 6 per cent. of the income as expenditure. We are, therefore, of the opinion that the matter requires a re-visit by the Assessing Officer. We, therefore, set aside the orders of authorities below and remit the issue regarding disallowance under section 14A back to the file of the Assessing Officer for consideration afresh and decide in accordance with law. - Decided in favour of assessee for statistical purposes. Disallowance of claim for additional depreciation under section 32(1)(iia) - Held that -. In the case before us also, it is not the question of any amount being included as income by inadvertence. The assessee had not chosen to make additional depreciation under section 32(1)(iia) of the Act. Therefore, in the given facts and circumstances, claim having not been made through a revised return cannot be accepted. We are, therefore, of the opinion that the Commissioner of Income-tax (Appeals) was justified in not considering such claim raised by the assessee. - Decided against assessee. Non-exclusion of interest receivable from its Malaysian subsidiary company - Held that - Without doubt, the assessee had included in its income, interest from its Malaysian subsidiary. The claim that it was not received and if received withholding tax would be deducted by the Malaysian company, were all new pleadings made during the course of assessment proceedings. The assessee never cared to file a revised return. In our opinion, for the same reasons, such a claim could not have been accepted. This was, therefore, rightly rejected by the Assessing Officer and confirmed by the learned Commissioner of Income-tax (Appeals). We do not find any reason to interfere with the order of the Commissioner of Income-tax (Appeals). - Decided against assessee.
Issues Involved:
1. Deduction under Section 80-IA and 80-IB of the Income Tax Act. 2. Deduction under Section 80-IA for windmills. 3. Levy of interest under Section 234D. 4. Disallowance under Section 14A. 5. Claim for additional depreciation under Section 32(1)(iia). 6. Initial assessment year for deduction under Section 80-IA. 7. Exclusion of interest receivable from a Malaysian subsidiary. Issue-wise Detailed Analysis: 1. Deduction under Section 80-IA and 80-IB of the Income Tax Act: The Revenue contested the allowance of deduction under Section 80-IB despite the assessee's income being negative after setting off losses of other units. The Assessing Officer denied the deduction on the grounds that losses from non-80-IA units had to be adjusted against profits from eligible units, resulting in no net profit. The Commissioner of Income-tax (Appeals) ruled in favor of the assessee, stating that each unit should be considered independently for the deduction. The Tribunal upheld this view, referencing the jurisdictional High Court's decision in Chamundi Textiles (Silk Mills) Ltd. v. CIT, which allows deductions without inter-unit loss adjustments if the gross total income is positive. 2. Deduction under Section 80-IA for windmills: The Revenue challenged the deduction under Section 80-IA for windmills without adjusting notional losses from prior years. The Commissioner of Income-tax (Appeals) allowed the deduction, treating the windmills as a separate undertaking, even though the power was captively consumed. The Tribunal upheld this decision, citing the jurisdictional High Court's ruling in Velayudhaswamy Spinning Mills P. Ltd. v. Asst. CIT, which supports such deductions without adjusting prior notional losses. 3. Levy of interest under Section 234D: The assessee's appeal against the levy of interest under Section 234D was dismissed. The Tribunal referenced the jurisdictional High Court's decision in CIT v. Infrastructure Development Finance Co. Ltd., which mandates the levy of such interest for assessments completed after June 1, 2003. 4. Disallowance under Section 14A: The assessee contested the disallowance under Section 14A, arguing that Rule 8D was not applicable retrospectively. The Tribunal noted that the Assessing Officer had disallowed 6% of certain expenses without proper verification. Citing the Bombay High Court's decision in Godrej and Boyce Mfg. Co. Ltd. v. Deputy CIT, the Tribunal remitted the issue back to the Assessing Officer for fresh consideration and verification of actual expenses incurred for earning dividend income. 5. Claim for additional depreciation under Section 32(1)(iia): The assessee's claim for additional depreciation on windmills, made during assessment proceedings without a revised return, was rejected by the Assessing Officer and upheld by the Commissioner of Income-tax (Appeals). The Tribunal affirmed this decision, referencing the jurisdictional High Court's ruling in CIT v. Shriram Investments, which emphasizes the necessity of filing a revised return within the prescribed time limit for such claims. 6. Initial assessment year for deduction under Section 80-IA: The assessee disputed the Commissioner of Income-tax (Appeals)'s finding that the initial assessment year for deduction under Section 80-IA was 2003-04, as per the audit report. The Tribunal upheld the Commissioner's decision, stating that the data in the audit report could not be altered during assessment proceedings. 7. Exclusion of interest receivable from a Malaysian subsidiary: The assessee's claim for excluding interest receivable from its Malaysian subsidiary, made during assessment proceedings without a revised return, was rejected by the Assessing Officer and upheld by the Commissioner of Income-tax (Appeals). The Tribunal affirmed this decision, reiterating the necessity of filing a revised return for such claims, as discussed in the context of additional depreciation. Conclusion: The Tribunal dismissed the Revenue's appeals for all years. The assessee's appeals for the assessment years 2006-07 and 2007-08 were allowed for statistical purposes, appeals for the assessment years 2003-04 and 2008-09 were dismissed, and appeals for the assessment years 2002-03 and 2005-06 were partly allowed for statistical purposes.
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