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2015 (10) TMI 1522 - HC - Income TaxDeduction under Section 80-IA - 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
Issues Involved:
1. Entitlement to claim deduction under Section 80-IA of the Income Tax Act. 2. Applicability of previous judgments and pending appeals before the Supreme Court. Detailed Analysis: 1. Entitlement to Claim Deduction under Section 80-IA: The core issue in this appeal is whether the respondent/assessee is entitled to claim a deduction under Section 80-IA of the Income Tax Act. The Tribunal had ruled in favor of the assessee, allowing the deduction. The Revenue challenged this decision, citing that the issue had already been addressed by the High Court in the case of Velayudhaswamy Spinning Mills Vs Asst. CIT [2012) 340 ITR 477]. The High Court had previously concluded that once losses and other deductions have been set off against the income of the previous year, they should not be reopened for the purpose of computing the current year's income under Section 80I or 80IA, and the assessee should not be denied the admissible deduction under Section 80IA. 2. Applicability of Previous Judgments and Pending Appeals Before the Supreme Court: The High Court's decision in Velayudhaswamy Spinning Mills relied on the Supreme Court's ruling in Liberty India Vs CIT [2009) 317 ITR 218 (SC)], which clarified that Chapter VI-A provides for profit-linked incentives. The court noted that Sections 80I, 80IA, and 80IB are essentially similar, and once losses are set off, they cannot be reopened. The Revenue's standing counsel argued that appeals against Velayudhaswamy Spinning Mills were pending before the Supreme Court. However, the High Court found no compelling reason to deviate from its earlier ruling, as no new material or contrary judgments were presented. Judgment Summary: The High Court reiterated its stance from Velayudhaswamy Spinning Mills, emphasizing that: - Section 80-IA provides a deduction for profits derived from eligible businesses. - The "initial assessment year" for the deduction is defined by the assessee's option, and losses from years prior to this cannot be brought forward and set off against the current year's profits. - The High Court dismissed the Revenue's appeal, confirming the Tribunal's order in favor of the assessee. The judgment concluded that the assessee's business, which included windmill power generation and hosiery goods, qualified for the deduction under Section 80-IA. The court upheld the Tribunal's decision, dismissing the Revenue's appeal and answering all questions of law in favor of the assessee. The court also noted that appeals against its earlier decision in Velayudhaswamy Spinning Mills were pending before the Supreme Court but had not yet been admitted. Therefore, the Tax Case (Appeal) was dismissed, and the Tribunal's order was confirmed.
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