2019 (12) TMI 458 - HC - Income Tax

Deduction u/s 80IA - initial assessment year - HELD THAT - Sub-Section (2) that an assessee who is eligible to claim deduction u/s 80IA has the option to choose the initial/first year from which it may desire the claim of deduction for ten consecutive years, out of a slab of fifteen (or twenty) years, as prescribed under that Sub-Section. It is hereby clarified that once such initial assessment year has been opted for by the assessee, he shall be entitled to claim deduction u/s 80IA for ten consecutive years beginning from the year in respect of which he has exercised such option subject to the fulfillment of conditions prescribed in the section. The term initial assessment year would mean the first year opted for by the assessee for claiming deduction u/s 80IA. However, the total number of years for claiming deduction should not transgress the prescribed slab of fifteen or twenty years, as the case may be and the period of claim should be availed in continuity. AO are, therefore, directed to allow deduction u/s 80IA in accordance with this clarification and after being satisfied that all the prescribed conditions applicable in a particular case are duly satisfied. Pending litigation on allowability of deduction u/s 80IA shall also not be pursued to the extent it relates to interpreting initial assessment year as mentioned in Sub-Section (5) of that section for which the Standing Counsel/DRs be suitably instructed. The above be brought to the notice of all Assessing Officers concerned.

Summary

Issues:
1. Whether the Income Tax Tribunal was right in upholding the order of CIT(A) directing the assessing officer to ignore all depreciation loss from wind mill business prior to assessment year 2000-01?
2. Whether the Income Tax Tribunal was correct in holding that unabsorbed depreciation loss prior to the initial assessment year could be notionally carried forward while computing deduction u/s.80IA?
3. Whether the Appellate Tribunal was justified in following the jurisdictional High Court Judgment subject to SLP before the Supreme Court?

Issue 1:
The tax case appeal challenged the Income Tax Appellate Tribunal's decision to uphold the order of the Commissioner of Income Tax (Appeals) directing the assessing officer to disregard all depreciation loss from the windmill business before the assessment year 2000-01. The appellant contended that this decision was erroneous. The High Court examined this issue as a substantial question of law.

Issue 2:
The second issue revolved around whether the unabsorbed depreciation loss before the initial assessment year could be notionally carried forward when calculating the deduction under section 80IA. The Tribunal's decision was questioned on this matter. The High Court analyzed this issue in light of the arguments presented by both the appellant and the respondent.

Issue 3:
The third issue raised was whether the Appellate Tribunal was correct in following a jurisdictional High Court Judgment that was under consideration by the Supreme Court through a Special Leave Petition (SLP). The appellant sought a different interpretation based on the ongoing legal proceedings. The High Court reviewed this issue in light of the legal principles and precedents involved.

The appellant's counsel referred to a previous judgment by the High Court related to a similar appeal, highlighting the consistent application of a specific decision despite the Supreme Court issuing a notice. Additionally, a Circular issued by the Central Board of Direct Taxes was cited, clarifying the term 'initial assessment year' in Section 80IA(5) of the Income Tax Act, 1961. The Circular emphasized the option available to the assessee to choose the initial year for claiming deductions under section 80IA and provided guidance to Assessing Officers on the correct interpretation of the term 'initial assessment year.'

Based on the referenced judgment and the Circular, the High Court concluded that the questions of law raised in the appeal were adequately addressed and dismissed the appeal. The Court emphasized that the issues raised were covered by the Circular, leading to the dismissal of the appeal without costs.