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TMI Blog2013 (1) TMI 688X X X X Extracts X X X X X X X X Extracts X X X X ..... h such 'initial assessment year' alone at the highest could be so set off. The claim of the Appellant for deduction u/s 80-IA be allowed undiminished by such unabsorbed losses and depreciation." 2. We find that the Ld CIT(A) has decided the issued involved in the Grounds in the A.Y. 2005-06 and has followed his decision taken therein in the remaining appeals for the A.Ys. 2004-05 and 2006-07. 3. The relevant facts are that the assessee is in the business of import/export and trading in medicines and drugs and having a sister concern of Serum Institute of India (P) Ltd., manufacturer of vaccines. It set up a wind mill unit in F.Y. 2001- 02 in Satara. It claimed loss of Rs. 3.39 Crores in the A.Y. 2002-03 for this unit which it set off against the ineligible main business. It claimed deduction u/s. 80IA for the A.Ys. 2004-05 to 2006-07 ignoring the losses of A.Y. 2002-03. In the A.Y. 2005-06, it claimed deduction u/s. 80 IA of Rs. 51,72,296/-. In a note appended with the computation of income, it submitted that during the A.Y. under consideration i.e. 2005-06, the company had exercised the option of claiming deduction u/s. 80IA without taking cognizance of losses incurred prior to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. The A.O did not agree with the above explanation of the assessee. The A.O. held that in order to determine the quantum of deduction, the assessee's income needed to be computed as if it was the only source of income and to know whether there are carried forward losses of the eligible business by treating it as the only source of income, one has to compute assessee's income as eligible business right from the beginning year. He held that as per the provisions of Section 80IA(5), the profit of wind mill activity should be separately computed and the deduction u/s. 80IA should be worked out from such profit of wind mill activity. Since in the year under consideration, the income earned from wind mill activity is eaten away by the expenses and unabsorbed depreciation of earlier years, no profit from eligible business is left and therefore, the A.O came to the conclusion that no deduction u/s. 80IA is allowable to the assessee. 6. Before the Ld CIT(A), the contention of the assessee remained that the depreciation claimed by it on wind mills in earlier years stands set off against the assessee's income from sources other than wind mill activities, and therefore, there remains nothi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ised before the bench is as to whether in view of the provisions of Sec. 80IA(5) of the I.T. Act 1961, the profit from the eligible business for the purpose of deduction u/s. 80IA of the Act has to be computed after deduction of the notional brought forward losses and depreciation of eligible business even though they have been allowed set off against other non-eligible business income in earlier years. The submission of the Ld A.R. remained that on the wind mills set up in the previous year relevant to A.Y. 2002-03, the assessee had claimed depreciation at the rate of 100% thereon i.e. Rs. 3.54 Crores, which was fully set off against the another income in the said A.Y. 2002-03 itself. In the A.Y. 2004-05, the assessee had positive income from the said generation activity and there were no brought forward losses/ unabsorbed depreciation of the preceding year, which had remained to be set off in the A.Y. 2004-05. The A.O., notionally brought forward unabsorbed depreciation for the A.Y. 2003-04 to the impugned A.Y. 2004-05 and denied the claim for deduction made by the assessee u/s. 80IA in respect of the profit earned by it in A.Y. 2004-05. The Ld. A.R. submitted that sub-section (2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as defined and meant the first A.Y. relevant to the previous year in which the eligible unit commences production/power generation. Only from 1.4.2000, when Sections 80IA was replaced with Section 80IA and 80IB, the definition of "initial A.Y." did not find a mention. But nowhere, in the Parliament Speech of memorandum explaining the Finance Bill has any mention that there was any intention to ignore losses and depreciation from first year of power generation/production and that such losses till first year of claim of deduction is to be ignored. The view canvassed by the assessee does not find any support. He submitted that there is no discernible change in law or intention of parliament w.e.f. 1.4.2000. The Ld. D.R. submitted that the decision of Special Bench of the Tribunal in the case of Goldmine Shares and Finance (P) Ltd. (Supra) is fully applicable in the present case. He pointed out that in its recent decision dt. 21st January 2011, the Hyderabad Bench of the Tribunal in the case of Hyderabad Chemical Supplies Ltd. Vs. ACIT (Supra) has also decided an identical decision in favour of the Revenue following the decision of Special Bench of the Tribunal in the case of ACIT Vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e income of the assessee. The Hon'ble Madras High Court has been further pleased to hold that revenue cannot notionally bring forward any loss of earlier years which had already been set off against the other income of assessee and set off against the correct income of the eligible business. Fiction created by Sub-section (5) of Section 80IA does not contemplate such notional set off, held the Hon'ble High Court. The Hon'ble Madras High Court in that decision has also referred the decision of Hon'ble Supreme Court in the case of Liberty India Vs. CIT (Supra) and the decision of Special Bench of the Tribunal in the case of Goldman Shares & Finance (P) Ltd. (Supra). There is no dispute that even a decision of non-jurisdictional High Court is a binding precedent for the Tribunal until a contrary decision is given by any other competent High Court. In this regard, we find strength from the recent decision of Hon'ble jurisdictional Bombay High Court in the case of Commissioner of Central Excise Vs. Valson Dyeing, Bleaching and Printing Works (Supra) wherein the Hon'ble Bombay High Court has been pleased to hold in a case of excise matter that Tribunal is bound by the decision of High Co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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