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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 ..... ght forward and not the losses of the earlier years which have been already set off against the income of the assessee. As DR has not brought to the notice of the Bench any decision contrary on the issue in question it is to be held that the assessee is eligible for claim of deduction u/s 80-IA for the year under consideration in a manner whereby the initial assessment year referred to in section 80-IA(5) is to be taken as the A.Y. 2004-05 as the assessee has opted to claim this deduction only in this assessment year - in favour of assessee. - ITA Nos.290 to 292/PN/2010 - - - Dated:- 28-9-2011 - I. C. Sudhir and G. S. Pannu, JJ. Appellant Rep by: Shri R.D. Onkar Respondent Rep by: Shri Sanjay Singh ORDER Per: I. C. Sudhir: In all these appeals, the assessee has questioned first appellate order on the following common grounds : 1. Treating the year of first generation of power from the Windmill Undertaking i.e. AY.02-03 as the initial assessment year for the purposes of Section-80IA(5); and, 2. accordingly reducing the amount of profits derived by the Appellant from the said undertaking in the year under appeal b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plained that Section 80IA(1) read with sub-section (2), grants taken of 100% of profit of specified business for any 10 consecutive years within a block of 15 years beginning with the year in which the specified business commences and though the stress in sub-section (5) is why words initial assessment year , in the absence of its definition, it needs to be interpreted reasonably in such a manner that it serves the option prescribed u/s. 80IA (2), otherwise, such purpose will be defeated. It was stated that Section 80IA(5) gets force of law only when deduction u/s. 80IA(1) is claimed and not otherwise, because if an assessee has not lodged any claim for deduction u/s. 80IA from the A.Y. when the undertaking begins operation, then, there is no occasion to invoke provisions of Section 80IA for the initial A.Y. Alternatively, it was pleaded by the assessee that the provisions of Section 80IA(5) are applicable for A.Y. immediately succeeding the initial A.Y. or any subsequent A.Y. Accordingly, the provisions of Section 80IA(5) treating the eligible industrial undertaking as the only source of income of the assessee for computation of deduction u/s. 80IA(1) was applicable to A.Y. 2003 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee for deduction u/s. 80IA in the A.Y. 2005-06. He has followed similar decision in the appeals for the remaining A.Ys. 2004-05 and 2006-07. 8. We have heard and considered the arguments advanced by the parties in view of orders of the authorities below, and material available on record and the decisions relied upon by them. 9. The Ld. A.R has basically reiterated the submissions made on behalf of the assessee before the authorities below on the issue. In support, he has placed reliance on the following decisions : 1) Velayudhaswamy Spinning Mills (P) Ltd Vs. ACIT (2010) 38 DTR (Mad.) 57. 2) Poonawalla Estate Stude and Agro Farm Pvt. Ltd. Vs. ACIT, ITA 92/PN/2008, (A.Y. 2004-05), order dt. 29 September 2010 3) G.B. Rubber Products V/s. DCIT, ITA No. 1466/PN/2009 (A.Y. 2005-06) order dated 25th May 2011. 4) ACIT Vs. Aurangabad Holiday resorts (P) Ltd (2009), 118 ITD 1 (Pune) 5) Commissioner of Central Excise Vs. M/s. Valson Dyeing, Bleaching and Printing Works, 2010 10. The Ld. D.R., on the other hand, tried to justify the orders of the authorities below and placed reliance on the following decisions in support thereto : 1) ACIT Vs. Gol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2004-05. The Ld. A.R. placed heavy reliance on the decision of Hon ble Madras High Court in the case of Velayudhaswamy Spinning Mills (P) Ltd Vs. ACIT (Supra). He submitted that the decision of Hon ble Madras High Court will prevail upon the decision of the Special Bench of the Tribunal in the case of ACIT Vs. Goldmine Shares and Finance (P) Ltd. (Supra) followed by the Pune Bench of the Tribunal in its recent decision in the case of Prima Paper Engg (P) Ltd. Vs. ITO (Supra) and there the assessee did not dispute the fact that the authorities below have decided the issue following the decision of Special Bench of the Tribunal in the case of ACIT Vs. Goldmine Shares.. The Ld. A.R. pointed out that decision of Hon ble Madras High Court in the case of Velayudhaswamy Spinning Mills (P) Ltd Vs. ACIT (Supra) was not cited before the Pune Bench in the case of Prima Paper Engg (P) Ltd. Vs. ITO (Supra). The Ld. A.R. has also cited the decision of Pune Bench of the Tribunal in the case of ACIT Vs. Aurangabad Holiday Resorts (P) Ltd., (Supra) holding 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... flate the profit of eligible business has got to be rejected in view of the overriding provisions of Sub-section (5) of Section 80IA of the Act. 13. Having been considered the above submissions, we find that the issue raised in Ground No. 1 as to what would be the initial A.Y for the purposes of Section 80IA(5) of the Act has been decided in favour of the assessee by the Pune Bench of the Tribunal in the case of Poonawalla Stud and Agro Farm Pvt. Ltd. Vs. ACIT (Supra). In that case after discussing the issue in detail, the Tribunal has come to the conclusion that the initial A.Y for the purpose of claiming deduction u/s. 80IA was the first year in which the assessee claimed the deduction u/s. 80IA (1) after exercising his option as per the provisions of 80IA (2) of the Act. It was held that the Ld CIT(A) has erred in holding that the initial A.Y for the purposes of Section 80IA(2) r.w.s. 80IA (5) was the year in which the assessee started generating electricity from the wind mill activity. We also find that the issue raised in Ground No. 2 regarding the eligibility of the assessee to claim deduction u/s. 80IA undiminished by unabsorbed losses and depreciation also set off in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orks (Supra) hold that the Tribunal is bound by the decision of the Hon ble Madras High Court on an identical issue in the case of Velayudhaswamy Spinning Mills (P) Ltd Vs. ACIT (Supra). We thus respectfully following the decision taken by the Hon ble Madras High Court in that case on an identical issue under almost similar facts, hold that when the assessee exercising the option, only the losses of the year beginning from the initial A.Y. are to be brought forward and not the losses of earlier year which have been already set off against the other income of the assessee. The revenue cannot notionally bring forward any loss of earlier years which has already been set off against any other income of the assessee and set off the same against the current income of the eligible business. We thus set aside the orders of the authorities below and direct the A.O to allow the claimed deduction u/s. 80IA without bringing the notionally brought forward any loss or depreciation of earlier years which has already been set off against other income of the assessee. The decision of Pune Bench of the Tribunal in the case of Prima Paper Engineering P.Ltd. Vs. ITO (Supra) cited by the Ld. DR is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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