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TMI Blog2014 (3) TMI 808X X X X Extracts X X X X X X X X Extracts X X X X ..... de the order passed by the Assessing Authority as well as the lower Appellate Authority. Both the Assessing Authority and the Appellate Authority proceeded on the basis that the initial claim for deduction is made in the assessment year 2006-07 - the assessee contends that the claim for deduction was put forth for the first time in the Assessment Year 2008-09 and therefore, it is his specific contention that loss and depreciation incurred by the eligible business was set off against the income of the assessee from other source - for the first time, when the claim was put forth for the Assessment Year 2008-09, the Assessing Authority was not justified in setting off the profit from eligible business against the loss and depreciation which had already been set off against the income of the assessee - this aspect has not been carefully looked into by either of the Authorities and the finding to be recorded is based on the finding of fact – thus, the matter remitted back to the Assessing Authority to consider the claim of exemption u/s 80IA of the Act – Decided in favour of Revenue. - ITA No.176/2011 - - - Dated:- 5-2-2014 - N Kumar And C R Kumaraswamy, JJ. For the Appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uantum of reduction available under Section 80IA of the Act. Following the said judgment, the Tribunal accepted the contention of the assessee and reversed the order of the Commissioner of Income-tax (Appeals) on that point and directed the Assessing Authority to grant deduction to the assessee under Section 80IA of the Act for the quantum claimed by the assessee without diluting the same by the notional deduction of earlier loss and depreciation. Aggrieved by the said order, the Revenue is in appeal. 3. The learned counsel for the Revenue assailing the impugned order of the Tribunal contended in view of sub-section (5) of Section 80IA of the Act, for the purpose of determining the quantum of deduction under sub-section (1) of Section 80IA, the only source of income of the assessee from the eligible business during the previous year relevant to the assessment year is to be taken into consideration and, therefore, the loss and depreciation claimed by the assessee in respect of the said eligible business from the date the business was commenced is to be setoff against the profits earned by the assesee for any relevant previous year and assessment is to be made. Therefore, the Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 218 (SC) analysing the provisions contained chapter VI-A in which Section 80IA finds a place, has held that Chapter VI-A which provides for incentives in the form of tax deductions essentially belong to the category of profit linked incentives; when Section 80-IA/80-IB refers to profits derived from eligible business, it is not the ownership of that business which attracts the incentives. What attracts the incentives under Section 80-IA/80-IB is the generation of profits. The Parliament has confined deduction to profits derived from eligible businesses mentioned in sub-sections (3) to (11A) constitutes a stand-alone item in the matter of computation of profits. That is the reason why the concept of Segment Reporting stands introduced in the Indian Accounting Standards (IAS) by the Institute of Chartered Accountants of India (ICAI). Sections 80- IB/80-IA are the Code by themselves as they contain both substantive as well as procedural provisions. Sub- section (13) of Section 80-IB provides for applicability of the provisions of sub-section (5) and sub-sections (7) to (12) of Section 80-IA, so far as may be, applicable to the eligible business under Section 80-IB. Sections 80I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment years out of 15 years beginning from the year in which the undertaking or the enterprise develops and begins to operate in infrastructure facility. In other words, an option is given to the assessee to choose ten consecutive years out of 15 years from the date of establishment of the undertaking. Sub-section (5) deals with determination of quantum of deduction. It provides that notwithstanding anything contained in any other provision of this Act, the profits and gains of an eligible business to which the provisions of sub- section (1) apply shall, for the purposes of determining the quantum of deduction under that sub-section for the assessment year immediately succeeding the initial assessment year or any subsequent assessment year, be computed as if such eligible business were the only source of income of the assessee during the previous year relevant to the initial assessment year and to every subsequent assessment year up to and including the assessment year for which the determination is to be made. 8. From the aforesaid provisions, it is clear that incentive is given to the assessee which has invested in infrastructure. The said benefit has to be claimed from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me of an assessee includes any profits and gains derived by an undertaking or an enterprise from any business referred to in sub-section (4) i.e. referred to as the eligible business, there shall, in accordance with and subject to the provisions of the section, be allowed, in computing the total income of the assessee, a deduction of an amount equal to 100 per cent of the profits and gains derived from such business for ten consecutive assessment years. Deduction is given to eligible business and the same is defined in sub-section (4). Sub-section (2) provides option to the assessee to choose 10 consecutive assessment years out of 15 years. Option has to be exercised. If it is not exercised, the assessee will not be getting the benefit. Fifteen years is outer limit and the same is beginning from the year in which the undertaking or the enterprise develops and begins to operate any infrastructure activity etc. Sub- section (5) deals with quantum of deduction for an eligible business. The words initial assessment year are used in sub-section (5) and the same is not defined under the provisions. It is to be noted that 'initial assessment year' employed in sub-section (5) is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the approach of the Tribunal is in accordance with law. The Assessing Authority and the Commissioner committed a serious error in setting off the profit earned by the assessee under Section 80IA against the losses and depreciation of the eligible business which is already setoff from other source before such a claim is putforth. Thus, there is no error committed by the Tribunal in setting aside the order passed by the Assessing Authority as well as the lower Appellate Authority. The substantial question of law is answered in favour of the assessee and against the Revenue. 11. However, in the instant case, both the Assessing Authority and the Appellate Authority proceeded on the basis that the initial claim for deduction is made in the assessment year 2006-07. Factually, if it is correct, then there is no case for interference with the orders passed by the Assessing Authority and lower Appellate Authority. However, the assessee contends that the claim for deduction was putforth for the first time in the Assessment Year 2008-09 and therefore, it is his specific contention that loss and depreciation incurred by the eligible business was setoff against the income of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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