9911796707
TMI Blog2014 (3) TMI 808X X X X Extracts X X X X X X X X Extracts X X X X ..... on relying on sub-section (5) of Section 80IA of the Act deducted the said profit and gains from the business in the depreciation/unabsorbed depreciation and carried forward losses in a sum of Rs.36,90,28,139/- and directed carry forward of unabsorbed loss in a sum of Rs. 34,92,54,208/- for the subsequent year. Aggrieved by the said setoff, to arrive at the income eligible for deduction under Section 80IA for the relevant Assessment Year, the assessee preferred an appeal to the Commissioner of Income-Tax (Appeals). The Appellate Authority held, the Assessing Officer was justified in denying the deduction of Rs.1,97,72,931/- claimed under Section 80IA of the Act as the losses and depreciation in respect of eligible business for the Assessment Years 2006-07 and 2007-08 has to be setoff notionally against the profits of eligible business as the Assessment Year as per sub-section(5) of Section 80IA of the Act. Thus, he dismissed the appeal. Aggrieved by the said order, the assessee preferred an appeal to the Tribunal. The Tribunal relying on the judgment of the Madras High Court in the case of Velayudhaswamy Spinning Mills (P) Ltd. Vs. Assistant Commissioner of Income Tax reported in ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see could claim, has to be setoff against the profits of the assessee from other business source. But, once he putforths such a claim, then from that day onwards the losses and depreciation of the said eligible business is to be taken into consideration for determining the quantum of deduction for the purpose of benefit under Section 80IA of the Act. Therefore, in the instant case, though the business was commenced in 2006-07, the assessee did not claim the benefit for the Assessment Years, 2006-07 and also 2007-08; for the first time, the said claim was made for the Assessment Year 2008-09 and, therefore, the loss and depreciation till such time was setoff against the profit from other source. The Assessing Authority could not have setoff the profit of the eligible business against the said depreciation and losses which were already claimed setoff from other sources. Therefore, the Tribunal was justified in following the judgment of Madras High Court and upholding the claim of the assessee. 5. The substantial question of law that arises for our consideration in this appeal is as under: Whether, in the facts and circumstances of the case, the depreciation and l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection (1) only to the extent of profits derived from such industrial undertaking after specified dates. Hence, apart from eligibility, sub-section (1) purports to restrict the quantum of deduction to a specified percentage of profits. This is the importance of the words "derived from industrial undertaking" as against "profits attributable to industrial undertaking. 7. In the background of the aforesaid law enunciated by the Apex Court, when we look at Section 80IA of the Act, it deals with deduction in respect of the profits and gains from industrial undertakings or enterprises engaged in infrastructure, development etc. Section 80IA of the Act provides where the gross total income of an assessee includes any profits and gains derived by an undertaking or an enterprise from any business engaged in infrastructure, development, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction of an amount equal to 100% of the profits and gains derived from such business for ten consecutive assessment years, is exempted from payment of tax. That is the incentive given by the Parliament with the avow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of a business or profession newly set up, or a source of income newly coming into existence, in the said financial year, the previous year shall be the period beginning with the date of setting up of the business or profession or, as the case may be, the date on which the source of income newly comes into existence and ending with the said financial year. Therefore, the previous year shall be the period beginning with the date of setting up of the business or profession. But, sub-section 80IA comes into picture only when a claim is putforth for deduction. It is only then the profits earned in the eligible business is to be setoff against the depreciation and losses of the eligible business. If no claim is putforth, there is no question of setting off the profits against the losses. If the assessee is carrying on other business, that loss and depreciation incurred by him under the provisions of the Act can be set off against other sources. There is no prohibition. Therefore, once the assessee sets off his profits earned from other source against the depreciation and loss suffered in the eligible business, again the same cannot be set off against the profits derived from the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It does not allow the Revenue to look backward and find out if there is any loss of earlier years and bring forward notionally even though the same were set off against other income of the assessee and the set off against the current income of the eligible business. Once the set off is taken place in earlier year against the other income of the assessee, the Revenue cannot rework the set off amount and bring it notionally. Fiction created in sub- section does not contemplates to bring set off amount notionally. Fiction is created only for the limited purpose and the same cannot be extended beyond the purpose for which it is created. 10. Therefore, keeping in mind the object with which these provisions are introduced, it is clear that an assessee is given the benefit of 100% deduction of the profits and gains from the eligible business. The quantum of deduction is to be calculated when the claim for deduction is made. If before claiming deduction, the loss and depreciation claimed by the assessee even in respect of eligible business is setoff against income of the assessee or other source, the said loss or depreciation is already absolved, it does not exist. For the purpose of det ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
