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TMI Blog2014 (7) TMI 497X X X X Extracts X X X X X X X X Extracts X X X X ..... Export turnover exceeded ₹ 10 crores - Held that:- The assessee submitted that the amended provisions were not applicable at the time of passing the original order U/s. 143(1) of the Act dated 21.01.2003 – there was no find any merit in the argument of the assessee and Revenue has given effect to the amendment provisions of the Act which came into force at the time of passing the order U/s143(3) which was enforceable with retrospective effect from 01.04.1988 – Decided against Assessee. Deduction of payment of ₹ 1 crore of non-compete fee U/s. 37 of the Act – Held that:- There was some strength in the submissions of the assessee - all the decisions and the facts were not properly placed before the Revenue on the earlier occasions by the assessee – thus, the matter is to be remitted back to the AO for fresh adjudication – Decided in favour of Assessee. - I.T.A. Nos.657 & 658 /Mds/2013, I.T.A. No. 777/Mds/2013 - - - Dated:- 8-1-2014 - Shri A. Mohan Alankamony And Shri V. Durga Rao,JJ. For the Petitioner : Shri M. Viswanathan,CA For the Respondent : Shri S. Das Gupta, CIT D. R ORDER Per A. Mohan Alankamony , Accountant Member: These two ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r additions some of them were further confirmed by the Ld. CIT(A) against which the assessee is in appeal before us. 4. Assessee s Appeal. 4.1 Ground No.1:- Initial year of claim for deduction U/s. 80-IA of the Act. The appellant had commenced windmill business from the assessment year 1995-96 onwards. However, the assessee suffered loss on these activities until the assessment year 1999-2000. Therefore, the assessee claimed deduction U/s. 80 IA of the Act from the assessment year 2000-01 onwards on 100% of the profits, the year from which the assessee company started making profits. Ld. Assessing Officer disallowed the deduction claimed by the assessee by observing as under:- 8.4. In the case of the assessee, the assessee s wind energy division had commenced in the previous year relevant to the assessment year 1995- 96. The initial assessment year in its case was A.Y.1995-96. The first five years ended in A.Y. 1999-2000. The assessee filed its profit and loss account with the statement that it would claim deduction in the year in which would commence deriving profits from the undertaking. There does not appear to be any conscious exercise opted by the assessee as to w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd loss account for that division from that year. 8.7. Accordingly, the assessment year 1995-96 is taken as the initial assessment year in this case, for the purpose of claiming deduction/s 80-IA of the Act. Therefore, the current assessment year viz.2001-02 is the 7th year and deduction under section 80-IA is restricted to 30% of the profits of the eligible undertaking. This is, apart from the stand that the assessee is not entitled to any deduction under section. 80-IA for this year, by applying the provisions of Sec 80-IA(5) of the Act, as discussed in para 7 above. When the matter reached the Ld. CIT(A), the Ld. CIT(A) confirmed the order of the Ld. Assessing Officer. The relevant para 7.3 of Ld. CIT (A) s order is reproduced below:- 7.3. Regarding the other issue of the initial year of claim of deduction/s 80IA, under the law as applicable for the assessment year 1995-96, which was the initial assessment year for the assessee s industrial undertaking, the assessee would be entitled for 100% deduction on the profits of the undertaking for the first 5 years and 30% for the subsequent 5 assessment years. The AO has elaborately discussed at para 8 of the assessment orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and maintains or develops, operates and maintains any infrastructure facility referred to in clause(a) or clause (b) or clause (c) of the Explanation to clause (i) of subsection (4),the provisions of this sub-section shall have effect as if for the words fifteen years , the words twenty years had been substituted.] [(2A) Notwithstanding anything contained in sub-section (1) or sub-section (2), the deduction in computing the total income of an undertaking providing telecommunication services, specified in clause (ii) of sub-section (4), shall be hundred per cent of the profits and gains of the eligible business for the first five assessment years commencing at any time during the periods as specified in subsection (2) and thereafter, thirty per cent of such profits and gains for further five assessment years.] (3) This section applies to [an [undertaking] referred to in [clause (ii) or] clause (iv) [ ***] of sub-section (4)] which fulfils all the following conditions, namely : Provided that where the assessee is a company, the provisions of this subsection shall have effect as if for the words twenty-five per cent , the words thirty per cent had been substituted. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... losses on this unit and therefore, the provisions of sec.80IA of the Act was not operational on the assessee. Subsequently from the assessment year 2000-01, the assessee earned profit from the unit. It is pertinent to note that the Act was amended by the Finance Act, 2001 with effect from assessment year 2002-03. Therefore, during the relevant previous year, this amended provision was not operational in the case of the assessee and the provisions which stood prior to the amendment were in force. Therefore, there is no error in the order of the Ld. AO and ld. Ld. CIT (A). Hence, we confirm the order of the Ld. CIT(A) on this issue, who has followed the order of the Ld. Assessing Officer. Accordingly, this ground raised by the assessee is dismissed. 5. Ground No.2: Disallowance of deduction U/s. 80HHC of the Act claimed by the assessee. Ld. Assessing Officer in the re-assessment proceedings U/s. 143(3) of the Act observed that the assessee s export turnover has exceeded ₹ 10 crores and therefore, the assessee was not entitled to deduction by virtue of the amended provisions of Sec. 80HHC(3) s Third, Fourth and Fifth proviso of the Act, which was inserted by Taxation Laws ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the amount of ₹ 1crore was paid towards noncompeting agreements, use of good will, transfer of trade mark committee -brand name- other commercial values, for transfer of existing orders of M/s.Easwaran Sons Engg. Ltd., and not only for non-compete fee. The appellant has submitted various decisions before us and prayed that if the expenditure claimed is disallowed, the same may be spread over for the period of five years. Ld. D.R relied on the orders of the Revenue. After examining the nature of expenditure incurred by the assessee, we find some strength in the submissions of the assessee. However, since all the decisions and the facts were not properly placed before the Revenue on the earlier occasions by the assessee we are of the considered view that the matter needs to be looked into afresh by the authorities below. Therefore, in the interest of justice we hereby remit this issue back to the file of Ld. Assessing Officer for de novo consideration. Revenue s Appeal (A.Y.2001-02) 7. Ground No.1 : Erroneous direction of the Ld. CIT(A) to the Ld. Assessing Officer to follow the decision of the jurisdictional High Court in the case of Velayudhaswamy Spinning Mills Pv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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