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TMI Blog2015 (1) TMI 1072X X X X Extracts X X X X X X X X Extracts X X X X ..... e business enterprise, the assessee in each of the appeal falls within the parameters of Section 80IA of the Income Tax Act. - Decided in favour of assessee. - Tax Case (Appeal) Nos.345 to 352 of 2012 - - - Dated:- 19-1-2015 - MR. R.SUDHAKAR AND MR. R.KARUPPIAH, JJ. For the Appellant : Mr. M. Swaminathan Standing Counsel for Income Tax For the Respondent : Mr. R. Senniappan, Mr.R.Sivaraman JUDGEMENT (Judgment of the Court was delivered by R.SUDHAKAR, J.) The above Tax Case (Appeals) are filed by the Revenue as against the order of the Income Tax Appellate Tribunal. In all the above Tax Case (Appeals), the issue raised by the Revenue is identical. Hence, all the above appeals are taken up together and common order is passed. 2. The core issue raised in all the above Tax Case (Appeals) is whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the respondent/assessee in each appeal is entitled to claim deduction under section 80-IA of the Income Tax Act. 3. Learned counsel appearing for the assessee submitted that the issue involved in these appeals have already been decided by this Court in the decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the previous year initially and subsequent assessment years. Sub-section (6) was the subject-matter before this court in the above-mentioned unreported judgment, wherein this court had held that while interpreting the above provision, for the purpose of allowing deduction under section 80-I brought forward losses and unabsorbed depreciation of the new industry need not be taken into consideration once they have been set off from other sources of income earlier. In the present case, we are concerned with the provision of section 80-IA. The said provision was introduced by the Finance Act, 1999, with effect from April 1, 2000. The provisions of sections 80-I and 80-IA are also more or less identically worded. Sections 80-I and 80-IA come in Chapter VI-A of the Income-tax Act. Chapter VI-A deals with deductions to be made in computing total income. There are two tax incentives contemplated in Chapter VI-A. One is investment incentive and the other one is profit-linked investment. Chapter VI-A was introduced by the Finance Act, 1965, with effect from April 1, 1965, and it consists of four headings. They are A, B, C and D. Heading A is general and it also contains definition. It con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s . Therefore, 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. Further, it has been held that sections 80-IB/80-IA are the code by themselves as they contain both substantive as well as procedural provisions. The Supreme Court further observed in the said judgment that sub-section (5) of section 80-IA provides for manner of computation of profits of an eligible business. Accordingly such profits are to be computed as if such eligible business is the only source of income of the assessee. Section 80-IA reads as follows : 80-IA. (1) Where the gross total income of an assessee includes any profits and gains derived by an undertaking or an enterprise from any business referred to in sub-section (4) (such business being hereinafter referred to as the eligible business) 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 hundred per cent. of the profits and gains derived from such business for ten consecutive assessment years. (2) The deduction s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess, 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 different from the words beginning from the year referred to in sub-section (2). The important factors are to be noted in sub-section (5) and they are as under : (1) I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered the scope of sub-section (6) of section 80-I, which is the corresponding provision of sub-section (5) of section 80-IA. Both are similarly worded and, therefore, we agree entirely with the Division Bench judgment of this court cited supra. In the case of CIT v. Mewar Oil and General Mills Ltd. (No. 1) [2004] 271 ITR 311 (Raj) ; [2004] 186 CTR (Raj) 141, the Rajasthan High Court also considered the scope of section 80-I and held as follows (page 314 of 271 ITR) : Having considered the rival contentions which follow on the line noticed above, we are of the opinion that on finding the fact that there was no carry forward losses of 1983-84, which could be set off against the income of the current assessment year 1984-85, the recomputation of income from the new industrial undertaking by setting off the carry forward of unabsorbed depreciation or depreciation allowance from previous year did not simply arise and on the finding of fact noticed by the Commissioner of Income-tax (Appeals), which has not been disturbed by the Tribunal and challenged before us, there was no error much less any error apparent on the face of the record which could be rectified. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvestment allowance of earlier years in respect of the new industrial undertaking, ship or approved hotel will be taken into account in determining the quantum of deduction admissible under the new section 80-I even though they may have been set off against the profits of the taxpayer from other sources. We are not agreeing with the counsel for the Revenue. We are, therefore, of the view that loss in the year earlier to the initial assessment year already absorbed against the profit of other business cannot be notionally brought forward and set off against the profits of the eligible business as no such mandate is provided in section 80-IA(5). Under these circumstances, we set aside the order of the Tribunal and answer all the questions in favour of the appellant/assessee and against the Revenue in Tax Case Nos. 909 and 940 of 2009 respectively. Accordingly, tax cases are allowed. 8. It is relevant to note that as against the above-said decision rendered by this Court, the Revenue has filed appeals before the Supreme Court, which are stated to be pending, in which, only notice was ordered and were not yet admitted by the Supreme Court. 9. The facts in the present batch ..... X X X X Extracts X X X X X X X X Extracts X X X X
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