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TMI Blog2011 (1) TMI 1375X X X X Extracts X X X X X X X X Extracts X X X X ..... as not noticed the non obstante provisions of s. 80-I(6)/80-IA(5) and, therefore, there is no discussion on this point in that decision. It would similarly, therefore, be not of any help to present case. The judgment of Special Bench in the case of Goldmine Shares Finance (P) Ltd. is squarely applicable to the facts of the present case and applying the ratio laid down by this order of the Special Bench of this Tribunal, the issue is decided against the assessee relating to allowability of deduction under s. 80-IA that in terms of provisions of under s. 80-IA(5) of the IT Act, the profit from the eligible business for the purpose of determination of the quantum of deduction under s. 80-IA of the Act has to be computed after deduction of the notional brought forward losses and depreciation of eligible business even though they have been allowed set off against other income in earlier years. Revision u/s 263 - Jurisdiction/power of CIT to invoke the provisions of s. 263 when the original assessment was completed u/s 143(3) of the Act and all the relevant informations at the point of s. 80-IA are furnished before the AO - HELD THAT:- The prejudicial to the interest of Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Charya for the Respondent. ORDER Chandra Poojari, Accountant Member - The first two appeals in ITA Nos. 352/Hyd/2005 and 1479/Hyd/2008 preferred by the assessee are directed against different orders passed by the CIT(A)-II and III, Hyderabad under s. 250 r/w s. 143(3) of the IT Act and pertains to the asst. yrs. 2002-03 and 2005-06. 2. There are other five appeals out of this-the first two appeals in ITA Nos. 40 and 41 by one assessee and other 3 appeals in ITA Nos. 42 to 44/Hyd/2006 are by another assessee which are directed against the different orders passed by the CIT, Hyderabad under s. 263 of the IT Act and pertain to the asst. yrs. 2001-02, 2002-03 and 2003-04. 3. The assessees herein raised common grounds in these appeals are that the CIT(A)/CIT erred in not accepting claim of the assessee that losses relating to the industrial undertaking which are already absorbed against other income need not be notionally brought forward against the profit of the current year while allowing the deduction under s. 80-IA. The assessees also raised ground in ITA Nos. 40 to 44/Hyd/2006 that the CIT(A) erred in cancelling the assessment when the original assessment was compl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uantification of the expenses of the undertaking, it was directed to the AO that he/she shall verify the correctness of the claim in this regard. In particular, he/she should allocate the expenses not particularly relatable to the existing alone in the rational manner to the new undertaking for determination of income of the undertaking. Against this the assessee is in appeal before us. 6. According to learned Authorized Representative, the notionally brought forward unabsorbed business losses or depreciation of eligible business unit need not be set off against the income earned by the unit for the assessment years. 7. He submitted that the assessee company started the windmill unit located at Kadavakallu near Tadipatyri, Anantapur District on 31st March, 1999. The assessee claimed deduction under s. 80-IA on this unit at ₹ 11,67,300. But the assessee company had losses for the asst. yrs. 1999-2000 and 2000-01 on this unit. It has shown a turnover of ₹ 12,85,783 towards this windmill and claimed expenses at ₹ 1,18,483 and arrived the figure of ₹ 11,67,300. The assessee set off the brought forward losses against the income of this windmill as per the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not called for and not contemplated in the claim of deduction provided in s. 80-IA and therefore the assessee s claim had to be allowed on the basis of profit of the windmill project, unfettered by any notional amount of unabsorbed depreciation pertaining to the preceding assessment year. 13. Further, he submitted that the amount allowed in earlier years for depreciation on wind mills was set off against the business income under s. 70 of the Act. That s. 80-IA does not have that past losses have to be brought forward to curtail the benefit. According to the learned Authorised Representative the deduction under s. 80-IA being a beneficial provision intended for the encouragement of the industries has to be construed liberally and only income for the year has to be taken into account for computation of deduction under s. 80-IA without setting off of any brought forward losses shall be when the earlier years losses already absorbed by the income from the other unit of the assessee company. Finally, he drew our attention to the following judgments : 1.CIT v. Mewar Oil General Mills Ltd. (supra) wherein it was held : That the question of rectification would have been ger ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levant to the initial assessment years and to very subsequent assessment years upto and including assessment years for which the said benefit is to be computed. According to Departmental Representative the income of the unit eligible for deduction under s. 80-IA only is to be computed before granting deduction under s. 80-IA as if that it is only source of income. She relied on the order of the Tribunal Special Bench in the case of Asstt. CIT v. Goldmine Shares Finance (P) Ltd. (2008) 116 TTJ (Ahd)(SB) 705 : (2008) 9 DTR (Ahd)(SB)(Trib) 282 : (2008) 113 ITD 209 (Ahd)(SB) wherein it was held that : The second aspect of the matter is that the fiction is created for all the years eligible for the deduction i.e., the initial year (the first year of the deduction) and all subsequent and succeeding years. It is not only for a particular year as is evident from the language used in s. 80-IA(5), it is for initial assessment year and every subsequent assessment year upto and including the assessment year for which the determination is to be made. There was no merit in the contention of the assessee that the fiction was for that year alone or that the concept of initial year was dispen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the only judgment on the point, has been rendered without having been informed about certain statutory provisions that are directly relevant, it is not to be followed. In our opinion, judgment of Special Bench in the case of Goldmine Shares Finance (P) Ltd. (supra) is squarely applicable to the facts of the present case and applying the ratio laid down by this order of the Special Bench of this Tribunal, we incline to decide the issue against the assessee relating to allowability of deduction under s. 80-IA that in terms of provisions of under s. 80-IA(5) of the IT Act, the profit from the eligible business for the purpose of determination of the quantum of deduction under s. 80-IA of the Act has to be computed after deduction of the notional brought forward losses and depreciation of eligible business even though they have been allowed set off against other income in earlier years. 16. Regarding invoking of provisions under s. 263, the argument of the assessee s counsel is that the assessments for the asst. yrs. 2001-02, 2002-03 and 2003-04 have been completed under s. 143(3) of the IT Act and the assessees have furnished all the information as required for the purpose of ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder passed by the AO is very cryptic. There is no discussion or methodology of computation of deduction under s. 80-IA. It cannot be said that the AO is aware of any of the Tribunal orders on the issues involved. The order of the AO is erroneous for want of proper enquiry. He has not recorded reasons for accepting the return of the assessee as submitted by it on the impugned issue. The AO without making any enquiry accepted the claim of the assessee without recording any reasons at all. The assessment order is silent about the issue raised by the CIT. He has not examined the merit of the claim of the assessee. We cannot say that he has taken one of the permissible views in accordance with law. He has not taken any view, except accepting the view of the assessee on the issue. In this case, the failure of the AO to make an enquiry with regard to the claim of the assessee and to record such a reason, why he is taking particular view, makes the assessment order erroneous and prejudicial to the interest of the Revenue. As such, we are of the opinion that there is no merit in the arguments of the assessee s counsel against observation made by CIT in his order under s. 263. 17. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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