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TMI Blog2016 (3) TMI 914X X X X Extracts X X X X X X X X Extracts X X X X ..... in law, the Ld. CIT(A) was correct to interpret the operation of Section 80IA(5) only from the year of first claim of deduction u/s 80IA(1) even when the eligible business had commenced in earlier years? 2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) and Hon'ble ITAT, Pune, on which the Ld.CIT(A) placed reliance was correct to treat the judgement of non-jurisdictional High Court as a binding precedent that must be followed in disregard to the principle laid down on this issue by the Division Bench of the Bombay High Court in the case of CIT Vs. Thane Electricity Supply Ltd. reported in 206 ITR 727 ? 3. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in allowing deduction u/s.80IA(4) by considering the initial assessment year for the purpose of claiming deduction u/s.80IA(4) of the Act, is the first year in which the assessee claimed deduction u/s.80IA(iv)(4) for ignoring the operation of Sec. 80IA(5) of the I.T. Act, 1961 ? 4. The appellant craves leave to add, amend or alter any of the above grounds of appeal. 3. Facts of the case, in brief, are that the assessee is engaged in the busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10,96,404 15,31,630 --- Set off of loss allowed 12,60,699 10,96,404 15,31,630 --- Losses of earlier years to be carried forward 1,18,81,787 1,06,53,341 1,00,05,493 3,22,66,511 6. The major portion of resultant loss of windmills of ₹ 7,06,51,788/- as on 01-04-2009 computed above adjusted with other income of the earlier years by the assessee, were notionally brought forward by A.O. u/s. 80IA(5). After adjustment of profits of windmills in this year, the AO noted that the assessee had total loss of Rs.(-) 6,48,07,132/ - in this year. He further noted that no unit has shown profitability if considered on stand-alone basis. Hence, the claim of deduction u/ s 80IA of the Income-tax Act, 1961 was not found to be admissible by the A.O. 7. The AO further noted that the assessee claimed deduction u/s 80IA(1) for the first time in A.Y. 2009-10 as per Form No. 10CCB filed. It has also been claimed in this year on the same basis. According to the AO, section 80IA( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee, the fiction u/s.80IA(5) is applicable only from the initial year of claim of deduction and not prior to it. The assessee stated that as the windmills were installed from A.Y. 1999-2000 onwards, hence its case is covered by the amended provisions of See. 80IA(2), implying that assessee company had the option of choosing the 'initial assessment year'. The assessee company opted A.Y. 2009-10 as the initial assessment year, implying that any loss incurred in the windmill division prior to A.Y. 2009-10 need not be notionally carried forward and adjusted against current year s income. Relying on various decisions it was submitted that the claim made by the assessee should be allowed. 9. Based on the arguments advanced by the assessee, the Ld.CIT(A), following the decision of the Pune Bench of the Tribunal in the case of Serum International Ltd. vide ITA Nos. 290 to 292/PN/2010 order dated 28-09-2011 for A.Y. 2004-05 and the decision of Hon ble Madras High Court in the case of Vellayudhaswamy Spinning Mills Pvt. Ltd. Vs. ACIT reported in 38 DTR 57 (Madras) allowed the claim of the assessee. 10. Aggrieved with such order of the CIT(A) the revenue is in appeal before us. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in which power generation commences and not the year in which it chooses to make claim for deduction for the first time. Reliance is also placed on the decision of Hon'ble Delhi High Court in the case of CIT vs. Nestor Pharmaceuticals Ltd. 322 ITR 631. Initial year is not defined in the Act. It may represent year of commencement of production or first claim but cannot change the interpretation of Section 80IA(5), which has been explained by the Hon'ble ITAT, Special bench, Ahmedabad, in Gold Mine judgement quoted supra and the Supreme Court Judgement of Liberty India Vs. CIT 317 ITR 218. Similar view was also found expressed by Bombay High Court in the case of Cipla Ltd reported in 2 SOT 617. Further the assessee company had started windmill electric production during the A.Y.1999- 2000, however not claimed deduction u/ s. 80IA(4) and the loss of windmill was adjusted with other income. After the adjustment of brought forward losses of windmill unit of earlier years, there was no profit left and thus, the assessee is not entitled for deduction u/s.80IA(4) of the Income-tax Act, 1961. He accordingly submitted that the order of Ld.CIT(A) be reversed and that of the AO be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the option, only the losses of the years beginning from the initial A.Y. are to be brought forward and not the losses of the earlier years which have been already set off against the income of the assessee. The Hon ble Madras High Court has been further pleased to hold that revenue cannot notionally bring forward any loss of earlier years which had already been set off against the other income of assessee and set off against the correct income of the eligible business. Fiction created by Sub-section (5) of Section 80IA does not contemplate such notional set off, held the Hon ble High Court. The Hon ble Madras High Court in that decision has also referred the decision of Hon ble Supreme Court in the case of Liberty India Vs. CIT (Supra) and the decision of Special Bench of the Tribunal in the case of Goldman Shares Finance (P) Ltd. (Supra). There is no dispute that even a decision of non-jurisdictional High Court is a binding precedent for the Tribunal until a contrary decision is given by any other competent High Court. In this regard, we find strength from the recent decision of Hon ble jurisdictional Bombay High Court in the case of Commissioner of Central Excise Vs. Valson D ..... X X X X Extracts X X X X X X X X Extracts X X X X
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