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TMI Blog2016 (11) TMI 1067X X X X Extracts X X X X X X X X Extracts X X X X ..... tion for 10years and also Income Tax exemption 100% of such profits and gains for 5years and thereafter 30% of the profits and gains - under section 80IC(3)(ii) of Income Tax Act. The Assessee Company commenced production in Uttarakhand in Assessment year 2008-09. The assessee had incurred a loss of Rs. 51,55,665/- in A.Y. 2008-09 and loss of Rs. 2,38,08,961/- in A.Y. 2009-10 in respect of the eligible unit at Uttarakhand which was set off against the income of the non-eligible unit at Mumbai in A.Ys 2008-09 and 2009-10 respectively. Therefore, the said losses were not available to be carried forward and set off in A.Y. 2010-11 under consideration. However, the A.O. while completing the assessment u/s. 143(3) of the Act for A.Y. 2010-11, notionally carried forward the losses of A.Y.s 2008-2009 and 2009-2010 which were already set off against the profit of the non-eligible unit at Mumbai and again set it off against the profit of Rs. 4,48,33,073/- of the eligible unit at Uttarakhand for A.Y.2010-11 and allowed only the balance of Rs. 1,58,68,447/- as deduction u/s. 80IC of the Act. Thus, the A.O. reduced the claim of deduction u/s.80IC of the Act to the extent of Rs. 2,89,64,626/-. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rlier years. There is a positive profit during the year. The unreported judgment of this court cited supra considered the scope of sub-section (6) of section 80-1, 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 Cl T v. Mewar Oil an d 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 80-1 and held as follows (page 314 of271 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" as no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pvt. Ltd. vs. ACIT (340 ITR 477, Mad.), answered the following question in negative and in favour of the assessee: 2. Whether on the facts and circumstances in the case, the ITAT was fight in its interpretation holding that depreciation on Wind Mills which had been already adjusted for the assessment years 1995-96 and 1996-9 again t th profits of Printing Business could artificially be carried forward for the impugned assessment year for the purpose of denial of relief u/s. 801A r/w sections 80AB and 801AA(7), of the Income Tax Act?... " The Hon. Madras High Court held as under: "In the light of the pronouncement of this court in Velayudhaswamy Spinning Mills P. Ltd.' s case (supra) and inasmuch as the facts and circumstances of the instant appeals, are similar, substantial questions of law 2 and 3 states supra, are answered in favour of the assessee." (ii) In the case of CIT vs. M/s. Kongoor Textile Process in TCA No. 184 of 2015 dated zn" April, 2015the Madras High followed its decision in the case of Velayudhaswamy Spinning Mills Pvt. Ltd. vs. ACIT (340 ITR 477) and held as under: "6. It is relevant to note that as against the above-said decision rendered by this Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue cannot take into consideration the loss and depreciation which is already set off against the income of the assessee from other source and compute the profit under Section 80-IA Therefore, the approach of the Tribunal is in accordance with law. The Assessing Authority and the Commissioner committed a serious error in setting off the profit earned by the assessee under Section 80-IA against the losses and depreciation of the eligible business which is already set off from other source before such a claim is put forth. Thus, there is no error committed by the Tribunal in setting aside the order passed by the Assessing Authority as well as the lower Appellate Authority. The substantial question of law is answered in favour of the assessee and against the Revenue." (iv) In the case of ACIT vs. Hamilton Houseware Pvt. Ltd. in ITA No. 988/Ahm/2009 dated 9th June, 2015 the Hon. Tribunal Ahmedabad Bench held as under: "30. We have heard both sides. Orders of the lower authorities have also been perused. There is no dispute about the factual position narrated in the proceeding paragraphs. The authorities below rely on section 80IA(5) and hold that assessee's losses pertaining ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 Dyeing, Bleaching and Printing Works (Supra) wherein the Hon'ble Bombay High Court has been pleased to hold in a case of excise matter that Tribunal is bound by the decision of High Court, even of a different State, so long as there is no contrary decision of any other High Court. The Hon'ble Bombay High Court has been pleased to hold further that the Tribunal had no option but to follow the judgment of the Madras High Court. An authority like an Income Tax Tribunal acting anywhere in the country has to re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss/depreciation of the Wind Mill cannot be notionally set off against the profit of eligible business for the computation of deduction. Accordingly, the order of the Id. CIT(A) is confirmed and the grounds raised by the Revenue is dismissed. 8. On the other hand learned DR relied on the order of the lower authorities and contended that CIT(A) has dealt with the issue in great detail and after applying correct proposition of law as laid down under section 80IC(7), 80IA(5) and 80IC(8)(v) had reached to the conclusion that eligible unit is an independent, therefore, its profit and loss has to be computed independently and the losses incurred by it is required to be set-off only against its profit and not against profit of other unit. Accordingly learned CIT(A) after applying various judicial pronouncements correctly reached to the conclusion that assessee was not correct in setting off loss of earlier years in the eligible unit against profit of non-eligible unit, accordingly AO was justified in artificially carrying forward the loss of earlier years so as to reduce assessee's claim for deduction u/s. 80IC (3) (ii) of the IT Act. 9. We have considered rival contentions and carefull ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. (113 ITD 209, Ahd. SB) which has been overruled by the Madras High Court in Velayudhswamy Spinning Mills Pvt. Ltd. vs. ACIT (340 ITR 477, Mad) dated 11th March 2010 and it has also been rendered prior to the decision of Velayudhswamy Spinning Mills Pvt. Ltd. vs. ACIT (340 ITR 477, Mad). 12. The decision of Mumbai Tribunal in case of Pidilite Industries Ltd. vs. DCIT (12 taxmann.com 96 Mum.) dated l0th June 2011 was also referred by CIT(A). This judgment has followed the decision of Goldmine Shares & Finance Pvt. Ltd. (113 ITD 209, Ahd. SB) which has been approved by the Madras High Court in Velayudhswamy Spinning Mills Pvt. Ltd. vs. ACIT (340 ITR 477, Mad.) which was the only judgment of the High Court in India and hence the decision of the Hon. Tribunal in Pidilite Industries Ltd. is not to be followed as it is against the judicial precedents. 13. In case of Prasad Production P. Ltd. vs. DCIT (98 ITD 212, Chennai. Trib.) dated 30th September 2005 was relied on by CIT(A), we found that this judgment is rendered prior to the decision of Velayudhswamy Spinning Mills Pvt. Ltd. vs. ACIT (340 ITR 477, Mad) dated 11 th March 2010 and therefore, the decision is distinguishable. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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