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TMI Blog2015 (1) TMI 1404X X X X Extracts X X X X X X X X Extracts X X X X ..... her in the facts and in the circumstances of the case, the Ld. CIT(A) was correct in interpreting "initial assessment year". 3. Whether in the facts and in the circumstances of the case, the definition of "Initial Assessment Year" as given in Section 80IB(14) of the Act is not applicable in the provision of Section 80IA of the Act." 2.1 Facts of the case, in brief, are that the assessee is a company engaged in the business of manufacturing of Automobile press components and windmill power generation. It filed its return of income on 30-09-2009 declaring total income at Rs. 4,96,15,470. During the course of assessment proceedings, the Assessing Officer noted that the assessee has claimed deduction u/s.80IA(4)(iv)(a) of the Act from windmill power generation at Rs. 12,97,740/-. Since the assessee is having losses in earlier years he was of the opinion that the assessee is not eligible for the deduction as per provisions of section 80IA(5). The AO was of the opinion that as per the said provision, the profit and gain of the industrial unit for the purpose of determining quantum of deduction admissible to the undertaking in the assessment year immediately succeeding initial assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gly, the AO worked out the allowable deduction u/s 80IA for A.Ys.2004- 2005 to 2008-09 as under: ASSESSMENT YEAR CURRRENT YEAR NOTIONAL (LOSS PROFIT) LOSS SET OFF CARRIED FORWARD CUMULATIVE BALANCE UNABSORBED LOSSESS 2001-02 (10,787,017.00) - (10,787,017.00) (10,787,017.00) 2002-03 561,963.00 561,963.00 - (10,225,054.00) 2003-04 437,261.00 437,261.00 - (9,787,793.00) 2004-05 1,517,692.00 1,348,919.00 - (8,438,874.00) 2005-06 964,434.00 964,434.00 - (7,474,440.00) 2006-07 1,517,692.00 1,517,692.00 - (5,956,748.00) 2007-08 1,374,740.00 1,374,740.00 - (4,582,008.00) 2008-09 1,297,737.00 1,297,737.00 - (3,284,271.00) 2009-10 657,700.00 657,700.00 - (2,626,571.00) 2.4 The A.O., therefore, concluded that for the purpose of determining quantum of deduction u/s 80IA of the Act, the assessee company has no profit available for claiming deduction under the said section. In support of the disallowance of deduction claimed by the assessee u/s 80IA(4), the AO relied on the following decisions (i) ACIT Vs. Goldmines Shares & Investments. Pvt. Ltd. (Special Bench Ahmadabad ITAT) 113 ITD 209. (ii) Swarnagiri Wire Insulations (P) Ltd. Vs. ITO, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of the CIT(A) the Revenue is in appeal before us. 5. After hearing both the sides, we find identical issue had come up before the Pune Bench of the Tribunal in the case of ACIT Vs. Mrs. Sulbha Subhash Lodha. We find the Tribunal vide ITA No.1845/PN/2013 order dated 24-09-2014 has decided the issue in favour of the assessee by observing as under : "10. We have considered the rival arguments made by both the sides. The only dispute to be decided in the impugned grounds raised by the Revenue is as to whether in view of section 80IA(5) of the I.T. Act, 1961 the quantum of deduction is to be computed after reducing the notional brought forward losses and depreciation of the eligible business even though the same might have been set off against other income in the earlier years or the year in which the assessee exercises the option contained in sub-section 80IA(2) of the Act of identifying 10 consecutive assessment years out of 15 years for which the deduction is to be availed. We find an identical issue had come up before the Pune Bench of the Tribunal in the case of Sangram Patil (Supra) wherein the Tribunal, following the decision of the Pune Bench of the Tribunal in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there was a profit from windmill activity of Rs. 21,96,821/- and after setting off the brought forward loss of windmill activity of Rs. 3,47,134/-, assessee claimed deduction u/s 80-IA of the Act on the balance of the profits. In the year under consideration i.e. 2006-07, the assessee had profits from windmill activity at Rs. 25,62,314/- which has claimed to be exempt in terms of section 80-IA of the Act. However, as per the Revenue, the losses incurred by the assessee for A.Y. 2002-03 and 2003-04 from the activity of windmill have to be reduced from the current year's profits of the windmill activity in order to compute the amount eligible for deduction u/s 80-IA of the Act, having regard to the provisions of section 80-IA(5) of the Act. Pertinently, it is not disputed that the losses of A.Y. 2002-03 and 2003-04 from windmill activity are otherwise lying absorbed against assessable incomes in the past years. As per the Revenue, section 80-IA(5) of the Act requires that the profits of the eligible units i.e. windmill are to be computed for the purposes of determining the quantum of deduction u/s 80-IA(1) of the Act, in a manner as if such eligible business was the only source of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revious year relevant to A.Y. 2002-03, the assessee had claimed depreciation at the rate of 100% thereon i.e. Rs. 3.54 Crores, which was fully set off against the another income in the said A.Y. 2002-03 itself. In the A.Y. 2004-05, the assessee had positive income from the said generation activity and there were no brought forward losses/ unabsorbed depreciation of the preceding year, which had remained to be set off in the A.Y. 2004-05. The A.O., notionally brought forward unabsorbed depreciation for the A.Y. 2003-04 to the impugned A.Y. 2004-05 and denied the claim for deduction made by the assessee u/s. 80IA in respect of the profit earned by it in A.Y. 2004-05. The Ld. A.R. submitted that sub-section (2) of Section 80IA provides an option to the assessee to choose 10 consecutive A.Ys. out of 15 years for claiming the deduction. He submitted that the term initial year in sub-section (5) of 80IA is not defined and is used in contradiction to the words "beginning from the year" used in subsection (2). He submitted that the assessee chose A.Y. 2004-05 as initial A.Y being the first year in which it claimed deduction u/s. 80IA and therefore, losses/depreciation beginning from A.Y. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch losses till first year of claim of deduction is to be ignored. The view canvassed by the assessee does not find any support. He submitted that there is no discernible change in law or intention of parliament w.e.f. 1.4.2000. The Ld. D.R. submitted that the decision of Special Bench of the Tribunal in the case of Goldmine Shares and Finance (P) Ltd. (Supra) is fully applicable in the present case. He pointed out that in its recent decision dt. 21st January 2011, the Hyderabad Bench of the Tribunal in the case of Hyderabad Chemical Supplies Ltd. Vs. ACIT (Supra) has also decided an identical decision in favour of the Revenue following the decision of Special Bench of the Tribunal in the case of ACIT Vs. Goldman Shares & Finance (P) Ltd. (Supra). He submitted that the Hyderabad Bench of the Tribunal while deciding the issue has also discussed the decision of Hon'ble Madras High Court in the case of Velayudhaswamy Spinning Mills (P) Ltd Vs. ACIT (Supra). The Ld. D.R. submitted that even in the case of Liberty India Vs. CIT (Supra), the Hon'ble Supreme Court has been pleased to explain the intention of Parliament and scope of deduction u/s. 80IA and 80IB of the Act. The Hon'ble Supr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 nonjurisdictional 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 respect the law laid down by the High Court, though of a different State, so long as there is no contrary decision of any other High Court on that question. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Velaydhaswamy Spinning Mills (P) Ltd. (supra) was being cited whereas the Revenue had relied upon the decision of Special Bench of the Tribunal in the case of Asstt. CIT Vs. Goldmine Shares and Finance (P) Ltd. (2008) 116 TTJ (Ahd) (SB) 705 to the contrary. The Tribunal noticed that having regard to the decision of the Hon'ble Madras High court the issue was to be decided accordingly and not on the basis of decision of Special Bench of the Tribunal in the case of Goldmine Shares and Finance (P) Ltd. (supra) which was to the contrary. In this context, the Tribunal came to the conclusion that when the assessee exercised option identifying ten consecutive years as contained in sub-section (2) of section 80-IA of the Act, only the losses of the year beginning from such initial assessment year are to be brought forward and set-off while applying the provisions of section 80-IA(5) of the Act and not the losses of earlier years which otherwise were set-off against other income of the assessee. 8. At the time of hearing, the learned DR has not brought to our notice any decision of a High Court contrary to that of the Hon'ble Madras High Court in the case of Velaydhaswamy Spinning ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee u/s 80-IA of the Act as above. "10.1 Respectfully following the decision of the Coordinate Bench of the Tribunal, we uphold the order of the CIT(A). Grounds raised by the Revenue are accordingly dismissed." 5.1 Respectfully, following the decision of the Coordinate Bench of the Tribunal cited (Supra) and in absence of any contrary material brought to our notice, we find no infirmity in the order of the CIT(A) on this issue. Accordingly, the same is upheld and the grounds raised by the Revenue are accordingly dismissed. 6. Grounds of appeal No.4 & 5 by the Revenue are as under : "4. Whether in the facts and in the circumstances of the case, the Ld. CIT(A) was correct in interpreting the provision of Section 14A r.w.Rule 8D in the light of decision of Jurisdictional High Court rendered in the case of Godrej & Boyce Mfg. Co. Ltd. Vs. Dy. CIT reported in (2010) 43 DTK (Bom) 328 ITR 81 (Bom). 5. Whether in the facts and in the circumstances of the case, the CIT(A) was correct in interpreting that the assessee has not earned dividend income and has not claimed exemption, the provisions of Section 14A r.w. rule 8D are not applicable in view of the judgments in the cases of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the order of the CIT(A) filed a copy of the decision of the Coordinate Bench of the Tribunal in the case of Shri Goyal Ishwarchand Kishorilal Vs. JCIT vide ITA No.422/PN/2013 order dated 26-06-2014. Referring to the said decision he submitted that the Tribunal following the decision of the Hon'ble Allahabad High court in the case of Shivam Motors Pvt. Ltd. vide ITA No.88/PN/2014 order dated 05-05-2014 and the decision of the Hon'ble Punjab High Court in the case of CIT Vs. Lakhani Marketing vide ITA No.970/2008 order dated 02- 09-2014 has held that when the assessee has not received any dividend income out of the shares held as investment and no disallowance u/s.14A has been made in the preceding as well as succeeding assessment years, disallowance u/s.14A of the Act cannot be made. He accordingly submitted that the order of the CIT(A) being in consonance with law should be upheld and the grounds raised by the Revenue should be dismissed. 10. The Ld. Departmental Representative on the other hand submitted that the Hon'ble Delhi High Court in the case of Tulipstar Hotels Ltd. Vs. ADdl.CIT (2008) 114 ITD 202 (Delhi) and in the case of J.K. Synthetics reported in 200 Taxmann 101 h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he shares are held in physical form and not in Demat account and no dividend income has been received on account of shares held under the head "investment". Whatever dividend was received was in the "share trading account". The above submission of the Ld. Counsel for the assessee could not be controverted by the Ld. Departmental Representative. We find various courts have held that disallowance u/s.14A cannot be made when there is no tax free income. 9.2 We find the Hon'ble Allahabad High Court in the case of Shivam Motors Pvt. Ltd.(Supra) has observed as under : "As regards the second question, Section 14A of the Act provides that for the purposes of computing the total income under the Chapter, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under the Act. Hence, what Section 14A provides is that if there is any income which does not form part of the income under the Act, the expenditure which is incurred for earning the income is not an allowable deduction. For the year in question, the finding of fact is that the assessee had not earned any tax free income. Hence, in the abse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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