Case Law Details

Case Name : CIT Vs M/s. G.R.T. Jewellers (India) Pvt. Ltd. (Madras High Court)
Appeal Number : TCA.No.176 of 2016
Date of Judgement/Order : 01/03/2016
Related Assessment Year : 2010-11
Courts : All High Courts (1347) Madras High Court (95)

Brief of the Case

Madras High Court held In the case of CIT vs. M/s. G.R.T. Jewellers (India) Pvt. Ltd. that as per CBDT Circular No. 1/2016 dated 15.2.2016, it is clear that the assessee has option to claim deduction in subsequent years i.e. he can choose initial assessment year for claiming deduction even post commencement of business. It is not necessary to claim deduction starting from fist year of commencement of operations. Hence, assessee has option to choose first assessment year of claim for deduction u/s 80IA.

Facts of the Case

The following substantial questions of law were raised-

-Whether under the facts and circumstances of the case, the Income Tax Appellate Tribunal was correct in holding that the initial assessment year in Section 80IA(5) would only mean the year of claim of deduction under Section 80IA and not the year of commencement of eligible business ?

-Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee has the option to choose the first/initial assessment year of claim for deduction under Section 80IA?

Held by High Court

 High Court held that as per CBDT Circular No.1/ 2016 dated 15.2.2016, an assessee who is eligible to claim deduction u/s 80IA has the option to choose the initial/first year from which it may desire the claim of deduction for ten consecutive years, out of a slab of fifteen (or twenty) years. Once such initial assessment year has been opted for by the assessee, he shall be entitled to claim deduction u/s 801A for ten consecutive years beginning from the year in respect of which he has exercised such option subject to the fulfilment of conditions prescribed in the section. Hence, the term ‘initial assessment year’ would mean the first year opted for by the assessee for claiming deduction u/s 801A. Some Assessing Officers are interpreting the term ‘initial assessment year’ as the year in which the eligible business/manufacturing activity had commenced and are considering such first year of commencement/operation etc. itself as the first year for granting deduction, ignoring the clear mandate provided under Sub-Section (2) which allows a choice to the assessee for deciding the year from which it desires to claim deduction.

From the above circular, it is clear that the assessee has option to claim deduction in subsequent years different from the first year of commencement of operations.

Accordingly, appeal disposed of.

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