S. 80IA Initial assessment year means 1st year opted by assessee for deduction

Brief:

The assessee being eligible had option to start claiming deduction from any of the assessment years within time frame of Ay 2004-2005 to AY 2019-2020. Assessee exercises the option in AY 2008-09. AO made the disallowance by holding that assessment year 2004-05 is the initial AY. ITAT issued order in favour of Assessee.

Fact of the Case:

Briefly, the facts of the case are that the assessee established two wind mills in District Jaisalmer, Rajasthan a 20 Mega Watt (MW) at village Gorera and 25 MW at village Soda Mada on 30.3.2004 and 24.1.2004 respectively. The assessee claimed deduction under section 80IA of the Act of Rs.95,00,547/- @ 100% on the income earned from the business of wind power generation projects. The Assessing Officer noted that on all these wind power plants, the assessee had incurred losses for assessment years 2004-05 to 2006-07. These losses were set off by the assessee company against the income derived from the business of cable jointing etc., which does not qualify for deduction under section 80IA of the Act. The assessee also earned and declared income from the business of wind power project for the assessment years 2007-08 to 2012-13.Referring to the provisions of section 80IA(5) of the Act, the Assessing Officer observed that the brought forward losses of the eligible business need not to be set off against the income from the eligible business, even though if they were set off against the non-eligible business in the respective years. The Assessing Officer further noted that after setting off of the losses for assessment years 2004-05 to 2006-07 against the income for assessment years 2007-08 to 2012-13, there were still brought forward losses of Rs.390.36 lacs, which were to be set off against the income from the wind mill projects. This exercise renders the income from the eligible business at nil and, therefore, exemption claimed by the assessee at Rs.95,00,547/- was not allowable.

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