Case Law Details
ITAT Ahmedabad held in M/s Anand Food Dairy & products Vs ITO that the deduction u/s 80IB(11A) would be allowed from the initial assessment year i.e A.Y relevant to the previous year in which the business was commenced but not from the A.Y of the incorporation of this provision in the I.T Act i. e not from -01-04-2005.In other words irrespective of the date of incorporation of this provision in the act, deduction u/s would be allowed from the AY in which business was commenced though the benefit of 100% was not available to the assessee for full five years. Law very clearly mentioned the definition of initial assessment year from which the deduction would be available and it defined the same as the A.Y from which the business had commenced.
Facts of the case:
Assessee had commenced its business in A.Y 2002-03 and this disputed case was related with the A.Y 2007-08, 08-09 and 09-10.The provision related with the deduction u/s 80(IB)(11A) for consecutive 10 AY’s came into effect from 01-04-2005. As the assessee had commenced its business in the A.Y 2002-03 which was before the provision of deduction u/s 80(IB)(11A) came into effect, So the assessee had started claiming the deduction from A.Y 2006-07 for 10 consecutive A.Y’s because in this A.Y only the relevant provision came into effect. But the AO disagreed with this and started 10 consecutive A.Y’s from A.Y 2002-03 which was the initial assessment year i.e the year of commencement of business.
Contention of the assessee:
Assessee was of the view that the main aim of introducing this provision was to encourage the food industry and to take the benefit of deduction for full 10 consecutive A.Y‘s. So the assessee should be given the benefit for full 10 consecutive A.Y’s, 100 % for first five A.Y’s and then 25% for next five consecutive years and the same should start from A.Y 06-07 when the provision came into effect not from the A.Y 2003-03 in which business was commenced because with this the benefit of 100% deduction for first five years would not be available to the assessee only benefit of 25% would be available to the assessee which was wrong.
Contention of the revenue:
Revenue was of the view that the deduction would be available from the initial assessment year and the definition of the initial assessment year was clearly mentioned in the provision which means the assessment year relevant to the previous year in which the business was commenced. So the deduction would be available from A.Y 2002-03 in which the assessee had commenced its business not form the A.Y 2006-07.
Held by ITAT:
ITAT held that as it was clearly mentioned in the provision of sec 80(IB)(11A) that the deduction would be available from the initial assessment year and the definition of the initial assessment year clearly defines the assessment year in which the business was commenced and the business had commenced in the A.Y 2002-03 not in A.Y 2006-07, So deduction would be available from the A.Y 2002-03 not from A.Y 2006-07.One could not go beyond what the law had mentioned.
Appeal of the assessee was dismissed.
