Case Law Details
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.
Contention of Assessee:
The learned counsel for the assessee submitted before us that similar issue was involved in the earlier assessment year i.e. assessment year 2010-11, whereby the CIT (Appeals) had deleted the addition so made by the Assessing Officer, against which the Department preferred an appeal before the I.T.A.T. and I.T.A.T., Chandigarh Bench in ITA No.1062/Chd/2014 has decided the issue in favour of the assessee. His contention was that since the CIT (Appeals) has also relied on his order for assessment year 2010-11, the claim of the assessee in this year may also be allowed. Further a Circular of CBDT No.I/2016 dated 15.2.2016 was also brought to our notice by the learned counsel for the assessee. In this Circular, the CBDT had clarified that an assessee who is eligible to claim deduction under section 80IA of the Act has the option to choose the initial year from which it may desire to claim deduction for ten consecutive years out of a slab of fifteen years as prescribed under Sub-section (2) of section 80IA of the Act. Therefore, the term ‘initial assessment year’ would mean the first year opted for by the assessee for claiming deduction under section 80IA of the Act. In view of this, the officers of the Department were directed to allow the deduction under section 80IA of the Act after duly satisfying as to the compliance of the eligibility condition. It was also instructed that the pending litigation of allowability of deduction under section 80IA of the Act was also not to be pursued to the extent which relates to interpreting initial assessment year as mentioned in sub-section (5) to section 80IA of the Act.
Contention of Department:
The learned D.R. whi le arguing before us, relied on the order of the Assessing Officer submitting that by not considering the year of star t of manufacturing as the
initial year , the assessee gets an undue benefit in the form of claiming excess deduct ion under sect ion 80IA of the Act at i ts own opt ion.
Judgement of honoured ITAT:
From the perusal of the order of the I .T.A.T. Chandigarh Bench in assessee’s own case for assessment year 2010-11 in ITA No.1062/Chd/2014 dated 10.2.2016 The issue was decided by the I .T.A.T. in favour of the assessee in the fol lowing terms :
- The initial year falls in any of the 15 assessment years at the option of the assessee starting from the previous year in which the enterprise begins operating and maintaining the infrastructure facility. Under section 80IB and also u/s 80IC, 80ID and 80IE, the first year in which the production is started is taken as initial previous year whereas, after the amendment in provisions of section 80IA w.e.f. 01.04.2000 the initial assessment year is at the option of the assessee.
- Any profit or loss arising from the wind mills business would be considered for the computation from A.Y. 2008-09 to subsequent consecutive 10 assessment years. Therefore, the losses pertaining to previous years prior to A.Y. 2008-09 will not be taken into consideration for calculating the amount of deduction u/s 80IA of the Act
In view of the above, since no distinguishing facts were brought to our notice, respectfully following the order of the Coordinate Bench, we dismiss the grounds of appeal raised by the Revenue.
