1 IN HIGH COURT OF JUDICATURE AT MADRAS Dated : 14.12.2015 Coram Honourable Mr.Justice M.JAICHANDREN and Honourable Mrs.Justice S.VIMALA Tax Case (Appeal) No.1154 of 2015 --- Commissioner of Income Tax No.63, Race Course Road Coimbatore ... Appellant -vs- S.Martin 355-359, Daisy Plaza, 6th Street, Gandhipuram, Coimbatore-641 012. ... Respondent Tax Case (Appeal) filed under Section 260A of Income Tax Act, 1961 against order of Income Tax Appellate Tribunal Madras 'C' Bench, Chennai, dated 29.5.2015 in ITA No.2211/Mds/2014. For appellant : Mr.T.R.Senthil Kumar JUDGMENT This Tax Case Appeal has been filed against order of Income Tax Appellate Tribunal C Bench, Chennai, dated 29.5.2015, made in I.T.A.No.2211/Mds./2014. 2 2. brief facts of case, necessary for disposal of appeal, are as follows: 2.1) assessee, respondent herein, is individual having income from sale of lottery tickets, money lending and by generating power through windmills. assessee had filed revised return of income, for assessment year 2010-11, on 2.9.2011, declaring total income of Rs.34,36,04,230/-. assessee had claimed deduction of Rs.7,03,72,084/-, under Section 80IA of Income Tax Act, 1961 (hereinafter referred to as `the Act'), on income from windmill division. case of assessee had been selected for scrutiny assessment and notice, under Section 143(2) of Act had been issued and served on assessee. 2.2) Assessing Officer had disallowed Rs.7,03,72,084/-, being deduction claimed by assessee, under Section 80IA of Act, holding that initial assessment year is year from which assessee commences its eligible business and as no profits were available for deduction in financial year relevant to assessment year 2010-11, after notionally bringing forward unabsorbed depreciation and business loss. 3 2.3) assessee had claimed 80IA deduction on basis of decision of this Court, in Velayudhaswamy Spinning Mills (P) Ltd. Vs. Assistant Commissioner of Income Tax, (231 CTR (Mad.) 368). Challenging said order, Revenue had filed special leave petition, which had been admitted by Supreme Court, in S.L.P.Civil No.33475 of 2012. 2.4) Aggrieved by order passed by assessing officer, assessee had filed appeal before Commissioner of Income Tax (Appeals). Commissioner of Income Tax (Appeals) had held that issue is covered by decision of this Court, in Velayudhaswamy Spinning Mills (P) Ltd. Vs. Assistant Commissioner of Income Tax, (231 CTR (Mad.) 368). As such, claim of assessee had been allowed. Aggrieved by order passed by Commissioner of Income Tax (Appeals), Revenue had filed appeal before Income Tax Appellate Tribunal C Bench, Chennai. Tribunal, by its impugned order, dated 29.5.2015, had dismissed appeal, following decision of this Court, in Velayudhaswamy Spinning Mills (P) Ltd. Vs. Assistant Commissioner of Income Tax, (231 CTR (Mad.) 368). 4 3. Challenging order of Tribunal, dated 29.5.2015, Department has filed present appeal, before this Court, under Section 260A of Act, raising following substantial questions of law. "1. Whether under facts and circumstance of case Hon'ble Income Tax Appellate Tribunal was right in law in holding that assessee is entitled to deduction under Section 80IA without setting off losses/unabsorbed depreciation pertaining to windmill, which were set off in earlier year against other business income of assessee, following decision of jurisdiction High Court in case of M/s.Velayudhaswamy Spinning Mills (340 ITR 477) when same is pending appeal before Hon'ble Supreme Court in S.L.P.Civil No.33475 of 2012? 2. Whether under facts and circumstances of case, Income Tax Appellate Tribunal was correct in holding that initial assessment year in Section 80IA(5) would only mean year of claim of deduction under Section 80IA and not year of commencement of eligible business? 3. Whether on facts and in circumstances of case, Tribunal was right in holding that assessee has option to choose first/initial assessment year of claim for deduction under Section 80- IA? 5 4. learned counsel appearing on behalf of Department had raised following grounds, while challenging impugned order of Tribunal:- "a. order of Income Tax Appellate Tribunal is erroneous in law and opposed to facts and circumstances of case. b. Income Tax Appellate Tribunal erred in holding that losses and unabsorbed depreciation which already stood set off against other income in earlier years could not be carried forward and set off against profits or income of initial/subsequent years in respect of windmill in computing deduction under Section 80IA. c. Income Tax Appellate Tribunal erred in holding that initial assessment year shall be first year in which assessee opts to make claim or sixth year where assessee had not opted in earlier years. Tribunal failed to appreciate that year of commencement is to be considered as initial assessment year for purpose of determining deduction under Section 80 IA. d. Income Tax Appellate Tribunal failed to appreciate memorandum explaining provisions in Finance (No 2) Bill 1980 (123 ITR (St.) 154 also explains that in computing quantum of tax holiday profits for 6 unit is to be determined as if such units were independent unit owned by taxpayer. e. Income Tax Appellate Tribunal ought to have appreciated that as per provisions of Section 80IA (5) undertaking eligible for deduction under Section 80IA should be treated as only source of income for computing quantum of deduction. f. Income Tax Appellate Tribunal erred in following decision of Jurisdictional High Court in case of M/s.Vellayuthasamy Spinning Mills when same is appeal before Hon'ble Supreme Court. g. Income Tax Appellate Tribunal should have observed that since sub Section 5 of Section 80IA starts with non-obstante clause, restriction put in sub- section 5 will prevail and deduction under 80IA has to be restricted accordingly. h. Income Tax Appellate Tribunal ought to have appreciated that as per provisions of Section 80IA (5) undertaking eligible for deduction should be treated as only source of income for computing quantum of deduction. 7 5. We have heard learned counsel appearing on behalf of appellant. We have also perused records available before this Court. 6. It is noted that facts and circumstances based on which present appeal had arisen are similar to those which had already been decided by this court. Further, in batch of cases, in CIT Vs. Eastman Exports Global Clothing (P) Ltd. [2015] 229 Taxman 449/54 Taxmann.com 408 (Madras), this Court had followed decision rendered in Velayudhaswamy Spinning Mills (P) Ltd. Vs. Assistant Commissioner of Income Tax, (231 CTR (Mad.) 368), and had decided matter in favour of assessee and against Revenue. Taking note of above said decisions, we are constrained to dismiss present appeal filed by Revenue, confirming order passed by Tribunal, dated 29.5.2015. Accordingly, questions of law raised in appeal are answered against Revenue and in favour of assessee, for reasons stated above. Accordingly, Tax Case Appeal stands dismissed. (M.J.,J) (S.V.,J) 14.12.2015 csh INDEX : YES INTERNET : YES 8 M.JAICHANDREN, J. and S.VIMALA, J. csh To Income Tax Appellate Tribunal C Bench, Chennai. Tax Case Appeal No.1154 of 2015 14.12.2015 Commissioner of Income-tax v. S. Martin