IN INCOME TAX APPELLATE TRIBUNAL BENCH : CHENNAI , BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G.PAVAN KUMAR, JUDICIAL MEMBER . I.T.A.No.2198 Mds. 2016 Assessment year : 2009-10 Deputy Commissioner of Vs. M s.Sri Janarthana Spinning Income Tax, Mills, Circle-(1), Ooty. 187-1,K N P Road, Karamadai,Coimbatore-104. [PAN AAMFS 4005 M ] ( Appellant) ( Respondent) Appellant by : Mr.Clement Ramesh Kumar, Additional CIT D.R Respondent by : Mr.S.Sridhar,Advocate Date of Hearing : 17 -10-2016 Date of Pronouncement : 17-10-2016 ORDER PER CHANDRA POOJARI, ACCOUNTANT MEMBER This appeal is filed by Revenue is directed against order of Learned Commissioner of Income Tax(A)-3, Coimbatore dated 08.04.2016 pertaining to assessment year 2009-10. 2. Revenue has raised following grounds. :- 2 -: ITA No.2198 Mds. 2016 1. order of Ld.CIT(A)-3 is against facts and circumstances of case. 2. learned Commissioner of Income-Tax (Appeals)-3 is not justified in deleting addition of Rs.25,69,958 which was added to returned income on account of disallowance of exemption u s 801A to net profit after depreciation of company which is directly declared in Profit and Loss account of company. These claims of exemption u s 801A were made to circumvent law. 3. learned CIT (A)-3 ought to have observed that under section 801A (5), assessee s profits and gains of eligible business has to be worked out as if such eligible business were only source of income of assessee right from commencement of business and in subsequent years up to computation is made and business losses, depreciation and investment allowance of earlier years should be taken into account in determining quantum of deduction admissible under new section 801A. 4. learned CIT A)-3 ought to have ascertained fact that assessee needs to prove that claim of exemption u s 801A was made only from eligible business. 5. learned CIT (A) could have ascertained fact that doctrine of judicial precedents, judicial discipline, contempt and Res Judicata have been evolved to ensure stability and certainty in law and deterrent action in case of its violation by subordinate Courts and Tribunals. Judgments of Supreme Court i.e. ratio decidendi and even obiter dicta are binding on all courts and Tribunals within territory of India as laid down in Article 141 of Constitution of India. Bombay HC quoted following observations of Earl of Halsbury in case of Qumin vs. Leathem ( 1901) AC 495 (HL) in Blue Star Ltd. vs. CIT (1996) 217 ITR 514 520. Every judgment must be read as applicable to particular facts proved or assumed to be proved, since generality of expressions which may be found there, are not intended to be expositions of :- 3 -: ITA No.2198 Mds. 2016 whole law, but governed and qualified by particular facts of case in which such expressions are found and case is only authority for what it actually decides. 3. There is delay of 3 days in filing appeal before this Tribunal and Revenue has explained reasons for delay in its petition for condonation. In our opinion, reasons explained by Revenue for filing appeal belatedly is bonafide. Accordingly, delay is condoned. 3.1 In our opinion, this issue is squarely covered by order of jurisdictional High court in case of Velayudhaswamy Spinning Mills (P) Ltd vs. ACIT 340 ITR 477, wherein it was held that:- from reading of sub-s (1) of s. 80IA, it is clear that it provides that where gross total income of assessee includes any profits and gains derived by undertaking or enterprise from any business referred to in sub-s (4) i.e. referred to as eligible business, there shall, in accordance with and subject to provisions of sections, be allowed, in computing total income of assessee, deduction of amount equal to 100 per cent of profits and gains derived from such business for ten consecutive assessment years. Deduction is given to eligible business and same is defined in sub-s. (4). Sub-s(2) provides option to assessee to choose 10 consecutive assessment years out of 15 years. Option has to be exercised. If it is not exercised, assessee will not be getting benefit. Fifteen years is outer limit and same is beginning from years in which undertaking or enterprise develops and begins to operate any infrastructure activity etc Sub-s. (5) deals with quantum of deduction for eligible business. words initial assessment year are used in sub-s (5) and same is not defined under provisions. It is to be noted that initial assessment year employed in sub-s (5) is different from words beginning from year referred to in sub-s(2). Important factors are to be noted in sub-s(5) and they are as under: (1)it starts with non obstante clause which means it overrides all provisions of Act and other provisions are to be ignored; (2) it is for purpose of determining :- 4 -: ITA No.2198 Mds. 2016 quantum of deduction; (3) for assessment year immediately succeeding initial assessment year ; (4) It is deeming provision; (5) fiction created that eligible business is only source of income; and (6) during previous year relevant to initial assessment year and every subsequent assessment year. From reading of above, it is clear that eligible business were only source of income, during previous year relevant to initial assessment year and every subsequent assessment years. When assessee exercises option, only losses of years beginning from initial assessment year alone are to be brought forward and not losses of earlier years which were already set off against income of assessee. Looking forward to period of ten years from initial assessment contemplated. It does not all Revenue to look backward and find out if there is any loss of earlier years and bring forward nationally even though same were set off against other income of assessee and set off against current income of eligible business. Once set off is taken place in earlier year against other income of assessee, Revenue cannot rework set off amount and bring it notionally. Fiction created in sub-s(5) does not contemplates to bring set off amount notionally. Fiction is created only for limited purpose and same cannot be extended beyond purpose for which it is created. There is no dispute that losses incurred by assessee were already set off and adjusted against profits of earlier years. During relevant assessment year, assessee exercised option under S.80-IA(2). In Tax Case No.918 of 2008 assessment year was 2004-05. During relevant period, there were no unabsorbed depreciation or loss of eligible undertakings and same were already absorbed in earlier years. There is positive profit during relevant year. Therefore, loss in year earlier to initial assessment year already absorbed against profit of other business cannot be notionally brought forward and set off against profit of eligible business as no such mandate is provided in S. 80-IA(5) CIT vs. TTK Pharma Ltd (Tax Case (Appeal ) No.298 of 2004, dt. 23rd Dec., 2009) Followed; CIT vs. Mewar Oil & General Mills Ltd (2004) 186 CTR (Raj) 141; (2004) 271 ITR 311 (Raj) concurred with; Mohan Breweries & Distilleries Ltd vs. Asst. CIT (2008) 114 TTJ (Chennai) 532: (2008) 3 DTR (Chennai) (Trib) 477 affirmed . :- 5 -: ITA No.2198 Mds. 2016 4. Since Ld.CIT(A) has rightly followed decision of Jurisdictional High Court cited supra and held issue in favour of assessee, we do not find it necessary to interfere with order of Ld.CIT(A). Therefore we hereby confirm order of Ld. Ld. CIT (A). 5. In result, appeal of Revenue is dismissed. Order pronounced in open court at time of hearing on 17th October, 2016, at Chennai. Sd - Sd - (G.PAVAN KUMAR) (CHANDRA POOJARI) JUDICIAL MEMBER ACCOUNTANT MEMBER Chennai Dated: 17th October, 2016 K S Sundaram Copy to: 1. Appellant 4. CIT 2. Respondent 5. DR 3. ( ) CIT(A) 6. GF Deputy Commissioner of Income-tax, Circle-(1), Ooty v. M/s. Sri Janarthana Spinning Mill