Assistant Commissioner of Income Tax, Circle-1(2)(1), Bangalore v. M/s. Khivraj Motors
[Citation -2016-LL-1019-141]

Citation 2016-LL-1019-141
Appellant Name Assistant Commissioner of Income Tax, Circle-1(2)(1), Bangalore
Respondent Name M/s. Khivraj Motors
Court ITAT-Bangalore
Relevant Act Income-tax
Date of Order 19/10/2016
Assessment Year 2010-11
Judgment View Judgment
Keyword Tags eligible undertaking • initial assessment • eligible business • sales promotion • current income • wind mill
Bot Summary: 2005-06 to 2009-10 were adjusted and set off against other business income of the appellant in such assessment years. The CIT held that when the assessee exercises the option, the only losses of the years beginning from initial assessment year alone are to be brought forward and no losses of earlier years which were already set off against the income of the assessee. Further looking forward to a period of ten years from the initial assessment is contemplated and does not allow the Revenue to look backward and find out if there is any loss of earlier years and bring forward notionally even though the same were set off against other income of the assessee and the set off against the current income of the ITA No.1051 1052/Bang/2015 Page 3 of 5 eligible business. The CIT(A) held that once the set off is taken place in earlier year against the other income of the assessee, the Revenue cannot rework the set off amount and bring it notionally. The CIT(A) erred in directing to allow the assessee s claim of deduction of Rs. 1,16,90,948/- u/s 80IA in A.Y. 2010-11 being the initial assessment year by relying on the order of the Madras High Court in the case of M/s. Velayudhaswamy Spinning Mills Ltd., and the decision of Jurisdictional High Court in the case of Shri. The profits of the undertaking shall be accordingly eligible for the said deduction for 9 more succeeding assessment years. The claim requested by the Assessee for deduction under section 80IA is to be allowed, as the claim is for the second year under the provisions of section 80IA. Therefore, the departmental appeal is dismissed.


IN INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI A. K. GARODIA, ACCOUNTANT MEMBER AND SMT ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA No.1051 & 1052/Bang/2015 Assessment years : 2010-11 & 2011-12 Assistant Commissioner of M/s. Khivraj Motors, Income Tax, No. 10/2, 4th Floor, Kasturba Road, Circle-1(2)(1), Bangalore. Vs. Bangalore 560001. PAN:AAAFK6627K APPELLANT RESPONDENT Revenue by : None Assessee by : Shri H. N. Kincha, CA Date of hearing : 10.10.2016 Date of Pronouncement : 19.10.2016 ORDER Per Asha Vijayaraghavan, Judicial Member This is departmental appeal. M/s. Khivraj Motors filed its return of income declaring income at Rs. 1,92,92,870/-. Assessing Officer passed assessment order by determining total taxable income at Rs.3,09,83,810/- by disallowing deduction under section 80IA amounting to Rs.1,16,90,948/- and disallowing 20% of petrol, marketing sales promotion and telephone expenditure. 2. Aggrieved, assessee preferred appeal before CIT(A). learned counsel for assessee pointed out before AO decision of Hon ble Madras High Court in case of M/s. Velayudhaswamy Spinning Mills (P) Ltd., Vs. ACIT 231 CTR 368, in support of claim of ITA No.1051 & 1052/Bang/2015 Page 2 of 5 deduction under section 80IA. But AO dismissed Assessee s contention. 3. On further appeal before CIT(A) it was submitted that there is no dispute that windmills fulfilled requisite conditions prescribed in Act, and profits of windmills were eligible for deduction u/s 80IA and that there is also no dispute that losses in wind mill division incurred during A. Yrs. 2005-06 to 2009-10 were adjusted and set off against other business income of appellant in such assessment years. details were filed by appellant as under: Assessment Year Losses (Rs.) 2005-2006 1,48,60,154.20 2006-2007 2,89,29,020.00 2007-2008 1,28,14,240.20 2008-2009 2,15,76,365.20 2009-2010 1,67,50,540.60 Total 9,49,30,319.00 4. CIT (A) held that decision in case of M/s. Velayudhaswamy Spinning Mills (P) Ltd., (Supra) 340 ITR 477 which has been upheld by Hon ble Karnataka High Court in case of CIT Vs. Shri. Anil H. Lad 102 DTR Karnataka 241 would apply to present case. CIT (A) held that when assessee exercises option, only losses of years beginning from initial assessment year alone are to be brought forward and no losses of earlier years which were already set off against income of assessee. Further looking forward to period of ten years from initial assessment is contemplated and does not allow Revenue to look backward and find out if there is any loss of earlier years and bring forward notionally even though same were set off against other income of assessee and set off against current income of ITA No.1051 & 1052/Bang/2015 Page 3 of 5 eligible business. CIT(A) held that once set off is taken place in earlier year against other income of assessee, Revenue cannot rework set off amount and bring it notionally. Aggrieved with orders of CIT (A) department is in appeal before us and has filed following grounds of appeal: 1. order of CIT(A) is opposed to law and facts and circumstances of case. 2. CIT(A) erred in directing to allow assessee s claim of deduction of Rs. 1,16,90,948/- u/s 80IA in A.Y. 2010-11 being initial assessment year by relying on order of Madras High Court in case of M/s. Velayudhaswamy Spinning Mills (P) Ltd., and decision of Jurisdictional High Court in case of Shri. Anil H. Lad and decision ITAT, Mumbai in case of Excel Cropcare Ltd without appreciating that relied upon orders of High Courts has not been accepted and SLP has been preferred against said order. 3. CIT(A) was not justified in allowing assessee s appeal without appreciating that deduction u/s 80IA is on profits of eligible business and that provisions of Section 81IA have to be understood along with provisions of sections 80B(5) and 80AB of IT Act, 1961. 4. For these and such other grounds that may be urged at time of hearing, it is humbly prayed that order of CIT(A) be reversed and that of Assessing Officer be restored. 5. appellant craves leave to add, to alter, to amend or delete any of grounds that may be urged at time of hearing of appeal. ITA No.1051 & 1052/Bang/2015 Page 4 of 5 5. We find that assessment year 2010-11 is initial assessment year of claim of deduction under section 80IA for windmill division or undertaking of assessee, consisting of four windmills, as per option exercised by assessee. profits of undertaking shall be accordingly eligible for said deduction for 9 more succeeding assessment years. It is only in case of loss in business of eligible undertaking during tax holiday period of 10 years beginning AY 2010-11 that same can be carried forward and set off against profits of undertaking. 6. We respectfully follow decision of jurisdictional High Court of Karnataka in case of CIT Vs. Shri. Anil H. Lad 102 DTR 241 and dismiss departmental appeal. In result, departmental appeal is dismissed. ITR No. 1052/Bang/2015 for assessment year 2011-12. 7. claim requested by Assessee for deduction under section 80IA is to be allowed, as claim is for second year under provisions of section 80IA. Therefore, departmental appeal is dismissed. 8. In result, departmental appeal for both years are dismissed. Pronounced in open court on this 19th day of October, 2016. Sd/- Sd/- (A. K. GARODIA) (ASHA VIJAYARAGHAVAN) Accountant Member Judicial Member Bangalore. Dated: 19th October, 2016. /NS/ ITA No.1051 & 1052/Bang/2015 Page 5 of 5 Copy to: 1. Appellants 2. Respondent 3. CIT 4. CIT(A) 5. DR, ITAT, Bangalore. 6. Guard file By order Assistant Registrar, ITAT, Bangalore. Assistant Commissioner of Income Tax, Circle-1(2)(1), Bangalore v. M/s. Khivraj Motor
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