Whether for purpose of claiming deduction u/s 80IA, losses and other deductions which were set off against income of previous year, can be reopened again for computation of current year income - NO: HC

THE issue before the Bench is - Whether for the purpose of claiming deduction u/s 80IA, losses and other deduction which have been set off against the income of the previous year, could be reopened again for the purpose of computation of current year income. And the verdict goes against the Revenue.

Facts of the case

The assessee concern has claimed deduction u/s 80IA. Counsel appearing for the assessee submitted that the issue involved in this appeal had already been decided by HC in the decision of Velayudhaswamy Spinning Mills V. Asst. CIT, (2012) 340 ITR 477 and hence the same may be followed in this case also. It was stated by the Standing Counsel appearing for the Revenue that as against the decision rendered by HC in the case of Velayudhaswamy Spinning Mills V. Asst. CIT, the Revenue preferred appeals before the Supreme Court and the same were pending. In the decision of Velayudhaswamy Spinning Mills V. ACIT, HC while dealing with the benefit under Chapter VIA, placed reliance on the decision of Liberty India V. CIT 2009-TIOL-100-SC-IT, wherein the SC considered the scope of Section 80I, 80IA and 80IB and held that Chapter VI-A provides for incentives in the form of tax deductions essentially belong to the category of "profit-linked incentives". This Court also placed reliance on the decision reported in (2004) 271 ITR 311 (Raj) (CIT V. Mewar Oil and General Mills Ltd.), and came to the conclusion that once the losses and other deduction have set off against the income of the previous year, it should not be reopened again for the purpose of computation of current year income under Section 80I or 80IA and the assessee should not be denied the admissible deduction u/s 80IA.

Held that,

++ it is relevant to note that as against the above-said decision rendered by HC, the Revenue has filed appeals before the SC, which are stated to be pending, in which, only notice was ordered and were not yet admitted by the Supreme Court. The facts in the present case are also identical to the above-said decision of this Court that all the business undertakings are wind mills and they have claimed the benefit of deduction under Section 80IA for the assessment years in question and for the subsequent years as well. Having exercised their option and their losses have been set off already against other income of the business enterprise, the assessee in this appeal falls within the parameters of Section 80IA of the Income Tax Act. In the decision reported in (2012) 340 ITR 477 (Velayudhaswamy Spinning Mills V. Asst. CIT), there appears to be no distinction on facts. Again in a batch of cases in T.C.(A)Nos.408 of 2012, by order dated 12.1.2015, this Court, following the decision reported in (2012) 340 ITR 477 (Velayudhaswamy Spinning Mills V. Asst. CIT) held in favour of the assessee and against the Revenue. We, therefore, taking note of the decision rendered by this Court in the case of Velayudhasamy Spinning Mills and in a batch of cases in T.C.(A) Nos.408 of 2012, are inclined to dismiss this Tax Case (Appeal), thereby confirm the order passed by the Tribunal. In view of the above, the questions of law raised and admitted by this Court are answered against the Revenue and in favour of the assessee. This Tax Case (Appeal) stands dismissed.