Mohan Breweries & Distilleries Ltd. v. ACIT
(Chennai)
A.Y. : 2004-05. Dated : 31-10-2007
S. 80IA of the Income-tax Act, 1961 — Whether S. 80-IA(2)
gives an option to assessee to claim relief u/s.80-IA for any 10 consecutive
assessment years out of 15 years beginning from year in which undertaking or
enterprise develops or begins to operate any infrastructure facility, etc.,
and it does not mandate that first year of 10 consecutive assessment years
should be always first year of set-up of enterprise — Held, Yes — Whether
provision of S. 80-IA(5), treating eligible undertaking as a separate sole
source of income, is applicable only when assessee chooses to claim deduction
u/s.80-IA and same cannot be applied to a year prior to the year in which
assessee opted to claim relief u/s.80-IA for first time — Held, Yes.
The assessee-company had started three power projects, two
in the previous year, relevant to the A.Y. 1996-97 and one in the previous
year, relevant to the assessment year 1999-2000. In respect of the profits of
these power units, the assessee claimed deduction u/s.80-IA for the first time
in the A.Y. 2004-05. The Assessing Officer held that while computing the gross
total income of the eligible units, the notional brought forward loss incurred
by those units in earlier years had to be taken into account first and after
that, if any remaining profit was available then the deduction u/s.80-IA had
to be given.
On appeal, the Commissioner (Appeals) upheld the order of
the Assessing Officer. On second appeal, the ITAT held that :
(1) S. 80-IA gives an option to the assessee to claim
relief under this section for any 10 consecutive assessment years out of 15
years beginning from the year in which the undertaking or enterprise
develops or begins to operate any infrastructure facility, etc.
(2) S. 80-IA(2) does not mandate that first year of 10
consecutive assessment years should be always the first year of set-up of
enterprise.
(3) The provision of S. 80-IA(5) is applicable only when
the assessee chooses to claim deduction u/s.80-IA and if it has not chosen
to claim the deduction u/s.80-IA, S. 80-IA(5) cannot be made applicable.
(4) In the instant case, there was a categorical finding
by the Assessing Officer and the Commissioner (Appeals) that the first year
claimed by the assessee was from the A.Y. 2004-05. Hence, the initial
assessment year could not be the year in which the undertaking commenced its
operations but it was the assessment year in which the assessee had chosen
to claim deduction u/s.80-IA. Therefore, there was no question of
setting-off notionally carried forward unabsorbed depreciation or loss of
earlier years against the profits of the units and the assessee was entitled
to claim deduction u/s.80-IA on the current assessment year’s profit.
