Income tax - Does Sec 80IA(5) create a legal fiction which renders redundant income from other sources and hence unabsorbed depreciation cannot be set-off - YES, says ITAT
CHENNAI, JUNE 07, 2010: THE issue before the Tribunal is - Whether section 80IA(5) creates legal fiction due to which the other sources of income become redundant, and hence unabsorbed depreciation cannot be setoff. And its answer is YES.
Facts of the case
Assessee claimed deduction of section 80IA(5), on the income earned from windmill. AO disallowed the same on the same on the ground that wind mill is not separate. AO further took the view that in view of provision of section 80IA(5) the unabsorbed depreciation cannot be allowed to be setoff with any other business income and the same is required to be setoff with the income eligible for deduction u/s 80IA. CIT(A) relying on the decision of Mohan Breweries decided the issue in favour of the assessee. The issue goes to the Tribunal where the DR argues that in view of the provision of section 80IA(5) the order of the AO is correct.
After hearing the parties, and referring to the following decisions, the Tribunal held that,
++ The Co-ordinate Benches of this Tribunal in the case of M/s VXL Systems Vs. ACIT as well as in the case of ACIT Vs. M/s Sudan Spinning Mills Ltd. & Ors. has decided the issue in favour of the Revenue and against the assessee by following the decision of Ahmedabad Special Bench of this Tribunal in the case of ACIT Vs. Goldmine Shares And Finance P. Ltd (2008-TIOL-220-ITAT-AHM-SB). Accordingly, by following the principle of consistency, and in view of the decisions of the Co-ordinate Benches of this Tribunal as well as Ahmedabad Special Bench decision, this issue is decided in favour of the Revenue and against the assessee;
++ Revenue appeal is allowed on this ground.
The second question before the Tribunal is whether Windmill is separate undertaking for the purpose of section 80IA. And its answer is also YES.
07 June, 2010 by admin