CIT vs. G.R.T. Jewellers (India) Pvt.Ltd (Madras High Court)
March, 16th 2016
S. 80-IA: As CBDT's Circular No.1/ 2016 dated 15.2.2016 is in line with Velayudhaswamy Spinning Mills 340 ITR 477 (Mad) the Dept should not agitate the controversy whether deduction u/s 80IA is allowable without setting off losses/unabsorbed depreciation which were set off in earlier years against other business income
The High Court had to consider whether the assessee is entitled to deduction under Section 80IA without setting off the losses/unabsorbed depreciation pertaining to the windmill, which were set off in the earlier year against other business income of the assessee following the decision of the jurisdictional High Court in the case of M/s.Velayudhaswamy Spinning Mills (340 ITR 477), when the same is pending appeal before the Supreme Court in SLP. Civil No.33475 of 2012. HELD by the High Court dismissing the appeal:
(i) On the basis of the decision in Velayudhaswamy Spinning Mills (340 ITR 477), the Central Board of Direct Taxes has issued Circular No.1/ 2016 dated 15.2.2016. The CBDT has clarified that an assessee who is eligible to claim deduction u/s 80IA has the option to choose the initial/first year from which it may desire the claim of deduction for ten consecutive years, out of a slab of fifteen (or twenty) years, as prescribed under that Sub-Section. It is clarified that once such initial assessment year has been opted for by the assessee, he shall be entitled to claim deduction u/s 801A for ten consecutive years beginning from the year in respect of which he has exercised such option subject to the fulfillment of conditions prescribed in the section. Hence, the term ‘initial assessment year’ would mean the first year opted for by the assessee for claiming deduction u/s 801A. However, the total number of years for claiming deduction should not transgress the prescribed slab of fifteen or twenty years, as the case may be and the period of claim should be availed in continuity.
(ii) We cannot resist our temptation to record one more fact. If an issue is covered by the judgment of the High Court, it is always open to the Department to take it on appeal to the Supreme Court and get the law settled once and for all. But, once a decision is taken at the level of the Board, we do not know why repeated appeals should be filed, only to meet with the same fate as that of a decision, on which, a circular has been issued. The Department shall take note of this for future guidance.