ACIT, CHENNAI v. GRT Hotels & Resorts Pvt. Ltd., CHENNAI

ITA 1416/CHNY/2010 | 2007-2008
Pronouncement Date: 25-03-2011 | Result: Allowed

Appeal Details

RSA Number 141621714 RSA 2010
Assessee PAN AAACG3608B
Bench Chennai
Appeal Number ITA 1416/CHNY/2010
Duration Of Justice 6 month(s) 29 day(s)
Appellant ACIT, CHENNAI
Respondent GRT Hotels & Resorts Pvt. Ltd., CHENNAI
Appeal Type Income Tax Appeal
Pronouncement Date 25-03-2011
Appeal Filed By Department
Order Result Allowed
Bench Allotted D
Tribunal Order Date 25-03-2011
Date Of Final Hearing 14-03-2011
Next Hearing Date 14-03-2011
Assessment Year 2007-2008
Appeal Filed On 27-08-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BENCH D CHENNAI (BEFORE SHRI HARI OM MARATHA JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE ACCOUNTANT MEMBER) .. I.T.A. NO. 1416/MDS/2010 ASSESSMENT YEAR : 2007-08 THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE III(3) CHENNAI 600 034. (APPELLANT) V. M/S GRT HOTELS & RESORTS PVT. LTD. 136 USMAN ROAD T. NAGAR CHENNAI 600 017. PAN : AAACG3608B (RESPONDENT) APPELLANT BY : SHRI K.E.B. RENGARAJAN JUNIOR STANDING COUNSEL RESPONDENT BY : SHRI PHILIP GEORGE O R D E R PER ABRAHAM P. GEORGE ACCOUNTANT MEMBER : IN THIS APPEAL REVENUE IS AGGRIEVED THAT CIT(APPE ALS) ALLOWED DEDUCTION OF RS.57 97 803/- UNDER SECTION 80-IA OF INCOME-TAX ACT 1961 (HEREINAFTER CALLED THE ACT). 2. ASSESSEE HAD MADE A CLAIM FOR DEDUCTION OF RS.57 97 803/- IN RESPECT OF ITS FOUR WINDMILLS UNDER SECTION 80-IA O F THE ACT. ASSESSING OFFICER WAS OF THE OPINION THAT THE IMPUG NED ASSESSMENT I.T.A. NO. 1416/MDS/10 2 YEAR BEING THE INITIAL ASSESSMENT YEAR FOR WHICH A SSESSEE HAD CLAIMED DEDUCTION UNDER SECTION 80-IA OF THE ACT F OR COMPUTING DEDUCTION UNDER SECTION 80-IA OF THE ACT SET OFF O F BROUGHT FORWARD UNABSORBED DEPRECIATION AND BUSINESS LOSSES HAD TO BE EFFECTED. A.O. FOUND THAT FOR ASSESSMENT YEAR 2005-06 THERE WAS UNABSORBED DEPRECIATION OF RS.2 30 75 787/- AND FOR ASSESSMENT YEAR 2006-07 THERE WAS AN UNABSORBED DEPRECIATION OF RS.16 27 60 4/- TOTALLING TO RS.2 47 03 391/-. THEREFORE AFTER SET OFF OF SUCH DEPRECIATION AS PER THE LD. A.O. THERE WAS NO INCOME FOR THE ASSESSEE FROM THE WINDMILL UNITS FOR ANY CLAIM OF DEDUCTION UNDER SECTION 80- IA OF THE ACT. HE THUS DISALLOWED THE CLAIM. ASSESSEES APPEAL BEFOR E CIT(APPEALS) WAS SUCCESSFUL. 3. LD. CIT(APPEALS) ON ASSESSEES APPEAL HELD THAT IN VIEW OF SUB-SECTION (5) OF SECTION 80-IA OF THE ACT PROFIT S AND GAINS FROM ELIGIBLE BUSINESS WAS TO BE TREATED AS THE ONLY SOU RCE OF INCOME STARTING FROM INITIAL ASSESSMENT YEAR ONLY AND NOT PRIOR TO INITIAL ASSESSMENT YEAR. THEREFORE ACCORDING TO HIM ANY DEPRECIATION OR BUSINESS LOSS PRIOR TO INITIAL ASSESSMENT YEAR HAD TO BE IGNORED. TAKING THIS VIEW HE WAS OF THE OPINION THAT ASSESS EES CLAIM UNDER I.T.A. NO. 1416/MDS/10 3 SECTION 80-IA OF THE ACT WAS ALLOWABLE WITHOUT SETT ING OFF ANY CARRY FORWARD UNABSORBED DEPRECIATION. 4. NOW BEFORE US THE LEARNED D.R. STRONGLY ASSAILI NG THE ORDER OF THE CIT(APPEALS) SUBMITTED THAT IT WAS NOT A NOTION AL DEPRECIATION BUT ACTUAL UNABSORBED DEPRECIATION THAT REMAINED TO BE SET OFF AND THEREFORE CIT(APPEALS) FELL IN ERROR IN HOLDING TH AT EVEN ACTUAL UNABSORBED DEPRECIATION COULD NOT BE SET OFF WHILE COMPUTING DEDUCTION UNDER SECTION 80-IA OF THE ACT FOR THE IN ITIAL ASSESSMENT YEAR. 5. PER CONTRA THE LEARNED A.R. SUPPORTING THE ORDE R OF THE CIT(APPEALS) SUBMITTED THAT THE ISSUE WAS COVERED I N FAVOUR OF ASSESSEE BY THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF M/S VELAYUDHASWAMY SPG. MILLS P. LTD. V. AC IT (231 CTR 368). 6. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL C ONTENTIONS. WHAT HAS BEEN HELD IN THE CASE M/S VELAYUDHASWAMY S PG. MILLS P. LTD. (SUPRA) BY THE HON'BLE JURISDICTIONAL HIGH COU RT IS REPRODUCED HEREUNDER:- I.T.A. NO. 1416/MDS/10 4 14. IN THE PRESENT CASES THERE IS NO DISPUTE THAT LOSSES INCURRED BY THE ASSESSEE WERE ALREADY SET OFF AND ADJUSTED AGAINST THE PROFITS OF THE EARLIER YEARS. DURING THE RELEVANT ASSESSMENT YEAR THE ASSESSEE EXERCISED THE OPTION UNDER S. 80-IA(2). IN TAX CASE NOS. 909 OF 2009 AS WELL AS 940 OF 2009 THE ASSESSMENT YEAR WAS 2005-06 AND IN THE TAX CASE NO. 918 OF 2008 THE ASSESSMENT YEAR WAS 2004-0 5. DURING THE RELEVANT PERIOD THERE WERE NO UNABSORBED DEPRECIATION OR LOSS OF THE ELIG IBLE UNDERTAKINGS AND THE SAME WERE ALREADY ABSORBED IN THE EARLIER YEARS. THERE IS A P OSITIVE PROFIT DURING THE YEAR. THE UNREPORTED JUDGMENT OF THIS COURT CITED SUPRA CONSI DERED THE SCOPE OF SUB-S. (6) OF S. 80- I WHICH IS THE CORRESPONDING PROVISION OF SUB-S. ( 5) OF S. 80-IA. BOTH ARE SIMILARLY WORDED AND THEREFORE WE AGREE ENTIRELY WITH THE DIV ISION BENCH JUDGMENT OF THIS COURT CITED SUPRA. IN THE CASE OF CIT VS. MEWAR OIL & GEN ERAL MILLS LTD. (2004) 186 CTR (RAJ) 141 : (2004) 271 ITR 311 (RAJ) THE RAJASTHAN HIGH COURT ALSO CONSIDERED THE SCOPE OF S. 80-I AND HELD AS FOLLOWS HAVING CONSIDERED THE RIVAL CONTENTIONS WHICH FOLL OW ON THE LINE NOTICED ABOVE WE ARE OF THE OPINION THAT ON FINDING THE FACT THAT THERE WAS NO CARRY FORWARD LOSSES OF 1983-84 WHICH COULD BE SET OFF AGAINST THE INCOME OF THE CU RRENT ASST. YR. 1984-85 THE RECOMPUTATION OF INCOME FROM THE NEW INDUSTRIAL UND ERTAKING BY SETTING OFF THE CARRY FORWARD OF UNABSORBED DEPRECIATION OR DEPRECIATION ALLOWANCE FROM PREVIOUS YEAR DID NOT SIMPLY ARISE AND ON THE FINDING OF FACT NOTICED BY THE CIT(A) WHICH HAS NOT BEEN DISTURBED BY THE TRIBUNAL AND CHALLENGED BEFORE US THERE WAS NO ERROR MUCH LESS ANY ERROR APPARENT ON THE FACE OF THE RECORD WHICH COUL D BE RECTIFIED. THAT QUESTION WOULD HAVE BEEN GERMANE ONLY IF THERE WOULD HAVE BEEN CAR RY FORWARD OF UNABSORBED DEPRECIATION AND UNABSORBED DEVELOPMENT REBATE OR A NY OTHER UNABSORBED LOSSES OF THE PREVIOUS YEAR ARISING OUT OF THE PRIORITY INDUSTRY AND WHETHER IT WAS REQUIRED TO BE SET OFF AGAINST THE INCOME OF THE CURRENT YEAR. IT IS NOT A T ALL REQUIRED THAT LOSSES OR OTHER DEDUCTIONS WHICH HAVE ALREADY BEEN SET OFF AGAINST THE INCOME OF THE PREVIOUS YEAR SHOULD BE REOPENED AGAIN FOR COMPUTATION OF CURRENT INCOME UNDER S. 80-I FOR THE PURPOSE OF COMPUTING ADMISSIBLE DEDUCTIONS THEREUNDER. IN VIEW THEREOF WE ARE OF THE OPINION THAT THE TRI BUNAL HAS NOT ERRED IN HOLDING THAT THERE WAS NO RECTIFICATION POSSIBLE UNDER S. 80-I IN THE PRESENT CASE ALBEIT FOR REASONS SOMEWHAT DIFFERENT FROM THOSE WHICH PREVAILED WITH THE TRIBUNAL. THERE BEING NO CARRY FORWARD OF ALLOWABLE DEDUCTIONS UNDER THE HEAD DEPR ECIATION OR DEVELOPMENT REBATE WHICH NEEDED TO BE ABSORBED AGAINST THE INCOME OF T HE CURRENT YEAR AND THEREFORE RECOMPUTATION OF INCOME FOR THE PURPOSE OF COMPUTIN G PERMISSIBLE DEDUCTION UNDER S. 80-I FOR THE NEW INDUSTRIAL UNDERTAKING WAS NOT REQ UIRED IN THE PRESENT CASE. ACCORDINGLY THIS APPEAL FAILS AND IS HEREBY DISMIS SED WITH NO ORDER AS TO COSTS. FROM READING OF THE ABOVE THE RAJASTHAN HIGH COURT HELD THAT IT IS NOT AT ALL REQUIRED THAT LOSSES OR OTHER DEDUCTIONS WHICH HAVE ALREADY BEEN SET OFF AGAINST THE INCOME OF THE PREVIOUS YEAR SHOULD BE REOPENED AGAIN FOR COMPUTAT ION OF CURRENT INCOME UNDER S. 80-I FOR THE PURPOSE OF COMPUTING ADMISSIBLE DEDUCTIONS THEREUNDER. WE ALSO AGREE WITH THE SAME. WE SEE NO REASON TO TAKE A DIFFERENT VIEW. I.T.A. NO. 1416/MDS/10 5 15. THE STANDING COUNSEL APPEARING FOR THE REVENUE IS UNABLE TO BRING TO OUR NOTICE ANY RELEVANT MATERIAL OR ANY COMPELLING REASON OR ANY C ONTRA JUDGMENT OF OTHER COURTS TO TAKE A DIFFERENT VIEW. HE ONLY RELIED HEAVILY ON MEMORAN DUM EXPLAINING THE PROVISIONS IN THE FINANCE (NO. 2) BILL 1980 [ 123 ITR (ST) 154] TO SUPPORT THIS CASE AND THE SAME READS AS FOLLOWS CLAUSE 30(III) IN COMPUTING THE QUANTUM OF TAX HO LIDAY PROFITS IN ALL CASES TAXABLE INCOME DERIVED FROM THE NEW INDUSTRIAL UNITS ETC. WILL BE DETERMINED AS IF SUCH UNITS WERE AN INDEPENDENT UNIT OWNED BY A TAXPAYER WHO DO ES NOT HAVE ANY OTHER SOURCE OF INCOME. IN THE RESULT THE LOSSES DEPRECIATION AND INVESTMENT ALLOWANCE OF EARLIER YEARS IN RESPECT OF THE NEW INDUSTRIAL UNDERTAKING SHIP OR APPROVED HOTEL WILL BE TAKEN INTO ACCOUNT IN DETERMINING THE QUANTUM OF DEDUCTION ADM ISSIBLE UNDER THE NEW S. 80-I EVEN THOUGH THEY MAY HAVE BEEN SET OFF AGAINST THE PROFI TS OF THE TAXPAYER FROM OTHER SOURCES. WE ARE NOT AGREEING WITH THE COUNSEL FOR THE REVENU E. WE ARE THEREFORE OF THE VIEW THAT LOSS IN THE YEAR EARLIER TO INITIAL ASSESSMENT YEAR ALREADY ABSORBED AGAINST THE PROFIT OF OTHER BUSINESS CANNOT BE NOTIONALLY BROUGHT FORWARD AND SET OFF AGAINST THE PROFITS OF THE ELIGIBLE BUSINESS AS NO SUCH MANDATE IS PROVIDED IN THE S. 80-IA(5). 16. UNDER THESE CIRCUMSTANCES WE SET ASIDE THE ORD ER OF THE TRIBUNAL AND ANSWER ALL THE QUESTIONS IN FAVOUR OF THE APPELLANT/ASSESSEE AND A GAINST THE REVENUE IN TAX CASE NOS. 909 AND 940 OF 2009 RESPECTIVELY. ACCORDINGLY TAX CASES ARE ALLOWED. TAX CASE NO. 918 OF 2008: 17. IT IS FILED BY THE REVENUE BY RAISING THREE QUE STIONS OF LAW AS STATED ABOVE. IN RESPECT OF THE SECOND QUESTION WHICH IS THE SAME AS THE IS SUE INVOLVED IN THE ABOVE TAX CASES IN TAX CASE NOS.909 AND 940 OF 2009 WE ALSO ANSWER IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 18. IN RESPECT OF QUESTION NOS. 1 AND 3 THE ISSUES ARE RELATED TO THE EXERCISING THE OPTION OF CLAIMING DEDUCTION UNDER S. 80-IA. AS PER THE AS SESSEE THE ASSESSMENT YEAR IS 2004- 05. ACCORDING TO THE REVENUE THE ASSESSMENT YEAR I S 1999-2000. FROM THE RECORDS IT IS CLEAR THAT THE ASSESSEE CLAIMED DEDUCTION UNDER S. 80-IA FOR THE FIRST TIME DURING THE ASST. YR. 2004-05. THE AO ACCEPTED THE SAME AND THERE IS NO DISPUTE. THE DEDUCTION UNDER S. 80-IA IS REJECTED ONLY ON THE GROUND THAT THERE WAS NO POSITIVE INCOME AND IT WAS HELD BY THE AO THAT THE ELIGIBLE DEDUCTION UNDER S. 80-IA A FTER SETTING OFF OF THE LOSS WORKED OUT TO NIL. BEFORE THE AO THERE WAS NO DISPUTE REGARDI NG THE CLAIM DURING THE YEAR. AGGRIEVED BY THAT ORDER THE ASSESSEE FILED AN APPE AL BEFORE CIT(A). BEFORE THE APPELLATE AUTHORITIES ALSO THERE IS NO DISPUTE REGARDING THE CLAIM DURING THE YEAR. LINE 3 IN PARA 2 OF THE ORDER READS AS FOLLOWS THE APPELLANT HAS CLAIMED DEDUCTION UNDER S. 80-IA FOR THE FIRST TIME IN THE CURRENT YEAR NAMELY THE ASST. YR. 2004-05. I.T.A. NO. 1416/MDS/10 6 THE REVENUE HAS NOT FILED AN APPEAL AGAINST THE ORD ER OF THE CIT(A). IT REACHED FINALITY. AGGRIEVED BY THE ORDER OF THE CIT(A) REGARDING THE QUANTUM OF DEDUCTION THE ASSESSEE FILED AN APPEAL BEFORE THE TRIBUNAL. IN THE ASSESSE ES APPEAL THE REVENUE FILED A LETTER FIRST TIME BEFORE THE TRIBUNAL AND DISPUTED THE FAC T RELATING TO THE ASSESSEES CLAIM THAT ASST. YR. 2004-05 IS THE INITIAL ASSESSMENT YEAR. T HE TRIBUNAL FOUND THAT BOTH THE AO AND CIT(A) HAD GIVEN CATEGORICAL FINDING THAT THE ASSES SEE CLAIMED DEDUCTION FOR THE FIRST TIME DURING THE YEAR 2004-05 AND PARA 5 READS AS FO LLOWS IN THE PRESENT CASE THERE IS A CATEGORICAL FINDIN G BY THE AO AND CIT(A) THAT THE FIRST YEAR CLAIMED IS FROM THE ASST. YR. 2004-05. AT THE TIME OF HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE FILED A LETTER WHICH RE ADS AS FOLLOWS ASSESSEES CLAIM IS THAT ASST. YR. 2004-05 IS THE INITIAL ASSESSMENT YEAR. HOWEVER FROM A PERUSAL OF RECORDS THE FOLLOWING FACTS ARE OBSERV ED ASST. YR. 1999-2000 ASSESSEE CLAIMED DEDUCTION OF RS. 2 15 59 112 UNDER S. 80-IA OF THE IT ACT. THE AO REJECTED THE CLAIM UNDER S. 143(3) R/W S. 263. AGGR IEVED BY THE ORDER THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) AGITATING INT ER ALIA THE CLAIM FOR A DEDUCTION UNDER S. 80-IA. THE CIT(A) VIDE HIS ORDER IN ITA NO. 39/2 005-06/DT. 4TH AUG. 2005 IN PARA NO. 12 DIRECTED THE AO TO ALLOW THE CLAIM UNDER S. 80-IA WHICH WAS ACCORDINGLY ALLOWED. ASST. YR. 2000-01 IN THIS ASSESSMENT YEAR ALSO THE ASSESSEE IN THE CO MPUTATION MEMO CLAIMED DEDUCTION UNDER S.80-IA OF AN AMOUNT OF RS. 1 20 19 495 WHICH WAS ALLOWED IN FULL BY THE AO IN THE REGULAR ASSESSMENT ORDER UNDER S. 143(3) DT. 28 TH MARCH 2003. THIS BEING THE POSITION THE STATEMENT OF THE ASSES SEE THAT THE CLAIM UNDER S. 80-IA CLAIMED FOR THE FIRST TIME IN THE ASST. YR. 2004-05 IS TOTALLY CONTRARY TO THE FACTS AS MENTIONED. THIS PROVES THAT ASST. YR. 2004-05 IS NO T THE INITIAL ASSESSMENT YEAR AS CLAIMED BY THE ASSESSE. THE FACT OF THE MATTER IS THAT ASSESSEE EXERCISED I TS OPTION OF CLAIMING DEDUCTION UNDER S. 80-IA IN THE ASST. YR. 1999-2000 ITSELF. THEREFORE ASST. YR. 1999-2000 IS INITIAL ASSESSMENT YEAR. BUT THIS LETTER IS CONTRARY TO THE FINDINGS OF THE LOWER AUTHORITIES. THE LOWER AUTHORITIES CATEGORICALLY OBSERVED THAT THE FIRST YEAR IN WHICH DEDUCTION WAS CLAIMED WAS 2004-05. WE HAVE ALREADY NARRATED IN THE FACTS OF THE CASE T HAT IF THE FACTS STATED BY THE AO OR CIT(A) ARE WRONG THE DEPARTMENTAL REPRESENTATIVE IS REQUIRED TO ADDUCE THE EVIDENCE AS PER RR. 10 AND 29 OF TRIBUNAL RULES 1963 WHICH REA D AS FOLLOWS I.T.A. NO. 1416/MDS/10 7 RULE 10. FILING OF AFFIDAVITSWHERE A FACT WHICH CA NNOT BE BORNE OUT BY OR IS CONTRARY TO THE RECORD IS ALLEGED IT SHALL BE STATED CLEAR LY AND CONCISELY AND SUPPORTED BY A DULY SWORN AFFIDAVIT. RULE 29. PRODUCTION OF ADDITIONAL EVIDENCE BEFORE T HE TRIBUNALTHE PARTIES TO THE APPEAL SHALL NOT BE ENTITLED TO PRODUCE ADDITIONAL EVIDENC E EITHER ORAL OR DOCUMENTARY BEFORE THE TRIBUNAL BUT IF THE TRIBUNAL REQUIRES ANY DOCUMENT TO BE PRODUCED OR ANY WITNESS TO BE EXAMINED OR ANY AFFIDAVIT TO BE FILED TO ENABLE IT TO PASS ORDERS OR FOR ANY OTHER SUBSTANTIAL CAUSE OR IF THE IT AUTHORITIES HAVE D ECIDED THE CASE WITHOUT GIVING SUFFICIENT OPPORTUNITY TO THE ASSESSEE TO ADDUCE EVIDENCE EITH ER ON POINTS SPECIFIED BY THEM OR NOT SPECIFIED BY THEM THE TRIBUNAL FOR REASONS TO BE RECORDED MAY ALLOW SUCH DOCUMENT TO BE PRODUCED OR WITNESS TO BE EXAMINED OR AFFIDAVIT TO BE FILED OR MAY ALLOW SUCH EVIDENCE TO BE ADDUCED. THESE FACTS ARE CONTRARY TO THE FACTS RECORDED BY T HE CIT(A) AND AO. IT CANNOT BE CONSIDERED. THE ABOVE STATEMENT MADE BY THE AO IS N OT IN ACCORDANCE WITH RR. 10 AND 29. HENCE WE DECLINE TO CONSIDER THE SAME. 6. ADVERTING TO THE FACTS OF THE CASE THE INITIAL ASSESSMENT YEAR IN THIS CASE STARTS FROM 2004-05 SINCE THE ASSESSEE HAS OPTED TO CLAIM THIS DEDUCTION ONLY IN THIS ASSESSMENT YEAR THE INITIAL ASSESSMENT YEAR CANNOT BE THE YEAR IN W HICH THE UNDERTAKING COMMENCED ITS OPERATIONS AND IN THIS CASE THE INITIAL ASSESSMENT YEAR IS THE ASSESSMENT YEAR IN WHICH ASSESSEE HAS CHOSEN TO CLAIM DEDUCTION UNDER S. 80- IA. HENCE THE PROVISIONS OF S. 80- IA(5) TREATING UNDERTAKING AS A SEPARATE SOLE SOURC E OF INCOME CANNOT BE APPLIED TO A YEAR PRIOR TO THE YEAR IN WHICH ASSESSEE OPTED TO CLAIM RELIEF UNDER S. 80-IA FOR THE FIRST TIME. DEPRECIATION AND CARRY FORWARD LOSS RELIEF TO THE U NIT WHICH CLAIMS DEDUCTION UNDER S. 80- IA CANNOT BE NOTIONALLY CARRIED FORWARD AND SET OF F AGAINST THE INCOME FROM THE YEAR IN WHICH THE ASSESSEE STARTED CLAIMING DEDUCTION UNDER S. 80-IA. AT THE COST OF REPETITION WE MAKE IT CLEAR THAT THE CASE LAWS RELIED ON BY TH E DEPARTMENTAL REPRESENTATIVE ARE DELIVERED BEFORE THE AMENDMENT TO SECTION BY FINANC E ACT 1999. BEFORE THE AMENDMENT THE INITIAL ASSESSMENT YEAR WAS DEFINED IN THE ACT BUT AFTER THE AMENDMENT THERE IS NO DEFINITION FOR INITIAL ASSESSMENT YEAR IN THE ACT A ND THERE IS OPTION TO THE ASSESSEE IN SELECTING THE YEAR OF CLAIMING RELIEF UNDER S. 80-I A. IN VIEW OF THIS WE ARE OF THE OPINION THAT THERE IS NO QUESTION OF SETTING OFF NOTIONALLY CARRIED FORWARD UNABSORBED DEPRECIATION OR LOSS AGAINST THE PROFITS OF THE UNITS AND ASSESS EE IS ENTITLED TO CLAIM DEDUCTION UNDER S. 80-IA ON CURRENT ASSESSMENT YEAR ON THE CURRENT YEA R PROFIT. ACCORDINGLY WE ALLOW THE CLAIM OF THE ASSESSEE. 7. THE QUESTION HERE THEREFORE IS WHETHER THE DEPRE CIATION FOR ASSESSMENT YEAR 2005-06 AND 2006-07 WHICH HAVE BEEN CONSIDERED BY THE A.O. AS UNABSORBED DEPRECIATION WERE ACTUALL Y UNABSORBED OR ONLY NOTIONALLY UNABSORBED. IF SUCH DEPRECIATION W AS SET OFF AGAINST I.T.A. NO. 1416/MDS/10 8 OTHER INCOME OF THE ASSESSEE IN SUCH EARLIER YEARS THEN THE UNABSORBED DEPRECIATION CONSIDERED BY THE A.O. WAS ONLY NOTIONAL. THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT I N THE CASE OF M/S VELAYUDHASWAMY SPG. MILLS P. LTD. (SUPRA) IS CLEAR IN THAT ONLY NOTIONAL UNABSORBED DEPRECIATION OF EARLIER YEARS C OULD NOT BE CARRIED FORWARD AND SET OFF AGAINST INCOME OF ELIGIBLE UNIT . NOTIONAL UNABSORBED DEPRECIATION SIMPLY MEANS THAT SUCH DEPR ECIATION WAS ACTUALLY SET OFF AGAINST OTHER INCOME FROM OTHER UN ITS OR SOURCES. BY IMPLICATION IT WOULD ALSO MEAN THAT IF EARLIER DEPR ECIATION WAS NOT ACTUALLY SET OFF IN THE EARLIER YEARS BUT REMAINED UNABSORBED IT HAS TO BE NECESSARILY SET OFF BEFORE WORKING OUT DEDUC TION UNDER SECTION 80-IA OF THE ACT IN THE INITIAL ASSESSMENT YEAR. WE FIND THAT THIS ASPECT HAS NOT BEEN PROPERLY CONSIDERED EITHER BY T HE A.O. OR BY THE CIT(APPEALS). NOTHING IS COMING OUT FROM A.O. OR C IT(APPEALS) AS TO WHETHER THE UNABSORBED DEPRECIATION FOR THE EARLIER YEARS PERTAINING TO THE WINDMILL UNITS WERE NOTIONAL OR ACTUAL. IF NOTIONAL THEN THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN TH E CASE OF M/S VELAYUDHASWAMY SPG. MILLS P. LTD. (SUPRA) WOULD APP LY AND IF IT WAS NOT NOTIONAL BUT ACTUALLY REMAINED TO BE SET OFF T HEN BY VIRTUE OF THE SAME DECISION THE A.O. HAD TO SET OFF SUCH DEPRECI ATION BEFORE I.T.A. NO. 1416/MDS/10 9 WORKING OUT DEDUCTION UNDER SECTION 80-IA OF THE AC T. WE THEREFORE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND R EMAND THE ISSUE BACK TO THE FILE OF THE A.O. FOR CONSIDERING THE IS SUE IN THE LIGHT OF THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN TH E CASE OF M/S VELAYUDHASWAMY SPG. MILLS P. LTD. (SUPRA) AS MENTIO NED ABOVE. 7. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S ALLOWED FOR STATISTICAL PURPOSES. THE ORDER WAS PRONOUNCED IN THE COURT ON 25 TH MARCH 2011. SD/- SD/- (HARI OM MARATHA) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI DATED THE 25 TH MARCH 2011. KRI. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT(A)-II CHENNAI-34 (4) CIT CENTRAL-III CHENNAI (5) D.R. (6) GUARD FILE