Hyderabad Chemical Products Ltd., Hyderabad v. ACIT, Hyderabad

ITA 43/HYD/2006 | 2002-2003
Pronouncement Date: 21-01-2011 | Result: Dismissed

Appeal Details

RSA Number 4322514 RSA 2006
Assessee PAN AABCH1014K
Bench Hyderabad
Appeal Number ITA 43/HYD/2006
Duration Of Justice 5 year(s) 2 day(s)
Appellant Hyderabad Chemical Products Ltd., Hyderabad
Respondent ACIT, Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 21-01-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 21-01-2011
Date Of Final Hearing 08-12-2010
Next Hearing Date 08-12-2010
Assessment Year 2002-2003
Appeal Filed On 18-01-2006
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A HYDERABAD BEFORE SHRI G.C. GUPTA VICE PRESIDENT AND SHRI CHANDRA POOJARI ACCOUNTANT MEMBER ITA NO.352/HYD/2005 ASSESSMENT YEAR 2002-03 M/S HYDERABAD CHEMICALS SUPPLIES LTD. APIE BALANAGAR HYDERABAD-37. (PAN AABCH 1014K) VS. THE ACIT CIRCLE 1(4) HYDERABAD (APPELLANT) (RESPONDENT) ITA NO.1479/HYD/2008 ASSESSMENT YEAR 2005-06 M/S HYDERABAD CHEMICALS PRODUCTS LTD. APIE BALANAGAR HYDERABAD-37. (PAN AAACH 5507 Q) VS. THE DY. CIT CIRCLE 2(2) HYDERABAD. (APPELLANT) (RESPONDENT) ITA NO.40 & 41/HYD/2006 ASSESSMENT YEAR 2001-02 & 2002-03 M/S HYDERABAD CHEMICALS SUPPLIES LTD. APIE BALANAGAR HYDERABAD-37. (PAN AABCH 1014K) VS. THE ACIT CIRCLE 1(4) HYDERABAD (APPELLANT) (RESPONDENT) ITA NO.42 43 & 44/HYD/2006 ASSESSMENT YEAR 2001-02 2002-03 & 2003-04 M/S HYDERABAD CHEMICALS PRODUCTS LTD. APIE BALANAGAR HYDERABAD-37. (PAN AAACH 5507 Q) VS. THE ACIT CIRCLE 1(4) HYDERABAD. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.V. RAGHURAM RESPONDENT BY : SHRI K.V.N. CHARYA O R D E R ITA NO.352 & 6 OTHER APPEALS HYDERABAD CHEMICALS & HYD. PRODUCTS HYD. 2 2 PER CHANDRA POOJARI ACCOUNTANT MEMBER: 2. THE FIRST TWO APPEALS IN ITA NOS.352/H/2005 & 1479/H/2008 PREFERRED BY THE ASSESSEE ARE DIRECTED AGAINST DIFF ERENT ORDERS PASSED BY THE CIT(A)-II & III HYDERABAD U/S 250 READ WITH 14 3(3) OF THE IT ACT AND PERTAINS TO THE ASSESSMENT YEARS 2002-03 & 2005-06. 3. THERE ARE OTHER FIVE APPEALS OUT OF THIS THE F IRST TWO APPEALS IN ITA NOS.40 & 41 BY ONE ASSESSEE & OTHER 3 APPEALS I N ITA NO. 42 TO 44/H/2006 ARE BY ANOTHER ASSESSEE WHICH ARE DIREC TED AGAINST THE DIFFERENT ORDERS PASSED BY THE CIT-HYDERABAD U/S 26 3 OF THE IT ACT AND PERTAINS TO THE ASSESSMENT YEARS 2001-02 2002-03 & 2003-04. 4. THE ASSESSEES HEREIN RAISED COMMON GROUND IN THESE APPEALS ARE THAT THE CIT(A)/CIT ERRED IN NOT ACCEPTING CLAI M OF THE ASSESSEE THAT LOSSES RELATING TO THE INDUSTRIAL UNDERTAKING WHICH IS ALREADY ABSORBED AGAINST OTHER INCOME NEED NOT BE NOTIONALLY BROUGHT FORWARD AGAINST THE PROFIT OF THE CURRENT YEAR WHILE ALLOWING THE DEDUC TION U/S 80IA. THE ASSESSEES ALSO RAISED GROUND IN ITA NO.40 TO 44/H/2 006 THAT THE CIT(A) ERRED IN CANCELING THE ASSESSMENT WHEN THE ORIGINAL ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT AND ALL THE RELEVAN T INFORMATION AT THE POINT OF SEC.80IA ARE FURNISHED BEFORE THE ASSESSIN G OFFICER. AS SUCH THE IT IS NOT OPEN TO THE CIT(A) TO INVOKE THE PROVISIONS OF SEC. 263 OF THE IT ACT. 5. THE ASSESSEE HEREIN IS A COMPANY WHICH IS CARR YING ON ITS BUSINESS IN THE MANUFACTURE AND TRADING OF AGRO CHE MICALS GENERATION DISTRIBUTION AND SALE OF POWER. IN THE ASSESSMENT YEARS 2002-03 AND 2005-06 ASSESSMENT WAS FRAMED U/S 143(3) OF THE AC T WHEREIN THE CLAIM OF THE ASSESSEE U/S 80IA WAS DENIED ON THE REASON T HAT IN VIEW OF THE SPECIFIC PROVISIONS OF SECTION 80IA(5) OF THE PROFI T FROM THE ELIGIBLE BUSINESS ITA NO.352 & 6 OTHER APPEALS HYDERABAD CHEMICALS & HYD. PRODUCTS HYD. 3 3 FOR THE PURPOSE OF DETERMINATION OF THE QUANTUM OF DEDUCTION U/S 80IA OF THE ACT HAS TO BE COMPUTED AFTER DEDUCTION OF THE N OTIONAL BROUGHT FORWARD LOSSES AND DEPRECIATION OF ELIGIBLE BUSINESS EVEN T HOUGH THEY HAVE BEEN ALLOWED SET OFF AGAINST OTHER INCOME IN EARLIER YEA RS. FOR THE ASSESSMENT YEARS 2001-02 2002-03 & 2003-04 THE ORIGINAL ASSE SSMENTS HAVE BEEN COMPLETED U/S 143(3) OF THE IT ACT WHILE PASSING AS SESSMENT ORDER THE ASSESSING OFFICER NOT CONSIDERED THE PROVISIONS OF SECTION 80IA(5) AND BRINGING FORWARD THE UNABSORBED LOSSES AND UNABSORB ED DEPRECIATION RELATING TO THE ELIGIBLE BUSINESS THAT HAVE NOT BEE N FULLY SET OFF/ADJUST AGAINST THE INCOME FROM THE SAID UNDERTAKING FOR TH E EARLIER YEAR(S) AND SETTING THEM OFF AGAINST THE INCOME FROM SUCH UNITS IN THE SUBSEQUENT YEAR TREATING THE UNDERTAKING AS IF THEY ARE ONLY T HE BUSINESS OF THE ASSESSEE FOR THE PURPOSE OF QUANTIFICATION AMOUNT O F THE INCOME THAT CAN BE CONSIDERED FOR DEDUCTION. IT IS ALSO OBSERVED T HAT THE ASSESSING OFFICER HAS NOT VERIFIED THE DETAILS RELATING TO THE EXPEND ITURE RELATABLE TO THE EARNINGS OF INCOME OF THE UNDERTAKING AND HAS NOT V ERIFIED THE CORRECTNESS OF THE INCOME OF THE UNDERTAKING. IN VIEW OF THIS THE CIT INVOKED THE PROVISIONS U/S 263 OF THE ACT IN THESE ASSESSMENT Y EARS I.E. 2001-02 2002-03 & 2003-04 AND SET ASIDE THE ORDER OF THE AS SESSING OFFICER WITH A DIRECTION TO THE ASSESSING OFFICER TO WORK OUT THE CORRECT AMOUNT OF DEPRECIATION AND BUSINESS LOSSES OF THE EARLIER YEA RS RELATING TO THE UNDERTAKINGS TO WHICH THE PROVISIONS OF SECTION 80I A(7) APPLY AND TO CARRY FORWARD THE SAME AND SET OFF AGAINST THE INCOME OF THE UNDERTAKING IN THE CURRENT YEAR TREATING THE UNDERTAKING AS IF THEY AR E ONLY BUSINESS OF THE ASSESSEE FOR THE PURPOSE OF COMPUTING THE DEDUCTION U/S 80IA. REGARDING THE QUANTIFICATION OF THE EXPENSES OF THE UNDERTAKI NG IT WAS DIRECTED TO THE ASSESSING OFFICER THAT HE/SHE SHALL VERIFY THE CORR ECTNESS OF THE CLAIM IN THIS REGARD. IN PARTICULAR HE/SHE SHOULD ALLOCA TE THE EXPENSES NOT PARTICULARLY RELATABLE TO THE EXISTING ALONE IN THE RATIONAL MANNER TO THE ITA NO.352 & 6 OTHER APPEALS HYDERABAD CHEMICALS & HYD. PRODUCTS HYD. 4 4 NEW UNDERTAKING FOR DETERMINATION OF INCOME OF THE UNDERTAKING. AGAINST THIS THE ASSESSEE IS IN APPEAL BEFORE US. 6. ACCORDING TO LEARNED AUTHORIZED REPRESENTATIVE THE NOTIONALLY BROUGHT FORWARD UNABSORBED BUSINESS LOSSES OR DEPRE CIATION OF ELIGIBLE BUSINESS UNIT NEED NOT BE SET OFF AGAINST THE INCOM E EARNED BY THE UNIT FOR THE ASSESSMENT YEARS. 7. HE SUBMITTED THAT THE ASSESSEE COMPANY STARTED THE WINDMILL UNIT LOCATED AT KADAVAKALLU NEAR TADIPATYRI ANANTA PUR DISTRICT ON 31.3.1999. THE ASSESSEE CLAIMED DEDUCTION U/S 80IA ON THIS UNIT AT RS.11 67 300/-. BUT THE ASSESSEE COMPANY HAD LOSSE S FOR THE ASSESSMENT YEAR 1999-2000 AND 2000-01 ON THIS UNIT. IT HAS SH OWN A TURNOVER OF RS.12 85 783/- TOWARDS THIS WINDMILL AND CLAIMED EX PENSES AT RS.1 18 483/- AND ARRIVED THE FIGURE OF RS.11 67 30 0/-. THE ASSESSEE SET OFF THE BROUGHT FORWARD LOSSES AGAINST THE INCOME O F THIS WINDMILL AS PER THE PROVISIONS OF SECTION 80IA(5). 8. FURTHER HE SUBMITTED THAT THE REAL INTENTION BEHIND SUB SECTION 5 SECTION 80IA IS TO ENSURE THAT THE INDUST RIAL UNDERTAKING WHICH IS ELIGIBLE FOR DEDUCTION HAS TO BE TREATED AS SEPARAT E INDUSTRIAL UNDERTAKING FOR INITIAL ASSESSMENT YEAR AND SUBSEQUENT ASSESSME NT YEAR TO ARRIVE AT RIGHT QUANTUM OF PROFITS THAT ARE ELIGIBLE FOR DEDU CTION I.E. THAT THERE IS NO OVERLAPPING OF ANY OTHER INCOME OF THE UNDERTAKING OR OTHER UNDERTAKINGS AND EVEN IF THERE IS ANY REORGANIZATION OF THAT UNI T SUBSEQUENT TO THE CLAIM THE PROFITS OF THE UNDERTAKING SHOULD BE AR RIVED TREATING IT AS A SEPARATE UNIT. SEC.80IA(5) HAS TO BE READ WITH SEC TION 80IA(8)(9) AND (10). THE OTHER PROVISIONS WHICH GIVE DETAILED INSTRUCTIO NS AS TO THE MANNER OF COMPUTATION NO WHERE SUGGEST ANY ADJUSTMENT FOR PAS T LOSSES ALREADY ABSORBED. ITA NO.352 & 6 OTHER APPEALS HYDERABAD CHEMICALS & HYD. PRODUCTS HYD. 5 5 9. HE SUBMITTED THAT S.80IA(5) HAS TO BE READ WIT H SECTION 80IA(9)(10) THE OTHER PROVISION WHICH GIVE DETAIL I NSTRUCTIONS AS TO MANNER OF COMPUTATION NO WHERE SUGGESTS ANY ADJUSTMENT WI TH REGARD TO PAST LOSSES ALREADY ABSORBED. 10. HE SUBMITTED THAT IF LOSS IS INTENDED TO BE S ET OFF AGAINST THE PROFITS IN A SUCCEEDING YEAR THE LAW WOULD HAVE CE RTAINLY PROVIDED FOR THE SAME AS EXPLICITLY AS IT HAD DONE UNDER SECTION 80J NOW DELETED. IT IS BECAUSE OF THE DEPARTMENT FROM NORMAL RULE THAT ASS ESSMENT FOR EACH YEAR IS DISTINCT AND SEPARATE IS MADE BY SPECIFIC PROVIS IONS EITHER U/S 80J EARLIER OR SECTION 70 TO 80 DEALING WITH SET OFF LO SSES IN CHAPTER VI. THERE CANNOT BE MIXING UP OF THE SECTION IN THIS CHAPTER WITH CHAPTER VIA EXCEPT WHERE THE CONCEPT OF SET OFF IS SPECIFICALLY INCORP ORATED OR A CROSS REFERENCE IS MADE THERETO. 11. ACCORDING TO THE LEARNED AR SEC.80IA NOWHERE IN EXPLICIT TERMS PROVIDES THAT PAST LOSSES ALREADY ABSORBED NE EDS TO BE NOTIONALLY BROUGHT BACK WHILE WORKING OUT DEDUCTION U/S 80IA F OR THE CURRENT YEAR. 12. HE RELIED ON THE JUDGEMENT OF RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. MERWER OIL AND GENERAL MILLS LTD. ( 271 ITR 33) AND SUBMITTED THAT ON SIMILAR FACTS THE HONBLE HIGH CO URT DID NOT UPHOLD THE SET OFF OF PAST LOSSES ALREADY ABSORBED IN THE PURP ORTED INTERPRETATION OF ANALOGOUS PROVISIONS. HE SUBMITTED THAT IN THE CAS E OF M.PALLONJI & CO. (P) LTD. VS. JT.CIT (6 SOT 287) (MUM) NOTIONAL ADJUSTME NT IS NOT CALLED FOR AND NOT CONTEMPLATED IN THE CLAIM OF DEDUCTION PROV IDED IN SECTION 80IA AND THEREFORE THE ASSESSEES CLAIM HAD TO BE ALLOWE D ON THE BASIS OF PROFIT OF THE WINDMILL PROJECT UNFETTERED BY ANY NOTIONAL AMOUNT OF UNABSORBED DEPRECIATION PERTAINING TO THE PRECEDING ASSESSMENT YEAR. ITA NO.352 & 6 OTHER APPEALS HYDERABAD CHEMICALS & HYD. PRODUCTS HYD. 6 6 13. FURTHER HE SUBMITTED THAT THE AMOUNT ALLOWED IN EARLIER YEARS FOR DEPRECIATION ON WIND MILLS AND WAS SET OFF AGAI NST THE BUSINESS INCOME U/S 70 OF THE ACT. THAT SECTION 80IA DOES NOT HAVE THAT PAST LOSSES HAVE TO BE BROUGHT FORWARD TO CURTAIL THE BENEFIT. ACCORDI NG TO THE LEARNED AR THE DEDUCTION U/S 80IA BEING A BENEFICIAL PROVISION INT ENDED FOR THE ENCOURAGEMENT OF THE INDUSTRIES HAS TO BE CONSTRUED LIBERALLY AND ONLY INCOME FOR THE YEAR HAS TO BE TAKEN INTO ACCOUNT FO R COMPUTATION OF DEDUCTION U/S 80IA WITHOUT SETTING OFF OF ANY BROUG HT FORWARD LOSSES SHALL BE WHEN THE EARLIER YEARS LOSSES ALREADY ABSORBED B Y THE INCOME FROM THE OTHER UNIT OF THE ASSESSEE COMPANY. FIINALLY HE D REW OUR ATTENTION TO THE FOLLOWING JUDGEMENTS: 1. CIT VS. MERWER OIL & GENERAL MILLS LTD. (271 ITR 3 11) (RAJAS.) WHEREIN IT WAS HELD: THAT THE QUESTION OF RECTIFICATION WOULD HAVE BEEN GERMANE ONLY IF THERE HAD BEEN CARRY FORWARD OF UNABSORBED DEPRECIATION A ND UNABSORBED DEVELOPMENT REBATE OR ANY OTHER UNABSORBED LOSSES O F 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. IN VIE W OF THE FINDING THAT THERE WAS NO CARRY FORWARD OF ALLOWABLE DEDUCTION U NDER THE HEAD DEPRECIATION OR DEVELOPMENT REBATE WHICH NEEDED TO BE ABSORBED AGAINST THE INCOME OF THE CURRENT ASSESSMENT YEAR 1984-85 RE-COMPUTATION OF INCOME FOR THE PURPOSE OF COMPUTING PERMISSIBLE DE DUCTION U/S 80I FOR THE NEW INDUSTRIAL UNDERTAKING WAS NOT REQUIRED. T HERE WAS NO ERROR APPARENT ON THE FACE OF THE RECORD WHICH COULD BE R ECTIFIED. 2. MOHAN BREWERIES & DISTILLERIES LTD. (116 ITD 241) (CHENNAI) WHEREIN HELD THAT: ASSESSEE HAVING CLAIMED DEDUCTION U/S 80IA FOR THE FIRST TIME IN ASSESSMENT YEAR 2004-05 THIS WILL BE THE YEAR IN W HICH THE UNDERTAKING HAS TO BE TREATED AS A SEPARATE SOLE SOURCE OF INCOME W ITHIN THE MEANING OF S.80IA (5) AND THEREFORE DEPRECIATION AND LOSS OF EARLIER YEARS CANNOT BE NOTIONALLY CARRIED FORWARD TO BE SET OFF AGAINST IN COME OF THAT YEAR FOR COMPUTING DEDUCTION U/S 80IA. 3. RANGAMMA STEELS & MALLEABLES VS. ACIT (132 TTJ 365) (CHENNAI) WHEREIN IT WAS HELD THAT: ITA NO.352 & 6 OTHER APPEALS HYDERABAD CHEMICALS & HYD. PRODUCTS HYD. 7 7 THE ASSESSEE HAS OPTION TO OPT FOR INITIAL YEAR AND THE DEDUCTION U/S 80IA SHALL HAVE RELEVANCE TO THAT INITIAL YEAR ONLY AND CONDITIONALITY U/S 80IA(5) SHALL BE APPLICABLE FROM SUCH INITIAL YEAR AND THEREFORE LOSSES PERTAINING TO YEAR(S) PRIOR TO THE YEAR IN WHICH THE ASSESSEE OPTED TO CLAIM DEDUCTION COULD NOT BE ADJUSTED AGAINST THE ELIGIBLE INCOME. 4. VELAYUDHASWAMY SPINNING MILLS (P) LTD. VS. ACIT ( 38 DTR 57) (MDS. ) (HC) WHEREIN IT WAS HELD THAT LOSSES AND DEPRECIATION OF THE YEARS EARLIER TO THE INITIAL ASSESSM ENT YEARS WHICH HAVE ALREADY BEEN ABSORBED AGAINST THE PROFIT OF OTHER BUSINESS CANNO T BE NOTIONALLY BROUGHT FORWARD AND SET OFF AGAINST THE ELIGIBLE BU SINESS PROFIT COMPUTING U/S 80IA. 14. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMI TTED THAT AS PER THE PROVISIONS OF SECTION 80IA (5) THE INCOME OF A NY ELIGIBLE BUSINESS UNIT SHALL BE COMPUTED AS IF IT IS ONLY SOURCE OF INCOME OF THE ASSESSEE DURING THE PREVIOUS YEAR RELEVANT TO THE INITIAL ASSESSMEN T YEARS AND TO VERY SUBSEQUENT ASSESSMENT YEARS UPTO INCLUDING ASSESSME NT YEARS FOR WHICH THE SAID BENEFIT IS TO BE COMPUTED . ACCORDING TO DEPARTMENTAL REPRESENTATIVE THE INCOME OF THE UNIT ELIGIBLE FOR DEDUCTION U/S 80IA ONLY IS TO BE COMPUTED BEFORE GRANTING DEDUCTION U/S 80IA A S IF THAT IT IS ONLY SOURCE OF INCOME. SHE RELIED THE ORDER OF THE TRIB UNAL SPECIAL BENCH IN THE CASE OF ACIT VS. GOLDMINE SHARES & FINANCE (P) LTD. (113 ITD 209) (AHED. S.B) WHEREIN IT WAS HELD THAT: THE SECOND ASPECT OF THE MATTER IS THAT THE FICTIO N IS CREATED FOR ALL THE YEARS ELIGIBLE FOR THE DEDUCTION I.E. THE INITI AL YEAR (THE FIRST YEAR OF THE DEDUCTION) AND SHALL SUBSEQUENT AND SUCCEEDI NG YEARS. IT IS NOT ONLY FOR A PARTICULAR YEAR AS EVIDENT FROM THE LANG UAGE USED IN SECTION 80IA(5) IT IS FOR INITIAL ASSESSMENT YEAR AND EVER Y SUBSEQUENT ASSESSMENT YEAR UPTO AND INCLUDING THE ASSESSMENT Y EAR FOR WHICH THE DETERMINATION IS TO BE MADE. THERE WAS NO MERI T IN THE CONTENTION OF THE ASSESSEE THAT THE FICTION WAS FOR THAT YEAR ALONE OR THAT THE CONCEPT OF INITIAL YEAR WAS DISPENSED WITH IN THE NEW PROVISION IN VIEW OF SECTION 80IA(1) OF THE OLD PRO VISION AND SECTION 80IA(2) (IV)(B) SUB SECTION (5) (6)(7). INSTEAD OF DEFINING THE CONCEPTS SEPARATELY BY CLAUSE (B) TO SUB SECTION (12) OF THE PRE AMENDED SECTION 80IA THE SUB SECTION (2) ITSELF HAS CONTAINED THE PROVISIONS OF THE EXPLANATION BY PROVIDING THE PERIOD OF DEDUCTION AN D THE YEAR FROM WHICH IT IS TO START. EVEN OTHERWISE THE PLAIN REA DING OF THE WORK ITA NO.352 & 6 OTHER APPEALS HYDERABAD CHEMICALS & HYD. PRODUCTS HYD. 8 8 INITIAL YEAR MEANS THE YEAR IN WHICH THE MANUFACT URE OR PRODUCTION OR OTHER ACTIVITY BEGINS. 15. WE HAVE HEARD BOTH THE PARTIES AND PERUSED TH E MATERIALS AVAILABLE ON RECORD. IN OUR OPINION THE ISSUE RELA TING TO COMPUTATION OF 80IA DEDUCTION THAT IT HAS TO BE COMPUTED AFTER DED UCTION OF THE NOTIONAL BROUGHT FORWARD LOSSES AND DEPRECIATION OF BUSINESS EVEN THOUGH THEY HAVE BEEN ALLOWED SET OFF AGAINST OTHER INCOME IN E ARLIER YEARS HAS BEEN DEALT BY THE SPECIAL BENCH IN THE CASE OF ACIT VS. GOLD MINE SHARES & FINANCE (P) LTD. (113 ITD 209) (SB) (AHEMADABAD) AN D DECIDE THE ISSUE AGAINST THE ASSESSEE. WHILE DELIVERING THIS ORDER THE SPECIAL BENCH CONSIDERED ALL THE ARGUMENTS WHAT THE ASSESSEE HAS PLACED BEFORE US. THE TRIBUNAL ALSO CONSIDERED THE JUDGEMENT IN THE CASE OF MEWAR OIL & GENERAL MILLS LTD. (SUPRA ) AND OBSERVED THAT THIS CASE HAS NOT NOTICED THE NON OBSTANTE PROVISIONS OF SECTION 80I(6)/80IA(5) A ND THEREFORE THERE IS NO DISCUSSION ON THIS POINT IN THAT DECISION. IT W OULD SIMILARLY THEREFORE BE NOT OF ANY HELP TO US. THE TRIBUNAL ALSO CONSID ERED THE DECISION CITED BY THE ASSESSEE IN THE CASE OF MOHAN BREWERIES & DI STILLERIES LTD. (116 ITD 241) (CHENNAI) (SUPRA) AND OBSERVED THAT WHAT IT DECIDED IN THAT CASE IS THAT THE DEDUCTION IS ALLOWED U/S 80IA FOR 10 OU T OF 15 YEARS AT THE OPTION OF THE ASSESSEE WHICH MEANS ANY TEN YEARS NO T NECESSARILY THE BEGINNING OF 10 YEARS. FINALLY IT WAS OBSERVED THA T THIS CASE HAS NO RELEVANCE IN DECIDING THE ISSUE IN THIS CASE OF THE ASSESSEE BECAUSE THE ASSESSEE ITSELF HAD CLAIMED DEDUCTION IN THE RETURN STARTING FROM 1 ST YEAR. THE SAME IS APPLICABLE IN THE CASE OF RANGAMMA STE ELS & MALLEABLES VS. ACIT (132 TTJ 365) (CHENNAI) AND VELAYUDHASWAMY SP INNING MILLS (P) LTD. VS. ACIT (38 DTR 57) (MDS. ) (HC). FURTHER JUDGEMENT OF HIGH COURT THOUGH NOT OF THE JURISDICTIONAL HIGH COURT PREVAI LS OVER AN ORDER OF THE SPECIAL BENCH EVEN THOUGH IT IS FROM THE JURISDICTI ONAL BENCH OF THE TRIBUNAL HOWEVER WHERE THE JUDGEMENT OF THE NON J URISDICTIONAL HIGH COURT THOUGH THE ONLY JUDGEMENT ON THE POINT HAS BEEN RENDERED WITHOUT ITA NO.352 & 6 OTHER APPEALS HYDERABAD CHEMICALS & HYD. PRODUCTS HYD. 9 9 HAVING BEEN INFORMED ABOUT CERTAIN STATUTORY PROVIS IONS THAT ARE DIRECTLY RELEVANT IT IS NOT TO BE FOLLOWED. IN OUR OPINIO N JUDGEMENT OF SPECIAL BENCH IN THE CASE OF GOLD MINE SHARES & FINANCE (P ) LTD. (113 ITD 209) (SB) (AHEMADABAD) SQUARELY APPLICABLE TO THE FACTS OF THE PRESENT CASE AND APPLYING THE RATIO LAID DOWN BY THIS ORDER OF THE S PECIAL BENCH OF THIS TRIBUNAL WE INCLINED TO DECIDE THE ISSUE AGAINST T HE ASSESSEE RELATING TO ALLOWABILITY OF DEDUCTION U/S 80IA THAT IN TERMS O F PROVISIONS OF U/S 80IA(5) OF THE IT ACT THE PROFIT FROM THE ELIGIBLE BUSINESS FOR THE PURPOSE OF DETERMINATION OF THE QUANTUM OF DEDUCTION U/S 80IA OF THE ACT HAS TO BE COMPUTED AFTER DEDUCTION OF THE NOTIONAL BROUGHT FO RWARD LOSSES AND DEPRECIATION OF ELIGIBLE BUSINESS EVEN THOUGH THEY HAVE BEEN ALLOWED SET OFF AGAINST OTHER INCOME IN EARLIER YEARS. 16. REGARDING INVOKING OF PROVISION U/S 263 THE ARGUMENT OF THE ASSESSEE COUNSEL IS THAT THE ASSESSMENT FOR THE ASS ESSMENT YEARS 2001- 02 2002-03 AND 2003-04 HAVE BEEN COMPLETED U/S 14 3(3) OF THE IT ACT AND THE ASSESSES HAVE FURNISHED ALL THE INFORMATION AS REQUIRED FOR THE PURPOSE OF ASSESSMENT AND THE CIT CANNOT INVOKE THE PROVISION U/S 263 FOR THE PURPOSE OF MAKING ROVING ENQUIRY AND THE OR DER OF THE ASSESSING OFFICER IS NOT ERRONEOUS AS HE HAS FOLLOWED ONE POS SIBLE VIEW ON THE ISSUE. WE HAVE CAREFULLY GONE THROUGH THE ARGUMENT OF THE ASSESSEES COUNSEL AND ALSO PERUSED THE MATERIAL ON RECORD. IN OUR OP INION PREJUDICIAL TO THE INTEREST OF REVENUE APPEARING SECTION 263 IS CONJUN CTION WITH THE EXPRESSION ERRONEOUS AND THAT EVERY LOSS OF REVEN UE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER CANNOT PREJUDICE TO THE INTEREST OF REVENUE. IN CASE WHERE THE ASSESSING OFFICER ADOP TS ONE OF THE COURSES PERMISSIBLE IN LAW WHERE TWO VIEWS ARE PLAUSIBLE TH E CIT CANNOT EXERCISE HIS POWER U/S 263 TO DEFER WITH THE ASSESSING OFFICER EVEN IF THERE HAS BEEN A LOSS OF REVENUE. ON THE OTHER HAND WHEN THE AS SESSING OFFICER TAKES A VIEW IT IS PATENTLY UNSUSTAINABLE THE CIT CAN EXE RCISE HIS POWERS WHERE ITA NO.352 & 6 OTHER APPEALS HYDERABAD CHEMICALS & HYD. PRODUCTS HYD. 10 10 THE LOSS OF REVENUE RESULTS AS A CONSEQUENCE OF THE VIEW TAKEN BY THE ASSESSING OFFICER. IT IS ALSO CLEAR THAT WHILE PAS SING THE ORDER U/S 263 THE CIT HAS TO BE EXAMINED NOT ONLY THE ASSESSMENT ORDE R BUT ALSO THE ENTIRE FACTS ON THE RECORD. FURTHER WHEN A REGULAR ASSES SMENT IS MADE IT HAS TO BE PRESUMED THAT IT HAS BEEN PASSED UPON PROPER APP LICATION OF MIND WHEN HE HAS MADE PROPER ENQUIRY BEFORE PASSING ASSE SSMENT ORDER. THE ITO IS NOT ONLY THE ADJUDICATOR BUT ALSO AN INVESTI GATOR. HE CANNOT BE REMAINED PASSIVE IN FACE OF AN ORDER WHEN IT CALLS FOR FURTHER ENQUIRY. HE HAS TO ASCERTAIN THE TRUTH OF THE FACTS STATED BY T HE ASSESSEE. IT IS INCUMBENT ON THE PART OF THE ASSESSING OFFICER TO M AKE FURTHER INVESTIGATION OF THE FACTS STATED BY THE ASSESSEE W HEN CIRCUMSTANCES WOULD MAKE SUCH AN ENQUIRY IS PRUDENT. THE WORD ERRONEO US IN SECTION 263 INCLUDES FAILURE TO MAKE SUCH AN ENQUIRY BY THE ASS ESSING OFFICER. THE ASSESSMENT ORDER BECOMES ERRONEOUS BECAUSE SUCH AN ENQUIRY IS NOT MADE AND NOT BECAUSE THERE IS ANYTHING WRONG WITH T HE FACTS STATED THEREIN OR ASSUMED TO BE CORRECT. AN INCORRECT AS SUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUI REMENT OF BEING ERRONEOUS. AN ORDER PASSED BY THE ASSESSING OFFICER WITHOUT AP PLICATION OF HIS MIND IS SAID TO BE AN ERRONEOUS ORDER. IN THE FACTS OF THE PRESENT CASE WE FIND THAT THE ASSESSING OFFICER HAS NOT APPLIED HIS MIND TO THE PROVISIONS OF SECTION 80IA(5). NO ADDITIONAL FACTS WERE NECESSAR Y BEFORE THE ASSESSING OFFICER TO COME TO THE CONCLUSION THAT DEDUCTION U/ S 80IA IS WRONGLY COMPUTED. THE ASSESSING OFFICER NOT EXAMINED THE F ACTS BEFORE HIM. THE ORDER PASSED BY THE ASSESSING OFFICER IS VERY CRYPT IC. THERE IS NO DISCUSSION OR METHODOLOGY OF COMPUTATION OF DEDUCTI ON U/S 80IA. IT CANNOT BE SAID THAT THE ASSESSING OFFICER IS AWARE OF ANY OF THE TRIBUNAL ORDERS ON THE ISSUES INVOLVED. THE ORDER OF THE AS SESSING OFFICER IS ERRONEOUS FOR WANT OF PROPER ENQUIRY. HE HAS NOT RECORDED REASONS FOR ACCEPTING THE RETURN OF THE ASSESSEE AS SUBMITTED B Y IT ON THE IMPUGNED ISSUE. THE ASSESSING OFFICER WITHOUT MAKING ANY EN QUIRY ACCEPTED THE ITA NO.352 & 6 OTHER APPEALS HYDERABAD CHEMICALS & HYD. PRODUCTS HYD. 11 11 CLAIM OF THE ASSESSEE WITHOUT RECORDING ANY REASONS AT ALL. THE ASSESSMENT ORDER IS SILENT ABOUT THE ISSUE RAISED B Y THE CIT. HE HAS NOT EXAMINED THE MERIT OF THE CLAIM OF THE ASSESSEE. W E CANNOT SAY THAT HE HAS TAKEN ONE OF THE PERMISSIBLE VIEWS IN ACCORDANC E WITH LAW. HE HAS NOT TAKEN ANY VIEW EXCEPT ACCEPTING THE VIEW OF THE AS SESSEE ON THE ISSUE. IN THIS CASE THE FAILURE OF THE ASSESSING OFFICER TO MAKE AN ENQUIRY WITH REGARD TO THE CLAIM OF THE ASSESSEE AND TO RECORD S UCH A REASON WHY HE IS TAKING PARTICULAR VIEW MAKES THE ASSESSMENT ORDER ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. AS SUC H WE ARE OF THE OPINION THAT THERE IS NO MERIT IN THE ARGUMENTS OF THE ASSE SSEES COUNSEL AGAINST OBSERVATION MADE BY CIT IN HIS ORDER U/S 263.. 17. IN THE RESULT ALL THE APPEALS OF THE ASSESSEE S ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON: 21.1.2011 SD/- SD/- G.C. GUPTA CHANDRA POOJARI VICE PRESIDENT ACCOUNTANT MEMBER DATED THE 21 ST JANUARY 2011 COPY FORWARDED TO: 1. S/SHRI RAJU & PRASAD CA 401 DIAMOND HOUSE PANJ AGUTTA HYDERABAD-82. 2. THE DCIT CIRCLE 2(2) HYDERABAD THE ACIT CIRCLE 1(4) HYDERABAD 3. THE CIT(A) II & II HYDERABAD 4. CIT HYDERABAD 5. THE D.R. ITAT HYDERABAD. NP