The Madras High court held that the assessee has the option under section 80IA to choose the first year from which deduction is claimed for 10 consecutive years.
The appellant, Commissioner of Income Tax challenged the order passed by the tribunal in respect of the assessment year 2007-08.
The revenue raised the issue whether the Income Tax Appellate Tribunal was right in holding that the disallowance made under section 40(a)(i) amounting to Rs.87.72 lakhs is not proper.
The other issue raised was whether the Income Tax Appellate Tribunal was right in not considering the retrospective amendment to the Income Tax Act by Finance Act 2010 to Section 9(1).
The division bench of Justices M.Duraiswamy and T.V. Tamilselvi in the light of the decision of the Madras High Court in the case of Commissioner of Income Tax, Chennai Vs. Fluidtherm Technology (P). Ltd. noted 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.
The court clarified that once such initial assessment year has been opted for by the assessee, he shall be entitled to claim deduction u/s 80IA 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.
Therefore, the court directed the Assessing Officers are, therefore, directed to allow deduction under section 80IA in accordance with this clarification and after being satisfied that all the prescribed conditions applicable in a particular case are duly satisfied. Pending litigation on the allowability of deduction under section 80 IA shall also not be pursued to the extent it relates to interpreting ‘initial assessment year’ as mentioned in Sub-Section (5) of that section for which the Standing Counsel/DRs be suitably instructed. The above be brought to the notice of all Assessing Officers concerned.