The division bench of Madras High Court has recently held that Income from windmill division entitles for deduction in respect of profits and gains from industrial undertakings or enterprises engaged in infrastructure development, etc under Section 80IA of Income Tax Act.
The facts of the case are that, the Assessee M/s. Prem Textile International filed the return for the assessment year 2011-12, on 29.09.2011, admitting the total income of Rs.15,19,456/-. The nature of the business of the assessee is to export home textile products and generate power using wind energy. The case was selected for scrutiny under CASS and Notice, under Section 143(2) of the Income Tax Act, was issued.
The Appellant, the Commissioner of Income Tax, Trichy pointed out the correctness of the order of the Income-Tax Appellate Tribunal, “B” Bench, Chennai, dated 15.05.2015, on the grounds that the Tribunal has erred in holding that the assessee is entitled to the claim of deduction, under Section 80-IA, with respect to the windmill unit and further contended that the Tribunal ought to have appreciated that profit and gains of such business, right from the beginning, had to be computed separately and after reducing the past losses, unabsorbed depreciation and unabsorbed investment allowance, deduction under Section 80-IB can be allowed on the balance amount and therefore, raised a substantial question of law, as to whether, the Tribunal was right in holding that the assessee is entitled to deduction under Section 80IA, with respect of the windmill division, by following the decision of this Court in Velayudhaswamy Spinning Mills Pvt. Ltd.,’s case.
In Velayudhaswamy Spinning Mills Pvt. Ltd.,’s case, the assessee therein was engaged in the business of manufacture of IMFL products, generation of power through wind and biomass and also trading in iron ore and coal. The return of income for the assessment year 2004-05 was filed on 1st Nov. 2004 admitting a total income of Rs.9,54,41,024. The said return of income was processed under Section 143(1) on 19th Feb. 2005. Subsequently, this case was selected for scrutiny and notice was issued under Section 143(2) on 21st Oct. 2005. While computing the assessment, the Assessing Officer disallowed the claim of deduction made by the assessee under Section 80-IA amounting to Rs.10,63,74,164/-, on the ground that the eligible deduction under Section 80-IA after setting off, of the loss, which works out to ‘nil’.
While rejecting the contentions of the revenue, The bench comprising of Justices S. Manikumar and D.Krishnakumar observed that Material on record discloses that while confirming the order of the Commissioner of Income-Tax (Appeal), the Income-Tax Appellate Tribunal has rightly held that, “on appeal, the Commissioner of Income-tax(Appeals), following the aforesaid judgment of the Madras High Court in the case of Velayudhaswamy Spinning Mills Pvt. Ltd. (supra), allowed the claim of the assessee and concurred that, in case the Apex Court reverses the decision given by the Madras High Court in the above case of Velayudhaswamy Spinning Mills Pvt. Ltd. (supra), and supports contention of the Department in future, the Assessing Officer may accordingly take suitable remedial action.” The above view expressed by the appellate authority has been confirmed by the IncomeTax Appellate Tribunal, Chennai.
The Court also observed that there are no valid grounds to reverse the above-said orders.
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