Vodafone Essar Gujarat Ltd. v. ACIT (2020) 424 ITR 498/191 DTR 288 / 315 CTR 778/ 275 Taxman 432(Guj)(HC)

S. 80IA :Industrial undertakings – Infrastructure development- Telecommunications Services —Change in shareholding- Losses which have lapsed cannot be taken into account for purposes of computation of deduction .[ S.72(b) , 79 80IA(4) ,80IA(5) (2) ]

The assessee-company, established in the year 1997-98, was in the business of providing cellular telecommunications services in the State of Gujarat. During the previous year relevant to the assessment year 200102, there was a change in the shareholding of the assessee, as a result of which the provisions of section 79 was made applicable and the accumulated losses from the assessment years 199798 to 200102 lapsed. The assessee therefore, made a claim for deduction under S.  80IA for the first time for the assessment year 2005-06. In the return of income, the assessee had shown total income of Rs.191,59,84,008 and claimed the entire amount as deduction under S.  80IA(4)(ii). According to the Assessing Officer, the quantum of deduction available to the assessee under S.  80IA(4)(ii) of the Act, 1961 was to be computed in accordance with the provisions of S.  80IA(5) of the Act, without the application of the provisions of section 79. This was upheld by the Commissioner (Appeals) and the Tribunal. On appeals  Court held that , the assessment year 2005-06 was opted as the first year in the block of 10 consecutive assessment years for claiming deduction under S.  80IA(1). This fact of the option exercised by the assessee was not disputed by the Assessing Officer. Therefore, the assessment year 2005-06 was the initial assessment year and Circular No. 1 of 2016 ([2016] 381 ITR (St.) 1) would be applicable to the facts of the case. The Assessing Officer, the Commissioner (Appeals) and the Tribunal were not justified in applying S.  80IA(5) so as to ignore the losses which had already lapsed by operation of section 79.( AY.2005-06, 2006-07)


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