Initial Assessment Year??

[Sanjay Patel]

Deduction u/s 80IB(11A) for fruits and vegetables was first inserted from A.Y. 2005-06. The Section allows deduction for 10 Assessment Years (100%in first 5 years and thereafter @ 25%) beginning from the INITIAL ASSESSMENT YEAR. As per Section 80IB(14)(iv) Initial Assessment year is the year in which the Undertaking commences operations.

Now, the interesting question is: -
An Undertaking commences operations from A.Y. 2002-03. But as the Deduction was first introduced from A.Y. 2005-06, in A.Y. 2008-09, the Undertaking claimed Deduction @ 100% considering the A.Y. 2008-09 as the 4th Year as the Initial Year was considered to be the year in which the Deduction was first introduced i.e. A.Y. 2005-06.
The Assessing Officer (AO) considered A.Y. 2002-03 as the Initial Assessment Year as per Section 80IB(14)(iv) and restricted the Deduction to 25% as A.Y. 2008-09 was the 7th year.
Suggestions are invited as to What will be the Initial Assessment Year in the present case i.e. A.Y. 2002-03 (the year when there was no such provision in existence) OR A.Y. 2005-06 (when the Deduction was first introduced.)

[pawansingla]

[(iv) in the case of an undertaking engaged 65[in the business of processing, preservation and packaging of fruits or vegetables or] in the integrated business of handling, storage and transportation of foodgrains, means the assessment year relevant to the previous year in which the undertaking begins such business;]

I think , if go by the wording , AO is correct. That deduction has been introduced subsequent tp commencement of business, will not make undertaing elgible for deduction as first year. The stress is on such business. if earlier you were doing another business, but now you have started this busineess , then in that case , the year in which youb started this business will be first year of deduction.

AO is right.