Hercules Hoists Ltd. v. Assistant Commissioner of IncomeTax

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The Tax PublishersI. T. A. Nos. 7944, 7946, 2255 and 7943/Mum/2011 2013 TaxPub(DT) 0812 (Mum-Trib) : (2013) 022 ITR (Trib) 0527 INCOME TAX ACT, 1961 --Deduction under section 80-IA--Computation Treatment of setting off of losses/unabsorbed depreciation--Revenue was not correct in law in denying set off of unabsorbed depreciation/loss of eligible units against its income from other sources in terms of sections 32, 70 and 71 said unabsorbed allowance/loss, however, would stand to be set-off in terms of sections 32(2). and 72, against the income of the respective eligible units for the subsequent years, i.e., where so, in computing the assessees, eligible income for determining the quantum of deduction under section 80-IA(5) taking the legal function of the said provision which have found to be applicable for the relevant years, to its logical end. We are, as explained above unable to consider the twin aspects as disparate, but only as intextricably linked, arising from and integral to the issue before for adjudication, i.e., the scope and ambit of section 80-IA(5) read with section 80-IA(1) Tax shelter under the provision only to the profits of the eligible business/unit, by deeming the same (eligible business/unit) as the assessees only source/s of income for the previous year relevant to the initial assessment year, and up to the (assessment) year of determination of deduction under section 80-IA(1). The deeming, thus, commences with the previous year relevant to the initial assessment year. The same is not defined under the provision. The same must no doubt be determined first, or else it cannot be said if the year under consideration falls within the period for which deeming is to be applied and have effect, for section 80-IA(5) to be operative and applicable for the said year first observation in the matter is that the same may precede the year of determination of deduction under section 80-IA(1) for the first time, signifying a positive income of the eligible business for that (latter) year. This is clear from the fact that the deeming as to the single source, as contemplated, is to continue right from the initial assessment year, and continue without break-up to every subsequent year for which deduction under the provision is to be determined, including, therefore, the first of such year/s. There is no question, thus, of the first year of such determination as being necessarily the initial assessment year. In fact, were it so, i.e., the initial assessment year being, the first year of such determination, the Legislature would have or ought to have provided so, while what stands provided clearly contemplates of at least one year preceding such a year. It may be relevant to reproduce the relevant part of the Circular No. 281. dated 22-9-1980 ,(1981) 131 ITR (St.) 4) issued by the Board on introduction of section 80-1 (by the Finance (No. 2) Act 1980), which contained a like provision (to section 80-IA(5)) in section 80-I(6).[Para 11] The whole purport and intent of section 80-IA(5), even as explained by the Board vide its said Circular, being relied upon both by the assessee and the Revenue, is towards providing a separate and parallel basis for the aggregation and carry forward of unabsorbed depreciation and/or loss of the eligible business for the purpose of determining of quantum of education admissible under the said section. To the same effect and purport are the 'Notes on Clauses' (123 ITR (St.) 126) and the memorandum explaining the provisions of the Bill, vide clause 30 thereof qua section 80-I (appearing at 123 ITR (St.) 154), clarifying the legislative intent. [Para 12] If the first year of claim of deduction under section 80-IA(1) is itself taken as the initial assessment year, the whole purpose of the provision gets defeated; rather, botched, where there is an unabsorbed deprecation/ loss incurred prior to that year, so that there is no scope for the same being carried forward and set-off. There is ho rationale for such an embargo or restriction:, which is thus incomprehensible inasmuch as it is neither borne out by the clear language of the provision nor by its rationale ; rather, it goes against its grain, besides being inconsistent with the memorandum, explanatory notes and the Board Circular explaining the provision, which operate as a contemporanea exposito inasmuch as they clarify the legislative intent that the aggregation would be applicable for the initial loss years. True, the said circular is not binding on the higher courts of law, or the Tribunal for that matter, but only on the Revenue authorities. So, however, the question that remains unanswered is the legal or the logical basis for ignoring the same. What, one may ask, could be the purpose in excluding the losses for the initial years for aggregation; for which though one see no reason, given the legislative intention as expressed and noted hereinabove, and the fact that no deduction would even otherwise be available in case of a loss. After all, there is no question or reason for the assessee to opt for the year of loss as the 'initial assessment year', and of which the Legislature could not but be considered to be aware of. This is assuming that the provision, confers that option to the assessee. In other words, some infirmity therein (the Circular and the memorandum explaining the provisions as well as Notes on Clauses) has to be shown so as to disregard the same as not valid or acceptable. It is in fact not merely a case of a circular, even, as pointed out by the Special Bench at paragraph 59 (also read paragraphs 16 to 18) of its order. In fact, the assessee in the instant case itself relies on the said Circular, to press for its claim for the impugned set-off.[Para 13] Further, let us consider the losses incurred after such year, i.e., the first year of determination of deduction under section 80-IA(1) (treating it as the initial assessment year), the; scope of which, though remote, cannot be excluded. .The same, going by the assessees contention (refer paragraph 3.1 of this order), would not stand to be considered under section 80-IA(5) as there is no question of computing deduction under section 80-IA(1) for such year, further, even ignoring the said argument, so that section 80-IA(5) applies the question that arises is: What is a rationale in including some losses while disregarding others ? In, fact, empirically speaking, the unabsorbed depreciation and losses would only be during the initial years over which the charge of depreciation is more and the business is yet to stabilise, so that the possibility of unabsorbed depreciation or losses, after the, units, coming into, profits where the business is successful, returning, profits (only whereupon the question of deduction under section 80-IA(1).would arise), is even otherwise remote. So, however, such, losses/allowance, where so, would stand to be carried forward, as much as the loss/allowance, incurred prior to the first year of deduction, to the subsequent years for set-off. The more basic question that though arises, is the absence of any legal or logical (the raison dletre) basis for artificially segregating the losses/unabsorbed depreciation for the years prior and subsequent, to the first year aforesaid. The two, therefore, cannot be segregated or treated separately, but have to be so only uniformly,, and in a manner consistent and, in harmony with the object and the language of the provision.[Para 14] Continuing further, though the period pf deduction under section 80-IA(1) over which the deeming of section 80-IA(5) is to be applied commences with the previous year relevant to the initial assessment year, and up to the year of determination of deduction, its stated purpose is for the determination of quantum of deduction under section 80-IA(1) for the year immediately succeeding the initial assessment year (and not the initial assessment itself) and for every subsequent year. Why ? The reason is simple. There could be no brought forward allowance or loss prior to the initial (assessment) year. The first year for which there could be, if so, a loss or unabsorbed depreciation, is the first year of operations, so that the question of aggregation of income for the purpose of determination of quantum of deduction could, at the earliest, be the immediately succeeding assessment year. It is for this reason that while the aggregation is applicable from the initial assessment year itself (of course, up to the year of determination of deduction), the determination of quantum of deduction, which is the stated purpose of the provision, is to be for or begins from the year immediately succeeding the initial assessment year. Also, once the deeming commences with the initial assessment year, the aggregation of income is to continue over every subsequent year, i.e., irrespective of whether the deduction under the provision is exigible for the said year or not. The deeming would thus continue to be operative, and is not dependent on whether deduction for a particular year is being claimed or not.[Para 15] The first year of determination of deduction under section 80-IA(1), or of returning profits of the eligible business, ignoring the losses, if any, incurred prior to that year, or assuming the same as having been absorbed against any other income, cannot, thus, be considered as the initial assessment year. This emanates clearly from the language employed and the rationale of the provision, as explained, besides being endorsed by the decisions by the Tribunal cited and relied upon by the parties. [Para 16] Further on, section 80-I contains a provision similar to sub-section (5) of section 80-IA, and which bears the identification of the initial assessment year as the year of commencement of operations of the eligible undertaking. Section 80-1 is a pre-cursor to both, section 80-IA and section 80-IB, and thus relevant. In fact, Circular No. 281 dated 22-9-1980, issued by the Board explaining the said provision, and referred to in their decisions by the Honble courts, is only in the context of section 80-I. It also cannot be overlooked that the initial assessment year stood clearly defined by way of an Explanation to section 80-IA as it stood prior to its substitution by the Finance Act, 1999 with effect from 1-4-2000 and, further, could have been easily defined, either per section 80-IA(5) itself or by way of an Explanation to the section, as a first year of determination of deduction under section 80-IA(1), for which the section itself grants option to the assessee (per section 80-IA(2)). The omission, thus, is deliberate and, further, leads to two direct inferences. One, that the Legislature did not intend to extend any option to the assessee in the matter. Secondly, the amendment, which is by way of substitution, is to be read in a purposive manner, looking at what stands provided for as also what has been omitted to be. That the mischief that the law seeks to curb and prevent is a dominant consideration in interpreting a provision of law, particularly a subsequent amendment, is a settled principle of interpretation of statutes, so that it would be required to be seen if the interpretation accorded actually advances the remedy. [Para 17] In fine, the absence of definition of the initial assessment year in section 80-IA, as amended by the Finance Act, 1999 with effect from 1-4-2000, even as its earlier version bore the same (per section 80-IA(12)), is not an 'omission' (which in any case cannot be lightly inferred), but deliberate. Further, the understanding of the year marking the commencement of operations of the eligible undertaking or enterprise (as specified in section 80-IA(4) as the initial assessment year, is one which satisfies both the test of the clear language of the provision and internal consistency. It is also in harmony with the purpose as well as the scope of the provision as explained by the Board, which, therefore must be regarded as a contemporaneous exposition, and is also in alignment with the intent and purpose of the provision. Any other reading of the initial assessment year would render the provision internally inconsistent, besides considerably diluting its purport of giving tax shelter only to the profits of the eligible undertaking/business. It may be borne in mind that it is only the initial years that bear the additional charge on account of depreciation and the pressure on profits due to inadequate capacity utilisation and/or non-stabilisation of operations, so that the possibility of the undertaking returning losses once it starts yielding profits, i.e:, as per the example taken up by us, is even otherwise remote and stood taken up only to cover an extreme situation, only to find it as of no moment.[Para 18] The initial assessment year in the instant case would thus be the assessment year 2005-06 (refer the assessees revised statement of income at paragraph 3 of the assessment order, and its reply dated 3-12-2009, reported at pages 3 to 6 of the assessment order).[Para 19] It may be argued that the provision provides the assessee an option to choose a period of 10 consecutive years out of a block of 15 years, beginning with the year in which it commences operations, so that the initial assessment year could be the year which the assessee, at its option so chooses. Tribunal has already explained our reasons for being unable to read the provision thus. The said year has in fact been identified in the section itself as the year of determination of deduction, and could, if that were the case, easily further clarified as the first year of such claim/determination. Nothing can be read into a provision, and there is no scope for applying the principle of casus omissus. In fact, the very concept of aggregation as conceived in section 80-lA(5) (or section 80-I(6) for that matter) becomes relevant and meaningful only upon considering losses for the years prior to the year of determination of deduction under consideration. It may not be that all such years are loss years (as was only year 1 in the example cited in the case of Swarnagiri Wire Insulations P. Ltd.; but that is largely irrelevant, for what is sought to be achieved is the absorption of such losses, and which would only be on the unit turning positive (in year 3 in the example). The Act contemplates aggregation of income by carrying forward of losses/unabsorbed allowance, and does not envisage or permit carry backward thereof, and which principle would continue to govern the aggregation of income from this source as well, the absorption of losses/allowance could thus only be against future profits, so that the deduction under section 80-IA(1), once granted, could not be withdrawn on the basis of having incurred losses subsequently, which would only stand to be carried forward for setoff against future profits.[Para 20] The Legislature, it may be appreciated, while proposing and/or sanctioning legislation, cannot possibly presumeÃ¢â‚¬â€being even otherwise a matter which would vary from assessee to assessee, existence, of an alternate or other source/s of income with the .assessee for the relevant years and, further, of the same being sufficient and adequate enough, so that the losses ,and/or depreciation would in, any case stand to be absorbed against the other income, from the non-eligible, business or source/s. On the contrary, it makes it abundantly clear that the deduction under the provision is to be computed considering, the eligible source to be .the only source of income throughout. The same (i.e., the tax holiday period) has nothing to do with the aggregation principle per se, the whole purport of which is to extend the tax shelter only to the profits of the eligible undertaking or enterprise over the tax-holiday, period. [Para 21] It may also be relevant to state that rather than enabling the said objective, existence of such an alternate source of income, given the interpretation sought to be placed, on the term 'initial assessment year' (i.e., as the year of determination of deduction under section 80-IA(1) for the first time), causes, an abuse of the provision., This is as instead of providing tax shelter to the profits from the priority sector, as the windmill/s sin the instant case, the same extends to income from other sources. The priority sector losses firstly stand to be set-off against such other income, while the priority setter profits are reckoned, for the purpose of computation of deduction under section 80-IA(1), without reference to the losses sustained earlier on the premise that the deeming of the 'stand alone' principle does not apply to the initial years or that no notional carry forward is envisaged. [Para 22] In sum, there is firstly nothing in the language of the section to suggest its applicability only for the year/s the eligible business returns profits. The losses/unabsorbed depreciation, irrespective of the year to which these pertain, are placed at par under the provision. Further, placing such an interpretation, as aforestated, the losses and/or unabsorbed depreciation for the years prior to such year/s would stand to be excluded for aggregation, to no good reason, and in consequence defeat the clear object of the provisionÃ¢â‚¬” as imminent from its language, i.e., to confine the benefit of deduction thereunder only to the income from such business, which would stand to be breached if the negative income (losses and depreciation, allowance), is ignored or excluded. Rather, existence of an alternate source of income vitiates the application of the provision further by extending the tax shelter to such income as well. Year of commencement of operations is the initial assessment year, with effect from which year, irrespective of the years which the assessee may choose to opt for as the holiday period, the loss or, unabsorbed depreciation, if any, incurred, is to betaken into, account, i.e., aggregated, for the purpose of determination of the quantum of deduction under the provision, of course up to the last of the years for which the deduction is to be determined. Whole premise of the provision is to include such losses for the purpose of determination of the deduction by introducing the 'stand alone' principle, providing for its supersession over the other applicable provisions of the Act. Tax shelter under section 80-IA(1), it may be emphasised, is to be accorded only to the profits, from the eligible source, and which is all what section 80-IA(5) seeks to achieve. This understanding emanates from the reading the statute, i.e., the relevant provision as a whole, in consistence with the purpose it sets out to seek, as explained and gathered from the clear language of the provision including the amendments to the provision; Notes on clauses ; the Memorandum explaining the provisions and the Board Circular. The decisions, by the Tribunal, inducting, by, the Special Bench, also confirm and endorse this view, This is also not in conflict with the assessees argumentÃ¢â‚¬â€which is otherwise valid, that, the future, being uncertain, there may be no profits from the eligible source for the subsequent years,, so that the set-off of the losses/depreciation against positive income from other sources could not be denied. This is as the aggregation prescribed by the section is limited only to quantify the deduction under section 80-IA(1), and which would only be on the unit turning positive, returning, profits. As a corollary, the, losses/unabsorbed depreciation would stand to be set-off against the other incomes under the regular provisions of the Act.[Para 24] Firstly, that section 80-IA(5) (section 80-I(6) in that case) is a separate provision, which stands co-opted on the statute with a specific purpose, treating the profits from the defined (eligible) source as the only source of income to determine the quantum of deduction that could be allowed under the provision. All the other applicable provisions of the Act, including sections 32(2) and 72, would apply in the computation of such income. The same, thus, presents a parallel method for arriving at the profits of the eligible business, and is to be given full play. That being the mandate of the section, carry forward and set off of the loss for the earlier years from such a source would hold, considering it as the only source of income, in terms of section 72. The same may or may not have been already set-off against other income, but that is irrelevant. A deeming provision or a legal fiction, it is even otherwise trite, to be taken to its logical end/conclusion. This also agrees with the avowed objective of the provision, i.e., to restrict the tax shelter under the provision only to the profits from the eligible source. It is, it may be emphasised, also well-settled that a deeming provision, as section 80-IA(5) in the instant case, has to be interpreted in light of the object of the provision. [Para 30] The grant of the deduction is, however, circumscribed by the condition of section 80-IA(1), which must in any case be satisfied ; the two operating in different spheres. The computation of gross total income (section 80B(5)) ; the condition of the relevant income being comprised in gross total income (section 80-IA(1)), and to the extent it is actually so (section 80AB); and the overall cap under section 80A(2), could neither be impinged nor breached in any manner. To do so, it stood explained, would render the said provisions, which are declaratory and applicable to all the sections falling under Chapter AT-A, nugatory. In other words, the gross total income would continue to be computed in terms of section 80B(5), and would not stand restricted by section 80-IA(5) in any manner. [Para 31] At this juncture, one cannot refrain from, and are obliged to refer, once again, to the decision by the Tribunal in the case of Swarnagiri Wire Insulations P. Ltd. including the example cited therein. Firstly, to state that irrespective of the facts of the case, which are bound to vary and exhibit some difference in each case, it is the ratio of the decision, arising from a holistic interpretation of the provision, rendered on the relevant parameters, that ought to obtain. Questions as to, or aspects as the computation of gross total income; the years of the deeming qua the only source of income; the impact of the said deeming on the other relevant provisions, viz., sections 32(2), 70 to 72; the notional carry forward of losses, assuming the said sections would continue to be operative as in the normal course, etc., arise, and require being addressed, when/an issue qua the application of section 80-IA(5), as in the instant case, comes to be considered. It is thus neither possible nor desirable to adopt a. segmented and fragmented approach to the matter. Mo wonder, the Tribunal in the cited cases considered the matter holistically, answering questions which do not appear to arise directly before it. Secondly, the treatment, as advocated as per paragraphs 6.6 to 6.10 of its order .by the Tribunal in the case of Swarnagiri Wire Insulations (P) Ltd. (supra). The said decision by the Tribunal, thus, reflects the correct position in the matter, including in respect of the issue as to the notional carry forward of losses, which it suggests per the computation of income and that of deduction under section 80-IA for year 2 and year 3 of the example. Finally, it would also be by now abundantly clear from the host of case law referred to, as well as that cited by the parties themselves, enabling the issue being viewed in its different dimensions, that the concept of aggregation, as sought to be projected per the 'stand alone' principle, is only toward removing the aberration/s that stand to arise if the losses of the eligible source are ignored and not carried forward in computing the tax benefit available to it in the year/s of profit.[Para 34] Revenue is, thus, not correct in law in denying the set-off of the unabsorbed depreciation allowance/loss of the assessees eligible unit/s against its income from other sources in terms of sections 32(2), 70 and 71 said unabsorbed allowance/loss, however, would stand to be set-off in terms of sections 32(2). and 72, against the income of the respective eligible units for the subsequent years, i.e., where so, in computing the assessees, eligible income for determining the quantum of deduction under section 80-IA(5), taking the legal fictionl of the said pro-vision which have found to be applicable for the relevant years, to its logical end. We are, as explained above unable to consider the twin aspects as disparate, but only as intextricably linked, arising from and integral to the issue before for adjudication, i.e., the scope and ambit of section 80-IA(5) read with section 80-IA(1). [Para 35] SUBSCRIBE FOR FULL CONTENT

The Tax PublishersI. T. A. Nos. 7944, 7946, 2255 and 7943/Mum/2011
2013 TaxPub(DT) 0812 (Mum-Trib) : (2013) 022 ITR (Trib) 0527

INCOME TAX ACT, 1961

--Deduction under section 80-IA--Computation Treatment of setting off of losses/unabsorbed depreciation--Revenue was not correct in law in denying set off of unabsorbed depreciation/loss of eligible units against its income from other sources in terms of sections 32, 70 and 71 said unabsorbed allowance/loss, however, would stand to be set-off in terms of sections 32(2). and 72, against the income of the respective eligible units for the subsequent years, i.e., where so, in computing the assessees, eligible income for determining the quantum of deduction under section 80-IA(5) taking the legal function of the said provision which have found to be applicable for the relevant years, to its logical end. We are, as explained above unable to consider the twin aspects as disparate, but only as intextricably linked, arising from and integral to the issue before for adjudication, i.e., the scope and ambit of section 80-IA(5) read with section 80-IA(1)

Tax shelter under the provision only to the profits of the eligible business/unit, by deeming the same (eligible business/unit) as the assessees only source/s of income for the previous year relevant to the initial assessment year, and up to the (assessment) year of determination of deduction under section 80-IA(1). The deeming, thus, commences with the previous year relevant to the initial assessment year. The same is not defined under the provision. The same must no doubt be determined first, or else it cannot be said if the year under consideration falls within the period for which deeming is to be applied and have effect, for section 80-IA(5) to be operative and applicable for the said year first observation in the matter is that the same may precede the year of determination of deduction under section 80-IA(1) for the first time, signifying a positive income of the eligible business for that (latter) year. This is clear from the fact that the deeming as to the single source, as contemplated, is to continue right from the initial assessment year, and continue without break-up to every subsequent year for which deduction under the provision is to be determined, including, therefore, the first of such year/s. There is no question, thus, of the first year of such determination as being necessarily the initial assessment year. In fact, were it so, i.e., the initial assessment year being, the first year of such determination, the Legislature would have or ought to have provided so, while what stands provided clearly contemplates of at least one year preceding such a year. It may be relevant to reproduce the relevant part of the Circular No. 281. dated 22-9-1980 ,(1981) 131 ITR (St.) 4) issued by the Board on introduction of section 80-1 (by the Finance (No. 2) Act 1980), which contained a like provision (to section 80-IA(5)) in section 80-I(6).[Para 11] The whole purport and intent of section 80-IA(5), even as explained by the Board vide its said Circular, being relied upon both by the assessee and the Revenue, is towards providing a separate and parallel basis for the aggregation and carry forward of unabsorbed depreciation and/or loss of the eligible business for the purpose of determining of quantum of education admissible under the said section. To the same effect and purport are the 'Notes on Clauses' (123 ITR (St.) 126) and the memorandum explaining the provisions of the Bill, vide clause 30 thereof qua section 80-I (appearing at 123 ITR (St.) 154), clarifying the legislative intent. [Para 12] If the first year of claim of deduction under section 80-IA(1) is itself taken as the initial assessment year, the whole purpose of the provision gets defeated; rather, botched, where there is an unabsorbed deprecation/ loss incurred prior to that year, so that there is no scope for the same being carried forward and set-off. There is ho rationale for such an embargo or restriction:, which is thus incomprehensible inasmuch as it is neither borne out by the clear language of the provision nor by its rationale ; rather, it goes against its grain, besides being inconsistent with the memorandum, explanatory notes and the Board Circular explaining the provision, which operate as a contemporanea exposito inasmuch as they clarify the legislative intent that the aggregation would be applicable for the initial loss years. True, the said circular is not binding on the higher courts of law, or the Tribunal for that matter, but only on the Revenue authorities. So, however, the question that remains unanswered is the legal or the logical basis for ignoring the same. What, one may ask, could be the purpose in excluding the losses for the initial years for aggregation; for which though one see no reason, given the legislative intention as expressed and noted hereinabove, and the fact that no deduction would even otherwise be available in case of a loss. After all, there is no question or reason for the assessee to opt for the year of loss as the 'initial assessment year', and of which the Legislature could not but be considered to be aware of. This is assuming that the provision, confers that option to the assessee. In other words, some infirmity therein (the Circular and the memorandum explaining the provisions as well as Notes on Clauses) has to be shown so as to disregard the same as not valid or acceptable. It is in fact not merely a case of a circular, even, as pointed out by the Special Bench at paragraph 59 (also read paragraphs 16 to 18) of its order. In fact, the assessee in the instant case itself relies on the said Circular, to press for its claim for the impugned set-off.[Para 13] Further, let us consider the losses incurred after such year, i.e., the first year of determination of deduction under section 80-IA(1) (treating it as the initial assessment year), the; scope of which, though remote, cannot be excluded. .The same, going by the assessees contention (refer paragraph 3.1 of this order), would not stand to be considered under section 80-IA(5) as there is no question of computing deduction under section 80-IA(1) for such year, further, even ignoring the said argument, so that section 80-IA(5) applies the question that arises is: What is a rationale in including some losses while disregarding others ? In, fact, empirically speaking, the unabsorbed depreciation and losses would only be during the initial years over which the charge of depreciation is more and the business is yet to stabilise, so that the possibility of unabsorbed depreciation or losses, after the, units, coming into, profits where the business is successful, returning, profits (only whereupon the question of deduction under section 80-IA(1).would arise), is even otherwise remote. So, however, such, losses/allowance, where so, would stand to be carried forward, as much as the loss/allowance, incurred prior to the first year of deduction, to the subsequent years for set-off. The more basic question that though arises, is the absence of any legal or logical (the raison dletre) basis for artificially segregating the losses/unabsorbed depreciation for the years prior and subsequent, to the first year aforesaid. The two, therefore, cannot be segregated or treated separately, but have to be so only uniformly,, and in a manner consistent and, in harmony with the object and the language of the provision.[Para 14] Continuing further, though the period pf deduction under section 80-IA(1) over which the deeming of section 80-IA(5) is to be applied commences with the previous year relevant to the initial assessment year, and up to the year of determination of deduction, its stated purpose is for the determination of quantum of deduction under section 80-IA(1) for the year immediately succeeding the initial assessment year (and not the initial assessment itself) and for every subsequent year. Why ? The reason is simple. There could be no brought forward allowance or loss prior to the initial (assessment) year. The first year for which there could be, if so, a loss or unabsorbed depreciation, is the first year of operations, so that the question of aggregation of income for the purpose of determination of quantum of deduction could, at the earliest, be the immediately succeeding assessment year. It is for this reason that while the aggregation is applicable from the initial assessment year itself (of course, up to the year of determination of deduction), the determination of quantum of deduction, which is the stated purpose of the provision, is to be for or begins from the year immediately succeeding the initial assessment year. Also, once the deeming commences with the initial assessment year, the aggregation of income is to continue over every subsequent year, i.e., irrespective of whether the deduction under the provision is exigible for the said year or not. The deeming would thus continue to be operative, and is not dependent on whether deduction for a particular year is being claimed or not.[Para 15] The first year of determination of deduction under section 80-IA(1), or of returning profits of the eligible business, ignoring the losses, if any, incurred prior to that year, or assuming the same as having been absorbed against any other income, cannot, thus, be considered as the initial assessment year. This emanates clearly from the language employed and the rationale of the provision, as explained, besides being endorsed by the decisions by the Tribunal cited and relied upon by the parties. [Para 16] Further on, section 80-I contains a provision similar to sub-section (5) of section 80-IA, and which bears the identification of the initial assessment year as the year of commencement of operations of the eligible undertaking. Section 80-1 is a pre-cursor to both, section 80-IA and section 80-IB, and thus relevant. In fact, Circular No. 281 dated 22-9-1980, issued by the Board explaining the said provision, and referred to in their decisions by the Honble courts, is only in the context of section 80-I. It also cannot be overlooked that the initial assessment year stood clearly defined by way of an Explanation to section 80-IA as it stood prior to its substitution by the Finance Act, 1999 with effect from 1-4-2000 and, further, could have been easily defined, either per section 80-IA(5) itself or by way of an Explanation to the section, as a first year of determination of deduction under section 80-IA(1), for which the section itself grants option to the assessee (per section 80-IA(2)). The omission, thus, is deliberate and, further, leads to two direct inferences. One, that the Legislature did not intend to extend any option to the assessee in the matter. Secondly, the amendment, which is by way of substitution, is to be read in a purposive manner, looking at what stands provided for as also what has been omitted to be. That the mischief that the law seeks to curb and prevent is a dominant consideration in interpreting a provision of law, particularly a subsequent amendment, is a settled principle of interpretation of statutes, so that it would be required to be seen if the interpretation accorded actually advances the remedy. [Para 17] In fine, the absence of definition of the initial assessment year in section 80-IA, as amended by the Finance Act, 1999 with effect from 1-4-2000, even as its earlier version bore the same (per section 80-IA(12)), is not an 'omission' (which in any case cannot be lightly inferred), but deliberate. Further, the understanding of the year marking the commencement of operations of the eligible undertaking or enterprise (as specified in section 80-IA(4) as the initial assessment year, is one which satisfies both the test of the clear language of the provision and internal consistency. It is also in harmony with the purpose as well as the scope of the provision as explained by the Board, which, therefore must be regarded as a contemporaneous exposition, and is also in alignment with the intent and purpose of the provision. Any other reading of the initial assessment year would render the provision internally inconsistent, besides considerably diluting its purport of giving tax shelter only to the profits of the eligible undertaking/business. It may be borne in mind that it is only the initial years that bear the additional charge on account of depreciation and the pressure on profits due to inadequate capacity utilisation and/or non-stabilisation of operations, so that the possibility of the undertaking returning losses once it starts yielding profits, i.e:, as per the example taken up by us, is even otherwise remote and stood taken up only to cover an extreme situation, only to find it as of no moment.[Para 18] The initial assessment year in the instant case would thus be the assessment year 2005-06 (refer the assessees revised statement of income at paragraph 3 of the assessment order, and its reply dated 3-12-2009, reported at pages 3 to 6 of the assessment order).[Para 19] It may be argued that the provision provides the assessee an option to choose a period of 10 consecutive years out of a block of 15 years, beginning with the year in which it commences operations, so that the initial assessment year could be the year which the assessee, at its option so chooses. Tribunal has already explained our reasons for being unable to read the provision thus. The said year has in fact been identified in the section itself as the year of determination of deduction, and could, if that were the case, easily further clarified as the first year of such claim/determination. Nothing can be read into a provision, and there is no scope for applying the principle of casus omissus. In fact, the very concept of aggregation as conceived in section 80-lA(5) (or section 80-I(6) for that matter) becomes relevant and meaningful only upon considering losses for the years prior to the year of determination of deduction under consideration. It may not be that all such years are loss years (as was only year 1 in the example cited in the case of Swarnagiri Wire Insulations P. Ltd.; but that is largely irrelevant, for what is sought to be achieved is the absorption of such losses, and which would only be on the unit turning positive (in year 3 in the example). The Act contemplates aggregation of income by carrying forward of losses/unabsorbed allowance, and does not envisage or permit carry backward thereof, and which principle would continue to govern the aggregation of income from this source as well, the absorption of losses/allowance could thus only be against future profits, so that the deduction under section 80-IA(1), once granted, could not be withdrawn on the basis of having incurred losses subsequently, which would only stand to be carried forward for setoff against future profits.[Para 20] The Legislature, it may be appreciated, while proposing and/or sanctioning legislation, cannot possibly presumeÃ¢â‚¬â€being even otherwise a matter which would vary from assessee to assessee, existence, of an alternate or other source/s of income with the .assessee for the relevant years and, further, of the same being sufficient and adequate enough, so that the losses ,and/or depreciation would in, any case stand to be absorbed against the other income, from the non-eligible, business or source/s. On the contrary, it makes it abundantly clear that the deduction under the provision is to be computed considering, the eligible source to be .the only source of income throughout. The same (i.e., the tax holiday period) has nothing to do with the aggregation principle per se, the whole purport of which is to extend the tax shelter only to the profits of the eligible undertaking or enterprise over the tax-holiday, period. [Para 21] It may also be relevant to state that rather than enabling the said objective, existence of such an alternate source of income, given the interpretation sought to be placed, on the term 'initial assessment year' (i.e., as the year of determination of deduction under section 80-IA(1) for the first time), causes, an abuse of the provision., This is as instead of providing tax shelter to the profits from the priority sector, as the windmill/s sin the instant case, the same extends to income from other sources. The priority sector losses firstly stand to be set-off against such other income, while the priority setter profits are reckoned, for the purpose of computation of deduction under section 80-IA(1), without reference to the losses sustained earlier on the premise that the deeming of the 'stand alone' principle does not apply to the initial years or that no notional carry forward is envisaged. [Para 22] In sum, there is firstly nothing in the language of the section to suggest its applicability only for the year/s the eligible business returns profits. The losses/unabsorbed depreciation, irrespective of the year to which these pertain, are placed at par under the provision. Further, placing such an interpretation, as aforestated, the losses and/or unabsorbed depreciation for the years prior to such year/s would stand to be excluded for aggregation, to no good reason, and in consequence defeat the clear object of the provisionÃ¢â‚¬” as imminent from its language, i.e., to confine the benefit of deduction thereunder only to the income from such business, which would stand to be breached if the negative income (losses and depreciation, allowance), is ignored or excluded. Rather, existence of an alternate source of income vitiates the application of the provision further by extending the tax shelter to such income as well. Year of commencement of operations is the initial assessment year, with effect from which year, irrespective of the years which the assessee may choose to opt for as the holiday period, the loss or, unabsorbed depreciation, if any, incurred, is to betaken into, account, i.e., aggregated, for the purpose of determination of the quantum of deduction under the provision, of course up to the last of the years for which the deduction is to be determined. Whole premise of the provision is to include such losses for the purpose of determination of the deduction by introducing the 'stand alone' principle, providing for its supersession over the other applicable provisions of the Act. Tax shelter under section 80-IA(1), it may be emphasised, is to be accorded only to the profits, from the eligible source, and which is all what section 80-IA(5) seeks to achieve. This understanding emanates from the reading the statute, i.e., the relevant provision as a whole, in consistence with the purpose it sets out to seek, as explained and gathered from the clear language of the provision including the amendments to the provision; Notes on clauses ; the Memorandum explaining the provisions and the Board Circular. The decisions, by the Tribunal, inducting, by, the Special Bench, also confirm and endorse this view, This is also not in conflict with the assessees argumentÃ¢â‚¬â€which is otherwise valid, that, the future, being uncertain, there may be no profits from the eligible source for the subsequent years,, so that the set-off of the losses/depreciation against positive income from other sources could not be denied. This is as the aggregation prescribed by the section is limited only to quantify the deduction under section 80-IA(1), and which would only be on the unit turning positive, returning, profits. As a corollary, the, losses/unabsorbed depreciation would stand to be set-off against the other incomes under the regular provisions of the Act.[Para 24] Firstly, that section 80-IA(5) (section 80-I(6) in that case) is a separate provision, which stands co-opted on the statute with a specific purpose, treating the profits from the defined (eligible) source as the only source of income to determine the quantum of deduction that could be allowed under the provision. All the other applicable provisions of the Act, including sections 32(2) and 72, would apply in the computation of such income. The same, thus, presents a parallel method for arriving at the profits of the eligible business, and is to be given full play. That being the mandate of the section, carry forward and set off of the loss for the earlier years from such a source would hold, considering it as the only source of income, in terms of section 72. The same may or may not have been already set-off against other income, but that is irrelevant. A deeming provision or a legal fiction, it is even otherwise trite, to be taken to its logical end/conclusion. This also agrees with the avowed objective of the provision, i.e., to restrict the tax shelter under the provision only to the profits from the eligible source. It is, it may be emphasised, also well-settled that a deeming provision, as section 80-IA(5) in the instant case, has to be interpreted in light of the object of the provision. [Para 30] The grant of the deduction is, however, circumscribed by the condition of section 80-IA(1), which must in any case be satisfied ; the two operating in different spheres. The computation of gross total income (section 80B(5)) ; the condition of the relevant income being comprised in gross total income (section 80-IA(1)), and to the extent it is actually so (section 80AB); and the overall cap under section 80A(2), could neither be impinged nor breached in any manner. To do so, it stood explained, would render the said provisions, which are declaratory and applicable to all the sections falling under Chapter AT-A, nugatory. In other words, the gross total income would continue to be computed in terms of section 80B(5), and would not stand restricted by section 80-IA(5) in any manner. [Para 31] At this juncture, one cannot refrain from, and are obliged to refer, once again, to the decision by the Tribunal in the case of Swarnagiri Wire Insulations P. Ltd. including the example cited therein. Firstly, to state that irrespective of the facts of the case, which are bound to vary and exhibit some difference in each case, it is the ratio of the decision, arising from a holistic interpretation of the provision, rendered on the relevant parameters, that ought to obtain. Questions as to, or aspects as the computation of gross total income; the years of the deeming qua the only source of income; the impact of the said deeming on the other relevant provisions, viz., sections 32(2), 70 to 72; the notional carry forward of losses, assuming the said sections would continue to be operative as in the normal course, etc., arise, and require being addressed, when/an issue qua the application of section 80-IA(5), as in the instant case, comes to be considered. It is thus neither possible nor desirable to adopt a. segmented and fragmented approach to the matter. Mo wonder, the Tribunal in the cited cases considered the matter holistically, answering questions which do not appear to arise directly before it. Secondly, the treatment, as advocated as per paragraphs 6.6 to 6.10 of its order .by the Tribunal in the case of Swarnagiri Wire Insulations (P) Ltd. (supra). The said decision by the Tribunal, thus, reflects the correct position in the matter, including in respect of the issue as to the notional carry forward of losses, which it suggests per the computation of income and that of deduction under section 80-IA for year 2 and year 3 of the example. Finally, it would also be by now abundantly clear from the host of case law referred to, as well as that cited by the parties themselves, enabling the issue being viewed in its different dimensions, that the concept of aggregation, as sought to be projected per the 'stand alone' principle, is only toward removing the aberration/s that stand to arise if the losses of the eligible source are ignored and not carried forward in computing the tax benefit available to it in the year/s of profit.[Para 34] Revenue is, thus, not correct in law in denying the set-off of the unabsorbed depreciation allowance/loss of the assessees eligible unit/s against its income from other sources in terms of sections 32(2), 70 and 71 said unabsorbed allowance/loss, however, would stand to be set-off in terms of sections 32(2). and 72, against the income of the respective eligible units for the subsequent years, i.e., where so, in computing the assessees, eligible income for determining the quantum of deduction under section 80-IA(5), taking the legal fictionl of the said pro-vision which have found to be applicable for the relevant years, to its logical end. We are, as explained above unable to consider the twin aspects as disparate, but only as intextricably linked, arising from and integral to the issue before for adjudication, i.e., the scope and ambit of section 80-IA(5) read with section 80-IA(1). [Para 35]