Orchid Chemicals & Pharmaceuticals Ltd., CHENNAI V. ACIT, CHENNAI

CO 149/CHNY/2011

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 6963 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 4 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 02-03-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 28-02-2012
• Assessment Year: 1995-1996
• Appeal Filed On: 28-09-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: T BANUSEKAR; B RAMAKRISHNAN
• Keywords: Depreciation; Competent authority

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER I.T.A.NO.1260/MDS/2011 (ASSESSMENT YEAR : 1995-96) AND C.O.NO.149/MDS/2011 THE ASSISTANT COMMISSIONER OF INCOME-TAX, COMPANY CIRCLE-V(1), CHENNAI 34. VS. M/S. ORCHID CHEMICALS AND PHARMACEUTICALS LIMITED, ORCHID TOWERS, 313, VALLUVARKOTTAM HIGH ROAD NUNGAMBAKKAM HIGH ROAD, CHENNAI 34. PAN AAACO 0402 B (APPELLANT) (RESPONDENT/CROSS OBJECTOR) APPELLANT BY : SHRI SHAJI P. JACOB, IRS, ADDL. COMMISSIONER OF INCOME-TAX RESPONDENT BY : SHRI B. RAMAKRISHNAN, FCA AND SHRI T. BANUSEKAR, FCA DATE OF HEARING : 28 TH FEBRUARY, 2012 DATE OF PRONOUNCEMENT : 2 ND MARCH, 2012 O R D E R PER DR. O.K. NARAYANAN, VICE-PRESIDENT THE APPEAL AND THE CROSS OBJECTION FILED BY THE REV ENUE AND THE ASSESSEE, RESPECTIVELY, RELATE TO THE ASSESSMENT YE AR 1995-96. THE APPEAL AND THE CROSS OBJECTION ARE DIRECTED AGAINST THE ORDER PASSED BY ITA 1260 & CO 149/11 :- 2 -: THE COMMISSIONER OF INCOME-TAX (APPEALS)-V AT CHENN AI ON 5.4.2011 AND ARISE OUT OF THE ASSESSMENT COMPLETED UNDER SEC.143 (3) READ WITH SECTION 254 OF THE INCOME-TAX ACT, 1961. 2. THE ASSESSEE COMPANY HAD INSTALLED WINDMILLS IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL AND CL AIMED DEPRECIATION ALLOWANCE THEREON. THE ASSESSEE EXPLAINED THAT THE WINDMILL GENERATORS WERE COMMISSIONED ON 31.3.1995 AND, THEREFORE, THE ASSESSEE IS ENTITLED FOR DEPRECIATION FOR THE IMPUGNED ASSESSMENT YEAR 1 995-96 ON THE GROUND THAT THE GENERATORS WERE COMMISSIONED IN THE RELEVANT PREVIOUS YEAR ITSELF. DESPITE THE CERTIFICATE OF COMMISSION ING ISSUED BY TAMIL NADU ELECTRICITY BOARD THAT THE GENERATORS WERE COMMISSI ONED ON 31.3.1995, THE ASSESSING OFFICER TOOK A DIFFERENT VIEW. HE OB SERVED THAT ELECTRICITY WAS GENERATED IN THE MONTH OF JUNE, 1995 WHICH FALL S IN THE PREVIOUS YEAR 1995-96 RELEVANT TO THE ASSESSMENT YEAR 1996-97 AND , THEREFORE, THE CLAIM OF THE ASSESSEE COULD NOT BE CONSIDERED FOR T HE IMPUGNED ASSESSMENT YEAR FOR THE REASON THAT THE ASSESSEE HA D NOT COMMENCED GENERATING ELECTRICITY FROM THE WINDMILLS IN THE RE LEVANT PREVIOUS YEAR. THE ASSESSING OFFICER ON THE BASIS OF THE ENQUIRIES MADE FROM THE ELECTRICITY BOARD, RECORDED THAT THE METERS TO THE WINDMILLS WERE PROVIDED TO THE ASSESSEE AFTER 10 TH JUNE, 1995 AND AS SUCH, THERE COULD NOT BE A CASE OF GENERATION OF ELECTRICITY TILL THAT DATE. THE CLAIM OF THE ASSESSEE ITA 1260 & CO 149/11 :- 3 -: WAS TURNED DOWN BY THE ASSESSING AUTHORITY. IN FIR ST APPEAL, THE COMMISSIONER OF INCOME-TAX(APPEALS) ACCEPTED THE CO NTENTION OF THE ASSESSEE ON THE BASIS OF THE CERTIFICATE OF COMMISS IONING ISSUED BY THE COMPETENT GOVERNMENT AUTHORITY. THE TAMIL NADU ELE CTRICITY BOARD HAS ISSUED A CERTIFICATE ON 22.4.1995 STATING THAT WIND ENERGY GENERATION SERVICE OF THE ASSESSEE WAS SATISFACTORILY COMMISSI ONED ON 31.3.1995. AS THE FACTUM OF COMMISSIONING OF GENERATORS WAS TH US PROVED, THE COMMISSIONER OF INCOME-TAX(APPEALS) ACCEPTED THE CO NTENTION OF THE ASSESSEE AND DIRECTED THE ASSESSING OFFICER TO GRAN T THE DEPRECIATION ALLOWANCE TO THE ASSESSEE. 3. THIS ORDER OF THE COMMISSIONER OF INCOME-TAX( APPEALS) WAS TAKEN UP BY THE REVENUE IN SECOND APPEAL BEFORE THE ITAT, B BENCH, CHENNAI. THE TRIBUNAL THROUGH ITS ORDER DATED 25.5 .2007 SET ASIDE THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS) AN D REMITTED BACK THE ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH A D IRECTION TO DECIDE THE QUESTION OF DEPRECIATION IN ACCORDANCE WITH LAW AFT ER TAKING INTO CONSIDERATION ALL THE DOCUMENTARY DETAILS AVAILABLE ON RECORD. 4. THUS, THE MATTER WAS AGAIN BROUGHT TO THE C ONSIDERATION OF THE ASSESSING AUTHORITY. THE ASSESSING AUTHORITY COMPL ETED THE REMAND ASSESSMENT AS REQUIRED BY THE TRIBUNAL AND FINALLY HELD THAT THE WINDMILLS OF THE ASSESSEE WOULD HAVE BEEN PUT TO USE ONLY ON 10.6.1995, FROM ITA 1260 & CO 149/11 :- 4 -: WHICH DATE THE ASSESSEE STARTED GENERATING ELECTRIC ITY AND, THEREFORE, DEPRECIATION CANNOT BE ALLOWED FOR THE IMPUGNED ASS ESSMENT YEAR. THE ASSESSE TOOK UP THE MATTER IN APPEAL BEFORE THE COM MISSIONER OF INCOME-TAX(APPEALS) WHO ALLOWED THE CLAIM OF THE AS SESSEE AND DIRECTED THE ASSESSING OFFICER TO ALLOW DEPRECIATION. AGGRI EVED BY THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS), THE REVENUE AG AIN FILED THE SECOND APPEAL BEFORE THE TRIBUNAL WHICH IS NOW PLAC ED BEFORE US. THUS, THE MATTER IS COMING BEFORE THE TRIBUNAL FOR THE SE COND TIME AT THE INSTANCE OF THE REVENUE. 5. WE HEARD SHRI SHAJI P. JACOB, THE LEARNED C OMMISSIONER OF INCOME-TAX APPEARING FOR THE REVENUE AND SHRI T. BA NUSEKAR, THE LEARNED CHARTERED ACCOUNTANT APPEARING FOR THE RESP ONDENT ASSESSEE. 6. THE HONBLE HIGH COURT OF MADRAS HAD CONSID ERED A SIMILAR ISSUE IN THE CASE OF ACIT V. KENCES FOUNDATION PVT. LTD. (289 ITR 509). IN THAT CASE, THE ASSESSE HAD CLAIMED 100% DEPRECIATION WIT H REFERENCE TO THE INVESTMENT IN THE WINDMILL WHICH GOT COMMISSIONED O N SEPTEMBER 30, 1995, AS CERTIFIED BY THE STATE ELECTRICITY BOARD. THE TRIBUNAL ACCEPTED THE CONTENTION OF THE ASSESSEE THAT IT WAS ENTITLED FOR 100% DEPRECIATION FOR THE ASSESSMENT YEAR 1995-96. THE REVENUE TOOK UP THE MATTER BEFORE THE HONBLE HIGH COURT WITH A QUESTION OF LA W THAT WHETHER THE TRIBUNAL WAS RIGHT IN ALLOWING 100% DEPRECIATION EV EN IF IT HELD THAT THE ITA 1260 & CO 149/11 :- 5 -: PRODUCTION STARTED FROM 30 TH SEPT.,1995 AND NOT ON 25 TH OCT., 1995 AND WHETHER IT HAS IGNORED THE PROVISIONS OF SEC.32(1) SECOND PROVISO AND SEC.158B OF THE INCOME-TAX ACT, 1961. THE HONBLE HIGH COURT EXAMINED THE ISSUE AND FOUND THAT THE WINDMILLS WERE COMMISS IONED ON 30.9.1995, AS CERTIFIED BY THE ELECTRICITY BOARD. THE COURT, THEREFORE, HELD THAT THE ASSESSEE WAS ENTITLED FOR 100% DEPRECIATION WITH RE SPECT TO THE INVESTMENT IN THE INSTALLATION OF THE WINDMILL. TH E DECISION OF THE TRIBUNAL WAS UPHELD. 7. THE ABOVE DECISION IS SQUARELY APPLICABLE T O THE PRESENT CASE. IN THE PRESENT CASE ALSO, THE CERTIFICATE DATED 22.4.1 995 ISSUED BY THE TNEB IS ON RECORD STATING THAT THE GENERATORS WERE COMMISSIONED ON 31.3.1995. THEREFORE, IT IS BEYOND ANY DISPUTE THA T IT HAS BEEN OFFICIALLY RECOGNIZED BY THE COMPETENT AUTHORITY THAT THE COMM ISSIONING OF THE GENERATORS WAS COMPLETED IN THE IMPUGNED ASSESSMENT YEAR ITSELF. THIS IS THE CONDITION WHICH IS TO BE SATISFIED TO CLAIM DEPRECIATION ON THE WINDMILL. ONCE THE SAID CONDITION IS SATISFIED, TH E QUESTION OF ACTUAL GENERATION OF ELECTRICITY, PERHAPS IN THE NEXT PREV IOUS YEAR, DOES NOT DEFEAT THE CLAIM OF THE ASSESSE, AS THE ASSESSEE IS ENTITLED FOR DEPRECIATION ON COMMISSIONING ITSELF. THEREFORE, I N THE LIGHT OF THE ABOVE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT, WE HAVE TO HOLD THAT THE COMMISSIONER OF INCOME-TAX(APPEALS) HAS RIGHTLY HELD THAT THE ITA 1260 & CO 149/11 :- 6 -: ASSESSEE IS ENTITLED FOR DEPRECIATION. ACCORDINGLY , WE UPHOLD THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS). 8. AT THE TIME OF HEARING, THE LEARNED CHARTE RED ACCOUNTANT APPEARING FOR THE RESPONDENT ASSESSEE SUBMITTED THA T HE IS NOT PRESSING THE CROSS OBJECTION FILED BY THE ASSESSEE. 9. IN RESULT, THE APPEAL FILED BY THE REVENUE IS DI SMISSED ON MERIT AND THE CROSS OBJECTION FILED BY THE ASSESSEE IS DI SMISSED AS NOT PRESSED. ORDER PRONOUNCED ON FRIDAY, THE 02 ND OF MARCH, 2012 AT CHENNAI. SD/- SD/- (CHALLA NAGENDRA PRASAD) (DR.O.K.NARAYANAN) JUDICIAL MEMBER VICE-P RESIDENT CHENNAI, DATED THE 2 ND MARCH, 2012 MPO* COPY TO : APPELLANT/RESPONDENT/CIT/CIT(A)/DR