Vijayeswari Textiles Limited, Coimbatore V. ACIT, Coimbatore

CO 47/CHNY/2014

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 0341 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 21 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 25-02-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 11-02-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 03-06-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: S DASGUPTA
• Section: 2

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , B B ENCH, CHENNAI . , ' $ % , & ' BEFORE SHRI A.MOHAN ALANKAMONY ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./I.T.A.NO. 710/MDS/2014 & C.O.NO.47/MDS/2014 (IN ITA NO.710/MDS/2014) ( / ASSESSMENT YEAR: 2005-06) ASSISTANT COMMISSIONER OF INCOME TAX, SALARY CIRCLE-I COIMBATORE. VS M/S.VIJAYESWARI TEXTILES LTD. (NOW KNOWN AS VTX INDUSTRIES LTD.) 10/400, PALGHAT MAIN ROAD, KUNIAMUTHUR,COIMBATORE - 641 008. PAN: AAACV6388F ( /APPELLANT) (RESPONDENT/CROSS OBJECTOR) / APPELLANT BY : MR. S. DAS GUPTA, JCIT /RESPONDENT BY : NONE /DATE OF HEARING : 11 TH FEBRUARY, 2015 /DATE OF PRONOUNCEMENT : 25 TH FEBRUARY, 2015 / O R D E R PER BENCH: THIS APPEAL IS FILED BY THE REVENUE AGAINST THE O RDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-II, COI MBATORE DATED 18.12.2013 FOR THE ASSESSMENT YEAR 2005-06. THE CROSS OBJECTION IS FILED BY THE ASSESSEE. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE. HOWEVER , THE AUTHORIZED REPRESENTATIVE FILED WRITTEN SUBMISS IONS VIDE LETTER DATED 4.2.2015 REQUESTING THE BENCH TO DISPO SE OFF THE 2 ITA NO.710/MDS/2014 & C.O. NO.47/MDS/2014 APPEAL BASED ON THE WRITTEN SUBMISSIONS AS HE IS NO T IN A POSITION TO ATTEND THE HEARING ON 11.02.2015. AFT ER HEARING THE DEPARTMENTAL REPRESENTATIVE AND ON CONSIDERING THE WRITTEN SUBMISSIONS, WE PROCEED TO DISPOSE OFF THE APPEAL AND THE CROSS OBJECTION. 3. THE ONLY GRIEVANCE OF THE REVENUE IN ITS APPEAL IS THAT COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN HOLDI NG THAT ASSESSEE IS ENTITLED FOR DEDUCTION UNDER SECTION 80 IA OF THE ACT. THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE APPRECIATED THAT AS PER PROVISIONS OF SECTION 80IA(5) ELIGIBLE UNDERTAKING SHOULD BE TREATED AS ONLY SOUR CE OF INCOME FOR COMPUTING QUANTUM OF DEDUCTION ALLOWABLE UNDER SECTION 80IA OF THE ACT. 4. DEPARTMENTAL REPRESENTATIVE SUBMITS THAT THE ISS UE IN APPEAL HAS BEEN DECIDED BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF SRI VELAYUDHASWAMY SPINNING MILLS PVT.L TD. VS. ACIT (340 ITR 477) IN FAVOUR OF THE ASSESSEE. IN T HE WRITTEN SUBMISSIONS FILED BEFORE US, THE COUNSEL PLACES REL IANCE ON THE SAID DECISION OF SRI VELAYUDHASWAMY SPINNING MI LLS PVT. LTD. 3 ITA NO.710/MDS/2014 & C.O. NO.47/MDS/2014 5. THE HONBLE HIGH COURT IN THE CASE OF SRI VELAYUDHASWAMY SPINNING MILLS PVT.LTD. VS. ACIT (SU PRA) HELD THAT FOR THE PURPOSE OF COMPUTING DEDUCTION UN DER SECTION 80IA, INITIAL ASSESSMENT YEAR MEANS THE YE AR IN WHICH THE ASSESSEE BEGINS TO CLAIM DEDUCTION UNDER SECTION 80IA OF THE ACT. WHILE HOLDING SO, THE HONBLE HIG H COURT OBSERVED AS UNDER:- FROM READING OF SUB - S. (1) OF S . 80-IA, IT IS CLEAR THAT IT PROVIDES THAT WHERE THE GROSS TOTAL I NCOME OF AN ASSESSEE INCLUDES ANY PROFITS AND GAINS DERIVED BY AN UNDERTAKING OR AN ENTERPRISE FROM ANY BUSINESS REFERRED TO IN SUB-S. (4) I . E. REFERRED TO AS THE EL I GIBLE BUS I NESS, THERE SHAL L , IN ACCORDANCE W I TH AND SUBJECT TO THE PROV I S I ONS OF THE SECTION, BE ALLOWED, IN COMPUTING THE TOTAL I NCOME OF THE ASSESSEE, A DEDUCT I ON OF AN AMOUNT EQUAL TO 100 PER CENT OF THE PROFITS AND GAINS DERIVED FROM SUCH BUSINESS FOR TE N CONSECUTIVE ASSESSMENT YEARS . DEDUCTION IS GIVEN TO ELIGIBLE BUSINESS AND THE SAME IS DEFINED IN SUB-SO (4). SUB-S . (2) PROVIDES OPTION TO THE ASSESSEE TO CHOOSE 10 CONSECUTIVE ASSESSMENT YEARS OUT OF 15 YEARS. OPTION HAS TO BE EXERCISED. IF IT IS NOT EXERCISED, THE ASSESSEE WILL NOT BE GETTING THE BEN EF I T. FIFTEEN YEARS IS OUTER LIMIT AND THE SAME IS BEGINN ING FROM THE YEAR IN WHICH THE UNDERTAKING OR THE ENTERPRISE DEVELOPS AND BEGINS TO OPERATE ANY INFRASTRUCTURE ACTIVITY ETC. SUB-S. (5) DEALS WITH QUANTUM OF D EDUCTION FOR AN ELIGIBLE BUSINESS. THE WORDS 'INITIAL ASSESSMENT YEAR' ARE USED IN SUB - S.(5) AND THE SAME IS NOT DEFINED UNDER THE PROVISIONS. IT IS TO BE NOTED THAT ' IN I TIAL ASSESSMENT YEAR' EMPLOYED IN SUB-S. (5) IS DIFFERENT FROM THE WORDS 'BEGINNING FROM THE YEAR ' REFERRED TO IN SUB-S. (2). IMPORTANT FACTORS ARE TO BE NOTED IN SUB-S. (5 ) AND THEY ARE AS UNDER : '(1) IT STARTS WITH NON OBSTANTE CLAUSE WHICH MEANS IT OVERRIDES ALL THE PROVISIONS OF THE ACT AND OTHER PROVISIONS ARE TO BE IGNORED; (2) IT IS FOR THE PURPOSE OF DETERMINING THE QUANTUM OF DEDUCTION; (3) FOR THE ASSESSMENT YEAR IMMEDIATELY SUCCEEDING THE INITIAL ASSESSMENT YEAR; (4) IT IS A DEEMING PROVISION; (5) FICTION CREATED THAT THE E LI GIBLE BUSINESS IS THE ONLY SOURCE OF INCOME; AND (6) DURI NG THE PREVIOUS YEAR RELEVANT TO THE INITIAL ASSESSMEN T YEAR AND EVERY S U BSEQUENT ASSESSMENT YEAR.' FROM 4 ITA NO.710/MDS/2014 & C.O. NO.47/MDS/2014 READING OF THE ABOVE, IT IS CLEAR THAT THE ELIGIBLE BUSINESS WERE THE ONLY SOURCE OF INCOME, DURING THE PREVIOUS YEAR RELEVANT TO INITIAL ASSESSMENT YEAR A ND EVERY SUBSEQUENT ASSESSMENT YEARS. WHEN THE ASSESSEE EXERCISES THE OPTION, THE ONLY LOSSES OF T HE YEARS BEGINNING FROM INITIAL ASSESSMENT YEA R - ALONE ARE TO BE BROUGHT FORWARD AND NOT LOSSES OF EARLIER YEARS WHICH WERE ALREADY SET OFF AGAINST THE INCOME OF THE ASSESSEE . LOOKING FORWARD TO A PERIOD OF TEN YEARS FROM THE IN I TIAL ASSESSMENT IS CONTEMPLATED. IT DOES NOT ALLOW THE REVENUE TO LOOK BACKWARD AND FIN D OUT IF THERE IS ANY LOSS OF EARLIER YEARS AND BRING FORWARD NOTIONALLY EVEN THOUGH THE SAME WERE SET OF F AGAINST OTHER INCOME OF THE ASSESSEE AND THE SET OF F AGAINST THE CURRENT INCOME OF THE ELIGIBLE BUSINESS . ONCE THE SET OFF IS TAKEN PLACE IN EARLIER YEAR AGA I NST THE OTHER INCOME OF THE ASSESSEE, THE REVENUE CANNOT REWORK THE SET OF F AMOUNT AND BRING IT NOTIONALLY . FICTION CREATED IN SUB-S. (5) DOES NOT CONTEMPLATES TO BRING SET OFF AMOUNT NOTIONALLY . FICTION IS CREATED ONLY FOR THE LIMITED PURPOSE AND THE SAME CANNOT BE EXTENDED BEYOND THE PURPOSE FOR WHICH IT IS CREATED. 6. THE COMMISSIONER OF INCOME TAX (APPEALS) ALLOWED THE CLAIM OF THE ASSESSEE FOLLOWING THE JURISDICTIO NAL HIGH COURT DECISION IN THE CASE OF VELAYUDHASWAMY SPINNI NG MILLS LTD. VS. ACIT(SUPRA). RESPECTFULLY FOLLOWING THE SA ID DECISION, WE SUSTAIN THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) ON THIS ISSUE AND REJECT THE GROUNDS OF A PPEAL RAISED BY THE REVENUE. 7. COMING TO THE CROSS OBJECTION FILED BY THE ASSES SEE IN THE WRITTEN SUBMISSIONS, NOTHING IS SUBMITTED IN RE SPECT OF CROSS OBJECTIONS. IN THE CIRCUMSTANCES, CROSS OBJEC TION OF THE ASSESSEE IS DISMISSED. 5 ITA NO.710/MDS/2014 & C.O. NO.47/MDS/2014 8. IN THE RESULT, THE APPEAL OF THE REVENUE AND TH E CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH DAY OF FEBRUARY, 2015 AT CHENNAI. SD/- SD/- ( . ) ( ( *+ ) ( A.MOHAN ALANKAMONY ) ( CHALLA NAGENDRA PRASAD ) - / ACCOUNTANT MEMBER * - / JUDICIAL MEMBER * /CHENNAI, / /DATED 25 TH FEBRUARY, 2015 SOMU 12 32 / COPY TO: 1. APPELLANT 2. RESPONDENT 3. 4 () /CIT(A) 4. 4 /CIT 5. 2 7 /DR 6. /GF .