Panama Credit & Capital Pvt. Ltd., Pune V. ACIT, Pune

CO 52/PUN/2011

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 9635 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 8 month(s) 24 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 29-04-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 01-03-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 04-08-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE: SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO . 1024 /PN/20 1 0 ASSESSMENT YEAR : 200 7 - 08 THE ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 1 (2) , PUNE VS. PANNAMA CREDIT CAPITAL PVT. LTD., 36, SOMWAR PETH, PUNE (APPELLANT) (RESPONDENT) PAN NO. AABCP1293N CO NO. 52 /PN/201 1 ASSESSMENT YEAR : 200 7 - 08 PANNAMA CREDIT CAPITAL PVT. LTD., 36, SOMWAR PETH, PUNE VS . THE ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 1(2), PUNE (APPELLANT) (RESPONDENT) PAN NO. AABCP1293N A SSESSEE BY: SHRI SHARAD SHAH RE VENUE BY: SHRI S. P. WALIMBE DATE OF HEARING : 23 - 0 4 - 2014 DATE OF PRONOUNCEMENT : 29 - 0 4 - 2014 OR DER P ER R.S. PADVEKAR , JM : - TH IS APPEAL IS FILED BY THE REVENUE CHALLENGING THE IMPUGNED ORDER OF THE LD. CIT(A) - IV, PUNE DATED 22 - 02 - 2010 FOR THE A.Y . 200 7 - 08. THE REVENUE HAS TAKEN THE FOLLOWING GROUND IN THE APPEAL: 1. ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT(A) ERRED IN GIVING FINDING THAT ASSESSEE HAS NOT MADE CLAIM OF DEDUCTION U/S. 80IA(4)(IV)(A) OF I.T. ACT 1961 IN A.Y. 2004 - 05 EVEN THOUGH SUCH CLAIM WAS MADE IN COMPUTATION OF INCOME FOR A.Y. 2004 - 05 AT RS.21,49,202/ - WHICH WAS R EDUCED TO NIL IN ABSENCE OF PROFIT. THUS, ASSESSEE HAS EXERCISED ITS OPTION OF CLAIMING SAID DEDUCTION IN A.Y. 2004 - 05 AND NOT IN A.Y. 2006 - 07. 2 ITA NO . 1024/P N/2010 & CO NO. 52/PN/2011, PANNAMA CREDIT CAPITAL PVT. LTD., PUNE 2. THE FACTS WHICH ARE REVEALED FROM THE RECORD AS UNDER. THE ASSESSING OFFICER HAS OBSERVED THAT DURING THE A .Y. 2006 - 07 , THE ASSESSEE HAD CLAIMED THE DEDUCTION U/S. 80IA (4) IN RESPECT OF THE WIND MILL TO THE EXTENT OF RS.14,55,170/ - AND IN THE A.Y. 2007 - 08 AT RS.40,18,788/ - . AS NOTED BY THE ASSESSING OFFICER AS PER THE PROVISIONS OF SEC. 80IA(5) , FOR THE PURPOS E OF DETERMINING THE QUANTUM OF DEDUCTION U/S. 80IA THE ELIGIBLE BUSINESS HAS TO BE TREATED AS A STAND ALONE UNIT AND THAT HAS TO BE DONE FROM THE YEAR IN WHICH THE ASSESSEE STARTS CLAIMING THE DEDUCTION. AS OBSERVED BY THE ASSESSING OFFICER THE ASSESSEE HAS EXERCISED HIS OPTION IN THE A.Y. 2004 - 05 AS THE ASSESSEE HAS MENTIONED THE DEDUCTION U/S. 80IA IN THE COMPUTATION SHEET. THE ASSESSING OFFICER HAS NOTED THAT THE ASSESSEE HAS NO POSITIVE INCOME IN THE A.Y. 2004 - 05 AND HENCE, T HE ASSESSEE DID NOT CLAIM ANY DEDUCTION. THE ASSESSING OFFICER, THEREFORE, CONCLUDED THAT ONCE THE ASSESSEE HAS EXERCISED THE OPTION BY CLAIMING THE DEDUCTION U/S. 80IA THEN AS PER THE WORKING GIVEN IN THE ASSESSMENT ORDER BY THE ASSESSING OFFICER , T HE ASSESSE HAS NO QUANTUM OF D EDUCTION AVAILABLE FOR CLAIMING U/S. 80IA(4) AFTER CONSIDERING THE PROVISIONS OF SEC. 80IA(5). THE COMPUTATION MADE BY THE ASSESSING OFFICER WHICH IS IN THE FORM OF CHART IS AS UNDER: A.Y. INCOME DEPRECIATION CARRIED FORWARD DEPRECIATION LOSS CUMULATIVE DEPRECIATION ALLOWANCE DEDUCTION AVAILABLE U/S. 80IA 2004 - 05 2144292 24000000 - 21855708 - NIL 2005 - 06 4598269 4800000 - 201731 - 22057439 NIL 2006 - 07 4245677 960000 3285677 - 18771762 NIL 2007 - 08 5106252 192000 4914252 - 13857510 NIL 2.1. THE ASSESSING O FFICER, THEREFORE, DENIED THE DEDUCTION CLAIMED BY THE ASSESSEE U/S. 80IA WHICH WAS TO THE EXTENT OF RS. 40,18,788/ - AS IN 3 ITA NO . 1024/P N/2010 & CO NO. 52/PN/2011, PANNAMA CREDIT CAPITAL PVT. LTD., PUNE HIS OPINION THERE WAS NO PROFITS AVAILABLE FROM THE WIND MILL S . THE ASSESSEE CHALLENGED THE ACTION OF THE ASSESSING OFFICER BEFORE TH E LD. CIT(A) AND LD. CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE. ON THE ISSUE OF WHETHER THE ASSESSEE HAS EXERCISED HIS OPTION IN THE A.Y. 2004 - 05 FOR THE FIRST TIME THE RELEVANT DISCUSSIONS AND FINDINGS OF THE LD. CIT(A) ARE AS UNDER: 6.2 INITIATION OF CL AIM: ON CAREFUL CONSIDERATION OF THE FACTS AVAILABLE IN THE ASSESSMENT ORDER, IT IS OBSERVED THAT THE AO HAS HELD THAT THE APPELLANT HAS MADE CLAIM FOR THE ABOVE DEDUCTION STARTING FROM A.Y. 2004 - 05. WHEREAS, THE APPELLANT CLAIMS THAT THE DEDUCTION HAS BEE N CLAIMED STARTING FROM A.Y.2006 - 07. THE AO IN THE ORDER HAS STATED IN PARA 5 THAT THE ASSESSEE HAS EXERCISED HIS OPTION OF CLAIMING DEDUCTION U/S. 80IA STARTING FROM A.Y. 2004 - 05. IN THE TABLE GIVEN BELOW IN THE SAME PARAGRAPH IT HAS BEEN SHOWN BY THE AO THAT THE DEDUCTION AVAILABLE IN A.Y.2004 - 05 AND A.Y.2005 - 06 IS NIL BECAUSE OF DEPRECIATION OF THE UNIT BEING MORE THAN THE INCOME. IT IS ALSO OBSERVED THAT THE FINDING OF THE AO ON THIS ISSUE, IS DIFFERENT AT DIFFERENT PLACES. IN THE BEGINNING OF PARA 5, HE FIRST WRITES THAT THE DEDUCTION U/S. 80IA HAS BEEN MADE BY THE APPELLANT FOR A.Y. 2006 - 07 AND A.Y. 2007 - 08 AT RS.14,55,170/ - AND RS.40,18,788/ - RESPECTIVELY AND THEN SUBSEQUENTLY IN THE SAME PARA HE WRITES THAT THE OPTION TO CLAIM THIS DEDUCTION WAS EXE RCISED STARTING FROM A.Y. 2004 - 05. THE APPELLANT VEHEMENTLY OPPOSES TO THIS FINDING SAYING THAT THE SAME HAS NOT BEEN CLAIMED BY THE APPELLANT IN THESE TWO ASSESSMENT YEARS. ON THE FINDING OF THE AO THAT SUCH A CLAIM HAS BEEN MADE IN THE COMPUTATION OF INC OME, THE APPELLANT STATES THAT THE AVAILABLE DEDUCTION HAS BEEN INDICATED IN THE INNER COLUMN OF THE COMPUTATION BUT THE SAME WAS SHOWN IN THE OUTER COLUMN AS NIL. THE APPELLANT FURTHER STATES DURING APPEAL THAT THE ABOVE ENTRY IN THE INNER COLUMN WAS INEV ITABLE AS THE SOFTWARE IN WHICH THE RETURN WAS FILED IN WAS NOT ACCEPTING A NIL FIGURE IN THE INNER COLUMN WHERE THE UNITS ARE ELIGIBLE FOR DEDUCTION U/S. 80IA. ON CAREFUL CONSIDERATION OF THE FACTS AVAILABLE VIS - A - VIS THE LAW, I FIND THAT THE SECTION 80IA VERY CLEARLY GRANTS THE OPTION TO THE ASSESSEE TO CHOOSE ANY CONSECUTIVE TEN YEARS OUT OF 15 YEARS STARTING FROM 4 ITA NO . 1024/P N/2010 & CO NO. 52/PN/2011, PANNAMA CREDIT CAPITAL PVT. LTD., PUNE THE COMMENCEMENT OF THE SETTING UP OR PRODUCTION OF THE ELIGIBLE UNIT OR AS THE CASE MAY BE. THE AO IN THE ASSESSMENT ORDER HAS NOT OBJECTED T O THIS DEDUCTION ON ANY GROUND OF NON - FULFILLMENT OF ANY CONDITIONS LAID IN THE SAID SECTION. THE DISPUTE IS RELATING TO EXERCISE OF AN OPTION WHICH IS AVAILABLE STATUTORILY TO THE APPELLANT, STARTING FROM A PARTICULAR ASSESSMENT YEAR. ON PERUSAL OF THE DOCUMENTS SUBMITTED, I DO NOT FIND THE FINDING OF THE AO TO BE CORRECT. EVEN OTHERWISE, ONCE THE SECTION GRANTS THE OPTION TO THE APPELLANT, THERE SHOULD NOT BE MUCH OF A DISPUTE ON THE POINT OF INITIATION OF THE CLAIM. IT IS A TRITE LAW THAT EVEN IF A MIS TAKE IS MADE BY THE APPELLANT IN RESPECT OF A LEGITIMATE CLAIM, THE AO IS DUTY BOUND TO DETERMINE THE CORRECT INCOME. IN THE PRESENT CASE, THE DEPRECIATION AVAILABLE TO THE APPELLANT IS MUCH HIGHER THAN THE INCOME EARNED FROM THE ELIGIBLE UNIT AND THEREFOR E, BY HOLDING THE INITIATION TO AN EARLIER YEAR, THE AO IS TRYING TO REDUCE THE BENEFIT WHICH IS OTHERWISE LEGITIMATELY AVAILABLE TO THE APPELLANT. FROM THE DOCUMENTS AVAILABLE ALSO AND THE EXPLANATION GIVEN IN RESPECT OF THE SOFTWARE REQUIREMENT, I DO NOT FIND THAT THERE ARE JUSTIFIABLE REASONS TO HOLD THAT THE APPELLANT HAS EXERCISED HIS OPTION TO INITIATE THE CLAIM OF DEDUCTION FROM A.Y. 2004 - 05. IN VIEW OF THE ABOVE, THE APPEAL IS ALLOWED ON THE ABOVE GROUND. THE OPTION IS TO BE TREATED TO HAVE BEEN EXERCISED FROM A.Y. 2006 - 07, AS CLAIMED BY THE APPELLANT. NOW THE REVENUE IS IN APPEAL BEFORE US ON TH E ABOVE FINDING . 3. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE RECORD. THE SHORT ISSUE IN CONTROVERSY IS WHETHER THE ASSESSEE HAS EXERCISED THE OPTION , AS PER THE EVIDENCE ON RECORD , IN THE A.Y. 2004 - 05 FOR THE FIRST TIME. THE ARGUMENT OF THE LD. COUNSEL IS THAT IN THE A.Y. 2004 - 05 IN THE INCOME COMPUTATION STATEMENT ONLY THE COMPUTATION WAS SHOWN BUT NO CLAIM WAS MADE. THE LD. CO UNSEL ALSO FILED THE COPY OF THE INCOME COMPUTATION STATEMENT TO SUPPORT HIS CONTENTION THAT THOUGH THE ASSESSEE HAS SHOWN THE COMPUTATION IN THE INNER COLUMN BUT IN THE OUTER COLUMN NO DEDUCTION IS CLAIMED AND SHOWN AS NIL. HE SUBMITS THAT NO AUDIT REPOR T OR ANY OTHER SUPPORTING CERTIFICATE WAS FILED 5 ITA NO . 1024/P N/2010 & CO NO. 52/PN/2011, PANNAMA CREDIT CAPITAL PVT. LTD., PUNE FOR CLAIMING THE DEDUCTION. HE SUBMITS THAT THE ASSESSEE EFFECTIVELY CLAIMED THE DEDUCTION FOR THE FIRST TIME IN THE A.Y. 2006 - 07 NOT IN THE A.Y. 2004 - 05. WE HAVE ALSO HEARD THE LD. DR, WHO SUBMITS THAT AS PER THE COMPUTATION STATEMENT THE ASSESSEE ITSELF HAS SHOWN THE WORKING OF THE DEDUCTION U/S. 80IA BUT AS THE ASSESSEE HAS NO POSITIVE INCOME FOR A.Y. 2004 - 05 AT ALL , THE ASSESSEE DID NOT CLAIM ANY DEDUCTION. THE LD. COUNSEL HAS FILED THE COPY OF THE INCO ME COMPUTATION STATEMENT WHICH IS PLACED ON RECORD. 4. WE HAVE TO EXAMINE THE FINDING OF BOTH THE AUTHORITIES BELOW WHICH ARE BASED ON THE INCOME COMPUTATION STATEMENT FOR A.Y. 2004 - 05 . IT IS SEEN THAT THE ASSESSEE HAS NOT SHOWN ANY INCOME AT ALL AS THE RE IS A LOSS WHICH HAS BEEN CARRIED FORWARD. IT IS TRUE THAT IN THE INNER COLUMN THE ASSESSEE HAS GIVEN THE DETAILS IN RESPECT OF HIS UNDERTAKING I.E. WIND MILL AND QUANTUM IS ALSO SHOWN WHICH IS TO THE EXTENT OF RS. 21,44,292/ - BUT IN THE OUTER COLUMN NO CLAIM IS MADE. IN OUR OPINION, UNLESS THE ASSESSEE HAS MADE THE CLAIM IN THE OUTER COLUMN , THEN IT CAN BE SAID THAT THE ASSESSEE WAS DESI RING TO EXERCISE HIS OPTION. ADMITTEDLY, A.Y. 2004 - 05 IS THE FIRST ASSESSMENT YEAR IN WHICH THE WIND MILL COMMENCED T HE GENERATION OF ELECTRICITY. AFTER GIVING OUR ANXIOUS CONSIDERATION TO THE COPY OF THE INCOME COMPUTATION STATEMENT PLACED BEFORE US , WE ARE OF THE OPINION THAT THE ASSESSEE HAS NOT EXERCISED HIS OPTION U/S. 80IA(5) OF THE ACT IN THE A.Y. 2004 - 05. WE, T HEREFORE, CONCUR WITH THE ORDER OF THE LD. CIT(A) ON THIS ISSUE. ACCORDINGLY, GROUND TAKEN BY THE REVENUE IS DISMISSED. 5. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED. 6. SO FAR AS CO NO. 52/PN/2011 IS CONCERNED, THE LD. COUNSEL SUBMITS THAT AS PER THE INSTRUCTION OF THE ASSESSEE HE IS NOT PRESSING THE 6 ITA NO . 1024/P N/2010 & CO NO. 52/PN/2011, PANNAMA CREDIT CAPITAL PVT. LTD., PUNE CROSS OBJECTION. AS THE CROSS OBJECTION IS NOT PRESSED, THE SAME IS DISMISSED AS NOT PRESSED. 7. IN THE RESULT, THE REVENUES APPEAL AS WELL AS ASSESSEES CROSS OBJECTION ARE DISMISSED. PRONOUNC ED IN THE OPEN COURT ON 29 - 0 4 - 201 4 SD/ - SD/ - ( R.K. PANDA ) ( R.S. PADVEKAR ) ACCOUNTANT MEMBER JUDICIAL MEMBER RK /PS PUNE , DATED : 29 TH APRIL, 2014 COPY TO 1 ASSESSEE 2 DEPARTMENT 3 THE CIT(A) - IV, PUNE 4 THE CIT - IV, PUNE 5 THE DR, ITAT, B BENCH, PUNE . 6 GUARD FILE. //TRUE COPY// BY ORDER PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE