DCIT, Tiruppur V. Dollar Apparels, Tiruppur

ITA 105/CHNY/2016

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3943 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2016
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 03-10-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 19-01-2016
• Court: TRIBUNAL
• Department Lawyers: N GOPI KRISHNA
• Assessee Lawyers: T BANUSEKARC A
• Keywords: Depreciation; Unabsorbed depreciation

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI , . !' BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G.PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A.NOS104 & 105/MDS./2016. / ASSESSMENT YEARS :2011-12 & 2012-13 THE DCIT,B CIRCLE-1, TIRUPUR. VS. M/S.DOLLAR APPARELS, NO.13,SIXTY FEET ROAD, KUMARANANDAPURAM TIRUPUR 641 602. [PAN AABFD 8592 K ] ( #$ / APPELLANT) ( %&#$ /RESPONDENT) / APPELLANT BY : MR.N.GOPIKRISHNA, JCIT, D.R /RESPONDENT BY : MR.T.BANUSEKAR,C.A / DATE OF HEARING : 05 - 1 0 - 201 6 !' / DATE OF PRONOUNCEMENT : 23 - 11 - 2016 ' / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THESE TWO APPEALS OF THE REVENUE ARE DIRECTED AGAIN ST THE COMMON ORDER OF THE COMMISSIONER OF INCOME-TAX (AP PEALS)-3, COIMBATORE DATED 26.10.2015 PERTAINING TO ASSESSM ENT YEARS 2011- 12 & 2012-12. ITA NOS.104 & 105 /MDS./2016 :- 2 -: 2. THESE APPEALS ARE RECALLED MATTER. THESE APPEAL S ARE DISPOSED OFF BY THIS TRIBUNAL VIDE ORDER DATED 18.0 3.2016. LATER ON FILED OF MISCELLANEOUS PETITION BY THE ASSESSEE IN MP NO.66 & 67/MDS./16, THE EARLIER ORDER WAS RECALLED BY TRIBU NAL VIDE ORDER DATED 06.07.2016 TO CONSIDER THE ISSUE RELATING TO ALLOWA BILITY OF DEDUCTION U/S.80-IA OF THE ACT IN RESPECT OF INCOME FROM WIND MILL DIVISION. ACCORDINGLY, THESE APPEALS ARE LISTED FOR HEARING T O CONSIDER THE GROUND RELATING TO DEDUCTION U/S.80-IA OF THE ACT I N RESPECT OF INCOME FROM WIND MILL DIVISION. 3. THE LD.A.R SUBMITTED THAT THIS ISSUE WAS COVER ED THE JUDGEMENT OF VELAYUDHASWAMY SPINNING MILLS P. LTD. REPORTED IN [ 2012] 340 ITR 477 (MAD) WHEREIN HELD THAT:- FROM READING OF SUB-S (1) OF S. 80IA, IT IS CLEAR T HAT IT PROVIDES THAT WHERE THE GROSS TOTAL INCOME OF AN ASSESSEE INCLUDE S ANY PROFITS AND GAINS DERIVED BY AN UNDERTAKING OR AN ENTERPRISE FR OM ANY BUSINESS REFERRED TO IN SUB-S (4) I.E. REFERRED TO AS THE EL IGIBLE BUSINESS, THERE SHALL, IN ACCORDANCE WITH AND SUBJECT TO THE PROVIS IONS OF THE SECTIONS, BE ALLOWED, IN COMPUTING THE TOTAL INCOME OF THE AS SESSEE, A DEDUCTION OF AN AMOUNT EQUAL TO 100 PER CENT OF THE PROFITS A ND GAINS DERIVED FROM SUCH BUSINESS FOR TEN CONSECUTIVE ASSESSMENT Y EARS. DEDUCTION IS GIVEN TO ELIGIBLE BUSINESS AND THE SAME IS DEFINED IN SUB-S. (4). SUB- S(2) PROVIDES OPTION TO THE ASSESSEE TO CHOOSE 10 C ONSECUTIVE ASSESSMENT YEARS OUT OF 15 YEARS. OPTION HAS TO BE EXERCISED. IF IT IS NOT EXERCISED, THE ASSESSEE WILL NOT BE GETTING THE BENEFIT. FIFTEEN YEARS ITA NOS.104 & 105 /MDS./2016 :- 3 -: IS OUTER LIMIT AND THE SAME IS BEGINNING FROM THE Y EARS IN WHICH THE UNDERTAKING OR THE ENTERPRISE DEVELOPS AND BEGINS T O OPERATE ANY INFRASTRUCTURE ACTIVITY ETC SUB-S. (5) DEALS WITH Q UANTUM OF DEDUCTION FOR AN ELIGIBLE BUSINESS. THE WORDS INITIAL ASSES SMENT YEAR ARE USED IN SUB-S (5) AND THE SAME IS NOT DEFINED UNDER THE PRO VISIONS. IT IS TO BE NOTED THAT INITIAL 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 T HEY ARE AS UNDER: (1)IT STARTS WITH NON OBSTANTE CLAUSE WHICH MEANS I T OVERRIDES ALL THE PROVISIONS OF THE ACT AND OTHER PROVISIONS ARE TO B E 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 ELIGIBLE BUSINESS IS THE ONLY SOURCE OF INCOME; AND (6) DUR ING THE PREVIOUS YEAR RELEVANT TO THE INITIAL ASSESSMENT YEAR AND EVERY S UBSEQUENT ASSESSMENT YEAR. FROM READING OF THE ABOVE, IT IS CLEAR THAT THE ELIGIBLE BUSINESS WERE THE ONLY SOURCE OF INCOME, DURING TH E PREVIOUS YEAR RELEVANT TO INITIAL ASSESSMENT YEAR AND EVERY SUBSE QUENT ASSESSMENT YEARS. WHEN THE ASSESSEE EXERCISES THE OPTION, THE ONLY LOSSES OF THE YEARS BEGINNING FROM INITIAL ASSESSMENT YEAR ALONE ARE TO BE BROUGHT FORWARD AND NOT LOSSES OF EARLIER YEARS WHICH WERE ALREADY SET OFF AGAINST THE INCOME OF THE ASSESSEE. LOOKING FORWAR D TO A PERIOD OF TEN YEARS FROM THE INITIAL ASSESSMENT CONTEMPLATED. IT DOES NOT ALL THE REVENUE TO LOOK BACKWARD AND FIND OUT IF THERE IS A NY LOSS OF EARLIER YEARS AND BRING FORWARD NATIONALLY EVEN THOUGH THE SAME WERE SET OFF AGAINST OTHER INCOME OF THE ASSESSEE AND THE SET OF F AGAINST THE CURRENT ITA NOS.104 & 105 /MDS./2016 :- 4 -: INCOME OF THE ELIGIBLE BUSINESS. ONCE THE SET OFF IS TAKEN PLACE IN EARLIER YEAR AGAINST THE OTHER INCOME OF THE ASSESS EE, THE REVENUE CANNOT REWORK THE SET OFF AMOUNT AND BRING IT NOTIO NALLY. FICTION CREATED IN SUB-S(5) DOES NOT CONTEMPLATES TO BRING SET OFF AMOUNT NOTIONALLY. FICTION IS CREATED ONLY FOR THE LIMITE D PURPOSE AND THE SAME CANNOT BE EXTENDED BEYOND THE PURPOSE FOR WHICH IT IS CREATED. THERE IS NO DISPUTE THAT LOSSES INCURRED BY THE ASSESSEE WERE ALREADY SET OFF AND ADJUSTED AGAINST THE PROFITS OF THE EARLIER YEA RS. DURING THE RELEVANT ASSESSMENT YEAR, THE ASSESSEE EXERCISED TH E OPTION UNDER S.80-IA(2). IN TAX CASE NO.918 OF 2008 THE ASSESSM ENT YEAR WAS 2004-05. DURING THE RELEVANT PERIOD, THERE WERE NO UNABSORBED DEPRECIATION OR LOSS OF THE ELIGIBLE UNDERTAKINGS A ND THE SAME WERE ALREADY ABSORBED IN THE EARLIER YEARS. THERE IS A POSITIVE PROFIT DURING THE RELEVANT YEAR. THEREFORE, LOSS IN THE YEAR EAR LIER TO INITIAL ASSESSMENT YEAR ALREADY ABSORBED AGAINST THE PROFIT OF OTHER BUSINESS CANNOT BE NOTIONALLY BROUGHT FORWARD AND SET OFF AG AINST THE PROFIT OF THE ELIGIBLE BUSINESS AS NO SUCH MANDATE IS PROVIDE D IN S. 80-IA(5) CIT VS. TTK PHARMA LTD (TAX CASE (APPEAL ) NO.298 O F 2004, DT. 23RD DEC., 2009) FOLLOWED; CIT VS. MEWAR OIL & GENERAL M ILLS LTD (2004) 186 CTR (RAJ) 141; (2004) 271 ITR 311 (RAJ) CONCURRED W ITH; MOHAN BREWERIES & DISTILLERIES LTD VS. ASST. CIT (2008) 1 14 TTJ (CHENNAI) 532: (2008) 3 DTR (CHENNAI) (TRIB) 477 AFFIRMED. ACCORDINGLY, WE DIRECT THE AO TO CONSIDER THE DEDUC TION U/S.80-IA OF THE ACT IN RESPECT OF INCOME FROM WIND MILL DIVISIO N SUBJECT TO THE PROVISIONS OF THE SECTION 80AB OF THE ACT AFTER GIV ING OPPORTUNITY OF ITA NOS.104 & 105 /MDS./2016 :- 5 -: BEING HEARD. WITH THIS OBSERVATION, THIS GROUND RA ISED BY THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSED. 4. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 23 RD NOVEMBER, 2016, AT CHENNAI. S D/ - SD/ - ( . ) ( G.PAVAN KUMAR ) / JUDICIAL MEMBER ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER #$ / CHENNAI %& / DATED: 23 RD NOVEMBER, 2016 K S SUNDARAM &'(()*( +* / COPY TO: ( 1 . / APPELLANT 3. ( ,(- . / CIT(A) 5. */0 (1 / DR 2. / RESPONDENT 4. ( , / CIT 6. 02(3 / GF