Deputy Commissioner of Income-tax, V. M/s. Pearl Plastic Products, Pune

ITA 1074/PUN/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1077 (ITAT-PUNE)
• Duration Of Justice: 3 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2003-2004
• Appeal Filed On: 20-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIL KUMAR CHAWARE
• Keywords: Reopening of assessment; Depreciation; Reassessment proceedings

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, PUNE . . , BEFORE SHRI R.K. PANDA, AM . / ITA NOS.1073, 1074, 1076 & 1077/PN/2016 / ASSESSMENT YEARS : 2002-03, 2003-04, 2005-06 & 2006-07 DCIT, CIRCLE - 6, PUNE . / APPELLANT V/S M/S. PEARL PLASTIC PRODUCTS, CHAITANYA, 774, BUDHWAR PETH, PUNE 411 002 PAN : AABFP4498C . / RESPONDENT / APPELLANT BY : SHRI ANIL KUMAR CHAWARE / RESPONDENT BY : SHRI M.R. BHAGWAT / ORDER PER R.K.PANDA, AM : THE ABOVE 4 APPEALS FILED BY THE REVENUE ARE DIRECTED AGAINST THE COMMON ORDER DATED 03-02-2016 OF THE CIT(A )-4, PUNE RELATING TO THE ASSESSMENT YEARS 2002-03, 2003-04, 2005 -06 & 2006-07 RESPECTIVELY. SINCE IDENTICAL GROUNDS HAVE BEEN TAKEN BY THE REVENUE IN ALL THESE APPEALS, THEREFORE, THESE WERE H EARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER. 2. FIRST I TAKE UP ITA NO.1073/PN/2016 FOR A.Y. 2002-03 AS THE LEAD CASE. GROUNDS RAISED BY THE REVENUE ARE AS UNDER : 1. WHETHER ON THE FACT AND IN CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD.CIT(A) IS CORRECT IN DELETING THE DISALLO WANCE OF DEDUCTION U/S.80IA OF THE I.T. ACT, 1961 BY FOLLOWING THE DECI SION OF HONBLE ITAT IN ITA NOS. 740 TO 744/PN/2010 DATED 29-05-2015 WITHOUT GOING INTO THE MERITS OF THE CASE? / DATE OF HEARING :24.08.2016 / DATE OF PRONOUNCEMENT:26.08.2016 2 ITA NOS.1073,1074, 1076 & 1077/PN/2016 2. FOR THIS AND SUCH OTHER REASONS AS MAY BE URGED AT TH E TIME OF HEARING, THE ORDER OF THE CIT(A) MAY BE VACATED AND THAT OF THE AO BE RESTORED. 3. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER O R DELETE ANY OF THE ABOVE GROUNDS OF APPEAL DURING THE COURSE OF APPE LLATE PROCEEDINGS BEFORE THE HONBLE TRIBUNAL. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF MANUFACTURING P LASTIC MOLDED PRODUCTS. IT HAD FILED ITS RETURN OF INCOME ON 31-1 0-2002 DECLARING TOTAL INCOME OF RS.1,58,562/- WHICH WAS PROCESSED U/S.143(1). SUBSEQUENTLY, THE AO NOTED THAT THE GROSS PROFIT OF THE ASSESSEE INCLUDES INCOME OF RS.11,79,686/- FROM WINDMILL ACTIVITY, I.E. GENERATION OF POWER. THERE WERE NO SEPARATE EXPENSES INCURRED BY THE ASSESSEE FOR EARNING THESE RECEIPTS. FU RTHER, FROM THE SCHEDULE OF FIXED ASSETS, THE AO OBSERVED THAT THE ASSESSEE HAS CLAIMED DEPRECIATION ON THE WINDMILL AS PER THE PROVISIONS O F THE I.T. ACT. HE OBSERVED THAT IF THE WINDMILL INCOME FOR THIS Y EAR SHOWN BY THE ASSESSEE IS SET OFF AGAINST CARRIED FORWARD DEPRECIATION LOSS, THERE WAS A NET LOSS AND ACCORDINGLY THE ASSESSEE WAS NOT ENTITLED TO CLAIM DEDUCTION U/S.80IA TO THE EXTENT OF RS.11,79,686/-. THEREFORE, THE AO HAD REOPENED THE ASSESSMENT U/S.147 OF THE I.T. ACT BY WAY OF ISSUE OF NO TICE U/S.148. THEREAFTER, THE AO IN THE ORDER PASSED U/S.143(3 )/147 ORDER DATED 25-11-2009 DETERMINED THE TOTAL INCOME AT RS.13,38,250/- BY DISALLOWING THE CLAIM OF DEDUCTION U/S.80IA A T RS.11,79,686/-. WHILE DOING SO HE HELD THAT AS PER THE PRO VISIONS OF SECTION 80IA(5) THE PROFITS AND GAINS OF AN ELIGIBLE BUSINESS FOR THE PURPOSE OF DETERMINING THE QUANTUM OF DEDUCTION U/S.8 0IA FOR THE ASSESSMENT YEAR IMMEDIATELY SUCCEEDING THE INITIAL ASS ESSMENT YEAR OR ANY SUBSEQUENT YEAR WAS REQUIRED TO BE COMPU TED AS IF 3 ITA NOS.1073,1074, 1076 & 1077/PN/2016 SUCH ELIGIBLE BUSINESS WERE THE ONLY SOURCE OF INCOME OF T HE ASSESSEE DURING THE PREVIOUS YEAR RELEVANT TO THE INITIAL ASSESSMENT YEAR AND TO EVERY SUBSEQUENT ASSESSMENT YEAR THERETO AND INCLUDING THE ASSESSMENT YEAR FOR WHICH THE DETERMIN ATION IS TO BE MADE. HE WAS OF THE VIEW THAT IN TERMS OF PROVISIO NS OF SECTION 80IA (5) OF THE ACT THE SET OFF OF INCOME FOR THE YEAR AGAINST THE CARRIED FORWARD LOSS DID NOT RESULT INTO ANY POSITIVE INCOME. HE ACCORDINGLY DISALLOWED THE CLAIM OF DEDUCTION U/S.80IA(5). 4. BEFORE CIT(A) THE ASSESSEE CHALLENGED THE VALIDITY OF REOPENING AS WELL AS THE DISALLOWANCE OF DEDUCTION U/S.80IA. HOWEVER, THE LD.CIT(A) ALSO WAS NOT IMPRESSED BY THE ARGU MENTS ADVANCED BY THE ASSESSEE AND DISMISSED THE APPEAL FILED B Y THE ASSESSEE. THE ASSESSEE APPROACHED THE TRIBUNAL AND TH E TRIBUNAL VIDE ITA NOS. 740 TO 744/PN/2010 ORDER DATED 30-03-20 12 SET ASIDE THE MATTER TO THE FILE OF THE CIT(A) WITH A DIRECTION TO DECIDE THE ISSUE OF DEDUCTION U/S.80IA(5) IN THE LIGHT OF THE DECISIO N OF THE TRIBUNAL IN THE CASE OF SERUM INTERNATIONAL LTD. VS. ACIT VID E ITA NOS. 290 TO 292/PN/2010 ORDER DATED 28-09-2011. 5. SUBSEQUENTLY, THE ASSESSEE MOVED A MISCELLANEOUS APPLICATION BEFORE THE TRIBUNAL WITH A REQUEST TO ADJUDICA TE THE ISSUE CHALLENGING THE VALIDITY OF THE REOPENING OF ASSESSMENT U/S.147 OF THE I.T. ACT. THE TRIBUNAL VIDE M.A.NO.03/PN/2014 ORDER DATED 04-12-2014 RECALLED THE ORDER OF THE TRIBUN AL FOR THE LIMITED PURPOSE OF ADJUDICATING THE GROUNDS RELATING TO TH E VALIDITY OF REOPENING OF ASSESSMENT U/S.147 OF THE I.T. ACT. BEFORE THE CIT(A) THE ASSESSEE FILED A COPY OF THE ORDER OF THE TRIBUN AL VIDE ITA NOS. 740 TO 744/PN/2010 ORDER DATED 29-05-2015 A ND SUBMITTED THAT THE TRIBUNAL IN THE SAID ORDER HAS HELD T HAT THE 4 ITA NOS.1073,1074, 1076 & 1077/PN/2016 REOPENING OF CASES FOR A.YRS. 2002-03 TO 2006-07 ARE INV ALID AND APPEAL OF THE ASSESSEE WAS ALLOWED. 6. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE AND FOLLOWING THE ORDER OF THE TRIBUNAL FOR A.YRS. 2002-03 TO 200 6-07 THE LD.CIT(A) HELD THAT SINCE THE REOPENING OF THE CASES U /S.147 OF THE ACT HAS BEEN SET ASIDE AND THE APPEALS OF THE ASSE SSEE HAVE BEEN ALLOWED THERE REMAINS NO JUSTIFICATION FOR GOING INTO T HE MERITS OF DISALLOWANCE U/S.80IA OF THE ACT MADE BY THE AO. HENCE, SHE HELD THAT ALL THE GROUNDS RAISED IN THE APPEAL HAVE T O BE ADJUDICATED IN FAVOUR OF THE ASSESSEE. 7. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 8. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET SUB MITTED THAT THE APPEALS FILED BY THE REVENUE ARE INFRUCTUOUS SIN CE THE REASSESSMENT PROCEEDINGS HAVE BEEN HELD TO BE INVALID BY THE ORDER OF THE TRIBUNAL. 9. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HA ND FAIRLY CONCEDED THAT THE TRIBUNAL HAS HELD THE REASSESSM ENT PROCEEDINGS AS INVALID. 10. I HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND THE CIT(A) AND T HE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. I FIND IN THE INSTANT CASE THE AO PASSED THE ORDER U/S.143(3)/147 ON 25-11-2009 DISALLOW ING THE CLAIM OF DEDUCTION U/S.80IA OF THE I.T. ACT. IN THE FIRST ROUND OF LITIGATION, THE CIT(A) UPHELD THE ACTION OF THE AO. BEFORE THE TRIBUNAL THE ASSESSEE HAD RAISED TWO ISSUES, I.E. (A) VALIDITY OF 5 ITA NOS.1073,1074, 1076 & 1077/PN/2016 REASSESSMENT PROCEEDINGS AND (B) DISALLOWANCE OF CLAIM OF DEDUCTION U/S.80IA. I FIND THE TRIBUNAL VIDE ORDER DATED 30-03- 2012 VIDE ITA NOS. 740 TO 744/PN/2010 HAD DECIDED ONL Y THE SECOND ISSUE AND HAD SET ASIDE THE MATTER TO THE FILE OF THE CIT(A) TO DECIDE THE ISSUE AFRESH IN THE LIGHT OF THE DECISION IN TH E CASE OF SERUM INTERNATIONAL LTD. VS. ACIT. THEREAFTER, THE ASSES SEE FILED A M.A. BEFORE THE TRIBUNAL WITH A REQUEST TO ADJUDICATE THE GROUND RELATING TO THE VALIDITY OF REASSESSMENT PROCEEDINGS. THE TRIBUNAL VIDE M.A. NO.03/PN/2014 ORDER DATED 04-12-2014 RECALLED T HE ORDER OF THE TRIBUNAL. SUBSEQUENTLY, THE TRIBUNAL VIDE ITA NOS. 740 TO 744/PN/2010 ORDER DATED 29-05-2015 HELD THAT THE REASSESSMENT PROCEEDINGS INITIATED FOR A.YRS. 2002-03 TO 2 006-07 ARE INVALID AND ACCORDINGLY ALLOWED THE APPEALS FILED BY THE ASSESSEE. THEREAFTER, THE CIT(A) IN THE IMPUGNED ORDER ALLO WED THE APPEALS OF THE ASSESSEE HOLDING THAT SINCE THE REOPENING OF THE CASE U/S.147 OF THE ACT HAS BEEN SET ASIDE AND THE AP PEALS OF THE ASSESSEE HAVE BEEN ALLOWED, THEREFORE, THERE REMAINS NO JUSTIFICATION FOR GOING INTO THE MERIT OF DISALLOWANCE U/S.80IA OF THE ACT MADE BY THE AO. SINCE THE REASSESSMENT PROCEEDING S HAVE BEEN HELD TO BE INVALID, THEREFORE, THERE WAS NO NECESSITY ON THE PART OF THE CIT(A) TO GO INTO THE MERITS OF THE CASE BEING ACADEMIC. THEREFORE, THE GROUNDS RAISED BY THE REVENUE IN MY OPINIO N BECOME INFRUCTUOUS. ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 11. IDENTICAL GROUNDS HAVE BEEN TAKEN BY THE REVENUE IN ITA NOS. 1074/PN/2016, 1076/PN/2016 AND 1077/PN/2016. FOLLOWING THE ABOVE REASONINGS THE GROUNDS RAISED BY THE REVENUE IN ALL THE ABOVE APPEALS ARE ALSO DISMISSED. 6 ITA NOS.1073,1074, 1076 & 1077/PN/2016 12. IN THE RESULT, ALL THE 4 APPEALS FILED BY THE REVENUE A RE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 26-08-2016. SD/- ( R.K. PANDA ) ACCOUNTANT MEMBER PUNE ; DATED : 26 TH AUGUST, 2016. '# $# / COPY OF THE ORDER FORWARDED TO : / BY ORDER , // TRUE COPY // // $ % //TRUE COPY // // &' % * / SR. PRIVATE SECRETARY *, / ITAT, PUNE 1. / THE APPELLANT 2. / THE RESPONDENT 3. THE CIT (A) - 4 , PUNE 4. THE CIT-4, PUNE 5. $ %%* , * , SMC BENCH / DR, ITAT, SMC BENCH PUNE; 6. 2 / GUARD FILE.