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

ITA 1075/PUN/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 0996 (ITAT-PUNE)
• Duration Of Justice: 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2004-2005
• 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

] IQ.KS ] IQ.KS ] IQ.KS ] IQ.KS IQ.KS IQ.KSIQ.KS IQ.KS IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE , . . , # BEFORE MS. SUSHMA CHOWLA, JM AND SHRI R.K. PANDA, AM . / ITA NO.1075/PN/2016 % % / ASSESSMENT YEAR : 2004-05 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 : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 03-02-2016 OF THE CIT(A)-4, PUNE RELATING TO THE ASSESSMENT YEAR 2004-05. 2. 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 DISA LLOWANCE OF DEDUCTION U/S.80IA OF THE I.T. ACT, 1961 BY FOLLOWIN G THE DECISION OF HONBLE ITAT IN ITA NOS. 740/744/PN/2010 DATED 29 -05- 2015 WITHOUT GOING INTO THE MERITS OF THE CASE? 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 VAC ATED AND THAT OF THE AO BE RESTORED. / DATE OF HEARING :25.08.2016 / DATE OF PRONOUNCEMENT:31.08.2016 2 ITA NO.1075/PN/2016 3. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER O R DELETE ANY OF THE ABOVE GROUNDS OF APPEAL DURING THE COURSE OF APPELLATE 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 PLASTIC MOLDED PRODUCTS. IT HAD FILED ITS RETURN OF INCOME O N 01-11-2004 DECLARING TOTAL INCOME OF RS.30,69,990/- WHICH WAS PROCESSED U/S.143(1). SUBSEQUENTLY, THE AO NOTED THAT THE GROSS PROFIT OF THE ASSESSEE INCLUDES INCOME OF RS.22,59,223/- FROM WINDMILL ACTIVITY, I.E. GENERATION OF POWER. THERE WERE SEPARATE EXPENSES TO THE TUNE OF RS.2,23,657/- INCURRED BY THE ASSESSEE FOR EARNING THESE RECEIPTS. THE ASSESSEE HAS CLAIMED DEDUCTION OF RS.21,27,435/- U/S.80IA OF THE I.T. ACT, 1961. FURTHER, FRO M THE SCHEDULE OF FIXED ASSETS, THE AO OBSERVED THAT THE ASSESSEE HAS CLAIMED DEPRECIATION ON THE WINDMILL AS PER TH E PROVISIONS OF THE I.T. ACT. HE OBSERVED THAT IF THE WINDMILL INCOME FOR THIS YEAR SHOWN BY THE ASSESSEE IS SET OFF AGA INST CARRIED FORWARD DEPRECIATION LOSS OF RS.72,17,196/-, THERE WA S A NET LOSS AND ACCORDINGLY THE ASSESSEE WAS NOT ENTITLE D TO CLAIM DEDUCTION U/S.80IA. THEREFORE, THE AO HAD REOPENED THE ASSESSMENT U/S.147 OF THE I.T. ACT BY WAY OF ISSUE OF NOTICE U/S.148. THEREAFTER, THE AO IN THE ORDER PASSED U/S.143(3)/147 ORDER DATED 25-11-2009 DETERMINED THE TO TAL INCOME AT RS.21,27,435/- BY DISALLOWING THE CLAIM OF DEDUCTION U/S.80IA. WHILE DOING SO HE HELD THAT AS PER T HE PROVISIONS OF SECTION 80IA(5) THE PROFITS AND GAINS OF AN ELIG IBLE BUSINESS FOR THE PURPOSE OF DETERMINING THE QUANTUM OF DEDUCTION U/S.80IA FOR THE ASSESSMENT YEAR IMMEDIATELY 3 ITA NO.1075/PN/2016 SUCCEEDING THE INITIAL ASSESSMENT YEAR OR ANY SUBSEQUENT YEAR WAS REQUIRED TO BE COMPUTED AS IF SUCH ELIGIBLE BUSINESS WE RE THE ONLY SOURCE OF INCOME OF THE ASSESSEE DURING THE PR EVIOUS YEAR RELEVANT TO THE INITIAL ASSESSMENT YEAR AND TO EVER Y SUBSEQUENT ASSESSMENT YEAR THERETO AND INCLUDING THE ASSESSMENT YEAR FOR WHICH THE DETERMINATION IS TO BE MA DE. HE WAS OF THE VIEW THAT IN TERMS OF PROVISIONS OF SECTION 80IA (5) OF THE ACT THE SET OFF OF INCOME FOR THE YEAR AGAINST T HE 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 ARGUMENTS ADVANCED BY THE ASSESSEE AND DISMISSED THE APPEAL FILED BY THE ASSESSEE. THE ASSESSEE APPROACHED T HE TRIBUNAL AND THE TRIBUNAL VIDE ITA NOS. 740 TO 744/PN/20 10 ORDER DATED 30-03-2012 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 DECISION OF THE TRIBUNAL IN THE CASE OF SERUM INTERNATIONAL LTD. VS. ACIT VIDE ITA NOS. 29 0 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 TRIBUNAL FOR THE LIMITED PURPOSE OF ADJUDICATIN G 4 ITA NO.1075/PN/2016 THE GROUNDS RELATING TO THE VALIDITY OF REOPENING OF ASSESS MENT U/S.147 OF THE I.T. ACT. BEFORE THE CIT(A) THE ASSESSEE FILED A COPY OF THE ORDER OF THE TRIBUNAL VIDE ITA NOS. 740 TO 744/PN/2010 ORDER DATED 29-05-2015 AND SUBMITTED THA T THE TRIBUNAL IN THE SAID ORDER HAS HELD THAT THE REOPENING OF CASES FOR A.YRS. 2002-03 TO 2006-07 ARE INVALID 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 CASE U/S.147 OF THE ACT HAS BEEN SET ASIDE AND THE APPEALS O F THE ASSESSEE HAVE BEEN ALLOWED THERE REMAINS NO JUSTIFICATION FOR GOING INTO THE MERITS OF DISALLOWANCE U/S.80IA OF THE ACT MA DE BY THE AO. HENCE, SHE HELD THAT ALL THE GROUNDS RAISED IN THE APPEAL HAVE TO 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 SUBMITTED THAT THE APPEAL FILED BY THE REVENUE IS INFRUCTUO US SINCE THE REASSESSMENT PROCEEDINGS HAVE BEEN HELD TO B E 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. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOT H THE SIDES, PERUSED THE ORDERS OF THE AO AND THE CIT(A) A ND THE 5 ITA NO.1075/PN/2016 PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE FIND IN THE INSTANT CASE THE AO PASSED THE ORDER U/S.143(3)/147 ON 25-11-2009 DISALLOWING THE CLAIM OF DEDUCTION U/S.80IA OF TH E I.T. ACT. IN THE FIRST ROUND OF LITIGATION, THE CIT(A) UPHELD T HE ACTION OF THE AO. BEFORE THE TRIBUNAL THE ASSESSEE HAD R AISED TWO ISSUES, I.E. (A) VALIDITY OF REASSESSMENT PROCEEDINGS AND (B ) DISALLOWANCE OF CLAIM OF DEDUCTION U/S.80IA. WE FIND THE TRIBUNAL VIDE ORDER DATED 30-03-2012 VIDE ITA NOS. 740 T O 744/PN/2010 HAD DECIDED ONLY THE SECOND ISSUE AND HAD SET ASIDE THE MATTER TO THE FILE OF THE CIT(A) TO DECIDE THE IS SUE AFRESH IN THE LIGHT OF THE DECISION IN THE CASE OF SERUM INTERNATIONAL LTD. VS. ACIT. THEREAFTER, THE ASSESSEE FILED A M.A. BEFORE THE TRIBUNAL WITH A REQUEST TO ADJUDICATE TH E GROUND RELATING TO THE VALIDITY OF REASSESSMENT PROCEEDING S. THE TRIBUNAL VIDE M.A. NO.03/PN/2014 ORDER DATED 04-12-2014 RECALLED THE ORDER OF THE TRIBUNAL. SUBSEQUEN TLY, THE TRIBUNAL VIDE ITA NOS. 740 TO 744/PN/2010 ORDER DATE D 29-05-2015 HELD THAT THE REASSESSMENT PROCEEDINGS INITIA TED FOR A.YRS. 2002-03 TO 2006-07 ARE INVALID AND ACCORDINGLY ALLOWED THE APPEALS FILED BY THE ASSESSEE. THEREAFTER, THE CIT(A) IN THE IMPUGNED ORDER ALLOWED THE APPEAL OF THE ASSESSEE HOLDING THAT SINCE THE REOPENING OF THE CASE U/ S.147 OF THE ACT HAS BEEN SET ASIDE AND THE APPEAL OF THE ASS ESSEE HAS BEEN ALLOWED, THEREFORE, THERE REMAINS NO JUSTIFICATION FO R GOING INTO THE MERIT OF DISALLOWANCE U/S.80IA OF THE ACT MA DE BY THE AO. SINCE THE REASSESSMENT PROCEEDINGS HAVE BE EN HELD TO BE INVALID, THEREFORE, THERE WAS NO NECESSITY ON TH E PART OF THE CIT(A) TO GO INTO THE MERITS OF THE CASE BE ING 6 ITA NO.1075/PN/2016 ACADEMIC. THEREFORE, THE GROUNDS RAISED BY THE REVENUE IN OUR OPINION BECOME INFRUCTUOUS. ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31-08-2016. SD/- SD/- ( SUSHMA CHOWLA ) ( R.K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER IQ.KS PUNE ; DATED : 31 ST AUGUST, 2016. LRH'K ' (*+ ,+ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. % ( ) - THE CIT-V, PUNE 4. % S / THE JCIT, RANGE-10, PUNE 5. ( ++, , , , IQ.KS / DR, ITAT, A PUNE; 6. 0 / GUARD FILE. / BY ORDER , // TRUE COPY // ( + //TRUE COP 23 + , / SR. PRIVATE SECRETARY ,, IQ.KS / ITAT, PUNE