DCIT, CHENNAI V. Ucal Fuel Systems Ltd., CHENNAI

ITA 1107/CHNY/2015

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9887 (ITAT-CHENNAI)
• Duration Of Justice: 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-06-2015
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 11-05-2015
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN
• Assessee Lawyers: S SRIDHAR
• Keywords: Depreciation; Revised return; Unabsorbed depreciation
• Section: 143(3); 147

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI ... , . , , BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NOS.1107 & 1108 /MDS./2015 ( ! '! / ASSESSMENT YEARS :2005-06 & 2006-07) THE DY. COMMISSIONER OF INCOME TAX,COMPANY CIRCLE -3(2) CHENNAI. 600 034 VS. M/S.UCAL FUEL SYSTEMS LTD., RAHEJA TOWERS, UNIT 705, NO.177,ANNA SALAI, CHENNAI. PAN AAACU 0541 K ( / APPELLANT ) ( / RESPONDENT ) #$ % & / APPELLANT BY : MR.P.RADHAKRISHNAN, JCIT D.R '(#$ % & / RESPONDENT BY : MR.S.SRIDHAR, ADVOCATE ) * % +, / DATE OF HEARING : 22.06.2015 -' % +, /DATE OF PRONOUNCEMENT : 26.06.2015 / O R D E R PER A.MOHAN ALANKAMONY , ACCOUNTANT MEMBER: THESE TWO APPEALS ARE FILED BY THE REVENUE, AGGRI EVED BY THE SEPARATE ORDER OF THE LEARNED COMMISSIONER OF INCOM E TAX(A)-11, CHENNAI BOTH ORDER DATED 29.12.2014 & PASSED UNDE R SECTION- 143(3) READ WITH SECTION 147 & 250 OF THE ACT IN OLD ITA NO.1145/13-14 & NEW ITA NO.422/CIT(A)-11/2013-14 FO R ASSESSMENT ITA NOS.1107 & 1108/MDS/2015 2 YEAR 2005-06 AND IN OLD ITA NO.1442/13-14 & NEW ITA NO.528/CIT(A)-11/2013-14 FOR ASSESSMENT YEAR 2006-0 7. SINCE THE ISSUES IN BOTH THE APPEALS ARE COMMON IN NATURE, TH EY ARE CLUBBED & HEARD TOGETHER AND DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE REVENUE HAS RAISED THREE IDENTICAL & ELABOR ATE GROUNDS IN BOTH THE APPEALS, HOWEVER THE CRUX OF THE ISSUE IS THAT THE REVENUE IS AGGRIEVED BY THE ORDER OF THE LD. CIT (A), WHO HAD ERRED IN ALLOWING DEDUCTION US/ 80-IA OF THE ACT FOLLOWING THE DECISI ON OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF VELAYUDHAS WAMY SPINNING MILLS (P) LTD VS. ACIT REPORTED IN 231 CTR (MAD.) 3 68 THOUGH THE SLP FILED BY THE REVENUE BEFORE THE HONBLE APEX CO URT IS PENDING BY HOLDING AS FOLLOWS:- I) EACH ELIGIBLE UNIT OF THE INDUSTRIAL UNDERTAKIN G HAS TO BE CONSIDERED AS IF SUCH ELIGIBLE BUSINESS WHERE THE ONLY SOURCE OF INCOME OF THE ASSESSEE DURING THE PREVIOUS YEAR RELEVANT TO THE I NITIAL ASSESSMENT YEAR AND TO EVERY SUBSEQUENT ASSESSMENT YEAR UPTO T HE PERIOD PRESCRIBED UNDER THE ACT FOR THE BENEFIT OF SECTION 80IA OF THE ACT. ITA NOS.1107 & 1108/MDS/2015 3 II) THAT THE INITIAL ASSESSMENT YEAR REFERRED TO SE CTION-80-IA(5) OF THE ACT WOULD MEAN THE YEAR IN WHICH THE ASSESSEE OPTS IN SELECTING THE YEAR OF CLAIMING RELIEF U/S.80-IA OF THE ACT. III) THAT THE UNABSORBED DEPRECIATION AND CARRY FO RWARD LOSSES OF THE EARLIER YEARS WHICH HAD ALREADY BEEN SET OFF AGAINS T THE OTHER INCOME CANNOT BE NOTIONALLY CARRY FORWARD AND TAKEN INTO C ONSIDERATION FOR THE PURPOSE OF COMPUTATION OF DEDUCTION U/S.80-IA O F THE ACT. 3. THE ASSESSEE IS A COMPANY, ENGAGED IN THE BUSI NESS OF MANUFACTURING AND SALE OF CARBURETORS AND FUEL PUMP S FOR TWO AND FOUR WHEELERS, FILED ITS REVISED RETURN OF INCOME F OR THE ASSESSMENT YEAR 2005-06 ON 30.03.2006 ADMITTING INCOME OF ` 19,47,94,754/- & THE ORIGINAL RETURN OF INCOME FOR THE ASSESSMENT YE AR 2006-07 ON 31.11.2006 ADMITTING INCOME OF ` 36,61,15,170/-. THE CASE WAS TAKEN FOR SCRUTINY AND ASSESSMENT WAS COMPLETED ON 31.12.2010 (A.Y. 2005-06) & ON 26.12.2011 (FOR A.Y. 2006-07) W HEREIN THE LD. A.O DISALLOWED THE DEDUCTION U/S. 80-IA OF THE ACT ON WINDMILLS. 3.1. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS OBSERVED BY THE LD. ASSESSING OFFICER THAT THE ASSESSEE HAD CLAIMED THE ITA NOS.1107 & 1108/MDS/2015 4 DEDUCTION U/S.80-IA OF THE ACT RELYING UPON THE DEC ISION OF THE CASE RENDERED BY THE HONBLE JURISDICTIONAL HIGH COURT I N THE CASE OF VELAYUDHASWAMY SPINNING MILLS (P) LTD VS. ACIT REPO RTED IN 231 CTR (MAD) 368. THE LD. A.O. OPINED THAT SINCE THE R EVENUE IS IN APPEAL AND THE MATTER IS PENDING BEFORE THE HON. AP EX COURT, HE IS JUSTIFIED IN DISALLOWING THE AMOUNT OF ` 58,35,842/- FOR A.Y 2005-06 & ` 52,30,118/- FOR A.Y 2006-07 CLAIMED AS DEDUCTION U /S.80-IA OF THE ACT TOWARDS WINDMILL DIVISION AT PALLADAM UNIT. 4. ON APPEAL BY THE ASSESSEE, LD.CIT (A) DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY FOLLOWING THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF VELAYUDHASWAMY SPINNING M ILLS (P) LTD VS. ACIT REPORTED IN 231 CTR (MAD) 368 [2010] AND THE D ECISION OF CHENNAI TRIBUNAL B BENCH IN ASSESSEES OWN CASE F OR THE ASSESSMENT YEAR 2005-06 IN ITA NO.1487/MDS./2010 VI DE ORDER DATED 21 ST APRIL, 2011 WHEREIN THE LD. ASSESSING OFFICER WA S DIRECTED TO ALLOW THE CLAIM OF DEDUCTION U/S.80-IA OF THE INCOME TAX ACT, 1961. ITA NOS.1107 & 1108/MDS/2015 5 5. BEFORE US, THE LD. D.R ARGUED IN SUPPORT OF THE ORDER OF THE LD. ASSESSING OFFICER. LD. D.R FURTHER SUBMITTED THAT THE LD. ASSESSING OFFICER HAD ARRIVED AT THIS DECISION OUT OF ABUNDAN T CAUTION, BECAUSE THE REVENUE HAS CARRIED THE MATTER BEFORE THE HONB LE APEX COURT AND THE MATTER WAS PENDING. THE LD. A.R. ON THE OT HER HAND, RELIED ON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT & DECISION OF TRIBUNAL IN ASSESSEES OWN CASE VIDE ORDER DATED 21 ST APRIL, 2011 SUPRA AND PRAYED THAT THE ORDER OF THE LD. CIT(A) MAY BE UPHELD. 6. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY PE RUSED THE MATERIALS AVAILABLE ON RECORD. FROM THE FACTS OF THE CASE IT APPEARS THAT THE LD. ASSESSING OFFICER WAS OF THE VIEW THAT SINCE THE REVENUE WAS ON APPEAL AGAINST THE DECISION OF THE HONBLE MADRAS H IGH COURT IN THE CASE VELAYUDHASWAMY SPINNING MILLS P. LTD (SUPRA) BEFORE THE HONBLE APEX COURT, HE NEED NOT FOLLOW THAT DECISION. HE DID NOT REALIZE THAT MERE FILING OF THE SLP BEFORE THE APEX COURT IS NOT A VALID GRO UND FOR NOT FOLLOWING THE JUDGMENT OF THE HONBLE MADRAS HIGH COURT. FURTHER , IT IS NOT THE CASE OF THE REVENUE THAT THE JUDGMENT OF THE HONBLE MADRAS HIGH COURT IN THE CASE VELAYUDHASWAMY SPINNING MILLS P. LTD (SURPA) I S STAYED BY THE ITA NOS.1107 & 1108/MDS/2015 6 HONBLE APEX COURT. IT IS PERTINENT TO MENTION THA T IN THE ABSENCE OF ANY STAY GRANTED BY THE HONBLE APEX COURT AGAINST THE OPERATION OF THE JUDGMENT OF THE HONBLE MADRAS HIGH COURT, ALL THE LOWER JUDICIARIES AS WELL AS QUASI JUDICIAL AUTHORITIES ARE BOUND TO FOLL OW THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT. SINCE THE LD.CI T(A) HAS RIGHTLY FOLLOWED THE DECISION OF THE HONBLE JURISDICTIONAL MADRAS H IGH COURT(SUPRA) FOR THE BOTH THE ASSESSMENT YEARS AND HELD THE ISSUES IN FA VOUR OF THE ASSESSEE, WE DO NOT FIND IT NECESSARY TO INTERFERE WITH THE OR DERS OF THE LD.CIT(A). THEREFORE WE HEREBY CONFIRM THE ORDERS OF THE LD. LD. CIT (A). 7. IN THE RESULT, THE APPEALS OF REVENUE FOR BOTH T HE ASSESSMENT YEARS ARE DISMISSED. ORDER PRONOUNCED ON 26 TH JUNE, 2015 AT CHENNAI. SD/- SD/- ( . . . ) (N.R.S.GANESAN) ( . '#$ %' ) (A.MOHAN ALANKAMONY) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 26 TH JUNE, 2015. K S SUNDARAM. % '+./ 0 /'+ /COPY TO: 1. #$ /APPELLANT 2. '(#$ /RESPONDENT 3. ) 1+ () /CIT(A) 4. ) 1+ /CIT 5. /4 '+5 /DR 6. 6! 7* /GF