Assistant Commissioner of Income tax., Davangere V. M/s BS Channabasappa & sons, Davangere

ITA 1154/BANG/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0198 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 10 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 18-07-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 10-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: DR P K SRIHARI
• Keywords: Depreciation; Opportunity of being heard; Unabsorbed depreciation

Judgement Text

ITA NO. 1154 TO 1159/B/2014 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH A, BANGALORE BEFORE SHRI A.K. GARODIA, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYRAGHAVAN, JUDICIAL MEMBER ITA NOS. 1154 TO 1156/B/2014 ASSESSMENT YEARS : 2006 07 TO 2008 09 M/S BS. CHANNABASAPPA & SONS, KALIKA DEVI ROAD, DEVANGERE PAN AADFB0361L VS THE ACIT, CIRCLE 1, DEVANGERE (RESPONDENT) (APPELLANT) AND ITA NO. 1157 TO 1159/B/2014 ASSESSMENT YEAR 2006 07 TO 2008 09 M/S BSC TEXTILES, KALIKA DEVI ROAD, DEVANGERE PAN AAEFB9263A VS THE ACIT, CIRCLE 1, DEVANGERE (RESPONDENT) (APPELLANT) SHRI V. SRINIVASAN, ADVOCATE ASSESSEE BY DR. P. K. SRIHARI, ADDL. CIT REVENUE BY 18/07/2016 DATE OF HEARING 20/07/2016 DATE OF PRONOUNCEMENT O R D E R PER A. K. GARODIA, AM. ALL THESE SIX APPEALS ARE FILED BY TWO DIFFERENT BU T CONNECTED ASSESSES FOR A. YS. 2006 07 TO 2008 09 AND A COMMON ISSUE IS IN VOLVED IN THESE APPEALS. THEREFORE, ALL THESE APPEALS WERE HEARD TOGETHER AN D ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NO. 1154 TO 1159/B/2014 2 THE ONLY ISSUE INVOLVED IN THESE APPEALS IS REGARDI NG COMPUTATION OF DEDUCTION ALLOWABLE TO THE ASSESSEES U/S 80IA AFTER INVOKING THE PROVISIONS OF SUB SECTION (5) OF SECTION 80IA. THE CASE OF THE A.O. IS THIS THAT IN THE FIRST YEAR WHEN THE WIND MILLS WERE PUT INTO USE, 100% DEPRECIATION IS ALLOW ABLE AND THEREFORE, AS PER SECTION 80IA (5), EVEN IF SUCH DEPRECIATION IS ADJU STED IN THE PRECEDING YEARS AGAINST OTHER INCOMES, UNABSORBED DEPRECIATION OF W IND MILL UNITS HAS TO BE REDUCED FROM THE INCOME OF THE WIND MILL UNITS IN T HE RELEVANT YEAR TO THE EXTENT IT WAS NOT SET OFF AGAINST THE PROFIT OF THE ELIGIBLE UNIT AND WHEN THIS IS DONE, THERE IS NO PROFIT IN THE ELIGIBLE UNIT AND THEREFORE, NO DE DUCTION IS ALLOWABLE U/S 80IA. 2. DEDUCTION WAS ALLOWED BY CIT (A) BY FOLLOWING TH E TRIBUNAL ORDER RENDERED IN THE CASE OF SWARNGIRI WIRE INSULATION PVT. LTD. VS. ITO IN ITA NO. 200/BNG/2010 DATED 21.05.2010. NOW THE REVENUE IS I N APPEAL. 3. LEARNED DR OF THE REVENUE SUPPORTED THE ASSESSME NT ORDER WHEREAS LEARNED AR OF THE ASSESSEE SUPPORTED THE ORDER OF CIT (A). HE ALSO SUBMITTED THAT THIS ISSUE IS NOW COVERED IN FAVOUR OF THE ASSESSEE BY T HE JUDGMENT OF HONBLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF CIT VS . SHRI ANIL H. LAD IN ITA NO. 176 OF 2011 DATED 05.02.2014. HE SUBMITTED A COPY O F THIS JUDGMENT AND POINTED OUT THAT IN THIS CASE, IT IS NOTED BY HONBLE KARNA TAKA HIGH COURT THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT O F HONBLE MADRAS HIGH COURT RENDERED IN THE CASE OF VELAYUDHASWAMY SPINNING MIL LS (P) LTD. VS. ACIT AS REPORTED IN 38 DTR 57. 4. IN THE REJOINDER, IT WAS SUBMITTED BY THE LEARNE D DR OF THE REVENUE THAT EVEN AS PER THIS JUDGMENT OF HONBLE KARNATAKA HIGH COUR T RENDERED IN THE CASE OF CIT ITA NO. 1154 TO 1159/B/2014 3 VS. SHRI ANIL H. LAD (SUPRA), THE LOSSES OF THE ELI GIBLE UNIT FOR THE YEARS BEGINNING FROM THE INITIAL ASSESSMENT YEAR HAS TO BE BROUGHT FORWARD AND THE LOSSES OF EARLIER YEARS PRIOR TO INITIAL ASSESSMENT YEAR WHICH WERE A LREADY SET OFF AGAINST OTHER INCOME OF THE ASSESSEE CANNOT BE BROUGHT FORWARD AN D SET OFF AGAINST THE INCOME OF THE ELIGIBLE BUSINESS AND THESE FACTS ARE TO BE EXA MINED AS TO WHICH YEAR IS THE INITIAL ASSESSMENT YEAR AND WHETHER THE LOSS OF ELI GIBLE BUSINESS IN AN EARLIER YEAR WAS ACTUALLY SET OFF AGAINST THE INCOME OF NON ELIG IBLE BUSINESS AND THEN ONLY IT CAN BE HELD THAT NO B/F LOSS OF THE ELIGIBLE BUSINESS I S TO BE SET OFF IN THE PRESENT THREE YEARS. HE SUBMITTED THAT THEREFORE, THE MATTER MAY BE RESTORED BACK TO CIT (A) FOR A FRESH DECISION IN THE LIGHT OF THIS JUDGMENT OF H ONBLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF CIT VS. SHRI ANIL H. LAD (S UPRA). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE RA TIO OF THE JUDGMENT OF HONBLE KARNATAKA HIGH COURT RENDERED IN THE CASE O F CIT VS. SHRI ANIL H. LAD (SUPRA) IS THIS THAT WHEN THE ASSESSEE EXERCISES TH E OPTION, ONLY LOSSES OF THE YEARS BEGINNING FROM THAT INITIAL ASSESSMENT YEAR ALONE A RE TO BE BROUGHT FORWARD AND NO LOSSES OF EARLIER YEARS WHICH WERE ALREADY SET OFF AGAINST INCOME OF THE ASSESSEE IS TO BE BROUGHT FORWARD. HENCE IT HAS TO BE SEEN AS T O IN WHICH YEAR, THE ASSESSEES IN THE PRESENT CASE EXERCISED ITS OPTION IN THE PRESEN T TWO CASES AND ACCORDINGLY, WHICH YEAR IS THE INITIAL ASSESSMENT YEAR IN THESE TWO CASES. THIS FACT IS NOT AVAILABLE ON RECORD. THEREAFTER, IT IS ALSO TO BE S EEN THAT IF THE INITIAL ASSESSMENT YEAR IS NOT THE FIRST YEAR IN WHICH THE WIND MILLS WERE PUT TO USE THEN WHETHER OTHER INCOMES OF THE ASSESSEE WAS SUFFICIENT DURING THE Y EARS PRIOR TO THE INITIAL ASSESSMENT YEAR TO ABSORB THE LOSS OF THE WIND MILL UNITS BECAUSE THEN ONLY IT CAN BE SAID THAT THE LOSS OF ELIGIBLE BUSINESS OF THE P ERIOD PRIOR TO INITIAL ASSESSMENT YEAR WAS ACTUALLY SET OFF AND THEREFORE, NO LOSS OF SUCH PRIOR PERIOD IS TO BE SET OFF ITA NO. 1154 TO 1159/B/2014 4 AGAINST INCOME OF THE WIND MILL UNITS IN THE INITIA L ASSESSMENT YEAR OR IN A SUBSEQUENT YEAR. THESE FACTS ARE ALSO NOT AVAILABLE ON RECORD. THEREFORE, WE FEEL IT PROPER TO RESTORE THIS MATTER BACK TO CIT (A). ACC ORDINGLY, WE SET ASIDE THE ORDERS OF CIT (A) IN BOTH CASES IN ALL THREE ASSESSMENT YE ARS AND RESTORE THE MATTER BACK TO HIS FILE FOR A FRESH DECISION IN THE LIGHT OF AB OVE DISCUSSION AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO BOTH SIDES. IN THE RESULT, ALL THESE SIX APPEALS OF THE REVENU E ARE ALLOWED FOR STATISTICAL PURPOSES. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) (ASHA VIJAYRAGHAVAN) (A.K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: /07/2016 PLACE: BANGALORE AM* COPY : TO 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., BANGALORE ASSTT. REGISTRAR, ITAT, BANGALORE ITA NO. 1154 TO 1159/B/2014 5 1. DATE OF DICTATION .. 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P. S. .. 4 DATE ON WHICH THE ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT .. 5. DATE ON WHICH THE ORDER COMES BACK TO THE SR. P.S. .. 6. DATE OF UPLOADING THE ORDER ON WEBSITE .. 7. IF NOT UPLOADED, FURNISH THE REASON FOR DOING SO . 8. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 9. DATE ON WHICH ORDER DOES FOR XEROX & ENDORSEMENT . 10. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK. 11 THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGIST RAR FOR SIGNATURE ON THE ORDER. 12 THE DATE ON WHICH THE FILE GOES TO THE DISPATCH SEC TION FOR DISPATCH OF THE TRIBUNAL ORDER 13 DATE OF DISPATCH OF ORDER