DCIT, Coimbatore V. G.V.G. Paper Mills (Pvt.) Ltd., Udamalpet

ITA 116/CHNY/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73833 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2006-2007
• Appeal Filed On: 13-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S DAS GUPTA IRS
• Keywords: Depreciation
• Section: 143(3); 148

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI . , . . , ! ' BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER & SHRI S.S. GODARA, JUDICIAL MEMBER ./ I.T.A. NOS.116 &117/MDS/2014 ( / ASSESSMENT YEAR : 2006-2007) THE DEPUTY COMMISSIONER OF INCOME TAX, SALARY CIRCLE I, COIMBATORE. ( #$ /APPELLANT) VS M/S. G.V.G. PAPER MILLS(PVT) LTD., NO.168/2, SIKKANDAR BATCHA STREET, GANDHI NAGAR, UDUMAPLET 642 128. [PAN: AABCG 1438N] ( %&#$ /RESPONDENT) / APPELLANT BY : SHRI. S. DASGUPTA, IRS, JCIT / RESPONDENT BY : NONE /DATE OF HEARING : 19.03.2014 ! /DATE OF PRONOUNCEMENT : 28.03.2014. ' / O R D E R PER SHRI S.S. GODARA, JUDICIAL MEMBER THESE TWO REVENUES APPEALS EMANATE FROM SEPARATE ORDERS, BOTH DATED 30.10.2013, PASSED BY THE COMMISSIONER O F INCOME TAX I.T.A.NOS.116-117/MDS/2014. :- 2 -: (APPEALS)-II, COIMBATORE IN ITA NO.253/11-12 AND IT A NO.124/12-13 RESPECTIVELY FOR ASSESSMENT YEAR 2006-2007, IN PROC EEDINGS UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME TAX ACT 196 1 [IN SHORT THE ACT]. 2. IN THESE TWO APPEALS OF ASSESSMENT YEAR 2006-07 I. E IN ITA NO.116/MDS/2014, THE REVENUE CHALLENGES ORDER OF TH E CIT(A) HOLDING THE ASSESSEE ELIGIBLE FOR DEDUCTION UNDER SECTION 80IA. IN ITA NO.117/MDS/2014 IT IS AGGRIEVED AGAINST ORDER OF TH E LOWER APPELLATE AUTHORITY HOLDING THAT REOPENING IN QUESTION IS INV ALID BEING HIT BY FIRST PROVISO OF SECTION 147 OF THE ACT. IN THE COURSE O F HEARING AS WELL, THE REVENUE REITERATES THE PLEADING AND PRAYS FOR ACCEP TANCE OF BOTH APPEALS. 3. NO ONE HAS COME PRESENT ON BEHALF OF THE ASSESSEE. AN ADJOURNMENT PETITION HAS BEEN MOVED STATING THAT IT S AUTHORIZED REPRESENTATIVE IS OUT OF THE COUNTRY. HOWEVER, THE RE IS NO CLARIFICATION FORTHCOMING AS TO WHO REPRESENTS THE ASSESSEE. IN THESE CIRCUMSTANCES, WE REJECT THIS PETITION AND PROCEED EX-PARTE TO DECIDE THE APPEALS ON MERITS. 4. FIRST WE TAKE UP ITA NO.116/MDS/2014. THE ASSESSEE; A COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING OF PAPER AND I.T.A.NOS.116-117/MDS/2014. :- 3 -: GENERATION OF POWER. ON 22.11.2006, IT HAD FILED I TS RETURN DECLARING AN INCOME OF K3,66,15,563/-. VIDE ORDER DATED 10.6. 2008, THE ASSESSING OFFICER HAD FRAMED REGULAR ASSESSMENT M AKING ADDITION OF K1,00,000/- TOWARDS REPAIRS EXPENSES. 5. AS THE CASE FILE READS, THE ASSESSING OFFICER THERE AFTER FORMED REASONS TO BELIEVE THAT ASSESSEES INCOME LIABLE TO BE TAXED HAD ESCAPED ASSESSMENT ON THE GROUND THAT IT HAD SET OF F LOSS OF WINDMILL UNIT III (K2,04,146/-) AGAINST THE PROFIT OF WINDMI LL UNIT I OF K17,97,809/- AND DID NOT SET OFF LOSS OF WINDMILL U NIT IV OF K2,51,35,226/- AGAINST THE PROFIT OF FIRST UNIT AT THE TIME OF CLAIMING ADDITION UNDER SECTION 80IA. THUS, HE FRAMED RE-ASS ESSMENT VIDE ORDER DATED 31.12.2011 HOLDING THEREIN THAT UNDER SECTION 80IA(5) OF THE ACT, LOSS HAD TO BE SET OFF BEFORE CLAIMING DEDUCTI ON. ACCORDINGLY, HE MADE ADDITION OF K15,93,663/- IN ASSESSEES INCOME. 6. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL. IN THE GROUNDS RAISED BEFORE THE CIT(A), HE PLEADED THREE FOLDED AVERMENTS I.E. REOPENING WAS NOT SUSTAINABLE, IT IS ENTITLED FOR D EDUCTION UNDER SECTION 80IA AND THE ISSUE WAS COVERED BY THE ORDE R OF THE TRIBUNAL IN ASSESSMENT YEARS 2004-05 AND 2005-2006. WE FIND THAT THE CIT(A) HAS AGREED TO ASSESSEES LATTER ARGUMENTS BY OBSERV ING AS FOLLOWS:- I.T.A.NOS.116-117/MDS/2014. :- 4 -: 6.0. I HAVE CONSIDERED THE SUBMISSIONS OF THE ASSESSEE AND THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE HAS RAISED AN OBJECTION REGARDING THE VALI DITY OF THE REOPENING OF THE ASSESSMENT ON THE GROUND TH AT THE REOPENING HAS BEEN MADE AFTER THE LAPSE OF 4 YE ARS AND THAT THERE IS NO FAILURE ON THE PART OF THE ASS ESSEE TO DISCLOSE ANY MATERIAL FACTS. ON GOING THROUGH TH E CASE RECORDS OF THE ASSESSEE IT IS SEEN THAT THE ASSESSMENT WAS COMPLETED ORIGINALLY U/S143(3) ON 10/06/2008 AND SUBSEQUENTLY REOPENED U/S 148 ON 30.3.2011. THEREFORE, THE REOPENING HAS BEEN DONE WITHIN THE 4 YEAR LIMIT AND THE ASSESSEES OBJECTIO NS ARE FACTUALLY INCORRECT. THEREFORE, THIS GROUND IS DIS MISSED AND THE REOPENING IS HELD TO BE IN ORDER. 6.1. COMING TO THE MERITS OF THE CASE, IT IS SEEN T HAT THE ASSESSEE HAS SEVERAL WINDMILL DIVISIONS AND IN THIS YEAR WHILE CLAIMING DEDUCTION U/S 80IA IT HAS NOT S ET OFF OF THE LOSSES FROM WIND MILL FARM DIVISION IV. THE ASSESSING OFFICERS ARGUMENT IS THAT THE DEDUCTIONS SHOULD BE CLAIMED AFTER THE SET OFF OF THE LOSS FRO M THE OTHER WIND MILL DIVISIONS, WHEREAS THE ASSESSEES C LAIM IS THT THE EACH WIND MILL DIVISIONS IS A SEPARATE ENTI TY BY ITSELF AND THE OPTION OF CLAIMING DEDUCTION U/S 80I A LIES WITH THE ASSESSEE. THE ASSESSEE HAS ALSO QUOTED TH E CASE OF SRI VELAYUDHASAMY SPINNING MILLS PVT. LTD ( 231 CTR368) (MADRAS) RENDERED BY THE JURISDICITIONAL HI GH COURT. ON PERUSAL OF THE FACTS OF THE CASE IT IS S EEN THAT THE ASSESSEE IS ENTITLED TO EXERCISE ITS OPTION ON CLAIMING 80IA DEDUCTION IN RESPECT OF DIFFERENT WIND MILL DI VISIONS. THERE IS NO COMPULSION IN THE ACT TO TREAT THE ACTI VITY AS AN AGGREGATE AND COMMON UNIT. FURTHER, THE DECISIO N IN THE CASE OF SRI VELAYUDHASAMY SPINNING MILLS PVT LT D WILL APPLY IN RESPECT OF THE CLAIM FOR THE SET OFF OF LO SSES. THEREFORE THE ASSESSEES APPEAL IS ALLOWED THIS LEAVES THE REVENUE AGGRIEVED. 7. WE HAVE HEARD THE REVENUE AND GONE THROUGH THE CASE FILE. ADMITTEDLY, WHILE GRANTING RELIEF TO ASSESSEE ON ME RITS, THE CIT(A) I.T.A.NOS.116-117/MDS/2014. :- 5 -: ACCEPTED ITS ARGUMENT THAT EACH WIND MILL DIVISION IS A SEPARATE ENTITY IS ITSELF AND OPTION OF CLAIMING DEDUCTION UNDER SE CTION 80IA RESTS WITH THE ASSESSEE. FROM THE STATEMENT OF FACTS FILED BY THE REVENUE, IT IS NOTICED THAT ITS MERE ARGUMENT IS THAT AGAINST THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT, SPECIAL LEAVE PE TITION BEFORE THE APEX COURT IS PENDING. IN OUR VIEW, MERELY BECAUSE THE REVENUES SPECIAL LEAVE PETITION IS PENDING DOES NOT FORM A VALID GRO UND TO ADOPT A DIFFERENT APPROACH IN THE IMPUGNED ASSESSMENT YEAR IN ABSENCE OF ANY DISTINCTION ON FACTS BEING POINTED OUT. IN ASSESSM ENT YEAR 2004-05 (SUPRA) THE ISSUE HAS TRAVELLED UPTO THE TRIBUNAL AND STANDS DECIDED IN ASSESSEES FAVOUR. THUS, IN THE IMPUGNED ASSESS MENT YEAR, WE ADOPT CONSISTENCY AND AFFIRM THE FINDINGS OF THE CI T(A) HOLDING THE ASSESSEE ELIGIBLE FOR DEDUCTION UNDER SECTION 80IA OF THE ACT. THE ITA NO.116/MDS/2014 IS DISMI SSED. 8. NOW, WE COME TO ITA NO.117/MDS/2014. THE RELEVANT F ACTS ARE THAT AFTER FRAMING REASSESSMENT VIDE ORDER DATED 30 .12.2011(SUPRA), THE ASSESSING OFFICER ISSUED ANOTHER REOPENING NOTI CE DATED 31.03.2012. THE ASSESSEE HAD CLAIMED DEDUCTION UND ER SECTION 80IA OF K1,51,88,550/- STATED TO BE IN RESPECT OF ITS TU RBINE DIVISION. PER ASSESSING OFFICER MANUFACTURING IN PAPER INVOLVES V ARIOUS PROCESSES I.T.A.NOS.116-117/MDS/2014. :- 6 -: CONSTITUTED INTO A SEPARATE DIVISION (TURBINE DIVIS ION) WITH THE USE OF FBC BOILERS AND STEAM TURBINE INSTEAD OF OLD BOILER S AND PRESSURE REDUCTION VALVE TO RECOVER ENERGY IN THE STEAM AN D THE ENERGY RECOVERED BY WAY OF ELECTRICITY AND RECYCLED IN THE PAPER DIVISION HAD GIVEN RISE TO AFORESAID RECEIPT. IN RE-ASSESSMENT FINALIZED ON 05.02.2013, HE HELD THAT THIS ARRANGEMENT AMOUNTED TO SPLITTING UP OR RECONSTRUCTION OF ALREADY EXISTING UNIT NOT ENTITLE D FOR DEDUCTION UNDER SECTION 80IA. SO, THIS AMOUNT OF K1,51,88,550/- ST OOD ADDED IN ASSESSEES INCOME. 9. IN ASSESEES APPEAL, THE CIT(A) HAS ACCEPTED ITS AR GUMENT AND HELD THAT RE-OPENING ITSELF IS INVALID BY OBSERVING AS UNDER:- 6.0. I HAVE CONSIDERED THE SUBMISSIONS OF THE APPE LLANT T AND THE MATERIALS AVAILABLE ON RECORD. THE ASSESSEE HA S QUESTIONED THE VALIDITY OF THE REOPENING RELYING ON THE DECISION OF THE SUPREME COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. KELVINATOR OF INDIA LTD. (320 ITR 561). IN THE CASE OF THE ASSESSEE THE ASSESSMENT WAS ORIGINALLY REOPENIN G ON 10/01/2008 TO CONSIDER THE ISSUE OF SET OFF OF CAR RY FORWARD DEPRECIATION IN ORDER TO COMPUTE THE INCOME ELIGIBL E FOR DEDUCTION U/S 80IA. HOWEVER, IT IS NOTICED THAT TH E REOPENING HAS BEEN DONE NOT WITHIN 4 YEARS FROM THE END OF TH E RELEVANT ASSESSMENT YEAR. THERE IS NO FAILURE ON THE PART O F THE ASSESSEE TO DISCLOSE ANY MATERIAL FACTS. IN VIEW O F SAME, THE REOPENING IS BAD IN LAW. SINCE THE REOPENING IS HE LD AS BAD IN LAW THE ISSUE OF APPLICABILITY OF SECTION 80IA IS N OT CONSIDERED ON MERITS. THEREFORE, THE APPEAL IS ALLOWED. THEREFORE, THE REVENUE IS IN APPEAL. I.T.A.NOS.116-117/MDS/2014. :- 7 -: 10. WE HAVE CONSIDERED ARGUMENTS OF THE REVENUE AND GON E THROUGH THE CASE FILE. THERE IS NO DISPUTE THAT TH IS RE-OPENING HAS BEEN TAKEN RECOURSE TO BY THE ASSESSING OFFICER AFT ER FOUR YEARS OF FINALIZING REGULAR ASSESSMENT. UNDER 1 ST PROVISO TO 147, IT IS NECESSARY TO POINT OUT FAILURE ON AN ASSESSEES PA RT IN DISCLOSING FULLY AND TRULY ALL PARTICULARS OF INCOME IN CASE OF REOP ENING AFTER FOUR YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR. IN THE AS SESSMENT ORDER, NO SUCH REASON IS FORTHCOMING. THE CIT(A) HAS TAKEN N OTE OF THIS CRUCIAL FEATURE. IN THE COURSE OF ARGUMENTS, WE HAVE ASKED THE REVENUE TO POINT OUT ANY FAILURE ON ASSESSEES PART BY WAY OF PLACING COGENT MATERIAL ON RECORD AND THE SAME IS NOWHERE FORTHCOM ING. THUS, WE AGREE WITH THE FINDINGS OF THE CIT(A) AND OBSERVE T HAT SINCE THERE IS NO FAILURE ON ASSESSEES PART IN DISCLOSING FULLY A ND TRULY ALL PARTICULARS OF INCOME FOR CLAIMING DEDUCTION UNDER SECTION 80IA , THE ASSESSING OFFICER COULD NOT HAVE REOPENED THE ASSESSMENT AFTE R FOUR YEARS FROM THE END OF THE IMPUGNED ASSESSMENT YEAR. THE RELEV ANT GROUNDS OF APPEAL ARE REJECTED. ITA NO.117/MDS/2014 IS ALSO DI SMISSED. 11. TO SUM UP BOTH THE REVENUES APPEALS ARE DISMISSED. I.T.A.NOS.116-117/MDS/2014. :- 8 -: ORDER PRONOUNCED ON FRIDAY, THE 28 TH OF MARCH, 2014, AT CHENNAI. SD/- SD/- (A.MOHAN ALANKAMONY) ACCOUNTANT MEMBER (S.S. GODARA) JUDICIAL MEMBER DATED:28 TH MARCH, 2014. K.V COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DEPARTMEN TAL REPRESENTATIVE.