Dy. CIT, Pune V. Prima Paper Engg. P.Ltd., Pune

ITA 120/PUN/2013

• Counselvise Citation: 12024514 RSA 2013
• Duration Of Justice: 2 year(s) 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 30-03-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 11-01-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B C MALAKAR
• Keywords: Depreciation; Opportunity of being heard; Unabsorbed depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER, AND SHRI R.K. PANDA, ACCOUNTANT MEMBER. ITA.NOS. 120 AND 121/PN/2013 (ASSESSMENT YEARS : 2007-08 AND 2008-09) DY.CIT, CIRCLE-10, PUNE .. APPELLANT VS. PRIMA PAPER ENGG. PVT. LTD., T-73, MIDC, BHOSARI, PUNE-411026 .. RESPONDENT PAN NO.AABCP1938J ASSESSEE BY : SHRI SHARAD SHAH REVENUE BY : SHRI B.C. MALAKAR DATE OF HEARING : 30-03-2015 DATE OF PRONOUNCEMENT : 31-03-2015 ORDER PER R.K. PANDA, AM : THE ABOVE 2 APPEALS FILED BY THE REVENUE ARE DIRECT ED AGAINST THE SEPARATE ORDERS DATED 06-10-2012 OF THE CIT(A)-V, P UNE RELATING TO ASSESSMENT YEARS 2007-08 AND 2008-09 RESPECTIVELY. SINCE COMMON ISSUES ARE INVOLVED IN BOTH THE APPEALS, THEREFORE, THESE WERE HEAD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON O RDER. ITA NO.120/PN/2013 (A.Y. 2007-08) : 2. GROUNDS OF APPEAL NO.1 TO 4 BY THE REVENUE READ AS UNDER : 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) WAS JUSTIFIED IN HOLDING THAT FOR THE PURPOSE OF SECTI ON 80IA THE YEAR IN WHICH THE ASSESSEE CHOOSES TO CLAIM DEDUCTION HAS TO BE TR EATED AS 'INITIAL ASSESSMENT YEAR? 2 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) WAS JUSTIFIED IN HOLDING THAT PROFIT OF THE' ELIGIBLE BUSINESS HAS TO BE COMPUTED WITHOUT DEDUCTING THEREFROM BROUGHT FORWAR D LOSSES OR UNABSORBED DEPRECIATION PRIOR TO THE INITIAL YEAR OF CLAIM DE HORS THE PROVISION U/S. 80IA(5)OF THE ACT? 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) ERRED IN IGNORING THAT THE ASSESSEE WAS IN POWER GENERAT ION BUSINESS AND HOLDING THAT EACH WINDMILL HAS TO BE TAKEN AS INDEPEN DENT 'ELIGIBLE BUSINESS'. 4. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN HOLDING THAT EACH WINDMILL UNIT HAS TO BE T REATED ON STANDALONE BASIS DE HORS THE SPECIFIC STIPULATION IN SECTION 80IA(5 ) OF THE ACT THAT 'PROFIT AND GAINS OF ELIGIBLE BUSINESS' BEING POWER GEN ERATION BUSINESS HAVE TO BE TAKEN? 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A COMPANY INCORPORATED UNDER THE PROVISIONS OF COMPANIES ACT AND IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF PLASTIC MOULDED PR ODUCTS, WINDMILLS ETC. IT FILED ITS RETURN OF INCOME FOR THE IMPUGNE D ASSESSMENT YEAR ON 31- 10-2007 SHOWING TOTAL INCOME OF RS.3,21,03,243/- . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS CLAIMED A SUM OF RS.45,19,551/- AS DEDUCTION U/S.80 IA ON ACCOUNT OF WINDMILL ACTIVITY OF POWER GENERATION. THE ASSESSI NG OFFICER, FOLLOWING HIS ORDER FOR A.Y. 2006-07 WHICH HAS BEEN UPHELD BY THE CIT(A,) DISALLOWED SUCH CLAIM OF DEDUCTION U/S.80IA. IN AP PEAL THE LD.CIT(A) FOLLOWING HIS ORDER IN THE CASE OF ADVIK HITECH PVT . LTD. FOR A.Y. 2008- 09 ALLOWED THE CLAIM OF DEDUCTION MADE BY THE ASSES SEE. 4. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVE NUE IS IN APPEAL BEFORE US. 5. AFTER HEARING BOTH THE SIDES, WE FIND THE ASSESS ING OFFICER WHILE DISALLOWING THE CLAIM OF DEDUCTION U/S.80IA HAS FOL LOWED THE ORDER OF HIS 3 PREDECESSOR FOR A.Y. 2006-07 WHICH HAS BEEN UPHELD BY THE LD.CIT(A). WE FIND ON AN APPEAL FILED BY THE ASSESSEE FOR A.YR S. 2005-06 AND 2006- 07 THE TRIBUNAL VIDE ITA NOS. 1239 AND 1240/PN/2009 ORDER DATED 24- 08-2011 HAS RESTORED THE ISSUE TO THE FILE OF THE L D.CIT(A) BY OBSERVING AS UNDER: 5. IN THE BACKGROUND OF THE AFORESAID PLEA SET UP BY TH E ASSESSEE, WE HAVE PERUSED THE IMPUGNED ORDER AND FIND THAT THE ASSESSEE HAD SPECIFICALLY RAISED THE ISSUE THAT EACH OF THE WINDMILL INSTALLED WAS LIABLE TO BE CONSIDERED AS A SEPARATE UNIT. IN THE ABSENCE OF ANY DE TERMINATION ON THIS ASPECT, WE DEEM IT FIT AND PROPER TO SET ASIDE THE ORDER O F THE CIT(A) TO DECIDE THE ISSUE RELATING TO THE CLAIM OF THE ASSESSEE U/ S 80IA AFRESH IN ACCORDANCE WITH LAW AND KEEPING IN MIND THE PRECEDENT IN THE A SSESSEE'S OWN CASE. NEEDLESS TO MENTION THAT THE CIT(A) SHALL ADJUDICATE THE ISSUE AFRESH AFTER ALLOWING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. IN THIS MANNER, THE GROUND NOS. 1, 3 AND 4 RAISE B Y THE ASSESSEE IN THE RESPECTIVE APPEALS ARE DISPOSED OF. ALTHOUGH THE ORDER OF HIS PREDECESSORS AS WELL AS T HE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE WAS AVAILABLE BEFOR E HIM, THE LD.CIT(A) HAS NOT AT ALL CONSIDERED THE SAME. UNDER THESE CI RCUMSTANCES AND FOLLOWING THE DECISION OF THE TRIBUNAL IN ASSESSEE S OWN CASE IN THE IMMEDIATELY PRECEDING TWO ASSESSMENT YEARS, WE RES TORE THE ISSUE TO THE FILE OF THE LD.CIT(A) WITH A DIRECTION TO DECIDE TH E ISSUE AFRESH AND IN ACCORDANCE WITH LAW AFTER GIVING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. IT MAY BE PERTINENT TO NOTE HERE THAT AL THOUGH THE ORDER OF THE TRIBUNAL FOR A.YRS. 2005-06 AND 2006-07 WAS SET ASI DE TO THE FILE OF THE CIT(A) IN THE MONTH OF AUGUST 2011, IT WAS BROUGHT TO OUR NOTICE THAT NO ORDER HAS BEEN PASSED BY THE CIT(A) TILL DATE. WE, THEREFORE, DIRECT THE LD.CIT(A) TO DISPOSE OF THE APPEALS WITHIN A PERIOD OF SIX MONTHS FROM THE DATE OF RECEIPT OF THIS ORDER IN HIS OFFICE. T HE ASSESSEE IS ALSO DIRECTED TO FILE A COPY OF THIS ORDER BEFORE THE LD.CIT(A) A ND BRING TO HIS NOTICE ABOUT NON-DISPOSAL OF THE APPEAL. WE HOLD AND DIRE CT ACCORDINGLY. 4 GROUNDS OF APPEAL NO. 1 TO 4 BY THE REVENUE ARE ACC ORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 6. GROUND OF APPEAL NO.5 BY THE REVENUE READS AS UN DER : 5. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS JUSTIFIED IN ALLOWING HIGHER RATE OF DEPRECIATION ON THE ELECTRICAL INSTALLATION BY TREATING THE SAME AS PART OF WINDMILL? 7. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE CLAIMED DEPRECIATION IN RESPECT OF FOLLOWING ITEMS AS PART OF COST OF WIND POWER PLANT AND ALLOWANCE OF DEPRECIATION AT THE RATE APP LICABLE TO THE WINDMILL: A. ALLOCATED DEEMED COST OF LAND B. ALLOCATED DEEMED COST OF CIVIL WORK C. ALLOCATED DEEMED COST OF ELECTRICAL ACCESSORIES DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASS ESSING OFFICER FOLLOWING HIS ORDER FOR A.Y. 2006-07 DISALLOWED THE CLAIM OF DEPRECIATION ON LAND/CIVIL WORK AND ELECTRICAL INST ALLATION USED FOR INSTALLATION OF WINDMILLS. ON THE BASIS OF RE-WORK ING SUBMITTED BY THE ASSESSEE IN THE ABOVE LINE, THE ASSESSING OFFICER D ISALLOWED DEPRECIATION ON LAND AT RS.3,37,740/- AND DEPRECIATION ON ELECT RICAL INSTALLATION AT RS.13,50,000/- BOTH TOTALLING TO RS.16,87,740/-. 8. IN APPEAL THE LD.CIT(A) HELD THAT DEPRECIATION I S NOT ALLOWABLE IN RESPECT OF CIVIL WORK. HOWEVER, HE DIRECTED THE AS SESSING OFFICER TO ALLOW DEPRECIATION IN RESPECT OF THE ELECTRICAL INS TALLATIONS AT THE RATE APPLICABLE TO WIND MILLS HOLDING THE SAME TO BE INT EGRAL PART OF THE WINDMILL. WHILE DOING SO, HE RELIED ON THE DECISIO N OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF POONAWALA FINVEST & AGR O PVT. LTD. VS. ACIT REPORTED IN 118 TTJ (PUNE) 68. 5 9. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVE NUE IS IN APPEAL BEFORE US. 10. AFTER HEARING BOTH THE SIDES, WE DO NOT FIND AN Y INFIRMITY IN THE ORDER OF THE CIT(A) WHO HAS FOLLOWED THE DECISION O F THE PUNE BENCHES OF THE TRIBUNAL IN THE CASE OF POONAWALA FINVEST & AGRO PVT. LTD. (SUPRA). MERELY BECAUSE THE REVENUE HAS PREFERRED AN APPEAL BEFORE THE HONBLE HIGH COURT AGAINST THE DECISION OF THE TRIB UNAL IN THE CASE OF POONAWALA FINVEST & AGRO PVT. LTD. (SUPRA) THE SAME IN OUR OPINION CANNOT BE A GROUND TO REVERSE THE DECISION OF THE C IT(A) IN ABSENCE OF CONTRARY ORDER BROUGHT TO OUR NOTICE AGAINST THE OR DER OF THE TRIBUNAL. IN THIS VIEW OF THE MATTER AND IN ABSENCE OF ANY CONTR ARY MATERIAL BROUGHT TO OUR NOTICE, WE UPHOLD THE ORDER OF THE CIT(A) ON TH IS ISSUE AND THE GROUND RAISED BY THE REVENUE IS DISMISSED. ITA NO. 121/PN/2013 (A.Y. 2008-09 : 11. GROUNDS RAISED BY THE REVENUE ARE AS UNDER : 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LD.CIT(A) WAS JUSTIFIED IN HOLDING THAT FOR THE PURPOSE OF SECTI ON 80IA THE YEAR IN WHICH THE ASSESSEE CHOOSES TO CLAIM DEDUCTION HAS TO BE TR EATED AS 'INITIAL ASSESSMENT YEAR ? 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) WAS JUSTIFIED IN HOLDING THAT PROFIT OF THE ELIGIBLE BUSINESS HAS TO BE COMPUTED WITHOUT DEDUCTING THEREFROM BROUGHT FORWAR D LOSSES OR UNABSORBED DEPRECIATION PRIOR TO THE INITIAL YEAR OF CLAIM DE HORS THE PROVISION U/S. 80IA(5)OF THE ACT? 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) ERRED IN IGNORING THAT THE ASSESSEE WAS IN POWER GENERAT ION BUSINESS AND HOLDING THAT EACH WINDMILL HAS TO BE TAKEN AS INDEPEN DENT 'ELIGIBLE BUSINESS'. 4. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN HOLDING THAT EACH WINDMILL UNIT HAS TO BE T REATED ON STANDALONE BASIS DE HORS THE SPECIFIC STIPULATION IN SECTION 80IA(5 ) OF THE ACT THAT 'PROFIT AND GAINS OF ELIGIBLE BUSINESS' BEING POWER GEN ERATION BUSINESS HAVE TO BE TAKEN? 6 5. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER ANY OF THE ABOVE GROUNDS OF APPEAL. 12. AFTER HEARING BOTH THE SIDES, WE FIND THE ABOVE GROUNDS ARE IDENTICAL TO GROUNDS OF APPEAL NO.1 TO 4 IN ITA NO. 120/PN/2013. WE HAVE ALREADY DECIDED THE ISSUE AND THE GROUNDS RAIS ED BY THE REVENUE HAVE BEEN RESTORED TO THE FILE OF THE CIT(A) FOR FR ESH ADJUDICATION. FOLLOWING THE SAME REASONINGS, WE RESTORE THESE GRO UNDS TO THE FILE OF THE CIT(A) WITH A DIRECTION TO DECIDE THE ISSUE IN THE LIGHT OF THE DIRECTIONS GIVEN THEREIN. THE GROUNDS RAISED BY THE REVENUE A RE ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 13. IN THE RESULT, ITA NO.120/PN/2013 FILED BY THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND ITA NO.121/PN/ 2013 FILED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 31-03-2015. SD/- SD/- (SUSHMA CHOWLA) ( R.K. PAN DA ) JUDICIAL MEMBER ACCOUNTANT MEMBER SATISH PUNE, DATED 31 ST MARCH, 2015 COPY OF THE ORDER IS FORWARDED TO: 1. THE ASSESSEE 2. THE DEPARTMENT 3. THE CIT(A)-V, PUNE 4. THE CIT-V, PUNE 5. THE DR B BENCH, PUNE. 6. GUARD FILE BY ORDER // TRUE COPY // ASSISTANT REGISTRAR, INCOME TAX APPELLATE T RIBUNAL, PUNE