ACIT, Jaipur V. RAJASTHAN STATE ROAD DEVELOPMENT & CONSTRUCTION CORP. LTD., Jaipur

ITA 132/JPR/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9697 (ITAT-JAIPUR)
• Duration Of Justice: 4 year(s) 1 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-03-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 01-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VARINDER MEHTA
• Assessee Lawyers: P C PARWAL CA DHK
• Keywords: Business income; Depreciation; Difference of opinion; Unabsorbed depreciation
• Section: 115JB

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH HKKXPUN] YS[KK LNL; ,OA JH DQY HKKJR] U;KF;D LNL; DS LE{K BEFORE: SHRI BHAGCHAND, AM AND SHRI KUL BHARAT, JM VK;DJ VIHY LA-@ ITA NO. 132/JP/2013 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10. THE ACIT, CIRCLE-6, JAIPUR. CUKE VS. M/S. RAJASTHAN STATE ROAD DEVELOPMENT & CONSTRUCTION CORPN. LTD., SETU BHAWAN, JHALANA DOONGARI, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AABCR 9650 F VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT C.O. NO. 14/JP/2013 (ARISING OUT OF VK;DJ VIHY LA-@ ITA NO. 132/JP/2013) FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10. M/S. RAJASTHAN STATE ROAD DEVELOPMENT & CONSTRUCTION CORPN. LTD., SETU BHAWAN, JHALANA DOONGARI, JAIPUR. CUKE VS. THE ACIT, CIRCLE-6, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AABCR 9650 F VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI VARINDER MEHTA (CIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL (CA) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 01.03.2017. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 03/03/2017. VKNS'K@ ORDER PER SHRI KUL BHARAT, JM. SINCE THERE WAS A DIFFERENCE OF OPINION BETWEEN TH E LEARNED MEMBERS, CONSTITUTING A DIVISION BENCH OF I.T.A.T., JAIPUR, THE HONBLE PRESIDENT, I.T.A.T. NOMINATED SHRI BHAVNESH SAINI, JUDICIAL MEMBER AS T HIRD MEMBER. THE HONBLE 2 ITA NO. 132/JP/2013 & CO 14/JP/2013 M/S. RAJASTHAN STATE ROAD DEVELOPMENT & CONSTRUCTIO N CORPN. LTD. THIRD MEMBER VIDE ORDER DATED 22.02.2017 CONCURRED WITH THE FINDINGS OF THE HONBLE ACCOUNTANT MEMBER AND HELD AS UNDER :- 7. I HAVE CONSIDERED RIVAL SUBMISSIONS OF BOTH TH E PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. HONBLE MADRAS HI GH COURT IN THE CASE OF VELAYUDHASWAMY SPINNING MILL PVT. LTD. VS. ACIT 340 ITR 477 HELD AS UNDER :- THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF MANUF ACTURE OF YARN AND ELECTRICITY GENERATION THROUGH WIND ELECTRIC GE NERATORS AND FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2005-06 AD MITTING A TOTAL INCOME OF RS. 1,36,36,470/- UNDER NORMAL COMPUTATIO N AND RS. 2,95,73,840/- UNDER SECTION 115JB OF THE INCOME-TAX ACT, 1961. THE ASSESSING OFFICER DISALLOWED THE CLAIM OF DEDUCTION MADE BY THE ASSESSEE UNDER SECTION 80-IA AMOUNTING TO RS. 1,70, 76,945/- ON THE GROUND THAT THE ELIGIBLE INCOME WAS A NEGATIVE FIGU RE. THE COMMISSIONER (APPEALS) ALLOWED THE APPEAL OF THE AS SESSEE ON THE GROUND THAT SINCE THE ASSESSMENT YEAR 2005-06 WAS T HE INITIAL ASSESSMENT YEAR, UNABSORBED DEPRECIATION OF EARLIER YEARS, WHICH HAD ALREADY BEEN ABSORBED, COULD NOT BE NATIONALLY CARR IED FORWARD AND TAKEN INTO CONSIDERATION FOR COMPUTING DEDUCTION UN DER SECTION 80-IA. THE TRIBUNAL SET ASIDE THE ORDER OF THE COMMISSIONE R (APPEALS) AND RESTORED THE ORDER OF THE ASSESSING OFFICER. ON AP PEAL : HELD, ALLOWING THE APPEAL, THAT THERE WAS NO DISPUTE THAT LOSSES I NCURRED BY THE ASSESSEE WERE ALREADY SET OFF AND ADJUSTED AGAINST THE PROFITS OF THE EARLIER YEARS. DURING THE RELEVANT ASSESSMENT YEAR, THE ASSESSEE EXERCISED THE OPTION UNDER SECTION 80-IA(2). DURING THE RELEVANT PERIOD, THERE WAS NO UNABSORBED DEPRECIATION OR LOS S OF THE ELIGIBLE UNDERTAKING AND THESE WERE ALREADY ABSORBED IN THE EARLIER YEARS. THERE WAS A POSITIVE PROFIT DURING THE YEAR. THE LO SS IN THE YEAR EARLIER TO THE INITIAL ASSESSMENT YEAR ALREADY ABSORBED AGA INST THE PROFIT OF OTHER BUSINESS COULD NOT BE NATIONALLY BROUGHT FORW ARD AND SET OFF AGAINST THE PROFITS OF THE ELIGIBLE BUSINESS AS NO SUCH MANDATE WAS PROVIDED IN SECTION 80-IA(50. THE ORDER OF THE TRI BUNAL WAS TO BE SET ASIDE. 8. THE AFORESAID DECISION HAS BEEN CONFIRMED BY HON BLE SUPREME COURT BY DISMISSING THE DEPARTMENTAL APPEAL REPORTED IN A CIT VS. VELAYUDHASWAMY SPINNING MILLS PVT. LTD. 389 (STAT)(5). THE LD. CO UNSEL FOR THE ASSESSEE 3 ITA NO. 132/JP/2013 & CO 14/JP/2013 M/S. RAJASTHAN STATE ROAD DEVELOPMENT & CONSTRUCTIO N CORPN. LTD. REFERRED TO ANNEXURE-2 ATTACHED WITH THE IMPUGNED O RDER WHICH I DETAILED CHART OF DEDUCTION CLAIMED UNDER SECTION 80IA OF TH E ACT FOR ASSESSMENT YEAR 2006-07 TO 2009-10. IN RESPECT OF CHALL NEEM KA TH ANA PROJECT, THE ASSESSEE HAS SHOWN LOSS IN ASSESSMENT YEAR 2006-07 AND 2007-08 AND DID NOT CLAIM ANY ELIGIBLE PROFIT. REMARK IS ALSO GIVEN THAT LESSER AMOUNT IS CLAIMED AS DEDUCTION UNDER SECTION 80IA BEING AMOUN T RESTRICTED TO GROSS TOTAL INCOME. THE LD. COUNSEL FOR THE ASSESSEE ALSO REFERRED TO ANNEXURE-1 ATTACHED WITH THE IMPUGNED ORDER WHICH ARE COMPUTAT ION OF INCOME FOR ASSESSMENT YEAR 2006-07 AND 2007-08 FILED WITH THE RETURN OF INCOME WHICH IS SUPPORTED BY ANNEXURE H IN WHICH THE ASSESSEE CLAIMED DEDUCTION UNDER SECTION 80IA OF THE ACT IN RESPECT OF OTHER PROJECT S, HOWEVER, FOR THE PROJECT OF CHALL NEEM KA THANA, ASSESEE HAS SHOWN LOSSES AN D NO DEDUCTION UNDER SECTION 80IA I STATED TO HAVE BEEN CLAIMED. IT I, T HEREFORE, CLEAR THAT ASSESSEE DID NOT MAKE CLAIM OF DEDUCTION UNDER SECT ION 80IA IN RESPECT OF CHALL NEEM KA THANA PROJECT UNDER SECTION 80IA BEIN G THERE WAS A LOSS IN BOTH THE ASSESSMENT YEARS 2006-07 AND 2007-08. IN THE AUDIT REPORT FOR ASSESSMENT YEAR UNDER APPEAL, THE AUDITOR HAS MENTI ONED 01.05.2005 AS DATE OF COMMENCEMENT OF OPERATION BY THE UNDERTAKING OR ENTERPRISES. THESE MATERIAL ON RECORD CLEARLY SHOW THAT ASSESSEE CHOSE THE A.Y. 2008-09 AS INITIAL YEAR FOR CHALL NEEM KA THANA PROJECT WHEN I T CAME IN PROFIT. IN ASSESSMENT YEAR 2006-07 AND 2007-08, THERE WAS LOSS , WHICH HAS ALREADY BEEN ADMITTEDLY ADJUSTED AGAINST THE OTHER BUSINESS INCOME OF THE ASSESSEE UNDER SECTION 80AB OF THE ACT BEING GROSS TOTAL INC OME. WHEN THE LOSS FOR BOTH THE YEARS HAS BEEN ADJUSTED AGAINST THE RESPEC TIVE YEARS, BUSINESS PROFIT OF OTHER UNITS OR OTHER BUSINESS INCOME, THERE IS N O LOSS TO BE CARRIED FORWARD BY THE ASSESSEE. HOWEVER, ASSESSING OFFICER NOTIONA LLY ADJUSTED THE BUSINESS LOSS FOR ASSESSMENT YEAR 2006-07 AND 2007-08 OF CHA LL NEEM KA THANA PROJECT IN COMPUTING DEDUCTION UNDER SECTION 80IA(5 ) BY OBSERVING THAT PROFIT OF ELIGIBLE BUSINESS SHALL BE COMPUTED AS IF SUCH E LIGIBLE BUSINESS WERE THE ONLY SOURCE OF INCOME OF THE ASSESSEE. AS PER SUB- SECTION (2) OF SECTION 80IA OF THE ACT, THE OPTION IS GIVEN BY LAW TO THE ASSES SEE TO CHOOSE INITIAL 4 ITA NO. 132/JP/2013 & CO 14/JP/2013 M/S. RAJASTHAN STATE ROAD DEVELOPMENT & CONSTRUCTIO N CORPN. LTD. ASSESSMENT YEAR FOR CLAIM OF DEDUCTION UNDER SECTIO N 80IA OF THE ACT FOR ANY TEN CONSECUTIVE ASSESSMENT YEARS OUT OF 15 YEARS BE GINNING FROM THE YEAR IN WHICH THE UNDERTAKING OR THE ENTERPRISE DEVELOPS AN D BEGINS TO OPERATE ANY INFRASTRUCTURE FACILITY ETC. SINCE THERE WAS A LOSS IN CHALL NEEM KA THANA PROJECT IN ASSESSMENT YEAR 2006-07 AND 2007-08 AND NO CLAIM OF DEDUCTION UNDER SECTION 80IA OF THE ACT COULD BE MADE, THEREF ORE, THERE IS NO QUESTION FOR ASSESSEE CHOOSING A.Y. 2006-07 AND 2007-08 INIT IAL YEARS WHERE THERE IS A LOSS ON THIS PROJECT. THE INCENTIVE IS GIVEN BY T HE LAW TO ENCOURAGE THE INVESTMENT IN INFRASTRUCTURE AND HAS ALLOWED DEDUCT ION UNDER SECTION 80IA(4) OF THE ACT ON PROFITS, THEREFORE, ASSESSEE CORRECTL Y CHOSEN A.Y. 2008-09 AS INITIAL ASSESSMENT YEAR IN WHICH ASSESSEE EARNED TH E PROFIT FOR THE FIRST TIME ON THIS PROJECT WHICH HAVE ALSO BEEN ALLOWED BY THE ASSESSING OFFICER, THEREFORE, ANY MISTAKE IN THE AUDIT REPORT MENTIONI NG INITIAL ASSESSMENT YEAR 2006-07 WOULD NOT BE RELEVANT. FURTHER, I FIND THA T EVEN THE CBDT VIDE ITS CIRCULAR NO. 1/2016 DATED 15.02.2016 HAS CLARIFIED THIS ISSUE AND HELD THAT THE TERM INITIAL ASSESSMENT YEAR WOULD MEAN THE FIRS T YEAR OPTED FOR BY THE ASSESSEE FOR CLAIMING DEDUCTION UNDER SECTION 80IA. THE CIRCULAR OF THE BOARD IS THEREFORE CLEAR THAT THE TERM INITIAL ASSESSME NT YEAR WOULD BE WITH REFERENCE TO THE FIRST YEAR OPTED FOR BY THE ASSESS EE WHEN ASSESSEE EARNED PROFIT FOR CLAIMING DEDUCTION UNDER SECTION 80IA OF THE ACT. THE DEDUCTION UNDER SECTION 80IA IS THUS, RELATED TO THE PROFITS ONLY. 9. CONSIDERING THE ABOVE DISCUSSION, IT IS CLEAR TH AT THERE WAS NO DISPUTE THAT LOSSES INCURRED BY ASSESSEE IN EARLIER YEARS H AVE ALREADY BEEN ADJUSTED AGAINST THE BUSINESS PROFITS OF OTHER UNITS IN EARL IER YEARS THEREFORE, NO LOSS IS TO BE CARRIED FORWARD BY THE ASSESSEE. IN ASSESSMEN T YEAR 2008-09, ASSESSEE EXERCISED THE OPTION UNDER SECTION 80IA(2). DURING THE RELEV ANT PERIOD, THERE WAS NO UNABSORBED LOSS OF ELIGIBLE UNDERTAKING BECA USE LOSS WAS ALREADY ADJUSTED IN EARLIER YEARS. THERE WAS A POSITIVE PRO FIT DURING ASSESSMENT YEAR 2008-09 AND IN ASSESSMENT YEAR UNDER APPEAL. THE LO SS IN ASSESSMENT YEAR THE YEARS 2006-07 AND 2007-08 EARLIER TO THE INITIA L ASSESSMENT YEARS ALREADY ADJUSTED AGAINST THE BUSINESS PROFITS OF OTHER UNIT S OR OTHER BUSINESS INCOME 5 ITA NO. 132/JP/2013 & CO 14/JP/2013 M/S. RAJASTHAN STATE ROAD DEVELOPMENT & CONSTRUCTIO N CORPN. LTD. COULD NOT BE NOTIONALLY BROUGHT FORWARD AND SET OFF AGAINST PROFITS OF ELIGIBLE BUSINESS AS NO SUCH MANDATE WAS PROVIDED IN SECTION 80IA(5) OF THE ACT. THUS, THERE IS NO CHANGE IN INITIAL ASSESSMENT YEAR OPTED BY THE ASSESSEE I.E. 2008-09 AND THERE IS NO CHANGE IN THE PLEADING OF T HE ASSESSEE. THE ISSUE IS, THEREFORE, SQUARELY COVERED IN FAVOUR OF THE ASSESS EE BY JUDGEMENT OF HONBLE MADRAS HIGH COURT IN THE CASE OF VELAYUDHAS WAMY SPINNING MILLS PVT. LTD. (SUPRA) WHICH IS ALSO CONFIRMED BY HONBLE SUP REME COURT. THE LD. DR, HOWEVER, RELIED UPON ANOTHER DECISION OF HONBLE MA DRAS HIGH COURT IN THE CASE OF CIT VS. KONGOOR TEXTILE PROCESS 377 ITR 559 IN WHICH THE CORE ISSUE WAS, WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE TRIBUNAL IS RIGHT IN LAW IN HOLDING THAT RESPONDENT ASSESSEE IS ENTITLED TO CLAIM DEDUCTION UNDER SECTION 80IA OF THE ACT ? IT WAS BROUGHT TO THE NOTICE OF THE HONBLE HIGH COURT THAT ISSUE INVOLVED HAS ALREADY BEEN DEC IDED BY HONBLE MADRAS HIGH COURT IN THE CASE OF VELAYUDHASWAMY SPINNING M ILLS PVT. LTD (SUPRA) HOWEVER, IT WAS SUBMITTED ON BEHALF OF THE REVENUE THAT APPEAL HAS BEEN PREFERRED BEFORE HONBLE SUPREME COURT AND SAME IS PENDING. HONBLE HIGH COURT FOUND THE FACTS OF THIS CASE TO BE IDENTICAL WITH THE CASE OF VELAYUDHASWAAMY SPINNING MILLS PVT. LTD. (SUPRA) AN D NO DISTINCTION ON FACTS WAS FOUND IN FOLLOWING THE DECISION IN THE CASE OF VELAYUDHASWAMY SPINNING MILLS PVT. LTD. (SUPRA). APPEAL OF THE REVENUE WAS DISMISSED. THIS JUDGEMENT WILL NOT RENDER ANY HELP TO THE REVENUE. 10. IN VIEW OF THE ABOVE, I HOLD THAT THE ASSESSEE RIGHTLY CHOOSE ASSESSMENT YEAR 2008-09 AS INITIAL ASSESSMENT YEAR WHEN IT CAME INTO PROFIT AND CLAIMED DEDUCTION UNDER SECTION 80IA OF THE ACT AND CLAIM HAVE BEEN ALLOWED BY THE ASSESSING OFFICER. I FURTHER HOLD T HAT LOSSES PERTAINING TO THE EARLIER YEARS OF ELIGIBLE BUSINESS, ARE NOT TO BE N OTIONALLY SET OFF/ADJUSTED FROM THE INCOME OF ELIGIBLE BUSINESS FOR THE YEAR U NDER CONSIDERATION. I, THEREFORE, AGREE WITH THE VIEW OF LD. ACCOUNTANT ME MBER THAT REVENUES APPEAL SHOULD BE DISMISSED AND CROSS OBJECTION OF T HE ASSESSEE TO BE ALLOWED. 6 ITA NO. 132/JP/2013 & CO 14/JP/2013 M/S. RAJASTHAN STATE ROAD DEVELOPMENT & CONSTRUCTIO N CORPN. LTD. 2. THEREFORE, IN ACCORDANCE WITH MAJORITY VIEW, THE APPEAL OF THE REVENUE IS DISMISSED AND CROSS OBJECTION OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 03.03.20 17. SD/- SD/- ( HKKXPUN ( DQY HKKJR ) ( BHAGCHAND) ( KUL BHARAT ) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 03/03/2017. D/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- THE ACIT, CIRCLE-6, JAIPUR. 2. THE RESPONDENT M/S. RAJASTHAN STATE ROAD DEVEL OPMENT & CONSTRUCTION CORPN. LTD, JAIPUR. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 132/JP/2013 & CO NO. 14/JP/2 013) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR