M/s. Jay Bharat Dyg. & Ptg. Mills Pvt.Ltd., Surat V. The Dy.CIT.,Circle-1, Surat

ITA 1366/AHD/2012

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1306 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 27-10-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 25-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Assessee Lawyers: S N SOPARKAR

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER ./ ITA NO.1366/AHD/2012 / ASSTT. YEAR: 2009-2010 JAY BHARAT DYG. & PRTG. MILLS PVT. LTD. P-126, KADODARA CHAR RASTA SURAT 394 327. PAN : AAACJ 7428 C VS DCIT, CIR.1 SURAT. ! / (APPELLANT) '# ! / (RESPONDENT) ASSESSEE BY : SHRI S.N.SOPARKAR REVENUE BY : SHRI DINESH SINGH, SR.DR / DATE OF HEARING : 27/10/2015 / DATE OF PRONOUNCEMENT: 27/10/2015 $%/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE OR DER OF THE LD.CIT(A)-I, SURAT DATED 26.4.2012 FOR THE ASSTT.YE AR 2009-10. 2. THE ASSESSEE HAS TAKEN SIX GROUNDS OF APPEAL, WH ICH ARE ARGUMENTATIVE AND DESCRIPTIVE IN NATURE, AND NOT IN CONSONANCE WITH THE RULE 8 OF THE INCOME TAX (APPELLATE TRIBUNAL) R ULES. IN BRIEF, THE GRIEVANCE OF THE ASSESSEE REVOLVES AROUND ADMISSIBI LITY OF DEDUCTION UNDER SECTION 80IA(4) OF THE INCOME TAX ACT, 1961 A ND ITS QUANTIFICATION. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E HAS FILED ITS RETURN OF INCOME ON 26.9.2009 DECLARING TOTAL INCOM E OF RS.1,50,37,250/-. THIS RETURN WAS REVISED ON 1.6.2 010, WHEREIN THE ITA NO.1366/AHD/2012 2 ASSESSEE HAS SHOWN INCOME AT RS.35,13,040/-. THE C ASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT AND N OTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED AND SERVED UPON THE AS SESSEE. THE LD.AO HAS GONE THROUGH THE RECORD AND FOUND THAT THE ASSE SSEE HAS CLAIMED DEDUCTION UNDER SECTION 80IA(4) OF THE ACT OF RS.1, 15,24,212/-. AFTER DETAILED DISCUSSION, THE LD.AO HAS DISALLOWED THE C LAIM OF THE ASSESSEE VIDE ORDER DATED 20.12.2011 PASSED UNDER SECTION 14 3(3) OF THE IT ACT, 1961. 4. DISSATISFIED WITH THE DISALLOWANCE, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD.FIRST APPELLATE AUTHORITY, WHO HAS CO NFIRMED THE DISALLOWANCE BY OBSERVING AS UNDER: 7.1 THE DECISIONS RELIED UPON BY THE APPELLANT ARE PERTAINING TO TRIBUNALS AD HIGH COURTS LOCATED I THE STATE OF TAM ILNADU I.E. OUTSIDE THE STATE OF GUJARAT. THE ITAT (AHMEDABAD) SPL. BENCH IN THE CASE OF CIT VS. GOLDMINE SHARES & FINANCE (P ) LTD ( 2008) REPORTED IN 113 ITD 209 HAS DECIDED THIS ISSUE AGAI NST THE APPELLANT. THEREFORE, THE DECISION OF JURISDICTIONA L TRIBUNAL IS AGAINST THE APPELLANT AND IS BINDING ON THE UNDERSI GNED. 7.2 MOREOVER, ELIGIBILITY OF A UNIT TO CLAIM DEDUC TION U/S 80IA IS DEALT WITH IN SECTION 80IA (3) AND 80IA (4). THESE SUB -SECTIONS DEFINE THE ELIGIBILITY OF AN UNDERTAKING FOR CLAIMI NG DEDUCTION U/S 80 IA (1). SUB - SECTION 2 ONLY GIVES A WINDOW TO T HE ASSESSEE TO CLAIM THE DEDUCTION IN ANY TEN CONSECUTIVE ASSESS MENT YEARS OUT OF FIFTEEN YEARS BEGINNING FROM THE YEAR IN WHICH UNDERTAKING BEGINS TO OPERATE INFRASTRUCTURE FACILITY THE HONB LE HIGH COURT OF CHENNAI HAS OBSERVED THAT INITIAL ASSESSMENT YEAR I S SECTION 80 IA ( 5) HAS NOT DEFINED ANYWHERE .IT HAS HELD THAT INITIAL ASSESSMENT YEAR' WOULD MEAN THE ASSESSMENT YEAR FRO M WHICH ASSESSEE STARTS CLAIMING DEDUCTION U/S 80 I A. HOWE VER, SECTION 80IA(2) DEFINES THE FIRST ASSESSMENT YEAR IN WHICH AN ASSESSEE GET ELIGIBILITY TO CLAIM DEDUCTION U/S 80IA. THEREF ORE, FOR AN ASSESSEE THE INITIAL ASSESSMENT YEAR' IN WHICH THE ASSESSEE GET ELIGIBILITY TO CLAIM DEDUCTION IS THE ASSESSMENT YE AR IN WHICH UNDERTAKING BEGINS TO OPERATE INFRASTRUCTURE FACILI TY. 7.4 THE INITIAL ASSESSMENT YEAR IS THE FIRST ASSESS MENT YEAR IN WHICH, THE UNDERTAKING BECAME ELIGIBLE FOR CLAIMING DEDUCTION U/S 80 I A (1) IRRESPECTIVE OF WHETHER IT WAS CLAIMED O R NOT. ASSESSEE IS ELIGIBLE TO CLAIM DEDUCTION FOR EACH OF THE 15 Y EARS STARTING ITA NO.1366/AHD/2012 3 FROM THE INITIAL YEAR I.E. THE YEAR IN WHICH UNDERT AKING STARTS OPERATION. SECTION 80IA (5) PROVIDES THE MECHANISM FOR COMPUTING THE SAID ALLOWABLE DEDUCTION. SECTION 801 A (2) GIVES AN OPTION ONLY TO SELECT WHETHER AN ASSESSEE WANTS TO CLAIM DEDUCTION IN A PARTICULAR YEAR OR NOT. 7.5 WE MAY EXAMINE THE AMENDMENT MADE FROM ASSTT YE AR 2002-03 FROM A DIFFERENT ANGLE ALSO. EARLIER DEDUCT ION WAS ALLOWED FOR THE NUMBER OF YEARS SPECIFIED IN EARLIER SECTIO N 80IA ( 6) STARTING FROM INITIAL ASSESSMENT YEAR. THE INITIAL ASSESSMENT YEAR MEANT THE FIRST ASSESSMENT YEAR IN WHICH THE UNDERTAKING /ASSESSEE BECOMES ELIGIBLE TO CLAIM DEDUCTION. 7.6. AFTER THE AMENDMENT THE DEDUCTION IS ALLOWED IN TEN OUT OF YEARS STARTING FROM THE INITIAL ASSESSMENT YEAR. IF WE ACCEPT INITIAL ASSESSMENT YEAR IS THE ONE IN WHICH OPTION TO CLAIM DEDUCTION IS EXERCISED, THEN FOR WHICH YEAR THE ELI GIBILITY OF UNDERTAKING WILL BE SEEN ? THE TEST OF ELIGIBILITY WILL ALWAYS BE TESTED FOR THE YEAR IN WHICH THE UNDERTAKING, BEGIN S ITS OPERATIONS. 7.7 WHEN THE INITIAL ASSESSMENT YEAR IS NOT SEPARAT ELY DEFINED AND THE WORDS BEGINNING FROM THE YEAR' HAVE BEEN U SED IN SECTION 801A (2), THE ONLY WAY WE CAN DEFINE THE WO RD ' INITIAL ASSESSMENT YEAR ' USED IN SECTION 80IA (5) IS BY LI NKING IT WITH WORDS ' BEGINNING FROM THE YEAR' USED IN SECTION 80 IA (2) 7.8 IN FACT, THE RATIONALE BEHIND SECTION 801 A IS TO GIVE INCENTIVE TO SPECIFIED UNDERTAKINGS. SINCE INITIAL FEW YEARS IN CASE OF SUCH UNDERTAKINGS OFTEN DID NOT GENERATE PROFIT, THE ASS ESSEE S COULD CLAIM DEDUCTION FOR LESS THAN TEN YEARS PERIOD INTE NDED. NEW SECTION 80IA (2) HAS BEEN INTRODUCED ONLY TO REMEDY THAT SITUATION AND NOTHING MORE. THEREFORE, THIS ISSUE IS DECIDED AGAINST THE APPELL ANT FOLLOWING THE DECISION OF JURISDICTIONAL ITAT REPORTED IN 113 ITD 209 WHICH IS BINDING ON THE UNDERSIGNED. 5. THE LD.COUNSEL FOR THE ASSESSEE, AT THE VERY OUT SET, SUBMITTED THAT SIMILAR CLAIM WAS MADE IN THE ASSTT.YEAR 2008- 09, WHICH WAS DISALLOWED BY THE LD.AO AND THE DISPUTE TRAVELLED U PTO THE TRIBUNAL. THE TRIBUNAL HAS SET ASIDE THE ISSUE TO THE FILE OF THE CIT(A) FOR RE- ADJUDICATION, BECAUSE THE LD.CIT(A) HAS FAILED TO A PPRECIATE THE ISSUE IN DISPUTE IN RIGHT PROSPECTIVE AND JUST TOUCHED THE PERIPHERAL ASPECTS. ITA NO.1366/AHD/2012 4 THE ESSENTIAL CONDITIONS REQUIRED TO BE FULFILLED B Y AN ASSESSEE OUGHT TO HAVE EXAMINED AND THEREAFTER MERITS OF THE ASSESSEE S CLAIM SHOULD BE DECIDED. HE PLACED ON RECORD COPIES OF THE TRIBUNAL ORDER DATED 23.1.2015 IN ITA NO.1372/AHD/2011 FOR THE ASSTT.YEA R 2008-09. ON THE STRENGTH OF THIS ORDER, HE CONTENDED THAT IN TH IS YEAR ALSO, THE LD.FIRST APPELLATE AUTHORITY HAS ADOPTED SIMILAR AN ALOGY FOR REJECTING THE CLAIM OF THE ASSESSEE, AND ISSUE REQUIRES RECONSIDE RATION AS PER THE ORDER OF THE TRIBUNAL PASSED IN THE ASSTT.YEAR 2008 -09. THE LD.COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT THE LD.FIRS T APPELLATE AUTHORITY HAS NOT SPECIFICALLY ADJUDICATED THE ISSUE REGARDIN G QUANTIFICATION OF THE DEDUCTION, IF ANY, ADMISSIBLE TO THE ASSESSEE, BUT MADE CERTAIN OBSERVATIONS, AS MENTIONED IN PAGE NO.4 OF THE IMPU GNED ORDER, BASED ON THE ORDER OF HIS PREDECESSOR FOR THE ASSTT.YEAR 2008-09. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSU E EITHER BE ADJUDICATED AT THE LEVEL OF THE TRIBUNAL, AFTER CON SIDERING THE JUDGMENT OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CI T VS. SHAH ALLOYS LTD., IN TAX APPEAL NO.2092 OF 2010 DATED 22.12.200 1, OR THE ISSUE BE LEFT OPEN FOR RE-ADJUDICATION AT THE LEVEL OF THE L D.FIRST APPELLATE AUTHORITY. 6. THE LD.DR, ON THE OTHER HAND, UNABLE TO CONTROVE RT THE SUBMISSIONS OF THE LD.COUNSEL FOR THE ASSESSEE, AS FAR AS THE EXAMINATION OF THE ISSUE WITH REGARD TO THE ADMISSI BILITY OF DEDUCTION UNDER SECTION 80IA(4) OF THE ACT. HE ALSO EMPHASIZ ED THAT IF THE ISSUE REGARDING RE-EXAMINATION OF DEDUCTION IS BEING REMI TTED BACK TO THE CIT(A), THEN ALL OTHER ISSUES REGARDING QUANTIFICAT ION AND THE RATES AT WHICH TOTAL RECEIPTS TO BE DETERMINED, ARE TO BE LE FT OPEN. 7. ON DUE CONSIDERATION OF THE FACTS AND CIRCUMSTAN CES, WE ARE OF THE LD.FIRST APPELLATE AUTHORITY HAS FAILED TO EXAM INE THE ISSUE WITH REGARD TO ADMISSIBILITY OF DEDUCTION UNDER SECTION 80IA(4) OF THE ACT ANALYTICALLY. THE ASTT.YEAR 2008-09 IS THE FIRST YEAR WHERE THE ITA NO.1366/AHD/2012 5 ASSESSEE HAS CLAIMED SUCH DEDUCTION. THE TRIBUNAL HAS ALREADY SET ASIDE THE ISSUE IN THE ASSTT.YEAR 2008-09. AT THIS STAGE, WE DEEM IT PROPER TO TAKE NOTE OF TRIBUNALS FINDING IN THE AS STT.YEAR 2008-09 AS UNDER: 4.1. THE UNDISPUTED FACTS EMERGE FROM THE RECORD A RE THAT THE ASSESSEE COMPANY ENTERED INTO AN AGREEMENT WITH GUJ ARAT ELECTRICITY BOARD TO WHEEL THE ENERGY GENERATED AT THE WINDFARM TO ITS OWN OTHER MANUFACTURING UNITS M/S.JAYBHARAT DYEING AND PRINTING PVT.LTD. AND CONSUMER NO.10024 LOCATED AT PLOT NO.216, KADODARA CHAR RASTA, TAL: PALSANA, DIST: SURAT. THE ASSESSEE- COMPANY GOT THE WIND FARM SET UP AND DEVELOPED BY T HE COMPANY M/S.SUZLON DEVELOPERS PVT.LTD. THE APPLICATION FOR WIND-FARM WAS MADE BY THE ASSESSEE-COMPANY TO THE GUJARAT ENERGY DEVELOPMENT AGENCY FOR SETTING UP OF WIND FARM. THE LD.CIT(A) REJECTED THE CLAIM ON THE BASIS THAT THE ASSESSEE H AS NOT DEVELOPED WIND-FARM AND THE SAME WAS DEVELOPED BY M /S.SUZLON DEVELOPERS PVT.LTD. THEREFORE, THE ASSESSEE WAS NOT ENTITLED FOR DEDUCTION U/S.80IA(4)(IV) OF THE ACT. ANOTHER OBJEC TION OF THE LD.CIT(A) WAS THAT THERE WAS GROSS INFLATION OF PRO FIT FROM THIS BUSINESS FOR CLAIMING HIGHER PROFIT SINCE THE ASSES SEE HAS TAKEN ENERGY RATE RS.3.65 PER UNIT. HOWEVER, CLAUSE-4 OF AGREEMENT WITH GUJARAT ELECTRICITY BOARD (GEB) INDICATES THAT GEB WAS TO BUY POWER @ RS.2.60 PER UNIT ONLY. IN THE FIRST OBJECTI ON, WE FIND THAT THE LD.CIT(A) HAS MISDIRECTED HIMSELF BY ASSUMING T HAT THE ASSESSEE HAS CLAIMED DEDUCTION U/S.80IA(4)(I)(B) OF THE ACT. FROM THE RECORDS IT IS FOUND THAT EVEN BEFORE THE AO, TH E ASSESSEE HAS MADE APPLICATION FOR CLAIMING DEDUCTION U/S.80IA(4) (IV) OF THE ACT VIDE LETTER DATED 18/05/2010 WHICH IS ENCLOSED AT P AGE NOS.11 & 12 OF THE PAPER-BOOK. AS PER NOTE SHOWN IN THE STAT EMENT OF TOTAL INCOME OF THE ASSESSEE PLACED AT PAGE NO.17 OF THE PAPER-BOOK, THE ASSESSEE COMPANY HAD GIVEN NOTE THAT THE COMPA NY IS ELIGIBLE FOR DEDUCTION U/S.80IA(4)(IV) OF THE I.T.A CT, 1961 IN RESPECT OF PROFITS FROM UNIT POWER DIVISION, AND RESERVES ITS RIGHT TO CLAIM THE SAME. THEREFORE, WE ARE OF THE CONSID ERED VIEW THAT THE LD.CIT(A) WAS NOT JUSTIFIED IN REJECTING THE CL AIM OF THE ASSESSEE SINCE THE LD.CIT(A) HAS NOT EVEN EXAMINED WHETHER THE ASSESSEE IS ENGAGED IN THE BUSINESS OF GENERATION A ND DISTRIBUTION OF POWER. THE DEDUCTION IS ALLOWABLE IF AN UNDERTAK ING WHICH IS SET UP IN ANY PART OF INDIA FOR THE GENERATION OR GENER ATION AND DISTRIBUTION OF POWER IF IT BEGINS TO GENERATE POWE R AT ANY TIME DURING THE PERIOD BEGINNING ON THE 1ST DAY OF APRIL , 1993 AND ENDING ON THE 31ST DAY OF MARCH, 2017. WE FIND THAT THE LD.CIT(A) MADE A PASSING REMARK THAT THE APPELLANT AFTER FIND ING THAT IT JUST DOES NOT MEET THE CONDITIONS LAID DOWN IN SECTION 8 0IA(4)(I)(A) & ITA NO.1366/AHD/2012 6 (B) HAS FAINTLY WRIGGLE OUT OF SITUATION BY WHISPER ING THAT THESE CONDITIONS DO NOT APPLY TO A POWER UNIT. HOWEVER, F ROM THE RECORDS IT IS TRANSPIRED THAT BEFORE THE AO THE ASS ESSEE HAD MADE U/S.80IA(4)(IV) WHICH APPLIED TO THE UNDERTAKING EN GAGED IN THE POWER GENERATION. UNDER THESE FACTS, THE LD.CIT(A) OUGHT TO HAVE GIVEN A CLEAR FINDING IN RESPECT OF THE CLAIM OF TH E ASSESSEE WHETHER IT IS ENTITLED FOR DEDUCTION U/S.80IA(4)(IV ) AND IF NOT THE SPECIFIC REASONS FOR REJECTION OF CLAIM. IN THE INS TANT CASE, THE LD.CIT(A) HAS NOT GIVEN REASON AS TO HOW THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S.80IA(4)(IV) OF THE ACT I S NOT ACCEPTABLE. IN THE ABSENCE OF SUCH REASONING, THE O RDER OF THE LD.CIT(A) BECOMES NON-SPEAKING ORDER, WHICH CANNOT BE CONFIRMED. THEREFORE, WE HEREBY SET ASIDE THE ORDER OF LD.CIT(A) AND THE GROUND OF THE APPEAL REGARDING ENTITLEMENT OF THE ASSESSEE FOR DEDUCTION U/S.80IA(4)(IV) OF THE ACT I S RESTORED TO THE FILE OF LD.CIT(A) FOR DECISION AFRESH. THE LD.C IT(A) WOULD VERIFY THE FACT WHETHER THE ASSESSEE IS ENGAGED IN THE BUS INESS OF GENERATION OF POWER. IF IT IS FOUND THAT THE ASSESS EE IS ENGAGED IN THE GENERATION POWER, THE CLAIM OF DEDUCTION IS TO BE ALLOWED AS PER LAW. NEEDLESS TO SAY THAT THE LD.CIT(A) WOULD A FFORD REASONABLE OPPORTUNITY TO THE ASSESSEE. THUS, THE G ROUNDS OF APPEAL ARE ALLOWED BUT FOR STATISTICAL PURPOSES. THEREFORE, IN ORDER TO MAINTAIN THE CONSISTENCY, WE DEEM IT APPROPRIATE TO SET ASIDE THE ISSUE IN THIS YEAR ALS O TO THE FILE OF THE CIT(A) FOR RE-ADJUDICATION. AS FAR AS QUANTIFICATI ON OF DEDUCTION IS CONCERNED, THE ASSESSEE WILL BE LIBERTY TO SUBMIT A NY DETAILS IN SUPPORT OF ITS CLAIM AND THE LD.FIRST APPELLATE AUTHORITY W ILL ADJUDICATE IT ON MERIT. 8. THE NEXT FOLD OF DISPUTE IS WITH REGARD TO THE D ETERMINATION OF INITIAL YEAR FOR WHICH THE ASSESSEE IS ELIGIBLE FOR CLAIMING DEDUCTION UNDER SECTION 80IA(4) OF THE ACT. WE LEAVE THIS AS PECT ALSO OPEN. THE LD.CIT(A) WILL DECIDE THIS ISSUE AFTER HEARING THE ASSESSEE. 9. IT IS NEEDLESS TO SAY THAT OBSERVATIONS MADE BY US WILL NOT IMPAIR OR INJURE THE CASE OF THE ASSESSING OFFICER AND WIL L NOT CAUSE ANY PREJUDICE TO THE DEFENCE/EXPLANATION OF THE ASSESSE E SO FAR AS ADMISSIBILITY OF DEDUCTION UNDER SECTION 80IA(4) OF THE ACT IS CONCERNED. ITA NO.1366/AHD/2012 7 THE ASSESSEE WILL BE AT LIBERTY TO SUBMIT ANY EVIDE NCE IN SUPPORT OF ITS CASE. THE LD.FIRST APPELLATE AUTHORITY SHALL DECID ED THE ISSUE IN ACCORDANCE WITH LAW, AFTER PROVIDING DUE OPPORTUNIT Y OF HEARING TO THE ASSESSEE. 10. IN RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE COURT ON 27 TH OCTOBER, 2015 AT AHMEDABAD. SD/- SD/- (ANIL CHATURVEDI) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER