Damodar Jagannath Malpani, Sangamner V. Deputy Commissioner of Income-tax.,

ITA 1383/PUN/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7354 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 11 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 28-09-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 26-10-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NIRUPAMA KOTRU
• Assessee Lawyers: SUNIL PATHAK
• Keywords: Depreciation; Additional depreciation
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E , , ! # . $ , % , & BEFORE MS. SUSHMA CHOWLA, JM AND SHRI D. KARUNAKARA RAO, AM ' / ITA NOS.1382 & 1383/PUN/2015 ( ) ) / ASSESSMENT YEARS : 2011-12 & 2012-13 M/S. DAMODAR JAGANNATH MALPANI S. NO. 50, MALPANI ESTATE, AKOLE ROAD, SANGAMER-422 605. PAN : AACFD1713B ....... / APPELLANT ( / V/S. THE DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-1(1), PUNE. / RESPONDENT ' / ITA NOS. 1467 & 1468/PUN/2015 ( ) ) / ASSESSMENT YEARS : 2011-12 & 2012-13 THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-3, PUNE. ....... / APPELLANT ( / V/S. M/S. DAMODAR JAGANNATH MALPANI S. NO. 50, MALPANI ESTATE, KASARA DUMALA, AKOLE ROAD, SANGAMER-422 605. PAN : AACFD1713B / RESPONDENT ASSESSEE BY : SHRI SUNIL PATHAK RESPONDENT BY : SMT. NIRUPAMA KOTRU / DATE OF HEARING : 28.09.2017 / DATE OF PRONOUNCEMENT : 16.10.2017 2 ITA NOS. 1382 & 1383/PUN/2015 ITA NOS. 1467 & 1468/PUN/2015 A.YS .2011-12 & 2012-13 * / ORDER PER D. KARUNAKARA RAO, AM : THERE ARE FOUR APPEALS FILED BY THE ASSESSEE AND THE REV ENUE UNDER CONSIDERATION INVOLVING TWO A.YRS 2011-12 AND 2012-13. THE SE ARE CROSS- APPEALS AND ARE AGAINST THE ORDER OF CIT(A)-11, PUNE DAT ED 17.08.2015. FOR THE SAKE OF CONVENIENCE, THESE APPEALS ARE DISPOSED OF BY THIS COMPOSITE ORDER. ITA NO. 1467/PUN/2015 (BY REVENUE A.Y. 2011-12) : 2. WE SHALL TAKE UP CROSS APPEALS FOR THE A.Y. 2011-12 A ND TAKE UP THE REVENUE APPEAL FIRST. THE GROUNDS RAISED BY THE REVENUE READ AS U NDER:- 1) THE LEARNED CIT(A) ERRED IN ALLOWING THE CLAIM O F THE ASSESSEE FOR A DEDUCTION OF RS. 11,09,92,227/- FOR A.Y. 2011-12 AND RS. 13,55,53,877 FOR A.Y.2012-13 U/S. 80IA (6) OF THE I NCOME TAX ACT. 2) A) THE LD. CIT(A) ERRED IN TREATING THE WINDMILL S SET UP AT DIFFERENT PLACED IN DIFFERENT YEAR AS SEPARATE UNDERTAKING AN D THAT SUCH WINDMILL DO NOT CONSTITUTE AS SINGLE BUSINESS UNDER TAKING FOR THE PURPOSE OF DEDUCTION U/S.80IA. 2. B) THE LD. CIT(A) ERRED IN HOLDING THAT DEDUCTIO N U/S. 80IA SHOULD BE ALLOWED BY TREATING EACH WINDMILL AS INDEPENDENT UNDERTAKING INSTEAD OF ALLOWING THE DEDUCTION ON CONSOLIDATED B ASIS AS HELD BY THE AO. 3) THE LD. CIT(A) ERRED IN DECIDING THAT SELECTION OF INITIAL ASSESSMENT YEAR U/S. 80IA IS AT THE OPTION OF THE ASSESSEE AND NOT THE YEAR IN WHICH YEAR BUSINESS ACTIVITY OF ELIGIBLE UNDERTAKIN G/UNITS STARTS? 4. THE LD. CIT(A) ERRED IN DECIDING THAT ASSESSEE I S ELIGIBLE TO CLAIM DEPRECIATION @ 80% ON ELECTRICAL FITTINGS USED FOR WINDMILL, ALTHOUGH DEPRECIATION ON ELECTRICAL FITTINGS IS ALLOWABLE 15 % ONLY AS PER IT RULES 1962. 5. THE APPELLANT PRAYS THAT THE ORDER OF LD. CIT(A) TO THE EXTENT OF THE ABOVE ISSUE BE HELD TO BE BAD IN LAW AND QUASHED AN D THAT OF THE ASSESSING OFFICER BE RESTORED. 6. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR OMIT ANY OF THE ABOVE GROUNDS OF APPEAL DURING THE COURSE OF THE AP PELLATE PROCEEDINGS. 3 ITA NOS. 1382 & 1383/PUN/2015 ITA NOS. 1467 & 1468/PUN/2015 A.YS .2011-12 & 2012-13 REVENUE RAISED SIMILAR GROUNDS IN VERBATIM IN A.Y. 2012-13 TOO. 3. AT THE OUTSET, LD. DR INFORMED THAT THE GROUND NO.1 R ELATING TO CLAIM OF DEDUCTION U/S.80IA (6) OF THE INCOME TAX ACT, 196 1 (HEREINAFTER REFERRED TO AS THE ACT) AND GROUND NOS. 5 AND 6 ARE GENERAL IN NATURE AND THEREFORE, THE SAME CAN BE DISMISSED AS SUCH. 4. REFERRING TO GROUND NO. 2.A) AND 2.B), LD. DR SUBMITTED T HAT THE ISSUE RELATES TO WHETHER WINDMILL INSTALLED AT DIFFERENT PLACES CONSTITUTES SEPARATE UNDERTAKING FOR THE PURPOSE OF COMPUTING THE D EDUCTION U/S. 80IA(4)(III) OF THE ACT. IN THIS REGARD, LD. COUNSEL FOR THE A SSESSEE SUBMITTED THAT THIS ISSUE HAS BEEN RAISED BY ASSESSING O FFICERS FOR MANY YEARS AND NOW, THE PRESENT ISSUE BEING SIMILAR ONE STANDS ADJUDICATED BY THE TRIBUNAL IN ASSESSEES OWN CASE BEING ITA NOS.1148 T O 1154/PN/2013 FOR A.YRS. 2007-08 TO 2010-11. PARA 54 TO 58 OF THE ORD ER OF TRIBUNAL WHICH IS AVAILABLE AT PAGE 15 TO 16 OF THE PAPER BOOK, AR E RELEVANT. FURTHER, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT CIT (A) GRANTED RELIEF RELYING ON OTHER DECISION OF THE TRIBUNAL OF PUNE BENCH. T HE CONTENTS OF PARA 9 AND SUB-PARAS ARE SELF EXPLANATORY AND RELEVANT IN THIS REGAR D. 5. THE LD. DR FOR THE REVENUE FAIRLY RELIED ON THE ORDER OF ASSESSING OFFICER. 6. WE PERUSED THE FACTS OF THE CASE AS WELL AS LEGAL PROPO SITION EMANATING FROM THE ORDER OF TRIBUNAL IN ASSESSEES OWN CA SE ( SUPRA.) AND ARE FOUND RELEVANT AND WE PROCEED TO EXTRACT THE SAME AS UNDER :- 54. GROUND OF APPEAL NO. 7 RELATES TO METHODOLOGY O F COMPUTATION OF DEDUCTION U/S.80IA (4) AS ADOPTED BY THE AO BY CONS IDERING 4 ITA NOS. 1382 & 1383/PUN/2015 ITA NOS. 1467 & 1468/PUN/2015 A.YS .2011-12 & 2012-13 DIFFERENCE PHASES OF WINDMILLS AS SEPARATE UNDERTAK ING. THE LD. CIT(A) FOLLOWING HIS ORDER FOR A.Y.2005-06 HELD THA T IN A FRESH CLAIM MADE BY THE ASSESSEE UNLESS IT IS SUPPORTED BY SOME INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH THE CLAI M CANNOT BE ENTERTAINED DURING PROCEEDINGS U/S.153A. HE ACCORDI NGLY DISMISSED THE ABOVE GROUND RAISED BY THE ASSESSEE. 55. THE LD. COUNSEL FOR THE ASSESSEE REFERRING TO T HE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF J. SONS F OUNDRY PVT. LTD. VS. DCIT AND VICE VERSA VIDE CONSOLIDATED ORDER DAT ED 30.01.2013 FOR A.Y.2007-08 AND 2008-09 HE SUBMITTED THAT THE TRIBU NAL IN THE SAID DECISION HELD THAT EACH WINDMILL IS TO BE CONSIDERA TE AS A SEPARATE UNDERTAKING. 56. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHE R HAND HEAVILY RELIED ON THE ORDER OF THE CIT(A). 57. AFTER HEARING BOTH THE SIDES, WE FIND THE COORD INATE BENCH OF THE TRIBUNAL IN THE CASE OF J. SONS FOUNDRY PVT. LTD. ( SUPRA) WHILE DISMISSING THE GROUNDS RAISED BY THE REVENUE ON THI S ISSUE HAS OBSERVED AS UNDER : 15. AGAINST THE DECISION OF THE LD. CIT(A), THE RE VENUE IS IN APPEAL BEFORE US. WE HAVE HEARD THE RIVAL SUBMISSIO NS OF THE PARTIES AND PERUSED THE RECORD. ADMITTEDLY, THE ASS ESSEE IS POWER GENERAL THROUGH THE WIND MILLS AT 3 DIFFERENT LOCATIONS I.E. IN TAMILNADU, PANCHGANI AND SATARA. THE WIND M ILLS ARE COMMISSIONED AND ERECTED IN DIFFERENT ASSESSMENT YE ARS AS NOTED BY THE AUTHORITIES BELOW. ASSESSEE IS MAINTAI NING SEPARATE BOOKS OF ACCOUNTS IN RESPECT OF 3 WIND MIL LS AND WORKING OUT THE PROFIT OR LOSSES. THOUGH THE FIRST WIND MILL WAS ERECTED AND COMMISSIONED IN THE A.Y. 2002-03, THERE WERE CONSISTENT LOSSES UP TO THE A.Y. 2007-08 AND ASSESS EE DID NOT OPT FOR CLAIMING THE DEDUCTION U/S 80IA(2) OF THE AC T. SO FAR AS A.Y. 2008-09 IS CONCERNED, ASSESSEE OPTED FOR CLAIMING THE DEDUCTION U/S 80IA(2) TREATING THE SAID ASSESSMENT YEAR (A.Y.) AS AN INITIAL ASSESSMENT YEAR AS THERE WAS THE PROF IT IN SATARA WIND MILL BUT LOSSES IN THE TAMIL NADU WIND MILL AN D PANCHGANI WIND MILL. IF WE LOOK AT THE SCHEME OF TH E SECTION 80IA(2), IT SPEAKS ABOUT THE 'UNDERTAKING' OR 'ENTE RPRISE' AND NOT THE BUSINESS OF THE ASSESSEE. ADMITTEDLY, THREE WIND MILLS AT THE 3 LOCATIONS ARE INDEPENDENTLY OPERATED AND T HE FINANCIAL RESULTS ARE SEPARATELY WORKED OUT. AS PER SUB-SEC.( 5) OF SECTION 80IA, FOR COMPUTING THE DEDUCTION U/S 80 IA(2), THE ELIGIBLE BUSINESS IS TO BE TREATED AS THE ONLY SOUR CE OF INCOME. SUB-SEC.(5) OF SECTION 80IA HAS BEEN EXPLAINED BY T HE HON'BLE HIGH COURT AND KERALA IN THE CASE OF CIT VS. ACCEL TRANSMATIC SYSTEMS LTD. 230 CTR 206 (KER) WHICH HAS BEEN FOLLO WED BY THE LD. CIT(A). THE TERM 'BUSINESS' USED IN SUB-SEC .(5) SECTION 80IA IN OUR HUMBLE OPINION IS CONFINED TO THE INDEP ENDENT UNDERTAKING AND CANNOT GET MERGED WITH THE OTHER BU SINESSES. IN SEC. 80IA(2), FOR CLAIMING DEDUCTION 'UNDERTAKING ' OR 'ENTERPRISE' AS SUCH IS TO BE CONSIDERED. SEC.80IA( 2) IS CHARGING SECTIONS FOR DETERMINING BASIC ELIGIBILITY AND THERE IS NO MENTION OF WORD 'BUSINESS'. SUB-SEC.(5) OF SEC.8 0IA SPEAKS OF BUSINESS BUT SAME IS TO BE CONSTRUED AS BUSINESS OF 'UNDERTAKING' OR 'ENTERPRISE' AS REFERRED TO IN SUB - SEC.(2) OF SEC.80IA. IT IS WELL SETTLED PRINCIPLE OF INTERPRET ATION OF STATUTORY PROVISION THAT THEY ARE TO BE INTERPRETED HARMONIOUSLY TO MAKE WORKABLE TO GIVE INTENDED RESU LTS. HENCE, AS RIGHTLY HELD BY LD. CIT(A) TERM 'BUSINESS ' USED IN 5 ITA NOS. 1382 & 1383/PUN/2015 ITA NOS. 1467 & 1468/PUN/2015 A.YS .2011-12 & 2012-13 SEC.80IA(5) IS TO BE CONSTRUED AND UNDERSTOOD TO ME AN 'BUSINESS' OR ITANOS.815, 891, 1494 &1600/PN/2011 M /S. J. SONS FOUNDRY PVT. LTD., SANGLI 'UNDERTAKING OR E NTERPRISE'. IN OUR OPINION, THE LD. CIT(A) IN HIS WELL REASONED ORDER HAS RIGHTLY HELD THAT EVERY UNIT CONSTITUTE A SEPARATE UNDERTAKING ENGAGED IN THE ELIGIBLE BUSINESS AND LO SSES FROM ONE UNIT CANNOT BE SET OFF AGAINST THE PROFIT OF ANOTHER UNIT ENGAGED IN THE SAME BUSINESS FOR THE PURPOSE OF COMPUTING THE DEDUCTION U/S 80IA. WE FIND NO REASON TO INTERFERE WITH THE FINDINGS OF THE LD. CI T(A) ON THIS ISSUE. ACCORDINGLY, THE SAME ARE CONFIRMED AND GROU NDS TAKEN BY THE REVENUE ARE DISMISSED. 58. RESPECTFULLY FOLLOWING THE DECISION OF THE COOR DINATE BENCH OF THE TRIBUNAL CITED (SUPRA.) AND IN ABSENCE OF ANY CONTR ARY MATERIAL BROUGHT TO OUR NOTICE WE HOLD THAT EACH PHASE OF WI NDMILL HAS TO BE CONSIDERED AS SEPARATE UNDERTAKING ELIGIBLE FOR DED UCTION U/S.80IA AND THEREFORE DEDUCTION U/S.80IA(4) SHOULD HAVE BEE N COMPUTED INDEPENDENTLY FOR EACH PHASE AND NOT ON CONSOLIDATE D BASIS. THE GROUND RAISED BY THE ASSESSEE ON THIS ISSUE IS ACCO RDINGLY ALLOWED. 7. CONSIDERING THE ABOVE FACTS, IT IS EVIDENT THAT THE TRIBU NAL RELIED ON THE DECISION OF COORDINATE BENCH OF THE TRIBUNAL IN THE CA SE OF J-SONS FOUNDRY PVT. LTD VS. DCIT (SUPRA.) FOR A.YRS. 2007-08 AND 2008-09 ORDER DATED 30.01.2013 WHILE GRANTING RELIEF TO THE ASSESSEE IN AP PEAL FOR THE A.YRS. 2007-08 TO 2010-11. IT IS NOW A SETTLED LEGAL PRO POSITION THAT EVERY UNIT CONSTITUTE A SEPARATE UNDERTAKING ENGAGED IN THE ELIGIBLE BUSINESS AND LOSSES FROM ONE UNIT CANNOT BE SET OFF A GAINST THE PROFIT OF ANOTHER UNIT ENGAGED IN THE SAME BUSINESS FOR THE PU RPOSE OF COMPUTING THE DEDUCTION U/S 80IA . THEREFORE, WE ARE OF THE OPINION THAT ORDER OF THE CIT(A) ON THIS ISSUE IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUND NO. 2 RAISED BY THE RE VENUE IS DISMISSED. 8. THE OTHER ISSUE RAISED IN THE GROUND NO. 3 BY THE REV ENUE RELATES TO INITIAL ASSESSMENT YEAR. REGARDING THIS ISSUE, LD. COUNSEL S UBMITTED THAT THE SAME ISSUE ALSO STANDS COVERED BY THE ORDER OF THE TRIBUNAL IN THE ASSESSEES OWN CASE (SUPRA) FOR A.YRS.2007-08 TO 2010-1 1 (SUPRA.) BRINING 6 ITA NOS. 1382 & 1383/PUN/2015 ITA NOS. 1467 & 1468/PUN/2015 A.YS .2011-12 & 2012-13 OUR ATTENTION TO PARA 59 TO 65 OF THE ORDER OF TRIBUNAL , WHICH IS PLACED AT PAGE NO. 16 AND 18 OF THE PAPER BOOK, LD. COUNSEL SUBMIT TED THAT THE TRIBUNAL HELD THE ISSUE IN FAVOUR OF THE ASSESSEE. AS SUCH, THE ASSESSEE HAS OPTION TO CHOOSE THE INITIAL ASSESSMENT YEAR. 9. WE HAVE HEARD BOTH PARTIES AND PERUSED THE SAID OR DER OF THE TRIBUNAL AND RELEVANT PORTION IS EXTRACTED AS UNDER: 64. AFTER HEARING BOTH THE SIDES, WE FIND THE ISSUE AS TO WHETHER INITIAL ASSESSMENT YEAR U/S.80IA (5) MEANS YEAR OF INSTALLA TION OF WINDMILL OR YEAR IN WHICH THE CLAIM OF DEDUCTION U/S.80IA IS FIRST MADE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF POONAWALLA ESTATE ST UD & AGRO FARM PVT. LTD. FOLLOWING THE DECISION OF HON'BLE MADRAS HIGH COURT IN THE CASE OF VELAYUDHASWAMY SPINNING MILLS PVT. LTD. HAS OBSERVE D AS UNDER : 13. 65. RESPECTFULLY FOLLOWING THE DECISION OF THE COOR DINATE BENCH OF THE TRIBUNAL CITED (SUPRA) AND IN ABSENCE OF ANY CONTRA RY MATERIAL BROUGHT TO OUR NOTICE WE HOLD THAT THE PROVISIONS OF SECTION 80IA( 5) ARE APPLICABLE ONLY FROM THE INITIAL ASSESSMENT YEAR, I.E THE ASSESSMENT YEAR IN WHICH DEDUCTION U/S.80IA WAS FIRST CLAIMED BY THE ASSESSEE AFTER EX ERCISING HIS OPTION AS PER THE PROVISIONS OF SECTION 80IA(2) OF THE ACT ,. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED. 10. CONSIDERING THE ABOVE, IT IS EVIDENT THAT THE INITIAL ASSE SSMENT YEAR FOR THE ASSESSEE FOR CLAIMING DEDUCTION U/S.80IA (4) R.W.S (5 ) IS THE ISSUE ADJUDICATED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE. WHILE GRANTING RELIEF IN PARA 65 OF THE TRIBUNAL ORDER, THE TRIBUNAL RELIED ON TH E DECISION OF CO- ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF POONAWALA ES TATE STUD & AGRO FARM PVT. LTD. REPORTED IN 136 TTJ (PUNE) 236 AND A LSO FOLLOWING THE JUDGMENT OF HON'BLE MADRAS HIGH COURT IN THE CASE OF VELA YUDHASWAMY SPINNING MILLS PVT. LTD REPORTED IN 340 ITR 477. AS SUCH, L D. DR COULD NOT BRING ANY CONTRARY DECISION ON THE ISSUE UNDER CONSIDERA TION. THUS, THE INITIAL ASSESSMENT YEAR CONSTITUTES THE ASSESSMENT YEAR IN WHICH THE 7 ITA NOS. 1382 & 1383/PUN/2015 ITA NOS. 1467 & 1468/PUN/2015 A.YS .2011-12 & 2012-13 DEDUCTION U/S.80IA OF THE ACT IS FIRST CLAIMED BY THE ASSES SEE AFTER EXERCISING HIS OPTION AS PER THE PROVISIONS OF SECTION 80IA (2) OF THE ACT. THEREFORE, WE ARE OF THE OPINION THAT THE RELIEF GRANTED B Y THE CIT(A) ON THIS ISSUE DOES NOT REQUIRE ANY INTERFERENCE. ACCORDINGLY, GROUND NO.3 RAISED BY THE REVENUE IS DISMISSED. 11. GROUND NO. 4 OF THE REVENUES APPEAL RELATES TO THE RATE OF DEPRECIATION APPLICABLE TO THE ELECTRICITY FITTINGS OF THE WIND MILL. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE BROUGHT OUT ATTENT ION TO THE RELEVANT PARAGRAPH IN THE ORDER OF TRIBUNAL IN THE ASSESSEES OWN CASE (SUPRA.) AND SUBMITTED THAT THE SIMILAR ISSUE CAME UP FOR ADJUDICATION B EFORE TRIBUNAL IN THOSE ASSESSMENT YEARS. HON'BLE TRIBUNAL DECIDED THE IS SUE AS PER DISCUSSION GIVEN IN PARA NO. 76 TO 80 OF THE ORDER OF TRIB UNAL, THE COPY OF WHICH IS PLACED AT PAGE NO. 19 AND 20 OF THE PAPER BOOK. 12. ON HEARING BOTH THE PARTIES, WE FIND THAT THIS IS A CAS E WHERE THE ASSESSING OFFICER ALLOWED DEPRECIATION AT THE RATE OF 10% O N ELECTRICITY FITTINGS USED FOR WINDMILL. IN THE APPEAL, THE CIT(A) DECIDED THE ISSUE IN FAVOUR OF ASSESSEE ALLOWING DEPRECIATION AT THE RATE OF 8 0%. IN DOING SO, HE RELIED ON THE AFORESAID PUNE COORDINATE BENCH OF THE TRIBUNALS DEC ISION IN THE CASE OF POONAWALA ESTATE STUD & AGRO FARM PVT. LT D.(SUPRA.). CONSIDERING THE SAID DECISION OF THE COORDINATE BENCH OF TH E TRIBUNAL, AS PER DISCUSSION GIVEN IN THE SAID PARAGRAPH, CIT(A) GRANTE D RELIEF TO THE ASSESSEE FOR A.YRS. 2007-08 TO 2010-11. IN OUR OPINION, D ECISION OF CIT(A) IS FAIR AND REASONABLE AND SAME DOES NOT REQUIRE ANY INTE RFERENCE. GROUND NO.4 RAISED BY THE REVENUE IS ACCORDINGLY DISMISSED. 13. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. 8 ITA NOS. 1382 & 1383/PUN/2015 ITA NOS. 1467 & 1468/PUN/2015 A.YS .2011-12 & 2012-13 ITA NO.1382/PUN/2015 (BY ASSESSEE A.Y. 2011-12) : 14. ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL : 1) THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDIT ION OF RS.6,39,85,357/-ON ACCOUNT OF DISALLOWANCE OF ADDIT IONAL DEPRECIATION CLAIMED BY THE ASSESSEE FIRM ON WINDMI LLS PURCHASED DURING THE YEAR. 2) THE LEARNED CIT(A) ERRED IN HOLDING THAT THE ASS ESSEE FIRM IS NOT ENTITLED TO CLAIM ADDITIONAL DEPRECIATION IN RESPEC T OF THE WINDMILLS PURCHASED BY IT DURING THE YEAR SINCE THE LEGISLATU RE HAS SPECIFICALLY PERMITTED THE CLAIM OF ADDITIONAL DEPRECIATION ON W INDMILLS FROM A.Y. 2013-14 AND THEREFORE, THE ADDITIONAL DEPRECIATION WAS NOT ALLOWABLE IN THIS YEAR. 3) THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THA T THE ASSESSEE WAS PRODUCING POWER THROUGH WIND ENERGY AND THEREFORE, ADDITIONAL DEPRECIATION U/S.32(1) (IIA) WAS ALLOWABLE TO THE A SSESSEE. 4) THE LEARNED CIT(A) ERRED IN HOLDING THAT THE COS T OF TEMPORARY APPROACHED ROAD AND FENCING WAS NOT PART AND PARCEL OF ACTUAL COST OF WIND MILL AND HENCE, THE DEPRECIATION IN RESPECT OF THE SAME WAS TO BE ALLOWED @ 10% AS AGAINST 80% CLAIMED BY THE ASSE SSEE. 5) THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL. 15. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE SUBMITTE D THAT GROUND NOS. 1 TO 3 RELATES TO THE COMMON ISSUE OF CLAIMING OF ADDIT IONAL DEPRECIATION IN RESPECT OF WIND MILL. FURTHER, HE SUBMITTED TH AT THE SAID ISSUE HAS BEEN SUBJECT MATTER OF LITIGATION FOR THE A.YRS. 2006-07 TO 2010- 11. THE MATTER REACHED UP TO THE TRIBUNAL AND THE SAME WAS DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL IN ITA NOS. 1150 & 1184/PUN/2013 DATED 30.10.2015. THE CONTENTS OF PARA NO S. 29 TO 35, AVAILABLE AT PAGE NO. 7 AND 8 ARE RELEVANT IN THIS REGARD. 16. AFTER HEARING BOTH THE PARTIES ON THIS ISSUE, WE REPRO DUCE THE SAID PARAGRAPH FOR THE SAKE OF COMPLETENESS OF THE ORDER AND THE SAME READS AS UNDER : 9 ITA NOS. 1382 & 1383/PUN/2015 ITA NOS. 1467 & 1468/PUN/2015 A.YS .2011-12 & 2012-13 33. AFTER HEARING BOTH THE SIDES, WE FIND THE CLAIM OF THE ASSESSEE REGARDING ADDITIONAL DEPRECIATION WAS ALLOWED BY TH E AO IN THE ASSESSMENT MADE U/S. 143(3) ON 29.12.2008 WHICH IS PRIOR TO THE DATE OF SEARCH ON 06.10.2009. THE DISALLOWANCE OF A DDITIONAL DEPRECIATION BY THE AO IS NOT BASED ON ANY INCRIMIN ATING MATERIAL FOUND DURING THE COURSE OF SEARCH OR POST SEARCH EN QUIRY. THEREFORE, IN VIEW OF THE DECISION OF HON'BLE BOMBAY HIGH COUR T IN THE CASE OF CONTINENTAL WAREHOUSING CORPORATION (SUPRA) THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE DISALLOWANCE MADE BY THE AO. WE ACCORDINGLY, UPHOLD THE ORDER OF THE CIT(A) AND THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 34. EVEN ON MERIT ALSO WE FIND THE ISSUE STANDS DEC IDED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. VTM LTD. REPORTED IN 319 ITR 336 HA S HELD THAT ASSESSEE WHICH WAS MANUFACTURING TEXTILE GOODS AND HAD SET UP A WINDMILL AFTER 31.03.2002 WAS ENTITLED TO ADDITIONA L DEPRECIATION. THE RELEVANT OBSERVATION OF HON'BLE HIGH COURT READ S AS UNDER (SHORT NOTES) : IN ORDER TO CLAIM THE BENEFIT OF SECTION 32(1) (IIA ) OF THE INCOME TAX ACT, 1961, WHAT IS REQUIRED TO BE SATISFIED IS THAT THE NEW MACHINERY OR PLANT SHOULD HAVE BEEN ACQUIRED AND IN STALLED AFTER MARCH 31, 2002 BY AN ASSESSEE WHO WAS ALREADY ENGAGED IN THE BUSINESS OF MANUFACTURE OR PRODUCTIO N OF ANY ARTICLE OR THING. THE PROVISION DOES NOT STATE THAT THE SETTING UP OF A NEW MACHINERY OR PLANT, WHICH WAS ACQUIRED AND INSTALLED AFTER MARCH 31, 2002, SHOULD HAVE ANY OPE RATIONAL CONNECTIVITY TO THE ARTICLE OR THING THAT WAS ALREA DY BEING MANUFACTURED BY THE ASSESSEE. 35. THE CHENNAI BENCH OF THE TRIBUNAL IN THE CASE O F ACIT VS.M. SATISH KUMAR ITA NO. 718/MDS/2012 ORDER DATED 28.09 .2012 HAS HELD THAT GENERATION OF ELECTRICITY IS AKIN TO MANU FACTURING OF NEW PRODUCT. RELYING ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. MADHYA PRADESH ELECTRICITY BOARD REPORTE D IN 1970 AIR 732(SC) AND THE DECISION OF THE DELHI BENCH OF TRIB UNAL IN THE CASE OF NTPC LTD. REPORTED IN 2002(4) (TM) 694(SC) IT WAS H ELD THAT GENERATION OF ELECTRICITY IS A MANUFACTURING ACTIVI TY AND THE ASSESSEE IS ELIGIBLE FOR ADDITIONAL DEPRECIATION U/S.32(1) ( IIA). IN VIEW OF THE ABOVE, THE ORDER OF THE CIT(A) IS UPHELD AND THE GR OUNDS RAISED BY THE REVENUE ARE DISMISSED. 17. FROM THE ABOVE DISCUSSION, IT IS SELF EXPLANATORY THAT T HE ISSUE OF ADDITIONAL DEPRECIATION WAS SUBJECT MATTER OF ADJUDICATION BY THE TRIBUNAL FOR A.YRS. 2006-07 TO 2010-11. ON MERITS, THE TRIBUNAL HELD IN PARA NOS.34 AND 35 THAT THE ISSUE IS TO BE DECIDED IN FAVOUR O F THE ASSESSEE RELYING ON THE DECISION IN THE CASE OF CIT VS. MADHYA PR ADESH ELECTRICITY BOARD REPORTED IN 1970 AIR 732 (SC), CIT VS.VTM LTD REPO RTED IN 319 ITR 336, CHENNAI BENCH DECISION IN THE CASE OF M. SATISH KUMAR ITA NO. 718/MDS/2012 DATED 28.09.12 WHERE IT IS HELD THAT GENERA TION OF 10 ITA NOS. 1382 & 1383/PUN/2015 ITA NOS. 1467 & 1468/PUN/2015 A.YS .2011-12 & 2012-13 ELECTRICITY IS AKIN TO MANUFACTURING OF NEW PRODUCT. RELYING ON THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS . MADHYA PRADESH ELECTRICITY BOARD (SUPRA.) AND THE DECISION OF DELHI B ENCH OF THE TRIBUNAL IN THE CASE OF NTPC LTD. REPORTED IN 2002 (4)(TM) 694(SC), IT WAS HELD THAT GENERATION OF ELECTRICITY IS A MANUFACTURING ACTIVIT Y AND THE ASSESSEE IS ELIGIBLE FOR ADDITIONAL DEPRECIATION U/S.32(1) (IIA) OF THE ACT. T HE ASSESSEE ALSO RELIED ON THE THIRD MEMBER DECISION IN THE C ASE OF M/S. GIRIRAJ ENTERPRISES CITED AS ITA NOS. 1384 & 1385/PUN/2 015 DATED 23.02.2017 WHICH IS RELEVANT FOR THE PROPOSITION THAT GENER ATION OF ELECTRICITY BY WINDMILL AMOUNTS TO PRODUCTION OF ARTICLE OR A THING AND CONSEQUENTLY HOLDING THAT THE ASSESSEE IS ENTITLED FOR AD DITIONAL DEPRECIATION AS PER SECTION 32(1) (IIA) OF THE ACT. RELEVANT PA RA NOS. 6 TO 8 FROM THE ORDER OF THIRD MEMBER BENCH ARE EXTRACTED AS UNDER: 6. THE QUESTION BEFORE THE HON'BLE COURT WAS- WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS RIG HT IN HOLDING THAT THE GENERATION OF ELECTRICITY BY WINDMILL AMOUNTS TO PR ODUCTION OF ARTICLE OR A THING AND CONSEQUENTLY HOLDING THAT THE ASSESSEE IS ENTITLED FOR ADDITIONAL DEPRECIATION AS PER SECTION 32(1) (IIA) OF THE ACT? 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTE D THAT SUCH BENEFIT SHOULD NOT BE ALLOWED BECAUSE OF SPECIFIC AMENDMENT HAVE BEEN ENACTED SUBSEQUENT TO THE YEAR IN QUESTION. IN VIEW OF THE DECISION OF THE HON'BLE HIGH COURT, I DO NOT FIND IT NECESSARY TO CONSIDER THE OTHER DECISIONS OF VARIOUS BENCHES OF THIS TRIBUNAL. 8. I DO NOT FIND THIS TO BE A LEGITIMATE ARGUMENT I N VIEW OF WHAT THE HON'BLE HIGH COURT OF MADRAS DECIDES. THE CASE IS THEREFORE ANSWERED IN THE AFFIRMATIVE THAT THE ASSESSEE IS ENTITLED TO CLAIM ADDITIONAL BENEFIT OF DEPRECIATION U/S. 32(1) (IIA) OF THE INCOME TAX ACT . 18. THUS, IT IS THE DECIDED ISSUE THAT THE GENERATION OF ELECTRICITY BY WINDMILL AMOUNTS TO PRODUCTION OF ARTICLE OR A THING AND THE REFORE, THE PRESENT ASSESSEE IS ENTITLED FOR ADDITIONAL DEPRECIATION AS PER SECTION 32(1) (IA) OF THE ACT. IN VIEW OF THESE FINDINGS, WE ARE OF THE OPINION THAT ASSESSEE IS ENTITLED TO RELIEF ON THE ISSUE OF ADDITIONAL DEPRECIATION. T O THAT EXTENT, 11 ITA NOS. 1382 & 1383/PUN/2015 ITA NOS. 1467 & 1468/PUN/2015 A.YS .2011-12 & 2012-13 THE ORDER OF CIT(A) STANDS REVERSED AND IN FAVOUR OF THE ASSESSEE. CONSIDERING THE ABOVE SETTLED NATURE OF THE ISSUE, WE A RE OF THE OPINION THAT THE GROUND NOS. 1 TO 3 RAISED BY THE ASSESSEE ARE ALLOWED. 19. GROUND NO. 4 RELATES TO THE RATE OF DEPRECIATION APPLIC ABLE (1) TEMPORARY APPROACHED ROAD (2) FENCING. ASSESSING OFFICER ALLO WED THE DEPRECIATION AT THE RATE OF 10% ONLY AND ON THE OTHER HAND, CIT(A) ALLOWED DEPRECIATION AT THE HIGHER RATE OF 80% AS THEY ARE USED FOR WINDMILL . 20. ON THIS ISSUE, LD. COUNSEL FOR THE ASSESSEE BROUGHT OU R ATTENTION TO THE SAID ORDER OF THE TRIBUNAL IN THE ASSESSEES OWN CAS E FOR A.YRS 2007-08 TO 2010-11 AND FAIRLY SUBMITTED THAT THE ISSUE WAS DECID ED AGAINST THE ASSESSEE RELYING ON THE DECISION OF COORDINATE BENCH OF T HE TRIBUNAL IN THE CASE OF POONAWALA ESTATE STUD & AGRO FARM PVT. LTD.(SUPR A.). HON'BLE TRIBUNAL DENIED THE SAID HIGHER RATE AND RESTRICTED THE R ATE TO 10% AS APPLICABLE TO THE ELECTRICAL FITTINGS. 21. WE HAVE HEARD BOTH THE PARTIES ON THIS ISSUE AND PE RUSED THE ORDERS OF THE REVENUE. WE FIND THE TRIBUNAL IN ASSESSEE S OWN CASE FOR A.YRS. 2007-08 TO 2010-11 DECIDED THIS ISSUE AGAINST TH E ASSESSEE. FOR THE SAKE OF COMPLETENESS OF THE ORDER, WE REPRODUCE THE RELEVANT PORTION OF THE SAID ORDER OF THE TRIBUNAL : 66. IN GROUNDS OF APPEAL NO. 9 TO 9.1 THE GRIEVANCE OF THE ASSESSEE IS REGARDING DENIAL OF CLAIM OF HIGHER RATE OF DEPRECI ATION IN RESPECT OF COST OF ELECTRICAL FENCING AND TEMPORARY APPROACH R OAD. 67. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET SUBMITTED THAT THE ISSUE STANDS DECIDED AGAINST THE ASSESSEE BY THE DE CISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF POONAWALA FINVEST AND AGRO PVT. LTD. (SUPRA.). IN VIEW OF THE ABOVE, GROU NDS OF APPEAL NO. 9 AND 9.1 BY THE ASSESSEE ARE DISMISSED. 12 ITA NOS. 1382 & 1383/PUN/2015 ITA NOS. 1467 & 1468/PUN/2015 A.YS .2011-12 & 2012-13 22. IT IS THE FINDING OF THE TRIBUNAL IN ASSESSEES OWN CASE (SUPRA.) THAT 10% IS THE DEPRECIATION RATE APPLICABLE TO THE ELECTRICAL FITT INGS. CONSIDERING THE ABOVE SETTLED NATURE OF THE ISSUE AT THE LEVEL OF THE TRIBUNAL AS INFORMED BY THE LD. COUNSEL FOR THE ASSESSEE, W E ARE OF THE VIEW THAT THE GROUND NO. 4 RAISED BY THE ASSESSEE IS TO BE DISMISSED. 23. GROUND NO. 5 IS GENERAL IN NATURE AND THEREFORE, THE S AME IS DISMISSED. 24. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ITA NO. 1468/PUN/2015 (BY REVENUE A.Y. 2012-13) : NOW WE ARE TAKING CROSS APPEALS FOR ASSESSMENT YEAR 20 12-13 FOR ADJUDICATION. 25. BOTH THE COUNSELS SUBMITTED THE ISSUES RAISED IN THIS APPEAL I.E (1) WHETHER WIND MILL INSTALLED DIFFERENT PLACES CONSTITUTES SEPARA TE UNDERTAKING (2) ISSUE OF INITIAL ASSESSMENT YEAR (3) APPLICABILITY RATE ON DEPRECIATION ON THE ELECTRICITY FITTINGS USED FOR WIND MILL ETC. ARE IDENTICAL TO THE ISSUE ADJUDICATED BY US IN CONNECTION WITH DEPART MENTAL APPEAL FOR THE A.Y. 2011-12. 26. WE HEARD BOTH THE SIDES. WE FIND THE GROUNDS RAISED BY THE REVENUE ARE IDENTICAL TO THE GROUNDS RAISED BY THE REVENUE IN A.Y. 2011-12 AND ALL THE ISSUES WERE ALREADY AD JUDICATED BY US AND DECIDED AGAINST THE REVENUE RELYING ON THE DECISION OF COORDINATE BENCH OF TRIBUNAL IN ASSESSEES OWN CASE FOR A.YRS. 2007- 08 TO 2010-11. CONSIDERING THE COMMONALITY OF THE FACTS AS WELL AS ARGUME NTS OF LD. 13 ITA NOS. 1382 & 1383/PUN/2015 ITA NOS. 1467 & 1468/PUN/2015 A.YS .2011-12 & 2012-13 COUNSEL, WE ARE OF THE OPINION THAT THE ISSUES RAISED BY THE REVENUE HAVE TO BE DECIDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. ACCORDINGLY, GROUNDS OF APPEAL RAISED BY THE REVENUE FOR A.Y. 2012-13 ARE ALSO DISMISSED. ITA NO. 1383/PUN/2015 (BY ASSESSEE A.Y. 2012-13) : 27. IN THIS APPEAL, ASSESSEE HAS RAISED THE FOLLOWING SOLITAR Y GROUND WHICH READS AS UNDER :- 1) THE LEARNED CIT(A) ERRED IN HOLDING THAT THE COS T OF TEMPORARY APPROACHED ROAD AND FENCING WAS NOT PART AND PARCEL OF ACTUAL COST OF WIND MILL AND HENCE, THE DEPRECIATION IN RESPECT OF THE SAME WAS TO BE ALLOWED @10% AS AGAINST 80% CLAIMED BY THE ASSESSEE. 28. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE SUBMITT ED THAT THE SOLITARY GROUND RAISED BY THE ASSESSEE RELATES TO THE A PPLICABILITY RATE OF DEPRECIATION ON (1) TEMPORARY APPROACH ROAD (2) FENCING. ON THIS COUNT, LD. COUNSEL SUBMITTED THAT SIMILAR ISSUE WAS ALSO RAISED AND ADJUDICATED BY THE TRIBUNAL FOR A.YRS. 2007-08 TO 2010-11. IN THIS RE GARD, HE BROUGHT OUT ATTENTION TO PAGE NO. 18 OF THE PAPER BOOK (PARA 66 AND 67). 29. AFTER HEARING BOTH PARTIES ON THIS ISSUE, WE FIND THAT T HE ONLY ISSUE RAISED BY THE ASSESSEE IN THIS A.Y. 2012-13 IS IDENTICAL T O THE ONE WHICH WAS ALREADY ADJUDICATED BY US IN THE ASSESSEES APPEAL FOR A.Y. 2011-12 WHILE DEALING WITH GROUND NOS. 1 TO 3 IN THE PRECEDING PARA GRAPH. WE DECIDE THE ISSUE IN FAVOUR OF THE REVENUE AND AGAINST TH E ASSESSEE RELYING ON THE DECISION OF COORDINATE BENCH OF THE TRIBUNAL. ACCO RDINGLY, WE DISMISS THE ONLY GROUND RAISED BY THE ASSESSEE. 14 ITA NOS. 1382 & 1383/PUN/2015 ITA NOS. 1467 & 1468/PUN/2015 A.YS .2011-12 & 2012-13 30. GROUND NO. 2 IS GENERAL IN NATURE AND THEREFORE, THE S AME IS DISMISSED. 31. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 32. TO SUM UP, THE APPEALS OF THE REVENUE FOR A.YRS. 201 1-12 & 2012- 13 ARE DISMISSED AND THE APPEALS OF THE ASSESSEE FOR BO TH THE ASSESSMENT YEARS ARE PARTLY ALLOWED. ORDER PRONOUNCED ON 16 TH DAY OF OCTOBER, 2017. SD/- SD/- ( / SUSHMA CHOWLA ) ( . / D. KARUNAKARA RAO ) ! '# / JUDICIAL MEMBER $ '# / ACCOUNTANT MEMBER $ / PUNE; %'& / DATED : 16 TH OCTOBER, 2017 SB *+,-./0/- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS), PUNE-11 4. THE CIT, PUNE-11. 5. '() !!*+ , , *+ , - -. , $ / DR, ITAT, B BENCH, PUNE. 6. )/ 01 / GUARD FILE. // TRUE COPY // ,'$2 / BY ORDER, !3 * / PRIVATE SECRETARY, , *+ , $ / ITAT, PUNE.