Assistant Commissioner of Income-tax, V. M/s. Sanjeev Auto Parts Manufacturers P. Ltd., Aurangabad

ITA 1387/PUN/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2698 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 07-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M K BIJU
• Keywords: Depreciation
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE , !, # $ BEFORE MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA, AM ITA NO.1387/PN/2014 ASSESSMENT YEAR : 2011-12 THE ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 1, AURANGABAD. . APPELLANT VS. M/S SANJEEV AUTO PARTS MANUFACTURERS PVT. LTD., K-96, MIDC, WALUJ, AURANGABAD. PAN : AAECS0129H . RESPONDENT / APPELLANT BY : SHRI M. K. BIJU, JCIT / RESPONDENT BY : SHRI NIKHIL PATHAK / DATE OF HEARING : 03.02.2016 / DATE OF PRONOUNCEMENT: 17.02.2016 % / ORDER PER PRADIP KUMAR KEDIA, AM : THE CAPTIONED APPEAL FILED BY THE REVENUE IS AGAINS T THE ORDER OF CIT(A), AURANGABAD DATED 08.04.2014 RELATING TO ASS ESSMENT YEAR 2011-12 PASSED UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT). 2. IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLLO WING GROUNDS OF APPEAL :- 1. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) WAS CORRECT IN INTERPRETING THE PROVISION OF SECTION 80 IA(5) IN THE LIGHT OF DECISION IN THE CASE OF M/S HYDERABAD CHEMICALS SUPPLIES LTD., APIE , BALANAGAR HYDERABAD- 37 VS. THE ACIT, CIRCLE 1 (4), HYDERABAD DATED 21 ST JANUARY, 2011. 2. WHETHER IN THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS CORRECT IN INTERPRETING 'INITIAL ASSESSMENT YEAR'. 3. WHETHER IN THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE DEFINITION OF 'INITIAL ASSESSMENT YEAR' AS GIVEN IN SECTION 80IB( 14) OF THE ACT IS NOT APPLICABLE IN THE PROVISION OF SECTION 80IA OF THE ACT. 2 ITA NO.1387/PN/2014 4. THE ORDER OF THE AO BE RESTORED AND THAT OF THE CIT(A) BE VACATED. 5. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTE R ANY GROUNDS OF APPEAL. 3. THE SOLITARY ISSUE INVOLVED IN THE PRESENT APPEA L IS INTERPRETATION OF THE INITIAL ASSESSMENT YEAR FOR THE PURPOSES OF CLAIM ING THE DEDUCTION UNDER SECTION 80IA(4)(IV)(A) OF THE ACT. IDENTICAL GROUN DS WERE RAISED BY THE REVENUE BEFORE THE TRIBUNAL IN RESPECT OF ASSESSMEN T YEARS 2009-10 AND 2010-11 IN ASSESSEES OWN CASE. 4. BRIEFLY STATED, THE RELEVANT FACTS OF THE CASE A RE THAT THE ASSESSEE IS A COMPANY REGISTERED UNDER THE COMPANIES ACT, 1956 AN D INTER-ALIA ENGAGED IN THE MANUFACTURING OF AUTOMOBILE COMPONENTS. THE AS SESSEE HAD FILED ITS RETURN OF INCOME ON 12.09.2011 DECLARING TOTAL INCOME OF R S.21,64,98,057/-. THE ASSESSEE CLAIMED THE DEDUCTION UNDER SECTION 80IA(4 )(IV)(A) OF THE ACT OF RS.55,07,530/-. IN THE OPINION OF THE ASSESSING OF FICER, THE PROFITS AND GAINS FROM THE POWER GENERATION WHICH IS THE ELIGIBLE BUS INESS IS TO BE COMPUTED AS IF THE ASSESSEES ONLY SOURCE OF INCOME IS FROM ELI GIBLE BUSINESS. THE ASSESSING OFFICER REJECTED THE CLAIM OF THE ASSESSE E TOWARDS THE DEDUCTION U/S. 80IA(4)(IV)(A) BY WORKING THE CARRY FORWARD LOSSES AS UNDER: ASSESSMENT YEAR CURRENT YEAR NOTIONAL (LOSS)/PROFIT LOSS SET OFF AS CLAIMED BY THE APPELLANT CARRIED FORWARD CUMULATIVE BALANCE OF UNABSORBED LOSSES 2006-07 (5,70,63,691) -- (5,70,63,691) (5,70,63,691) 2007-08 31,06,047 31,06,047 -- (5,39,57,643) 2008-09 31,30,123 31,30,123 -- (5,08,27,519) 2009-10 13,83,975 13,83,975 -- (4,94,43,544) 2010-11 62,73,330 62,73,330 -- (4,31,70,214) 2011-12 55,07,530 55,07,530 -- (3,76,62,684) 5. THE ASSESSING OFFICER HELD THAT AS THERE IS CUMU LATIVE BALANCES OF UNABSORBED LOSSES FROM A.Y. 2006-07 ONWARDS, MORE P ARTICULARLY FROM THE BUSINESS OF GENERATION OF POWER AND HENCE, ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION IN VIEW OF PROVISIONS OF SEC. 80IA(5) OF THE ACT. IN THE OPINION OF THE ASSESSING OFFICER THE ADJUSTMENT OF LOSSES FOR EARLIER YEARS HAS TO BE MADE AS PER PROVISIONS OF SEC. 80IA(5) OF THE ACT, WHICH IS A NON-OBSTANE CLAUSE 3 ITA NO.1387/PN/2014 HAVING OVERRIDING EFFECT TO THE PROVISIONS OF THE A CT. HE ACCORDINGLY DISALLOWED THE IMPUGNED DEDUCTION UNDER SECTION 80I A(4)(IV)(A) OF THE ACT. 6. IN THE FIRST APPEAL, THE CIT(A) DECIDED THE ISSU E IN FAVOUR OF THE ASSESSEE. 7. AGGRIEVED BY THE IMPUGNED ACTION OF THE CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 8. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESS EE POINTED OUT THAT THE IDENTICAL ISSUE HAS BEEN DECIDED IN FAVOUR OF THE A SSESSEE BY THE PUNE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NOS.1373 & 1374/PN/2013 RELATING TO ASSESSMENT YEARS 2009-10 & 2010-11, ORDER DATED 27.05.2014. 9. THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVE NUE RELIED UPON THE ORDER OF THE ASSESSING OFFICER AND REITERATED THE S UBMISSIONS MADE BEFORE THE CIT(A). 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE ISSUE STANDS S QUARELY COVERED IN FAVOUR OF THE ASSESSEE BY EARLIER DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2009-10 AN D 2010-11 (SUPRA) WHEREIN THE TRIBUNAL FOLLOWED THE JUDGEMENT OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF VELAYUDHASWAMY SPINNING MILLS (P) LTD. VS. ACIT, 38 DTR 57 (MAD.) AS WELL AS THE DECISION OF THE PUNE B ENCH OF THE TRIBUNAL IN THE CASE OF SERUM INTERNATIONAL LTD. VS. ADDL. CIT, RANGE-6 IN ITA NOS.290 TO 292/PN/2010, ORDER DATED 20.09.2011. THE OPERATIVE PARAS OF THE ORDER OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NOS.1373 & 1374/PN/2013 RELATING TO ASSESSMENT YEARS 2009-10 & 2010-11, ORDER DATED 27.05.2014 ARE REPRODUCED HEREUNDER FOR READY REFER ENCE :- 5. WE HAVE HEARD THE PARTIES. WE FIND THAT THE IS SUE STANDS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HON'B LE HIGH COURT OF MADRAS IN THE CASE OF VELAYUDHASWAMY SPINNING MILLS (P) LTD. VS. ACIT 38 DTR 57 (MAD) AS WELL 4 ITA NO.1387/PN/2014 AS THE DECISION OF THE ITAT, PUNE IN THE CASE OF SE RUM INTERNATIONAL LTD. VS. ADDL. CIT, RANGE-6 ITA NOS. 290 TO 292/PN/2010 DATED 20-0 9-2011. 6. IN THE CASE OF SERUM INTERNATIONAL LTD. (SUPRA) THE TRIBUNAL HAS HELD AS UNDER: '13. HAVING BEEN CONSIDERED THE ABOVE SUBMISSIONS, WE FIND THAT THE ISSUE RAISED IN GROUND NO. 1 AS TO WHAT WOULD BE THE INIT IAL A.Y FOR THE PURPOSES OF SECTION 80IA(5) OF THE ACT HAS BEEN DECIDED IN F AVOUR OF THE ASSESSEE BY THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF POONA WALLA STUD AND AGRO FARM PVT. LTD. VS. ACIT (SUPRA). IN THAT CASE AFTER DISCUSSING THE ISSUE IN DETAIL, THE TRIBUNAL HAS COME TO THE CONCLUSION THA T THE INITIAL 'A. Y' FOR THE PURPOSE OF CLAIMING DEDUCTION U/S. 80IA WAS THE FIR ST YEAR IN WHICH THE ASSESSEE CLAIMED THE DEDUCTION U/S. 80IA (1) AFTER EXERCISING HIS OPTION AS PER THE PROVISIONS OF 80IA (2) OF THE ACT. IT WAS H ELD THAT THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE INITIAL A. Y FOR THE PURP OSES OF SECTION 80IA(2) R.W.S. 80IA (5) WAS THE YEAR IN WHICH THE ASSESSEE STARTED GENERATING ELECTRICITY FROM THE WIND MILL ACTIVITY. WE ALSO FI ND THAT THE ISSUE RAISED IN GROUND NO. 2 REGARDING THE ELIGIBILITY OF THE ASSES SEE TO CLAIM DEDUCTION U/S. 80IA UNDIMINISHED BY UNABSORBED LOSSES AND DEPRECIA TION ALSO SET OFF IN EARLIER YEARS AGAINST THE OTHER INCOME, IS FULLY CO VERED BY THE DECISION OF HON 'BLE MADRAS HIGH COURT IN THE CASE OF VELAYUDHA SWAMY SPINNING MILLS (P) LTD VS. ACIT (SUPRA) HOLDING THAT AS PER SUB-SE CTION (5) OF SECTION 801 A, PROFITS ARE TO BE COMPUTED AS IF SUCH ELIGIBLE B USINESS IS THE ONLY SOURCE OF INCOME OF THE ASSESSEE. WHEN THE ASSESSEE EXERCISES THE OPTION, ONLY THE LOSSES OF THE YEARS BEGINNING FROM THE INITIAL A. Y . ARE TO BE BROUGHT FORWARD AND NOT THE LOSSES OF THE EARLIER YEARS WHICH HAVE BEEN ALREADY SET OFF AGAINST THE INCOME OF THE ASSESSEE. THE HON'BLE MAD RAS HIGH COURT HAS BEEN FURTHER PLEASED TO HOLD THAT REVENUE CANNOT NO TIONALLY BRING FORWARD ANY LOSS OF EARLIER YEARS WHICH HAD ALREADY BEEN SE T OFF AGAINST THE OTHER INCOME OF ASSESSEE AND SET OFF AGAINST THE CORRECT INCOME OF THE ELIGIBLE BUSINESS. FICTION CREATED BY SUB-SECTION (5) OF SEC TION 80IA DOES NOT CONTEMPLATE SUCH NOTIONAL SET OFF, HELD THE HON'BLE HIGH COURT. THE HON'BLE MADRAS HIGH COURT IN THAT DECISION HAS ALSO REFERRE D THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF LIBERTY INDIA VS. CIT (SUPRA) AND THE DECISION OF SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF GOL DMAN SHARES & FINANCE (P) LTD. (SUPRA). THERE IS NO DISPUTE THAT EVEN A D ECISION OF NON- JURISDICTIONAL HIGH COURT IS A BINDING PRECEDENT FO R THE TRIBUNAL UNTIL A CONTRARY DECISION IS GIVEN BY ANY OTHER COMPETENT H IGH COURT. IN THIS REGARD, WE FIND STRENGTH FROM THE RECENT DECISION OF HON'BL E JURISDICTIONAL BOMBAY HIGH COURT IN THE CASE OF COMMISSIONER OF CENTRAL E XCISE VS. VALSON DYEING, BLEACHING AND PRINTING WORKS (SUPRA) WHEREI N THE HON'BLE BOMBAY HIGH COURT HAS BEEN PLEASED TO HOLD IN A CASE OF EX CISE MATTER THAT TRIBUNAL IS BOUND BY THE DECISION OF HIGH COURT, EVEN OF A D IFFERENT STATE, SO LONG AS THERE IS NO CONTRARY DECISION OF ANY OTHER HIGH COU RT. THE HON'BLE BOMBAY HIGH COURT HAS BEEN PLEASED TO HOLD FURTHER THAT TH E TRIBUNAL HAD NO OPTION BUT TO FOLLOW THE JUDGMENT OF THE MADRAS HIGH COURT . AN AUTHORITY LIKE AN INCOME TAX TRIBUNAL ACTING ANYWHERE IN THE COUNTRY HAS TO RESPECT THE LAW LAID DOWN BY THE HIGH COURT, THOUGH OF A DIFFERENT STATE, SO LONG AS THERE IS NO CONTRARY DECISION OF ANY OTHER HIGH COURT ON THA T QUESTION. WE THUS RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY THE H ON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF COMMISSIONER OF CENTRAL EXCISE VS. VAKSON DYEING, BLEACHING AND PRINTING WORKS (SUPRA) HOLD THAT THE TRIBUNAL IS BOUND BY THE DECISION OF THE HON'BLE MADRAS HIGH COURT ON AN IDE NTICAL ISSUE IN THE CASE OF VELAYUDHASWAMY SPINNING MILLS (P) LTD VS. ACIT ( SUPRA). WE THUS RESPECTFULLY FOLLOWING THE DECISION TAKEN BY THE HO N'BLE MADRAS HIGH COURT IN THAT CASE ON AN IDENTICAL ISSUE UNDER ALMOST SIM ILAR FACTS, HOLD THAT WHEN 5 ITA NO.1387/PN/2014 THE ASSESSEE EXERCISING THE OPTION, ONLY THE LOSSES OF THE YEAR BEGINNING FROM THE INITIAL A. Y. ARE TO BE BROUGHT FORWARD AND NOT THE LOSSES OF EARLIER YEAR WHICH HAVE BEEN ALREADY SET OFF AGAINST THE OTHER I NCOME OF THE ASSESSEE. THE REVENUE CANNOT NOTIONALLY BRING FORWARD ANY LOSS OF EARLIER YEARS WHICH HAS ALREADY BEEN SET OFF AGAINST ANY OTHER INCOME OF TH E ASSESSEE AND SET OFF THE SAME AGAINST THE CURRENT INCOME OF THE ELIGIBLE BUS INESS. WE THUS SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DIRECT THE A. O TO ALLOW THE CLAIMED DEDUCTION U/S. 80IA WITHOUT BRINGING THE NOTIONALLY BROUGHT FORWARD ANY LOSS OR DEPRECIATION OF EARLIER YEARS WHICH HAS ALREADY BEEN SET OFF AGAINST OTHER INCOME OF THE ASSESSEE. THE DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF PRIMA PAPER ENGINEERING P. LTD. VS. I TO (S UPRA) CITED BY THE LD. DR IS ALSO NOT HELPFUL TO THE REVENUE SINCE FIRSTLY THE DECISION OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF VELAYUDHASWAMY SPI NNING MILLS (P) LTD. VS. ACIT (SUPRA) ON THE ISSUE WAS NOT CITED BEFORE THE BENCH AND SECONDLY THE ID. AR FAIRLY AGREED THAT THE ISSUE RAISED WAS COVERED AGAINST THE ASSESSEE BY THE DECISION OF SPECIAL BENCH IN THE CA SE OF ACIT VS. GOLDMINE SHARES & FINANCE (P) LTD. (SUPRA) FOLLOWED BY THE A UTHORITIES BELOW. THE ID. AR THEREIN THUS CONTENDED THAT THOUGH THE ISSUE MAY BE DECIDED AGAINST THE ASSESSEE IN VIEW OF THE SPECIAL BENCH OF THE TRIBUN AL IN THE CASE OF ACIT VS. GOLDMINE SHARES & FINANCIAL (P) LTD., BUT IT SHOULD NOT BE CONSTRUED AS ACQUIESCENCE FROM THE SIDE OF THE ASSESSEE AS THE L EGAL POSITION ON THE SUBJECT IS YET NOT SETTLED. THE GROUND NO. 2 IS THU S DECIDED IN FAVOUR OF THE ASSESSEE'. THE ABOVE DECISION HAS BEEN FURTHER FOLLOWED BY OUR CO-ORDINATE BENCH IN A SUBSEQUENT DECISION IN THE CASE OF LAP FINANCE & CO NSULTANCY P. LTD. (SUPRA). THEREFORE, FOLLOWING THE PRECEDENTS, WE C ONFIRM THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) ON THIS GROUND . THE REVENUE FAILS ON THIS GROUND OF APPEAL. 11. FOLLOWING THE PARITY OF REASONING LAID DOWN BY THE EARLIER DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE (SUPRA), WE CONFIRM THE ORDER OF THE CIT(A). ACCORDINGLY, THE GROUNDS TAKEN BY THE REVENUE ARE DISMISSED. 12. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED ON THIS 17 TH DAY OF FEBRUARY, 2016. SD/- SD/- ( SUSHMA CHOWLA ) ( PRADIP KUMAR KEDIA ) / JUDICIAL MEMBER # / ACCOUNTANT MEMBER PUNE ; DATED : 17 TH FEBRUARY, 2016. 6 ITA NO.1387/PN/2014 % & '() *)' / COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A), AURANGABAD; 4) THE CIT, AURANGABAD; 5) THE DR A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. %+ / BY ORDER , ' # //TRUE COPY// $ %& # '( / SR. PRIVATE SECRETARY ) '* , / ITAT, PUNE