DCIT, Coimbatore V. Deffree Engineering Private Limited, Coimbatore

ITA 146/CHNY/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9166 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 25-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A B KOLI
• Assessee Lawyers: A S SRIVAMAN
• Keywords: Depreciation; Reasonable cause
• Section: 143(3); 115JB

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , B B ENCH, CHENNAI . . . , . , & BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.146/MDS/2016 ( / ASSESSMENT YEAR: 2012-13) THE DEPUTY COMMISSIONER OF INCOME TAX , CORPORATE CIRCLE-I 63A, RACE COURSE ROAD, COIMBATORE. VS M/S.DEFFREE ENGINEERING PVT.LTD., S.F.NO.125/2B,AVINASHI ROAD. COIMBATORE-641 014. PAN:AAACD7943E ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. A.B.KOLI, JCIT /RESPONDENT BY : MR. A.S.SRIVAMAN, ADVOCATE /DATE OF HEARING : 30 TH MARCH, 2016 /DATE OF PRONOUNCEMENT : 9 TH JUNE, 2016 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THIS APPEAL IS FILED BY THE REVENUE AGGRIEVED BY TH E ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS)- 1, COIMBATORE DATED 14.10.2015 IN ITA NO.324/14-15 PASSED UNDER SECTION 143(3) R.W.S. 250(6) OF THE ACT. 2. THE APPEAL FILED BY THE REVENUE IS BARRED BY LIM ITATION OF 3 DAYS. THE REVENUE HAS FILED AN AFFIDAVIT EXPL AINING THE REASON FOR THE DELAY IN FILING THE APPEAL BY STATIN G THAT THE DELAY OCCURRED DUE TO ADMINISTRATIVE REASONS. IT WA S THEREFORE PLEADED THAT THE DELAY MAY BE CONDONED. 2 ITA NO.146 /MDS/2016 CONSIDERING THE SUBMISSIONS OF THE REVENUE, WE ARE SATISFIED THAT THERE WAS REASONABLE CAUSE FOR THE D ELAY IN FILING THE APPEAL. HENCE IN THE INTEREST OF JUSTICE , WE HEREBY CONDONE THE DELAY IN FILING OF THE APPEAL AND ADMIT THE SAME. 3. THOUGH THE REVENUE HAS RAISED SEVERAL GROUNDS IN ITS APPEAL, THE CRUX OF THE ISSUE IS THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN A LLOWING THE CLAIM OF DEDUCTION UNDER SECTION 80IA OF THE AC T BY THE ASSESSEE TOWARDS PROFITS AND GAINS DERIVED BY GENER ATING POWER THROUGH WINDMILL. 4. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A DOMESTIC COMPANY ENGAGED IN THE BUSINESS OF MANUFAC TURING OF ENGINEERING GOODS FILED ITS RETURN OF INCOME ON 29.09.2012 FOR THE ASSESSMENT YEAR 2012-13 DECLARING INCOME OF RS.5,39,11,800/- UNDER NORMAL PROVISIONS, BOOK PROF IT OF RS.5,24,88,347/- UNDER SECTION 115JB OF THE ACT. O N SCRUTINY, THE LEARNED ASSESSING OFFICER WAS OF THE VIEW THAT THE DEDUCTION CLAIMED BY THE ASSESSEE UNDER SECTION 80IA OF 3 ITA NO.146 /MDS/2016 THE ACT AMOUNTING TO RS.1,18,55,453/- IS IN VIOLATI ON OF SECTION 80IA(5) OF THE ACT. FURTHER, THE LEARNED AS SESSING OFFICE OBSERVED AS FOLLOWS IN HIS ORDER:- 4.2 AS PER SECTION 80IA(5), PROFITS AND GAINS OF AN ELIGIBLE BUSINESS HAS TO BE WORKED OUT AS SUCH AS IF SUCH ELIGIBLE BUSINESS WERE THE ONLY SOURCE OF INCOME OF THE ASSESSEE RIGHT FROM THE COMMENCEMENT OF THE BUSINESS AND IN SUBSEQUENT YEARS UPTO THE COMPUTATION IS MADE AND BUSINESS LOSSES, DEPRECIATION AND INVESTMENT ALLOWANCE OF EARLIER YEARS SHOULD BE TAKEN INTO ACCOUNT IN DETERMINING THE QUANTUM OF DEDUCTION ADMISSIBLE UNDER THE NEW SECTION 80IA, EVEN THOUGH THEY MAY HAVE BEEN SET OFF AGAINST THE PROFITS OF THE TAX PAYER FROM OTHER SOURCES. THERE IS NO CHANGE IN THE WORDINGS WITH REGARD TO COMPUTATION OF PROFITS AND GAINS OF THE ELIGIBLE BUSINESS RIGHT FROM THE IMPORT AND UNTIL NOW. IN THE LIGHT OF THE ABOVE DISCUSSION, THE ASSESSEE DOES NOT HAVE ELIGIBLE PROFITS TO CLAIM DEDUCTION UNDER SECTION 80IA AMOUNTING TO RS.1,17,84,905/- 4.4 HOWEVER, THE ASSESSEE HAS CLAIMED 80IA DEDUCTION ON THE BASIS OF THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF SRI VELAYUDHAAMY SPINNINGS MILLS PVT.LTD., 231 CTR 368 ON SIMILAR ISSUE. NEVERTHELESS, THIS ISSUE HAS NOT BECOME FINAL AS THE DEPARTMENT HAS PREFERRED A SLP BEFORE THE HONBLE SUPREME COURT WHICH IS PENDING FOR DECISION. CONSIDERING THE FACT THAT THE ISSUE HAS NOT BECOME FINAL, THE ASSESSING OFFICER IS COMPELLED TO MAKE NECESSARY ADDITION ON ACCOUNT OF THIS ISSUE. 4 ITA NO.146 /MDS/2016 4.5 N VIEW OF THE ABOVE THE UNDERSIGNED WITH DUE RESPECT TO THE JURISDICTIONAL HIGH COURT IS CONSTRAINED TO EXERCISE ABUNDANT CAUTION AND DISALLOW THE CLAIM OF THE ASSESSEE IN ORDER TO KEEP THE ISSUE ALIVE TILL THE SLP FILED BY THE DEPARTMENT BEFORE HONBLE SUPREME COURT ON THE SAME ISSUE IS DECIDED. ACCORDINGLY, THE CLAIM MADE BY THE ASSESSEE U/S.80IA OF THE ACT AMOUNTING TO RS.1,17,84,905/- IS HEREBY DISALLOWED AND ADDED BACK TO THE TOTAL INCOME. HOWEVER, IT IS NOTED THAT THE DEMAND RAISED ON ACCOUNT OF THIS ISSUE SHALL BE ENFORCEABLE ONLY WHEN THE STAND OF THE DEPARTMENT IS UPHELD BY THE HONBLE SUPREME COURT (SC) AND TILL SUCH TIME THE DEMAND RAISED ON ACCOUNT OF THIS ISSUE IS HELD TO BE STAYED. 5. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS) FOLLOWING THE DECISION OF THE JURISDICTIO NAL HIGH COURT IN THE CASE OF SRI VELAYUTHASAMY SPINNING MIL LS REPORTED IN 231 ITR 368 ALLOWED THE DEDUCTION UNDE R SECTION 80IA OF THE ACT CLAIMED BY THE ASSESSEE. 6. BEFORE US, THE LEARNED DEPARTMENTAL REPRESENTATI VE ARGUED IN SUPPORT OF THE ORDER OF THE LEARNED ASSES SING OFFICER WHILE AS THE LEARNED AUTHORIZED REPRESENTAT IVE RELIED IN THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS). 5 ITA NO.146 /MDS/2016 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFULL Y PERUSED THE MATERIAL ON RECORD. SINCE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAD FOLLOWED T HE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CA SE OF SRI VELAYUDHASWAMY SPINNING MILLS PVT.LTD., CITED SUPRA AND ALLOWED THE CLAIM OF THE ASSESSEE UNDER SECTION 80I A OF THE ACT, WE DO NOT HAVE ANY HESITATION TO CONFIRM THE O RDERS OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), A S THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT I S BINDING ON ALL THE LOWER AUTHORITIES UNDER ITS JURISDICTION. A CCORDINGLY, WE HEREBY CONFIRM THE ORDER OF THE LEARNED COMMISSIONE R OF INCOME TAX (APPEALS). 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 9 TH JUNE, 2016 SD/- SD/- ( . . . ) ( . ) (N.R.S.GANESAN) ( A.M OHAN ALANKAMONY ) # % / JUDICIAL MEMBER % / ACCOUNTANT MEMBER # /CHENNAI, ( /DATED 9 TH JUNE, 2016 SOMU *+ ,+ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. - () /CIT(A) 4. - /CIT 5. + 1 /DR 6. /GF