Poonawalla Estates Stud & Agri Farm Pvt. Ltd., Pune V. Assistant Commissioner of Income-tax,

ITA 1462/PUN/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2823 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 18-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HITENDRA NINAWE

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE . . , ! , # $ BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.1462/PN/2014 #& & / ASSESSMENT YEAR : 2006-07 POONAWALLA ESTATES STUD & AGRI FARM PVT. LTD., 16B-1, SAROSH BHAVAN, DR. AMBEDKAR ROAD, PUNE 411 001 PAN NO.AAHCP3543P . / APPELLANT V/S ACIT, CIRCLE-1(2), PUNE . / RESPONDENT / ASSESSEE BY : SHRI NIKHIL PATHAK / REVENUE BY : SHRI HITENDRA NINAWE / ORDER PER VIKAS AWASTHY, JM : THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDE R OF CIT(A)-I, PUNE DATED 28-02-2014 FOR THE ASSESSMENT YEAR 2006- 07. 2. THE SOLITARY ISSUE RAISED IN THE APPEAL FILED BY THE ASS ESSEE IS AGAINST DENIAL OF DEDUCTION U/S.80IA ON THE PROFITS FROM THE WINDMILLS. / DATE OF HEARING :03.02.2016 / DATE OF PRONOUNCEMENT:10.02.2016 2 ITA NO.1462/PN/2014 3. BRIEF FACTS OF THE CASE AS EMANATING FROM THE RECORDS ARE : THE ASSESSEE HAS SET UP WINDMILL FOR GENERATION OF POWER. THE WINDMILL WAS ERECTED AND PUT TO USE IN THE PERIOD RELEVANT TO T HE A.Y. 2002- 03. THE ASSESSEE CLAIMED DEDUCTION U/S.80IA ON THE PROFIT S OF WINDMILL FOR THE FIRST TIME IN THE A.Y. 2004-05. THE ASSESSMEN T YEAR UNDER APPEAL IS THE THIRD YEAR FOR CLAIMING DEDUCTION UNDER THE PROVISIONS OF SECTION 80IA. THE AO DENIED DEDUCTION TO T HE ASSESSEE U/S.80IA BY DISPUTING INITIAL ASSESSMENT YEAR. AGGRIEVED BY THE ASSESSMENT ORDER DATED 24-12-2008 T HE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). THE CIT(A ) UPHOLDING THE FINDING OF THE AO OBSERVED, THAT THE INITIAL ASSESSMENT YEAR IN WHICH THE GENERATION OF POWER FROM WINDMILLS BEGAN IS A.Y. 2002-03 AND NOT THE FIRST YEAR OF CLAIMING DED UCTION, I.E. A.Y. 2004-05. AGAINST THE ORDER OF CIT(A) THE ASSESSEE IS IN SECOND AP PEAL BEFORE THE TRIBUNAL. 4. SHRI NIKHIL PATHAK APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE FIRST APPELLATE AUTHORITY HAS ERRED IN HOLDING THAT THE INITIAL ASSESSMENT YEAR FOR THE PURPOSE OF SECTION 8 0IA IS THE FIRST YEAR IN WHICH THE WINDMILL STARTED GENERATING ELECTRICITY . THE CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT FOR THE PURPOSE OF CLAIMING RELIEF UNDER SECTION 80IA INITIAL ASSESSMENT YEAR IS THE YEAR IN WHICH THE ASSESSEE CLAIMED DEDUCTION U/S.80IA FOR THE FIRST TIME ON THE PROFITS FROM WINDMILL AND NOT THE FIRST YEAR OF ITS OPERATION. 3 ITA NO.1462/PN/2014 5. THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT THE ISSUE REGARDING ELIGIBILITY OF ASSESSEE TO CLAIM DEDUCTION U/S.80IA, V IS-- VIS INITIAL ASSESSMENT YEAR HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE COORDINATE BENCH OF THE TRIBUNAL IN ASSE SSEES OWN CASE FOR A.Y. 2004-05 IN ITA NO.92/PN/2008 REPORTED AS 1 36 TTJ 236. THE PUNE BENCH OF THE TRIBUNAL HAS BEEN CONSISTENT LY HOLDING THAT THE INITIAL ASSESSMENT YEAR IS THE FIRST YEAR OF AN Y 10 CONSECUTIVE ASSESSMENT YEARS OUT OF THE 15 YEARS IN WH ICH DEDUCTION U/S.80IA HAS BEEN CLAIMED FOR THE FIRST TIME. TH E TRIBUNAL IN A RECENT DECISION IN THE CASE OF D.J. MALPANI VS. ACIT IN ITA NO.1151/PN/2013 FOR A.Y. 2007-08 HAS REITERATED THE VIEW TAKEN IN THE CASE OF ASSESSEE FOR A.Y. 2004-05. 6. ON THE OTHER HAND SHRI HITENDRA NINAWA REPRESENTING THE DEPARTMENT VEHEMENTLY SUPPORTED THE FINDINGS OF THE CI T(A) ON THE ISSUE. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THA T THERE WERE NO PROFITS IN THE IMPUGNED ASSESSMENT YEAR ON WHICH THE ASSESSEE COULD HAVE CLAIMED DEDUCTION. THE LD. DEPARTMEN TAL REPRESENTATIVE IN SUPPORT OF THE FINDINGS OF CIT(A) PLACED R ELIANCE ON THE DECISION RENDERED IN THE CASE OF KHINVASARA INVEST MENT PVT. LTD. VS. JCIT REPORTED AS 110 ITD 198 (PUNE). THE LD. DEPART MENTAL REPRESENTATIVE PRAYED FOR DISMISSING THE APPEAL OF THE ASSESSEE. 7. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESEN TATIVES OF BOTH THE SIDES AND HAVE PERUSED THE ORDERS OF THE A UTHORITIES BELOW. WE HAVE ALSO CONSIDERED THE DECISIONS ON WHICH BOT H THE SIDES HAVE PLACED RELIANCE. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAD ERECTED AND PUT TO USE THE WINDMILL IN THE PERIOD RELEVANT TO A.Y. 2002-03. THE ASSESSEE HAD CLAIMED THE BENEFIT OF DEDUCTIO N 4 ITA NO.1462/PN/2014 U/S.80IA ON THE WINDMILL FOR THE FIRST TIME IN A.Y. 2004-05. THUS, THE INITIAL ASSESSMENT YEAR IN THE CASE OF ASSESSEE FOR THE PURPOSE OF CLAIMING DEDUCTION AS ENVISAGED UNDER THE PROVISIONS OF SECTION 80IA WAS A.Y. 2004-05. EARLIER, THE REVENUE HAD RAISED OB JECTION TO THE INITIAL ASSESSMENT YEAR FOR CLAIMING DEDUCTION U/S.80IA IN THE A.Y.2004-05. THE DISPUTE TRAVELLED UPTO THE TRIBUNAL. THE TRIBUNAL DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. THE TRIBUNAL HELD THAT INITIAL ASSESSMENT YEAR FOR THE PURPOSE OF CLAIMING DEDUCT ION U/S.80IA WOULD BE THE FIRST YEAR IN WHICH THE ASSESSEE HA S CLAIMED DEDUCTION. THE RELEVANT EXTRACT OF THE FINDINGS OF THE TR IBUNAL ARE REPRODUCED HEREIN BELOW : 13. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE F ACTUAL MATRIX OF THE CASE AND ORDERS OF THE REVENUE AND THE PAPER BOOK . WE HAVE ALSO EXAMINED THE LEGAL POSITION ON THE MATTER. BEFORE AD JUDICATING THE ISSUE IN QUESTION, IT IS NECESSARY TO EXAMINE THE SCOPE OF THE PROVISIONS RELATING TO THE INITIAL ASSESSMENT YEAR : '80-IA. DEDUCTIONS IN RESPECT OF PROFITS AND GAINS FRO M INDUSTRIAL UNDERTAKINGS OR ENTERPRISES ENGAGED IN INFRASTRUCTURE D EVELOPMENT, ETC.(1) WHERE THE GROSS TOTAL INCOME OF AN ASSESSEE INCL UDES ANY PROFITS AND GAINS DERIVED FROM ANY BUSINESS OF AN INDUST RIAL UNDERTAKING OR AN ENTERPRISE REFERRED TO IN SUB-S. (4) (SUCH BUSINESS BEING HEREINAFTER REFERRED TO AS THE ELIGIBLE BUSINESS) , THERE SHALL, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THIS SE CTION, BE ALLOWED, IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE, A DEDUCTION FROM SUCH PROFITS AND GAINS OF AN AMOUNT EQUAL TO HUND RED PER CENT OF PROFITS AND GAINS DERIVED FROM SUCH BUSINESS FOR THE FIRS T FIVE ASSESSMENT YEARS COMMENCING AT ANY TIME DURING THE PERIO DS AS SPECIFIED IN SUB-S. (2) AND THEREAFTER, TWENTY-FIVE PE R CENT OF THE PROFITS AND GAINS FOR FURTHER FIVE ASSESSMENT YEARS : PROVIDED THAT WHERE THE ASSESSEE IS A COMPANY, THE PROVI SIONS OF THIS SUB-SECTION SHALL HAVE EFFECT AS IF FOR THE WORDS TWENT Y-FIVE PER CENT; THE WORDS THIRTY PER CENT HAD BEEN SUBSTITUTED. (2) THE DEDUCTION SPECIFIED IN SUB-S. (1) MAY, AT THE OPTION OF THE ASSESSEE, BE CLAIMED BY HIM FOR ANY TEN CONSECUTIVE ASSESSME NT YEARS OUT OF FIFTEEN YEARS BEGINNING FROM THE YEAR IN WHIC H THE UNDERTAKING OR THE ENTERPRISE DEVELOPS AND BEGINS TO OPERATE ANY INF RASTRUCTURE FACILITY OR STARTS PROVIDING TELECOMMUNICATION SERVICE OR DEVEL OPS AN INDUSTRIAL PARK OR GENERATES POWER OR COMMENCES TRANSMISSION OR DIST RIBUTION OF POWER : 5 ITA NO.1462/PN/2014 PROVIDED THAT WHERE THE ASSESSEE BEGINS OPERATING AND MA INTAINING ANY INFRASTRUCTURE FACILITY REFERRED TO IN CL. (B) OF EX PLANATION TO CL. (I) OF SUB- S. (4), THE PROVISIONS OF THIS SUB-SECTION SHALL HAVE EFFE CT AS IF FOR THE WORDS FIFTEEN YEARS, THE WORDS TWENTY YEARS HAD BEE N SUBSTITUTED...............' 14. FROM THE ABOVE PROVISIONS OF SUB-S. (2) OF S. 80-IA OF THE ACT, IT IS EVIDENT THAT THE ASSESSEE IS GRANTED THE OPTION TO SELECT INITIAL ASSESSMENT YEAR I.E., FIRST ASSESSMENT YEAR OF THE ANY TEN CONSECUTIVE ASSESSMENT YEARS OUT OF FIFTEEN YEARS. STARTING ASSESSMENT Y EAR FOR COUNTING THE DURATION OF FIFTEEN YEARS IS ALSO PROVIDE D IN THE SAID SUB- SECTION. AS PER THESE PROVISIONS, THE ASSESSEE IS NOT ALLOWED TO JUMP THE ASSESSMENT YEAR ONCE AN INITIAL ASSESSMENT YEAR IS OPTED. TH EREFORE, WE FIND NO FAULT WITH THE ASSESSEE IN SELECTING THE ASST. YR. 2004-05 AS THE INITIAL ASSESSMENT YEAR. IN THIS REGARD I.E., ON THE I SSUE OF ASSESSEES OPTION TO SELECT THE INITIAL ASSESSMENT YEAR, WE HAVE PERUSED THE CITATIONS RELIED UPON BY THE ASSESSEES COUNSEL. THE CONCL USION BY THE TRIBUNAL MUMBAI BENCH DECISION IN ITA NO. 4620/MUM/2 007 (ASST. YR. 2004-05) IN THE CASE OF DY. CIT VS. USHDEV INTERNATION AL LTD., IS STRAIGHT ON THIS ISSUE OF INITIAL ASSESSMENT YEAR AND THE OPTION TO THE ASSESSEE AND THE HELD PORTION OF THE DECISION READS AS UNDER : 'IN VIEW OF THE ABOVE LEARNED CIT(A)S ORDER TO THE EXTENT OF HOLDING THAT INITIAL ASSESSMENT YEAR AND SUBSEQUENT SUCCEEDING ASSE SSMENT YEARS CAN ONLY BE CONSIDERED FOR THE PURPOSE OF COMPU TING DEDUCTION UNDER S. 80-IA. COMING TO THE FACTS OF THE CASE, HOWE VER, AS SEEN FROM THE SCHEDULE OF DETAILS AVAILABLE IN THE LEARNED CIT( A)S ORDER THE ASSESSEE HAS INCURRED LOSSES IN THE ASST. YRS. 1997-98 AND 1 998-99 ONLY. SUBSEQUENTLY IN ALL THE YEARS THERE WERE PROFITS TILL ASST. YR. 2004-05. IT IS NOT CLEAR WHETHER THE ASSESSEE HAS CLAIMED ANY DEDUCTI ON IN EARLIER YEARS UNDER S. 80-IA. THIS BEING THE 8TH YEAR OF STARTI NG THE PROJECT, ASSESSEE WOULD BE LEFT WITH ONLY ANOTHER 7 YEARS OF CLAI M OUT OF THE 10 YEARS AVAILABLE TO THE ASSESSEE. CONSIDERING THIS WE ARE O F THE OPINION THAT THE INITIAL ASSESSMENT YEAR IS TO BE DETERMINED ON THE BASIS OF THE YEAR THE ASSESSEE CHOOSE TO CLAIM THE DEDUCTION FOR THE FIRST TIME........' 15. WHEN THE STATUTE HAVE GRANTED THE OPTION TO CHO OSE THE INITIAL ASSESSMENT YEAR AND WHEN THE ASSESSEE HAS SO CHOSEN THE CURREN T ASSESSMENT YEAR AS THE INITIAL ASSESSMENT YEAR AND WHEN THE ASSESSEE ACCORDINGLY PAID THE TAXES ON THE PROFITS OF THE WIND MILL ACTIVITY IN THE EARLIER YEARS AS PER THE STATUTE, THE AOS DECISION TO T HRUST THE INITIAL ASSESSMENT YEAR ON THE ASSESSEE IS NOT IN TUNE WITH THE PROV ISIONS OF S. 80-IA(2) OF THE ACT. ACCORDINGLY, WE ARE OF THE OPI NION, THE LEARNED CIT(A) ERRED IN HOLDING THAT THE INITIAL ASSESSMENT YEA R FOR THE PURPOSES OF S. 80-IA(2) R/W S. 80-IA(5) WAS THE YEAR IN WHICH T HE ASSESSEE STARTED GENERATING THE ELECTRICITY. THEREFORE, THE ORDER OF THE CIT(A) HAS TO BE REVERSED ON THIS ISSUE. IT IS CLEAR THAT THE INITIAL ASSE SSMENT YEAR FOR THE ABOVE PURPOSES WAS THE FIRST YEAR IN WHICH THE ASSESSEE CLA IMED THE DEDUCTION UNDER S. 80-IA(1) AFTER EXERCISING HIS OPTIO N AS PER THE PROVISIONS OF S. 80-IA(2) OF THE ACT. CONSEQUENTLY, TH E ASSESSEE IS ENTITLED TO CLAIM THE DEDUCTION OF RS. 25,44,326 UND ER S. 80-IA IN RESPECT OF THE PROFITS FROM THE WINDMILL ACTIVITY. AC CORDINGLY, THE CLARIFICATORY GROUND RAISED IS ALLOWED. IN THE RESULT, ADJUDICATION OF THE GROUNDS 3 AND 4 RAISED IN THE APPEAL IS MERE ACADEMIC AND HENCE THEY ARE DISMISSED AS INFRUCTUOUS. 6 ITA NO.1462/PN/2014 8. RECENTLY, THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF D.J. MALPANI (SUPRA) HAS REITERATED THE POSITION WITH REGARD TO THE INITIAL ASSESSMENT YEAR. ACCORDINGLY, WE ARE OF THE CON SIDERED VIEW THAT THE ASSESSEE IS ELIGIBLE TO CLAIM DEDUCTION U/S.80IA O N THE PROFITS FROM THE WINDMILL FOR THE IMPUGNED ASSESSMENT YEAR. 9. THE LD. DEPARTMENTAL REPRESENTATIVE HAS PLACED RELIANC E ON THE DECISION OF KHINVASARA INVESTMENT PVT. LTD. (SUPRA) IN S UPPORT OF HIS SUBMISSIONS. WE ARE OF THE CONSIDERED VIEW THAT THE S AID ORDER WAS PASSED WAY BACK IN THE YEAR 2006. THEREAFTER, MUC H WATER HAS FLOWN AND THE ISSUE RELATING TO THE INITIAL ASSESSMENT YEAR HAS BEEN LAID TO REST BY THE HONBLE MADRAS HIGH COURT IN THE CAS E OF VELLAYUDHASWAMY SPINNING MILLS PVT. LTD. VS. ACIT REPORTED IN 38 DTR 57 (MADRAS). THE TRIBUNAL HAS BEEN CONSISTENTLY FOLLOWING THE VIEW TAKEN BY THE HONBLE MADRAS HIGH COURT. THEREFORE , THE DECISION ON WHICH THE LD. DEPARTMENTAL REPRESENTATIVE HAS PLACED RELIANCE WILL HAVE NO RELEVANCE IN VIEW OF THE SUBSEQUENT D ECISION OF HONBLE HIGH COURT. 10. IN THE RESULT, THE IMPUGNED ORDER IS SET ASIDE AND T HE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON WEDNESDAY THE, 10TH DAY OF FEB RUARY, 2016. SD/- SD/- ( R.K. PANDA ) ( VIKAS AWASTHY ) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE ; DATED : 10 TH FEBRUARY, 2016. 7 ITA NO.1462/PN/2014 ) *#,! -! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. THE CIT(A ) - I, PUNE 4. 5. 6. THE CIT-I, PUNE $ ''(, (, / DR, ITAT, B PUNE; - / GUARD FILE. / BY ORDER , $ ' //TRUE COPY// // TRUE COPY // // $ ' //TRUE C // /0 ' ( / SR. PRIVATE SECRETARY (, / ITAT, PUNE