ACIT, CHENNAI V. M/s. Mohan Breweries and Distilleries Ltd., CHENNAI

ITA 1491/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57759 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 10-01-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 05-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R B NAIK
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER I.T.A. NO. 1491/MDS/2011 (ASSESSMENT YEAR : 2006-07) THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE IV(3), CHENNAI 600 034. (APPELLANT) V. M/S MOHAN BREWERIES AND DISTILLERIES LTD., 158, RAYALA TOWERS, 2 ND FLOOR, ANNA SALAI, CHENNAI 600 002. PAN : AAACM2415L (RESPONDENT) APPELLANT BY : SHRI R.B. NAIK, CIT-DR RESPONDENT BY : SHRI SAROJKUMA R PARIDA, ADVOCATE DATE OF HEARING : 10.01.2012 DATE OF PRONOUNCEMENT : 13.01.2012 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : THE ONLY ISSUE RAISED BY THE REVENUE IN THIS APPE AL IS THAT LD. CIT(APPEALS) HELD ASSESSEE TO BE ELIGIBLE TO CLAIM DEDUCTION UNDER SECTION 80-IA OF INCOME-TAX ACT, 1961 (IN SHORT TH E ACT) WITHOUT SETTING OFF THE CARRIED FORWARD NOTIONAL LOSS. I.T.A. NO. 1491/MDS/11 2 2. AS PER THE REVENUE, THE DECISION OF HON'BLE JURI SDICTIONAL HIGH COURT IN THE CASE OF VELAYUDHASWAMY SPINNING MILLS V. ACIT (231 CTR 368) HAD NOT BECOME FINAL AND REVENUE HAD FILED SPECIAL LEAVE PETITION BEFORE HON'BLE APEX COURT. 3. WHEN THE APPEAL CAME UP FOR HEARING, LEARNED D.R . SUBMITTED THAT IN THE CASE OF ASSESSEE, THE INITIAL ASSESSMEN T YEAR WAS NOT ASSESSMENT YEAR 2004-05 BUT WAS ASSESSMENT YEAR 199 9-2000 AS NOTED BY THE ASSESSING OFFICER. THEREFORE, ACCORDI NG TO HIM, NOTIONAL LOSS OUGHT HAVE BEEN CONSIDERED FOR SETTING OFF BEF ORE ALLOWING CLAIM OF DEDUCTION UNDER SECTION 80-IA OF THE ACT. 4. PER CONTRA, LEARNED A.R. SUBMITTED THAT THIS TRI BUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2004-05 REP ORTED IN (2008) 114 TTJ (CHENNAI) 532, HAD CLEARLY HELD THAT THE INITIAL ASSESSMENT YEAR IN THE ASSESSEES CASE STARTED FROM 2004-05. RELEVANT PARA OF THIS TRIBUNAL ORDER DATED 31 ST OCTOBER, 2007, IS REPRODUCED HEREUNDER:- I.T.A. NO. 1491/MDS/11 3 6. ADVERTING TO THE FACTS OF THE CASE THE INITIAL A SSESSMENT YEAR IN THIS CASE STARTS FROM 2004-05. SINCE THE A SSESSEE HAS OPTED TO CLAIM THIS DEDUCTION ONLY IN THIS ASSESSME NT YEAR, THE INITIAL ASSESSMENT YEAR CANNOT BE THE YEAR IN WHICH THE UNDERTAKING COMMENCED ITS OPERATIONS AND IN THIS CA SE THE INITIAL ASSESSMENT YEAR IS THE ASSESSMENT YEAR IN WHICH ASS ESSEE HAS CHOSEN TO CLAIM DEDUCTION UNDER S. 80-IA. HENCE TH E PROVISIONS OF S. 80-IA(5) TREATING UNDERTAKING AS A SEPARATE S OLE SOURCE OF INCOME CANNOT BE APPLIED TO A YEAR PRIOR TO THE YEA R IN WHICH ASSESSEE OPTED TO CLAIM RELIEF UNDER S. 80-IA FOR T HE FIRST TIME. DEPRECIATION AND CARRY FORWARD LOSS RELIEF TO THE U NIT WHICH CLAIMS DEDUCTION UNDER S. 80-IA CANNOT BE NOTIONALL Y CARRIED FORWARD AND SET OFF AGAINST THE INCOME FROM THE YEA R IN WHICH THE ASSESSEE STARTED CLAIMING DEDUCTION UNDER S. 80 -IA. AT THE COST OF REPETITION, WE MAKE IT CLEAR THAT THE CASE LAW RELIED ON BY THE DEPARTMENTAL REPRESENTATIVE ARE DELIVERED BEFOR E THE AMENDMENT TO SECTION BY FINANCE ACT, 1999. BEFORE THE AMENDMENT THE INITIAL ASSESSMENT YEAR WAS DEFINED I N THE ACT BUT AFTER THE AMENDMENT THERE IS NO DEFINITION FOR INITIAL ASSESSMENT YEAR IN THE ACT AND THERE IS OPTION TO T HE ASSESSEE IN SELECTING THE YEAR OF CLAIMING RELIEF UNDER S. 80-I A. IN VIEW OF THIS, WE ARE OF THE OPINION THAT THERE IS NO QUESTI ON OF SETTING OFF NOTIONALLY CARRIED FORWARD UNABSORBED DEPRECIAT ION OR LOSS AGAINST THE PROFITS OF THE UNITS AND ASSESSEE IS EN TITLED TO CLAIM DEDUCTION UNDER S. 80-IA ON CURRENT ASSESSMENT YEAR ON THE CURRENT YEAR PROFIT. ACCORDINGLY WE ALLOW THE CLAI M OF THE ASSESSEE. WE ALSO FIND THAT THE REVENUE HAD FILED AN APPEAL B EFORE HON'BLE JURISDICTIONAL HIGH COURT AGAINST THIS DECISION OF THE TRIBUNAL AND HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF VE LAYUDHASWAMY SPINNING MILLS (SUPRA) HAD CONSIDERED SUCH APPEAL A LSO AND THIS IS I.T.A. NO. 1491/MDS/11 4 CLEAR FROM PARA 2 OF THE HON'BLE JURISDICTIONAL HIG H COURT. THEREFORE, WE FIND THAT THERE IS NOTHING ON RECORD WHICH CAN P ERSUADE US TO TAKE A DIFFERENT VIEW FOR THE IMPUGNED ASSESSMENT YEAR. 5. IN THE RESULT, APPEAL FILED BY THE REVENUE STAND S DISMISSED. THE ORDER WAS PRONOUNCED IN THE COURT ON 13 TH JANUARY, 2012. SD/- SD/- (GEORGE MATHAN) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 13 TH JANUARY, 2012. KRI. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT(A)-VI, CHENNAI (4) CIT-III, CHENNAI (5) D.R. (6) GUARD FILE