M/s Bellad & Company, Hubli V. DCIT, Hubli

ITA 1495/BANG/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89941 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 06-04-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 01-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: FARHAT HUSSAIN QURESHI
• Assessee Lawyers: C R NULVI
• Keywords: Revision of order; Depreciation; Question of law
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRI BUNAL BANGALORE BENCH B, BANGALORE BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO, JUDICIAL MEMBER ITA NO.1495(B)/2013 (ASSESSMENT YEAR : 2009-10) M/S BELLAD & COMPANY, VIDYANAGAR, HUBLI-21 APPELLANT PAN NO.AABFB6457D VS THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-1(1), HUBLI R ESPONDENT ASSESSEE BY : SHRI C.R.NULVI, CA REVENUE BY : SHRI FARHAT HUSSAIN QURESHI, CIT DATE OF HEARING : 06-04-2015 DATE OF PRONOUNCEMENT : 06-04-2015 O R D E R PER SHRI VIJAY PAL RAO, JM: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E REVISION ORDER DATED 25-09-2013 OF THE CIT, HUBLI PASSED U/S 263 O F THE IT ACT, 1961 ( IN SHORT THE ACT) FOR AY: 2009-10. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS IN ITS APPEAL I) THE ORDER OF THE HONBLE CIT, HUBLI IS BAD IN LAW AND AGAINST THE JURISDICTIONAL TRIBUNAL JUDGMENT IN CAS E OF ANIL ITA NO.1495(BANG)2013 2 LAD VS DCIT CENTRAL CIRCLE 2(3), BANGALORE IN ITA NO.12629BANG.)/2010 DATED 07-01-2011. II) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN D UNDER THE PROVISIONS OF THE LAW HONBLE CIT HUBLI E RRED IN SETTING ASIDE THE ORDER PASSED U/S 143(3) WITH THE DIRECTION TO THE AO TO DISALLOW THE CLAIM MADE U/S 80IA. III) ON THE FACTS AND CIRCUMSTANCES OF THE CASE & BASED ON THE CONSTITUTIONAL COURT JUDGMENT OF THE HONLE MADRAS HIGH COURT IN THE CASE OF HONBLE HIGH COURT OF MAD RAS IN CASE OF VELAYUDHASWAMY SPINNING MILLS PT.LTD., VS A CIT (38 DTR 57) WHETHER THE ACTION OF THE CIT HUBLI TO SET ASIDE THE ORDER PASSED U/S 143(3), ON THE GROUND THAT THE ORD ER IS ERRONEOUS AND PREJUDICE TO THE INTEREST OF THE REVE NUE IS CORRECT IS JUSTIFIED. IV) ON THE FACTS AND CIRCUMSTANCES OF THE CASE WHE THER THE ORDER OF THE HONBLE CIT HUBLI IS JUSTIFIED TO SETT ING ASIDE THE ORDER OF THE AO PASSED U/S 143(3) WHEREIN AO ADOPTE D ONE VIEW, WHERE THERE IS A POSSIBILITIES OF CONTRARY VI EW EXISTS. V) FOR THESE AND OTHER REASONS WHICH MAY BE ADDUCE D AT THE TIME OF HEARING THIS HONBLE BENCH IS REQUESTED TO ANNUL THE ORDER OF THE CIT, HUBLI PASSED U/S 263 OF THE I T ACT, 1961. 3. IN THIS CASE THE ASSESSMENT WAS COMPLETED U/S 1 43(3) OF THE ACT, ON 30-09-2009, WHEREBY THE TOTAL INCOME OF THE ASSE SSEE WAS DETERMINED AT RS.28,46,898/- AS AGAINST THE RETURNED INCOME OF RS.24,28,970/-. SUBSEQUENTLY, THE CIT NOTICED FROM THE RECORD THAT THE ASSESSEE HAD ITA NO.1495(BANG)2013 3 CLAIMED DEDUCTION U/S 80IA(5) OF THE ACT, TO THE TU NE OF RS.34,32,127/- IN RESPECT OF INCOME FROM WINDMILL. THE CIT FOUND THA T THE ASSESSEE HAD NOT COMPUTED THE QUANTUM OF DEDUCTION U/S 80IA AS IF TH E WIND MILL IS THE ONLY SOURCE OF INCOME, AS PROVIDED U/S 80IA(5) OF THE AC T. ACCORDING TO THE CIT THAT ALLOWING DEDUCTION U/S 80IA WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. CONSEQUENTLY, A SHOW CAUSE NO TICE DATED 06-092009 U/S 263 WAS ISSUED TO THE ASSESSEE AS TO WHY THE AS SESSMENT ORDER PASSED U/S 143(3) OF THE ACT ON 23-12-2011 SHOULD NOT BE S ET ASIDE. 4. THE ASSESSEE CONTENDED BEFORE THE CIT THAT THE C LAIM OF THE ASSESSEE WAS AS PER LAW, AND THEREFORE, THE PROPOSE D REVISION U/S 263 OF THE ACT SHOULD BE WITHDRAWN. IT WAS SUBMITTED THA T AS PER THE PROVISION OF SECTION 80IA, 100% OF THE PROFIT FROM GENERATION AN D DISTRIBUTION OF POWER IS DEDUCTIBLE FOR TEN YEARS COMMENCING FROM INITIAL ASSESSMENT YEAR. THE INITIAL ASSESSMENT YEAR MEANS ASSESSMENT YEAR SPECI FIED BY THE ASSESSEE AT HIS OPTION TO BE THE INITIAL YEAR, NOT FALLING BEYO ND FIFTEEN ASSESSMENT YEARS STARTING FROM THE PREVIOUS YEAR IN WHICH THE UNDER TAKING GENERATES POWER OR COMMENCING TRANSMISSION OR DISTRIBUTION OF POWER . THE ASSESSEE HAS OPTED THE FINANCIAL YEAR RELEVANT TO ASSESSMENT YEA R 2009-10 AS INITIAL ASSESSMENT YEAR. THE ASSESSEE RELIED UPON THE DEC ISION OF THIS TRIBUNAL IN THE CASE OF ANIL H LAD VS DCIT IN ITA NO.1262(BANG. )2010 DATED 07-01- 2010 AND SUBMITTED THAT THE TRIBUNAL HAS HELD THAT ONCE THE SET OFF HAS TAKEN PLACE IN EARLIER YEARS AGAINST THE OTHER INCO ME, THE REVENUE CANNOT RE-WORK THE SET OFF AMOUNT AND BRING IT NOTIONALLY. THE ASSESSEE HAS ALSO ITA NO.1495(BANG)2013 4 RELIED UPON THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF VELAYUDHASWAMY SPINNING MILLS PVT. LTD., VS ACIT AN D CIT VS MOHAN BREVARIES & DISTILLERIES LTD 340 ITR 477. APART FR OM THE ABOVE DECISION, ASSESSEE HAS ALSO RELIED ON THE DECISION OF THE BOM BAY BENCH OF THIS TRIBUNAL IN THE CASE OF M/S SHEVIE EXPORTS VS JCIT IN ITA NO.321/MUM/2012 DATED 10-04-2013. THE CIT DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND GIVEN MUCH EMPHASIS ON THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2010-11 WHEREIN THE A O RELIED UPON THE DECISION OF THE AHMEDABAD BENCH OF THIS TRIBUNAL IN THE CASE OF ACIT VS GOLDMINES SHARES AND FINANCE PVT.LTD.,(116 TTJ 705) . ACCORDINGLY, THE CIT CONCLUDED THAT THE ASSESSEE IS NOT ENTITLE FOR THE CLAIM OF DEDUCTION U/S 80IA(5) OF THE ACT AND CONSEQUENTLY, SET ASIDE THE ORDER OF THE AO DATED 23-12-2011 WITH THE DIRECTION TO THE AO TO RE -DO THE ASSESSMENT AFRESH. 5. BEFORE US THE LEARNED AR OF THE ASSESSEE SUBMIT TED THAT THE ASSESSEE HAD INSTALLED THE WIND MILL DURING THE FIN ANCIAL YEAR 2004-05, BUT NOT CLAIMED DEDUCTION U/S 80IA OF THE ACT FOR THE A SSESSMENT YEAR 2006-07 TO 2008-09, AS THERE WAS LOSS FROM THE WIND MILL BU SINESS. FOR THE ASSESSMENT YEAR 2009-10, ASSESSEE CLAIMED DEDUCTION U/S 80IA OF THE ACT, AS THE INITIAL ASSESSMENT YEAR. SINCE THE LOSS OF THE EARLIER YEARS FROM THE WIND MILL BUSINESS WAS ALREADY SET OFF AGAINST THE PROFITS OF OTHER BUSINESS OF THE ASSESSEE. THEREFORE, THE ASSESSEE IS ENTITL E FOR DEDUCTION U/S 80IA OF ITA NO.1495(BANG)2013 5 THE ACT FOR THE ASSESSMENT YEAR UNDER CONSIDERATION , BEING THE INITIAL ASSESSMENT YEAR. THE CLAIM OF DEDUCTION U/S 80IA W AS ALLOWED BY THE AO AS IT WAS ALLOWABLE IN VIEW OF THE VARIOUS JUDGMENT S OF THIS TRIBUNAL, THEREFORE, THE VIEW TAKEN BY THE AO IS ONE OF THE P OSSIBLE VIEWS ON THIS ISSUE. THE CIT(A) HAS PASSED THE REVISION ORDER BY NOT ACCEPTING THE POSSIBLE VIEW UNDER WHICH THE CLAIM OF THE ASSESSEE IS AN ALLOWABLE CLAIM, BUT BY TAKING A DIFFERENT VIEW AS PER THE DECISION OF THE AHMEDABAD BENCH OF THIS TRIBUNAL IN THE CASE OF ACIT VS GOLDMINES S HARES AND FINANCE PVT.LTD (SUPRA). THUS, THE LEARNED AR SUBMITTED TH AT ONCE THE AO HAS ALLOWED THE CLAIM WHICH IS A POSSIBLE VIEW THEN THE CIT IS NOT PERMITTED TO INVOKE THE PROVISIONS OF SECTION 263 OF THE ACT, ME RELY BECAUSE, HE DOES NOT AGREE WITH VIEW TAKEN BY THE AO. IN SUPPORT OF HI S CONTENTION, HE HAS RELIED UPON THE FOLLOWING DECISIONS; 1. ITAT MUMBAI BENCH JUDGMENT IN CASE OF SHEVIE EXP ORTS VS JCIT IN ITA NO.321(MUM/2012 2. ITAT BANGALORE BENCH JUDGMENT IN CASE OF ANIL H LAD VS DCIT, CENTRAL CIRCLE-2(3), BANGALORE IN ITA NO.1262(BANG.)/20 10 3. HONBLE HIGH COUYRT OF KARNATAKA JUDGMENT IN CAS E OF CIT VS ANIL H LAD IN ITA NO.176/2011 5 TH FEB.2014. 4. ITAT AHMEDABAD BENCH JUDGMENT IN CASE OF ACIT VS GOLDMINE SHARES & FINANCE PVT.LTD. ON 30 TH APRIL, 2008. 6. ON THE OTHER HAND, LEARNED DR HAS SUBMITTED THAT IN THE ORIGINAL ASSESSMENT ORDER PASSED U/S 143(3) OF THE ACT, THE AO HAS NOT CONDUCTED AN ENQUIRY, WHILE ALLOWING THE CLAIM OF THE ASSESSE E U/S 80IA OF THE ACT. ITA NO.1495(BANG)2013 6 THEREFORE, THE ORDER OF AO IS ERRONEOUS FOR WANT OF PROPER ENQUIRY AND APPLICATION OF MIND. HE HAS RELIED UPON THE IMPUG NED ORDER OF THE CIT. 7. WE HAVE CONSIDERED RIVAL SUBMISSIONS AS WELL AS THE MATERIAL ON RECORD. THERE IS NO QUARREL; ON THE POINT THAT LAC K OF ENQUIRY ON THE PART OF AO RENDERS THE ASSESSMENT ORDER ERRONEOUS, SO FAR A S IT IS PREJUDICIAL TO THE INTEREST OF REVENUE. IN THE CASE ON HAND, THE AO HAS DISCUSSED THE ISSUE IN PARA-3 OF THE ASSESSMENT ORDER PASSED U/S 143(3) OF THE ACT DATED 23-12-2011 AS UNDER; 3. THE ASSESSEE HAS INSTALLED WIND MILL AT GONNUR VILLAGE IN CHITRADURGA DISTRICT. THIS IS THE FIRST YEAR WHEREIN THE ASSESSEE HAS CLAIMED DEDUCTION U/S 80IA (5) SHOWING AN INCOME O RS.34,32,127/-. THE SAME HAS B EEN CLAIMED AS DEDUCTION U/S 80IA. BOOKS OF ACCOUNTS, BILLS AND VOUCHERS FOR THE EXPENSES OF WIND MILL BUSINESS AND FORM NO.10CCB HAVE BEEN OBTAINED AND PLACED AND RECORD. 8. THUS, IT IS CLEAR THAT THE AO HAS DULY CONSIDERE D THE ISSUE AND AFTER NOTING THE FACT THAT ASSESSEE CLAIMED THE DED UCTION U/S 80IA OF THE ACT, FIRST TIME FOR THE YEAR UNDER CONSIDERATION. I T IS MANIFEST FROM THE ASSESSMENT ORDER THAT IT IS NOT A CASE OF COMPLETE LACK OF ENQUIRY ON THE PART OF THE AO. RATHER, THE AO WAS CONSCIOUS ABOUT OF THE PROVISION OF SECTION 80IA(5) WHILE ALLOWING THE CLAIM OF THE ASS ESSEE. THEREFORE, WE DO ITA NO.1495(BANG)2013 7 NOT AGREE WITH THE CONTENTION OF THE LEARNED DR THA T THERE IS NO ENQUIRY ON THE PART OF THE AO WHILE ALLOWING THE CLAIM U/S 80I A OF THE ACT. WE NOTE THAT THERE IS NO DISPUTE AS FAR AS THE FACT OF LOSS INCURRED BY THE ASSESSEE IN WIND MILL BUSINESS FOR THE EARLIER ASSESSMENT YEAR WAS SET OFF AGAINST THE OTHER INCOME OF THE ASSESSEE. FOR THE ASSESSMENT Y EAR UNDER CONSIDERATION ASSESSEE HAS CLAIMED THE DEDUCTION IN RESPECT OF TH E INCOME DERIVED FROM WIND MILL POWER GENERATION AND DISTRIBUTION BUSINES S ACTIVITY. WE FIND THAT ON THE ISSUE OF ALLOWABILITY OF DEDUCTION U/S 80IA PARTICULARLY IN VIEW OF SUB-SECTION 5 OF SECTION 80IA, INITIAL YEAR HAS BEE N CONSIDERED AS YEAR IN WHICH THE ASSESSEE HAS FIRST TIME CLAIMED DEDUCTION U/S 80IA WITHIN THE BRACKET PERIOD OF 15 YEARS FROM THE YEAR IN WHICH T HE ASSESSEE HAS COMMENCED ITS POWER GENERATION FROM THE WIND MILL. THE ASSESSEE CONTENDED BEFORE THE CIT THAT IN CASE OF ANIL H LAD VS DCIT (SUPRA) THIS TRIBUNAL HAD TAKEN A VIEW THAT THE CLAIM U/S 80IA I S ALLOWABLE, IF THE EARLIER YEAR LOSS HAS BEEN SET OFF AGAINST THE OTHE R INCOME OF THE ASSESSEE AND THE ASSESSEE HAS CLAIMED THE DEDUCTION FIRST TI ME FOR THE YEAR UNDER CONSIDERATION WHICH IS CONSIDERED AS INITIAL YEAR. THE SIMILAR VIEW HAS BEEN TAKEN BY THE BOMBAY BENCH OF THIS TRIBUNAL IN THE CASE OF M/S SHEVIE EXPORTS VS JCIT (SUPRA) AND THE CIT HAS NOT DISPUTE D THE VIEW TAKEN BY THIS TRIBUNAL IN THE DECISION AS RELIED UPON BY THE ASSESSEE. HOWEVER, THE CIT HAS HELD THAT THE ASSESSEE IS NOT ENTITLE FOR D EDUCTION U/S 80IA OF THE ACT AND SUPPORTED HIS VIEW BY THE DECISION OF AHMED ABAD BENCH OF THIS TRIBUNAL IN THE CASE OF ACIT VS GOLDMINES SHARES & FINANCE PVT. ITA NO.1495(BANG)2013 8 LTD.(SUPRA). THUS, IT IS APPARENT THAT THERE ARE D IVERGENT VIEWS ON THIS ISSUE. IN SOME OF THE DECISIONS, AS RELIED UPON BY ASSESSEE IN THE CASE OF ANIL H LAD VS DCIT AS WELL AS IN CASE OF M/S SHEVIE EXPORT (SUPRA) THE TRIBUNAL HAS TAKEN THE VIEW IN FAVOUR OF THE ASSESS EE AND HELD THAT CLAIM OF DEDUCTION U/S 80IA OF THE ACT IS ALLOWABLE, IF THE ASSESSEE HAS NOT CLAIMED THE DEDUCTION IN THE EARLIER YEARS AND LOSS INCURRE D BY THE ASSESSEE WAS SET OFF AGAINST THE OTHER INCOME OF THE ASSESSEE IN THE YEAR EARLIER. 9. A DIFFERENT VIEW HAS BEEN TAKEN BY THE AHMEDAB AD BENCH OF THIS TRIBUNAL IN THE CASE OF ACIT VS GOLDMINES SHARES & FINANCE PVT.LTD, (SUPRA) RELIED UPON BY THE CIT. THEREFORE, IT IS A CLEAR CASE OF TWO VIEWS, POSSIBLE ON THIS ISSUE. IT IS NOT THE CASE THAT TH E VIEW TAKEN BY THE AO WHILE FRAMING THE ASSESSMENT U/S 143(3) OF THE ACT WAS AN ABSOLUTE IMPERMISSIBLE VIEW. WHEREAS THE VIEW TAKEN BY THE AO IS ONE OF THE POSSIBLE VIEW, THEN THE CIT IS NOT PERMITTED TO INV OKE JURISDICTION U/S 263 OF THE ACT, MERELY BECAUSE, HE DOES NOT AGREE WITH THE VIEW TAKEN BY THE AO. THE DECISION OF THIS TRIBUNAL IN THE CASE OF A NIL H LAD VS DCIT, CENTRAL CIRCLE-2(3), BANGALORE IN ITA NO.1262/(BANG.)/2010 (SUPRA) HAS BEEN CONFIRMED BY THE JURISDICTIONAL HIGH COURT VID E JUDGMENT DATED 05- 02-2014, SO FAR AS THE LEGAL POSITION INVOLVED IN T HE SAID ISSUE, IN PARA-10 AS UNDER; 10. THEREFORE, KEEPING IN MIND THE OBJECT WITH WHI CH THESE PROVISIONS ARE INTRODUCED, IT IS CLEAR THAT AN ASSE SSEE IS GIVEN ITA NO.1495(BANG)2013 9 THE BENEFIT OF 100% DEDUCTION OF THE PROFITS AND GA INS FROM THE ELIGIBLE BUSINESS. THE QUANTUM OF DEDUCTION IS TO B E CALCULATED WHEN THE CLAIM FOR DEDUCTION IS MADE. IF BEFORE CLAIMING DEDUCTION, THE LOSS AND DEPRECIATION CLAIMED BY THE ASSESSEE EVEN IN RESPECT OF ELIGIBLE BUSINESS IS SET OFF AGA INST INCOME F THE ASSESSEE OR OTHER SOURCE, THE SAID LOSS OR DEPR ECIATION IS ALREADY ABSOLVED, IT DOES NOT EXIST. FOR THE PUR POSE OF DETERMINING THE QUANTUM OF DEDUCTION UNDER SUB-SECT ION(5) OF SECTION 80IA, THE REVENUE CANNOT TAKE INTO CONSIDER ATION THE LOSS AND DEPRECIATION WHICH IS ALREADY SET OFF AGAI NST THE INCOME OF THE ASSESSEE FROM OTHER SOURCE AD COMPUTE THE PROFIT UNDER SECTION 80IA. THEREFORE, THE APPROACH OF THE TRIBUNAL IS N ACCORDANCE WITH LAW. THE ASSESSING A UTHORITY AND THE COMMISSIONER COMMITTED A SERIOUS ERROR IN S ETTING OFF THE PROFIT EARNED BY THE ASSESSEE UNDER SECTION 80I A AGAINST THE LOSSES AND DEPRECIATION OF THE ELIGIBLE BUSINES S WHICH IS ALREADY SET OFF FROM OTHER SOURCE BEFORE SUCH A CLA IM IS PUT FORTH. THUS, THERE IS NO ERROR COMMITTED BY THE TR IBUNAL IN SETTING ASIDE THE ORDER PASSED BY THE ASSESSING AUT HORITY AS WELL AS THE LOWER APPELLATE AUTHORITY. THE SUBSTANT IAL QUESTION OF LAW IS ANSWERED IN FAVOUR OF THE ASSESS EE AND AGAINST THE REVENUE. 10. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, AS WELL AS THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT I N THE CASE OF ANIL H LAD (SUPRA) WE FIND THAT THE CIT IS NOT JUSTIFIED IN IN VOKING THE PROVISIONS OF SECTION 263 OF THE ACT FOR REVISING THE ORDER OF TH E AO ON THIS ISSUE OF ITA NO.1495(BANG)2013 10 ALLOWING THE DEDUCTION U/S 80IA(5) OF THE ACT. HE NCE, WE SET ASIDE THE IMPUGNED REVISION ORDER PASSED U/S 263 OF THE IT AC T. 11. APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON CONCLUSION OF THE HEARING ON 6 TH APRIL, 2015. SD/- SD/ - (PRAMOD KUMAR) (VIJAY PAL R AO) ACCOUNTANT MEMBER JUDICIAL MEMBER D A T E D : 06-04-2015 PLACE: BANGALORE AM* COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A)-II BANGALORE 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER AR, ITAT, BANGALORE