ACIT, Trichy V. M/s. Mallow International, Karur

ITA 152/CHNY/2014

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7191 (ITAT-CHENNAI)
• Duration Of Justice: 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 10-12-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 16-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S DASGUPTA IRS JCIT SHRI SARO
• Assessee Lawyers: E PASS ROAD KARUR PAN AABFMB
• Keywords: Depreciation; Additional depreciation

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . , ! ' , # $ BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER & SHRI VIKAS AWASTHY JUDICIAL MEMBER. ./ I.T.A. NO.152/MDS/2014 ( / ASSESSMENT YEAR : 2006 -2007) THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE II, TRICHY-620 001. ( '% /APPELLANT) VS . M/S. MALLOW INTERNATIONAL, S.F. NO.535, SEMMADAI ROAD, SALEM BYE PASS ROAD, KARUR- 639 006. [PAN :AABFM1014B] ( &''% /RESPONDENT) / APPELLANT BY : SHRI. S. DASGUPTA, IRS, JCIT. / RESPONDENT BY : SHRI. SAROJ KUMAR PARIDA, ADVOCATE /DATE OF HEARING : 10.12.2014. !' /DATE OF PRONOUNCEMENT : 19.12.2014. ( / O R D E R PER VIKAS AWASTHY, JUDICIAL MEMBER THE APPEAL HAS BEEN FILED BY THE REVE NUE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS), TIRUCHIRAP PALLI, DATED 23.10.2013 FOR THE ASSESSMENT YEAR 2006-2007. THE ONLY ISSUE RAISED I.T.A.NO152 /MDS/2014 . :- 2 -: BY THE REVENUE IN APPEAL IS ADDITIONAL DEPRECIATION ON WINDMILL ALLOWED BY THE COMMISSIONER OF INCOME TAX (APPEALS) . 2. THE ASSESSEE IS A FIRM ENGAGED IN MANUFACTURE AND E XPORT OF TEXTILE GOODS AND GENERATION OF POWER USING WIND EN ERGY. THE ASSESSEE IN ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2006-2007 CLAIMED ADDITIONAL DEPRECIATION ON WINDMILL TO THE TUNE OF C35,97,603/. THE ASSESSING OFFICER VIDE ASSESSMENT ORDER DATED 1 3.12.2010 REJECTED THE CLAIM OF ADDITIONAL DEPRECATION U/S.32 (1)(IIA) OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS, THE ACT). AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESS EE PREFERRED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (AP PEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) BY FOLLOWING T HE DECISIONS OF JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. M/S. VTM LIMITED REPORTED AS 319 ITR 336 (MAD) AND CIT VS. M/S. HI T ECH ARAI LIMITED REPORTED AS 321 ITR 477 (MAD) ACCEPTED THE PLEA OF ASSESSEE AND ALLOWED ADDITIONAL DEPRECIATION U/S. 32(1)(IIA) OF THE ACT. AGAINST, THIS ORDER OF FIRST APPELLATE AUTHORITY, THE REVENUE HAS COME IN SECOND APPEAL BEFORE THE TRIBUNAL. 3. SHRI.S. DASGUPTA, REPRESENTING THE DEPARTME NT SUBMITTED THAT I.T.A.NO152 /MDS/2014 . :- 3 -: SUBMITTED THAT THE REVENUE HAS NOT ACCEPTED THE DE CISION RENDERED IN THE CASE OF M/S. HI TECH ARAI LIMITED (SUPRA ) AND HAS FILED SPECIAL LEAVE PETITION BEFORE THE HONBLE SUPREME COURT OF INDIA WHICH IS PENDING FOR FINAL ADJUDICATION. THE LD. DEPARTMENTA L REPRESENTATIVE FURTHER CONTENTED THAT THE ASSESSEE IS NOT ENGAGED IN THE BUSINESS OF MANUFACTURE OR PRODUCTION OF ANY ARTICLE OR THINGS IN ACCORDANCE WITH THE PROVISIONS OF SECTION 32(1)(IIA) OF THE ACT. TH E LEARNED DEPARTMENTAL REPRESENTATIVE IN ORDER TO SUPPORT HIS SUBMISSION PLACED RELIANCE ON THE DECISION OF HONBLE MADRAS HIGH COU RT IN THE CASE OF M/S. M.M. FORGINGS LTD IN T.C. NO.1130 OF 2010 DECIDED ON 11.01.2011 [349 ITR 673 (MDS)]. 4. ON THE OTHER HAND, LEARNED AUTHOR ISED REPRESENTATIVE APPEARING ON BEHALF OF THE ASSESSEE VEHEMENTLY DEFE NDED THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) AND SUBMIT TED THAT THE CASE OF THE ASSESSEE IS SQUARELY COVERED BY THE DEC ISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. M/S. HI TECH ARAI LIMITED AND THE ORDER OF THE CO-ORDINATE BENCH OF T HE TRIBUNAL IN THE CASE OF ER. R. RAMASAMY IN ITA NOS.162 & 163/MDS/20 14 DECIDED ON 09.04.2014. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESS EE PRAYED FOR DISMISSING THE APPEAL OF THE REVENUE. I.T.A.NO152 /MDS/2014 . :- 4 -: 5. BOTH SIDES HEARD. ORDERS OF THE AUTHORIT IES BELOW PERUSED. THE ONLY ISSUE IN THE APPEAL IS WHETHER THE ASSESSE E IS ELIGIBLE FOR CLAIMING ADDITIONAL DEPRECATION ON WINDMILL. WE FIND THAT THE ISSUE IN APPEAL IS I DENTICAL TO THE ONE ADJUDICATED BY THE CO-ORDINATE BENCH OF THE TRIBUNA L IN THE CASE OF ER.R.RAMASAMY(SUPRA). THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE SAID CASE PLACED RELIANCE ON THE DECISION OF THE TR IBUNAL IN THE CASE OF ACIT VS. SATISHKUMAR REPORTED AS 19 ITR (TRIB) 646 (CHENNAI) TO SAY THAT GENERATION OF ELECTRICITY IS AKIN TO MANUFACTU RING OF A NEW PRODUCT. THE RELEVANT EXTRACT OF THE ORDER OF THE T RIBUNAL IS REPRODUCED HEREIN BELOW : 6. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF BOTH THE SIDES. WE HAVE ALSO PE RUSED THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE DECISIONS ON W HICH THE LD.COUNSEL HAS PLACED RELIANCE. WE FIND THAT THE ISSUE WHETHE R THE ASSESSEE IS ENGAGED IN THE MANUFACTURE/PRODUCTION OF ARTICLES O R THINGS BY GENERATION OF ELECTRICITY THROUGH WIND MILL HAS BE EN DEALT WITH BY THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. M.SATISHKUMAR (SUPRA). THE TRIBUNAL IN THE SAID CASE HAS HELD AS UNDER: 9. WE HAVE HEARD THE SUBMISSIONS MADE BY THE RESPECTIVE PARTIES AND HAVE ALSO EXAMINED THE JUDGEMENTS ORDERS RELIED ON BY THE A.R. OF THE ASSE SSEE. A PERUSAL OF THE JUDGEMENTS CLEARLY SHOW THAT GENER ATION OF ELECTRICITY IS AKIN TO MANUFACTURING OF A NEW PR ODUCT. IN THE INSTANT CASE, ELECTRICITY WHICH MAY NOT BE SEEN WITH I.T.A.NO152 /MDS/2014 . :- 5 -: THE EYES, HOWEVER, ITS EFFECT CAN BE SEEN AND FELT. THE ELECTRICITY CAN BE TRANSMITTED, TRANSFERRED, DELIVE RED, STORED, POSSESSED ETC. THE HONBLE SUPREME COURT IN THE CASE OF THE CST VS. MADHYA PRADESH ELECTRICITY BOAR D (SUPRA) HAS HELD THAT ELECTRICITY FALLS WITHIN THE DEFINITION OF GOODS UNDER THE PROVISIONS OF SALE OF GOODS ACT, 19 30. THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF NTPC LTD. (SUPRA) AFTER A DETAILED EXAMINATION OF SEVERAL JUDGEMENTS, ACTS, CONSTITUTION OF INDIA, HAS CONCLU DED THAT THE PROCESS OF GENERATION OF ELECTRICITY IS AK IN TO MANUFACTURE OF AN ARTICLE OR THING. 10. IN VIEW OF THE ABOVE, WE ARE OF THE CONSIDERED OPINION THAT GENERATION OF ELECTRICITY I S A MANUFACTURING ACTIVITY. THE ASSESSEE IS INVOLVED IN THE MANUFACTURING ACTIVITY AND FULFILLS THE CONDITIONS AS LAID DOWN UNDER SECTION 32(1)(IIA). THE GOVERNMENT VIDE FINANCE ACT, 2012 HAS AMENDED THE PROVISIONS OF SEC TION 32(1)(IIA) TO INCLUDE THE BUSINESS OF GENERATION OR GENERATION AND DISTRIBUTION OF POWER, ELIGIBLE FOR BENEFIT UNDER SECTION 32(1)(IIA). ALTHOUGH THE SAID AMENDME NT IS WITH EFFECT FROM 1.4.2013 BUT IT GIVES IMPETUS TO T HE VIEW THAT GENERATION OF ELECTRICITY IS A MANUFACTURING P ROCESS AND QUALIFIES FOR THE BENEFITS UNDER SECTION 32(1)( IIA). IN VIEW OF THE ABOVE, THE ORDER OF THE CIT(A) IS UPHEL D AND THE APPEAL OF THE REVENUE IS DISMISSED BEING DEVOID OF MERIT. THE ISSUE IN PRESENT APPEAL IS SIMILAR TO THE ONE A LREADY ADJUDICATED BY THE TRIBUNAL IN THE CASE OF ACIT VS. M.SATISHKUMAR (SUPRA). RESPECTFULLY FOLLOWING THE SAME, THIS GRO UND OF APPEAL OF THE REVENUE IS DISMISSED. 6. THE HONBLE MADRAS HIGH COURT IN THE CASE OF CI T VS. HI TECH ARAI LTD. (SUPRA) HAS HELD THAT WHERE T HE ASSESSEE HAS SET UP WINDMILL IN ADDITION TO SOME OTHER EXIST ING BUSINESS, AND IS ENGAGED IN THE GENERATION OF ELECTRICITY, TH E ASSESSEE IS ENTITLED TO CLAIM ADDITIONAL DEPRECIATION ON THE SA ME. I.T.A.NO152 /MDS/2014 . :- 6 -: 7. WE FIND THAT THE ISSUE IN APPEAL IS SQUARELY CO VERED IN FAVOUR OF THE ASSESSEE BY THE AFORESAID DECISION S OF THE HONBLE MADRAS HIGH COURT AND THE CO-ORDINATE BENC H OF THE TRIBUNAL. WE DO NOT FIND ANY INFIRMITY IN THE IMPU GNED ORDER. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED BEING DEVOID OF MERIT. ORDER PRONOUNCED ON FRIDAY, THE 19TH OF DECEMBER, 2014, AT CHENNAI. SD/- SD/- ( . ) (A.MOHAN ALANKAMONY) / ACCOUNTANT MEMBER ( ! ' ) (VIKAS AWASTHY) # / JUDICIAL MEMBER #$ /DATED:19.12.2014. K.V $% &' (' /COPY TO: 1. ) APPELLANT 2. / RESPONDENT 3. * ( )/CIT(A) 4. * /CIT 5. '+, - /DR 6. ,. / /GF.