ACIT, CHENNAI V. M/s. G.R.Padmanabhan, CHENNAI

ITA 1528/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57768 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 3 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: 11-01-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 09-09-2011
• 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. 1524/MDS/2011 (ASSESSMENT YEAR : 2008-09) THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE III(3), CHENNAI 600 034. (APPELLANT) V. M/S G. RAJENDRAN (HUF), 136, USMAN ROAD, T. NAGAR, CHENNAI 600 017. PAN : AAAHG0559C (RESPONDENT) I.T.A. NO. 1525/MDS/2011 (ASSESSMENT YEAR : 2008-09) THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE III(3), CHENNAI 600 034. (APPELLANT) V. SHRI G. RAJENDRAN (INDL.), 136, USMAN ROAD, T. NAGAR, CHENNAI 600 017. PAN : AEEPG7361L (RESPONDENT) I.T.A. NO. 1526/MDS/2011 (ASSESSMENT YEAR : 2008-09) THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE III(3), CHENNAI 600 034. (APPELLANT) V. M/S G.R. THANGAMALIGAI FIRM, 136, USMAN ROAD, T. NAGAR, CHENNAI 600 017. PAN : AADFG7966Q (RESPONDENT) I.T.A. NOS. 1524 TO 1530/MDS/11 2 I.T.A. NO. 1527/MDS/2011 (ASSESSMENT YEAR : 2008-09) THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE III(3), CHENNAI 600 034. (APPELLANT) V. M/S G.R.T. HOTELS & RESORTS PVT. LTD., 136, USMAN ROAD, T. NAGAR, CHENNAI 600 017. PAN : AAACG3608B (RESPONDENT) I.T.A. NO. 1528/MDS/2011 (ASSESSMENT YEAR : 2008-09) THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE III(3), CHENNAI 600 034. (APPELLANT) V. SHRI G.R. PADMANABHAN, 136, USMAN ROAD, T. NAGAR, CHENNAI 600 017. PAN : AALPP9367N (RESPONDENT) I.T.A. NO. 1529/MDS/2011 (ASSESSMENT YEAR : 2008-09) THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE III(3), CHENNAI 600 034. (APPELLANT) V. SHRI G.R. RADHAKRISHNAN (INDL.) 136, USMAN ROAD, T. NAGAR, CHENNAI 600 017. PAN : AAEPR6723K (RESPONDENT) I.T.A. NOS. 1524 TO 1530/MDS/11 3 I.T.A. NO. 1530/MDS/2011 (ASSESSMENT YEAR : 2008-09) THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE III(3), CHENNAI 600 034. (APPELLANT) V. M/S MANORANJITHAM THANGAMALIGAI TRUST, 136, USMAN ROAD, T. NAGAR, CHENNAI 600 017. PAN : AAATM0655R (RESPONDENT) APPELLANT BY : SHRI R.B. NAIK, CIT-DR RESPONDENTS BY : SHRI PHILIP GEO RGE, ADVOCATE, DATE OF HEARING : 11.01.2012 DATE OF PRONOUNCEMENT : 13.01.2012 O R D E R PER BENCH : THE COMMON GROUNDS TAKEN BY THE REVENUE IN ALL TH ESE APPEALS FILED AGAINST THE ORDERS OF COMMISSIONER OF INCOME TAX (APPEALS)-II, CHENNAI, FOR ASSESSMENT YEAR 2008-09, ARE REPRODUCED HEREUNDER:- 1.A ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LEARNED CIT(A) HAS ERRED IN DIRECTING THE A.O. TO A LLOW THE CARRIED FORWARD DEPRECIATION AND/OR LOSS OF EARLIER YEARS PERTAINING TO WINDMILLS IF THE DEPRECIATION AND/OR LOSS OF EARLIER YEARS WERE NOT NOTIONAL. I.T.A. NOS. 1524 TO 1530/MDS/11 4 1.B THE LEARNED CIT(A) HAS FAILED TO APPRECIATE THA T THE DECISION OF THE HON'BLE HIGH COURT OF MADRAS IN THE CASES OF VELAYUDHASWAMY SPINNING MILLS (P) LTD. V. ACIT, CIT V. MOHAN BREWERIES AND DISTILLERIES LTD., SUDAN SPINNI NG MILLS (P) LTD. V. ACIT REPORTED IN 231 CTR 368 AND THE OR DER OF THE HON'BLE ITAT D BENCH IN ITA NO.1416/MDS/2010 DATED 25.03.2011 IN THE CASE OF M/S GRT HOTELS & RE SORTS PVT. LTD. HAVE NOT BECOME FINAL. 2. IN ALL THESE APPEALS, THE REVENUE IS AGGRIEVED T HAT LD. CIT(APPEALS) RELIED ON THE DECISION OF HON'BLE JURI SDICTIONAL HIGH COURT IN THE CASE OF VELAYUDHASWAMY SPINNING MILLS (P) LTD. (SUPRA). 3. THE ISSUE INVOLVED IS SETTING OFF OF BROUGHT FOR WARD DEPRECIATION AND/OR LOSS IN THE CASE WHERE THERE IS A CLAIM OF D EDUCTION UNDER SECTION 80-IA OF THE ACT ON WINDMILLS. THE DIRECTI ON GIVEN BY THE LD. CIT(APPEALS) IN ALL THESE APPEALS ARE SIMILAR AND T HIS RUNS AS FOLLOWS:- 8. IT IS NOT CLEAR FROM THE ASSESSMENT ORDER WHETHE R THE DEPRECIATION AND LOSSES OF EARLIER YEARS WERE SET O FF AGAINST THE INCOME OR PROFITS OF SUCH EARLIER YEARS. IF THESE WERE ALREADY SET OFF BEFORE THE INITIAL ASSESSMENT YEAR ITSELF, THEN BY VIRTUE OF THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF M/S VELAYUDHASWAMY SPINNING MILLS P LTD. AN D OTHERS (SUPRA) NO NOTIONAL CARRY FORWARD DEPRECIATION OR L OSS COULD BE CONSIDERED WHILE WORKING OUT THE DEDUCTION UNDER SE CTION 80-IA IN THE INITIAL ASSESSMENT YEAR. HOWEVER, IF SUCH E ARLIER DEPRECIATION OR LOSS ARISING FROM THE UNIT STILL RE MAINED TO BE SET-OFF, THEN EVEN IN THE INITIAL ASSESSMENT YEAR, THEY HAVE TO BE I.T.A. NOS. 1524 TO 1530/MDS/11 5 SET OFF BEFORE ALLOWING DEDUCTION UNDER SECTION 80- IA OF THE I.T. ACT BECAUSE SUCH DEPRECIATION OR LOSS WOULD NO T BE NOTIONAL BUT ACTUAL. THE A.O. IS, THEREFORE, DIRECTED TO VE RIFY WHETHER THE CARRIED FORWARD DEPRECIATION AND/OR LOSS OF EAR LIER YEARS PERTAINING TO THE WINDMILLS WERE NOTIONAL OR NOT. IN CASE THEY ARE NOTIONAL, NO SET OFF CAN BE DONE IN VIEW OF THE DEC ISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF M/S VELAYU DHASWAMY SPG. MILLS P. LTD. (SUPRA). IN CASE THEY ARE NOT NOTION AL, THEN SUCH SET OFF CAN BE DONE. THE A.O. IS DIRECTED TO ALLOW/REC OMPUTED DEDUCTION U/S 80-IA ACCORDINGLY. 4. LEARNED D.R. WAS UNABLE TO SHOW US ANY ERROR IN THE DIRECTIONS GIVEN BY THE LD. CIT(APPEALS) DIRECTING THE A.O. TO FOLLOW THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF VELAYUDHASWAMY SPINNING MILLS P. LTD. (SUPRA). WE FIND THAT THE D IRECTIONS WERE PERFECTLY IN ACCORDANCE WITH LAW LAID DOWN BY THE H ON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF VELAYUDHAS WAMY SPINNING MILLS . LTD. (SUPRA). LD. CIT(APPEALS) HAS ONLY DI RECTED TO CHECK WHETHER THE CARRIED FORWARD LOSSES/DEPRECIATION WER E NOTIONAL OR NOT AND TO DEAL WITH THE ISSUE OF SET-OFF ACCORDINGLY. WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF LD. CIT(APPEA LS). 5. IN THE RESULT, ALL THE APPEALS FILED BY THE REVE NUE STAND DISMISSED. I.T.A. NOS. 1524 TO 1530/MDS/11 6 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) RESPONDENTS (3) CIT(A)-II, CHENNAI-34 (4) CIT, CENTRAL-III, CHENNAI (5) D.R. (6) GUARD FILE