Assistant Commissioner of Income-tax, V. M/s. Laxmi Metal Pressing Work Pvt. Ltd., Aurangabad

ITA 1552/PUN/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2756 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 08-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HITENDRA NINAWE
• Keywords: Depreciation

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.1552/PN/2014 #& & / ASSESSMENT YEAR : 2010-11 ACIT, CIRCLE-1, AURANGABAD . / APPELLANT V/S M/S. LAXMI METAL PRESSING WORK PVT. LTD., E-77, MIDC, WALUJ, AURANGABAD 431 136 PAN NO. AAACL 5640G . / RESPONDENT / ASSESSEE BY : SHRI NIKHIL PATHAK / REVENUE BY : SHRI HITENDRA NINAWE / ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE O RDER DATED 27-05-2014 OF THE CIT(A), AURANGABAD RELATING TO ASSESSMENT YEAR 2010-11. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING O F AUTOMOBILE COMPONENTS AND ELECTRICITY GENERATION ETC. IT FILED ITS RETURN OF INCOME ON 15-10-2010 DECLARING TOTAL INCOME OF RS.1,57,34,890/-. DURING THE COURSE OF ASSESSMENT PROCEED INGS THE / DATE OF HEARING :03.02.2016 / DATE OF PRONOUNCEMENT:04.02.2016 2 ITA NO.1552/PN/2014 AO NOTED THAT ASSESSEE HAS CLAIMED DEDUCTION U/S.80IA AT RS.15,08,126/-. ACCORDING TO THE AO THE ASSESSEE HAS WR ONGLY APPLIED THE PROVISIONS OF SECTION 80IA(5) SINCE THERE IS ACCU MULATED BALANCE OF UNABSORBED LOSSES FOR EARLIER YEAR WHICH HAS T O BE ADJUSTED AS PER PROVISIONS OF SECTION 80IA(5) OF THE ACT, W HICH IS A NON OBSTINATE CLAUSE HAVING OVERRIDING EFFECT ON THE PROVIS IONS OF THE ACT. AS PER THE AO, THE SAID SECTION PROVIDES THAT FOR THE PURPOSE OF DETERMINING THE QUANTUM OF DEDUCTION U/S.80IA OF THE ACT FOR THE ASSESSMENT YEAR OR ANY SUBSEQUENT ASSESSMENT YEAR, T HE PROFITS AND GAINS FROM THE ELIGIBLE BUSINESS SHALL BE COMPUTED AS IF SUCH ELIGIBLE BUSINESS WAS THE ONLY SOURCE OF INCOME OF THE ASSESSEE DURING THE PREVIOUS YEAR RELEVANT TO THE INITIAL ASSESSMENT YEAR AN D TO EVERY SUBSEQUENT ASSESSMENT YEAR, FOR WHICH THE DETERMINATION IS TO BE MADE. RELYING ON VARIOUS DECISIONS, THE AO CONCLUDED THAT FOR THE PURPOSE OF DETERMINING QUANTUM OF DEDUCTION U/S.80IA OF TH E ACT, THE ASSESSEE COMPANY HAS NO PROFIT AVAILABLE FOR CLAIMING DE DUCTION UNDER THE SAID SECTION. HE ACCORDINGLY DISALLOWED THE CLAIM OF DEDUCTION MADE U/S.80IA OF THE I.T. ACT, 1961. 3. IN APPEAL THE LD.CIT(A) RELYING ON VARIOUS DECISIONS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. 4. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVENUE IS IN APPEAL BEFORE US BY TAKING THE FOLLOWING GROUNDS : 1. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) WAS CORRECT IN INTERPRETING THE PROVISION OF SECTION 8 0IA(5) IN THE LIGHT OF DECISION IN THE CASE OF M/S. HYDERABAD CHEMICALS SUP PLIES LTD., APIE, BALANAGAR, HYDERABAD-37 VS. THE ACIT, CIRCLE-1(4), H YDERABAD DATED 21 ST JANUARY, 2011. 2. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) WAS CORRECT IN INTERPRETING INITIAL ASSESSMENT YEAR. 3 ITA NO.1552/PN/2014 3. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE DEFINITION OF INITIAL ASSESSMENT YEAR AS GIVEN IN SECTION 80IA(14 ) OF THE ACT IS NOT APPLICABLE IN THE PROVISION OF SECTION 80IA OF THE ACT. 4. THE ORDER OF THE AO BE RESTORED AND THAT OF THE C IT(A) BE VACATED. 5. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER ANY GROUNDS OF APPEAL. 5. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE P APER BOOK FILED ON BEHALF OF THE ASSESSEE. WE FIND AN IDENTICAL ISSUE H AD COME UP BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NOS .1496 AND 1497/PN/2013 WHERE IDENTICAL GROUNDS WERE TAKEN. THE T RIBUNAL VIDE ORDER DATED 26-08-2014 FOR A.Y. 2007-08 & 2008-09 DISMISSED THE APPEAL FILED BY THE REVENUE BY OBSERVING AS UNDER : 4. THE ASSESSING OFFICER FINALLY CONCLUDED THAT IN THE A.Y. 2007-08 AS THERE ARE NO PROFIT AFTER CONSIDERING THE BROUGHT FO RWARD LOSSES FROM A.YS. 2002-03 AND 2003-04. THE ASSESSEE IS NOT ELIGIBLE F OR ANY DEDUCTION U/S. 80IA(4)(IV)(A) OF THE ACT. 5. SO FAR AS A.Y. 2008-09 IS CONCERNED THE ASSESSEE HAS CL AIMED THE DEDUCTION TO THE EXTENT OF RS.13,37,863/- U/S. 80IA(4 )(IV)(A) OF THE ACT IN RESPECT OF PROFIT DERIVED FROM ELECTRICITY GENERA TION. FOR THE REASONS GIVEN IN THE A.Y. 2007-08 THE ASSESSING OFFICER WAS OF T HE OPINION THAT THERE WAS STILL UNABSORBED LOSSES/DEPRECIATION AND HENCE, THE ASSESSEE IS NOT ENTITLED FOR CLAIMING ANY DEDUCTION. THE ASSESSIN G OFFICER, ACCORDINGLY, DISALLOWED THE ENTIRE CLAIM OF DEDUCTIO N U/S.80IA(4)(IV)(A) OF THE ACT TO THE EXTENT OF RS.13,37,863/-. THE ASSESSEE CARRIED THE ISSUE BEFORE THE LD. CIT(A) IN BOTH THE ASSESSMENT YEARS AND F OUND FAVOUR. 6. THE LD. CIT(A) FOLLOWING THE DECISION OF THIS TRIB UNAL IN THE CASE OF SERUM INTERNATIONAL LTD. VS. ADDL. CIT, RANGE-6 ITA NOS. 290 TO 292/PN/2010 DATED 20-09-2011 AS WELL AS IN THE CASE OF M/S. LAXMI RIKSHAW BODY PVT. LTD. VS. ACIT, CIRCLE-1, AURANGABAD IN ITA NOS. 421, 422, 424 & 425/PN/2012 ORDER DATED 30-07-2013 HELD THAT THE LOSSES FOR INITIAL ASSESSMENT YEAR IF THOSE HAVE BEEN ALREADY SE T OFF AGAINST THE INCOME OF OTHER BUSINESS OR UNDER THE OTHER HEADS THEN NO NOTIONAL BROUGHT FORWARD OF THOSE LOSSES ARE TO BE MADE FOR WORK ING OUT OF THE DEDUCTION TO DETERMINE THE ELIGIBLE PROFIT. THE LD. CIT(A), ACCORDINGLY, ALLOWED THE CLAIM OF THE ASSESSEE IN BOTH THE ASSESSMENT YE ARS. NOW, BEING AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US. 7. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD. WE FIND THAT THE ISSUE STANDS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISI ON IN THE CASE OF SERUM INTERNATIONAL LTD. (SUPRA) AND M/S. LAXMI RI KSHAW BODY PVT. LTD. (SUPRA). 4 ITA NO.1552/PN/2014 8. IN THE CASE OF SERUM INTERNATIONAL LTD. (SUPRA) TH E TRIBUNAL HAS HELD AS UNDER: '13. HAVING BEEN CONSIDERED THE ABOVE SUBMISSIONS, WE FI ND THAT THE ISSUE RAISED IN GROUND NO. 1 AS TO WHAT WOULD BE THE IN ITIAL A.Y FOR THE PURPOSES OF SECTION 80IA(5) OF THE ACT HAS BEEN DECIDE D IN FAVOUR OF THE ASSESSEE BY THE PUNE BENCH OF THE TRIBUNAL IN THE CASE O F POONAWALLA STUD AND AGRO FARM PVT. LTD. VS. ACIT (SUPRA). IN TH AT CASE AFTER DISCUSSING THE ISSUE IN DETAIL, THE TRIBUNAL HAS COME TO THE CONCLUSION THAT THE INITIAL 'A. Y' FOR THE PURPOSE OF CLAIMING DEDUCTION U/S. 80IA WAS THE FIRST YEAR IN WHICH THE ASSESSEE CLAIMED THE DEDUCTI ON U/S. 80IA (1) AFTER EXERCISING HIS OPTION AS PER THE PROVISIONS OF 80I A (2) OF THE ACT. IT WAS HELD THAT THE LD. CIT(A) HAS ERRED IN HOLDING THA T THE INITIAL A. Y FOR THE PURPOSES OF SECTION 80IA(2) R.W.S. 80IA (5) WAS THE YEAR IN WHICH THE ASSESSEE STARTED GENERATING ELECTRICITY FROM THE WIND M ILL ACTIVITY. WE ALSO FIND THAT THE ISSUE RAISED IN GROUND NO. 2 REGARDI NG THE ELIGIBILITY OF THE ASSESSEE TO CLAIM DEDUCTION U/S. 80IA UNDIMINISHED BY UNABSORBED LOSSES AND DEPRECIATION ALSO SET OFF IN EARLIER YEARS AGA INST THE OTHER INCOME, IS FULLY COVERED BY THE DECISION OF HON 'BL E MADRAS HIGH COURT IN THE CASE OF VELAYUDHASWAMY SPINNING MILLS (P) LTD VS. A CIT (SUPRA) HOLDING THAT AS PER SUB-SECTION (5) OF SECTION 801 A, PROFITS ARE TO BE COMPUTED AS IF SUCH ELIGIBLE BUSINESS IS THE ONLY SOURCE O F INCOME OF THE ASSESSEE. WHEN THE ASSESSEE EXERCISES THE OPTION, ONLY THE L OSSES OF THE YEARS BEGINNING FROM THE INITIAL A. Y. ARE TO BE BRO UGHT FORWARD AND NOT THE LOSSES OF THE EARLIER YEARS WHICH HAVE BEEN ALREADY SET OFF AGAINST THE INCOME OF THE ASSESSEE. THE HON'BLE MADRAS HIGH COURT HA S BEEN FURTHER PLEASED TO HOLD THAT REVENUE CANNOT NOTIONALLY BRING FORWARD ANY LOSS OF EARLIER YEARS WHICH HAD ALREADY BEEN SET OFF AGAINST T HE OTHER INCOME OF ASSESSEE AND SET OFF AGAINST THE CORRECT INCOME OF THE EL IGIBLE BUSINESS. FICTION CREATED BY SUB-SECTION (5) OF SECTION 80IA D OES NOT CONTEMPLATE SUCH NOTIONAL SET OFF, HELD THE HON'BLE HIGH COURT. T HE HON'BLE MADRAS HIGH COURT IN THAT DECISION HAS ALSO REFERRED THE DECI SION OF HON'BLE SUPREME COURT IN THE CASE OF LIBERTY INDIA VS. CIT (S UPRA) AND THE DECISION OF SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF GOLDMAN SHARES & FINANCE (P) LTD. (SUPRA). THERE IS NO DISPUTE THA T EVEN A DECISION OF NON-JURISDICTIONAL HIGH COURT IS A BINDING PRECEDENT FOR THE TRIBUNAL UNTIL A CONTRARY DECISION IS GIVEN BY ANY OTHER COMPE TENT HIGH COURT. IN THIS REGARD, WE FIND STRENGTH FROM THE RECENT DECISION OF HON'BLE JURISDICTIONAL BOMBAY HIGH COURT IN THE CASE OF COMMI SSIONER OF CENTRAL EXCISE VS. VALSON DYEING, BLEACHING AND PRINTING WORKS (SUPRA) WHEREIN THE HON'BLE BOMBAY HIGH COURT HAS BEEN PLEASED TO HOL D IN A CASE OF EXCISE MATTER THAT TRIBUNAL IS BOUND BY THE DECISION O F HIGH COURT, EVEN OF A DIFFERENT STATE, SO LONG AS THERE IS NO CONTRARY DECISION OF ANY OTHER HIGH COURT. THE HON'BLE BOMBAY HIGH COURT HAS BEEN P LEASED TO HOLD FURTHER THAT THE TRIBUNAL HAD NO OPTION BUT TO FOLL OW THE JUDGMENT OF THE MADRAS HIGH COURT. AN AUTHORITY LIKE AN INCOME TAX T RIBUNAL ACTING ANYWHERE IN THE COUNTRY HAS TO RESPECT THE LAW LAID D OWN BY THE HIGH COURT, THOUGH OF A DIFFERENT STATE, SO LONG AS THERE IS NO CONTRARY DECISION OF ANY OTHER HIGH COURT ON THAT QUESTION. WE THUS RESP ECTFULLY FOLLOWING THE RATIO LAID DOWN BY THE HON'BLE JURISDICTIONAL HI GH COURT IN THE CASE OF COMMISSIONER OF CENTRAL EXCISE VS. VAKSON DYEING, BLEACH ING AND PRINTING WORKS (SUPRA) HOLD THAT THE TRIBUNAL IS BOUN D BY THE DECISION OF THE HON'BLE MADRAS HIGH COURT ON AN IDENTICAL ISSUE IN THE CASE OF VELAYUDHASWAMY SPINNING MILLS (P) LTD VS. ACIT (SUPRA ). WE THUS RESPECTFULLY FOLLOWING THE DECISION TAKEN BY THE HON' BLE MADRAS HIGH 5 ITA NO.1552/PN/2014 COURT IN THAT CASE ON AN IDENTICAL ISSUE UNDER ALMOST SI MILAR FACTS, HOLD THAT WHEN THE ASSESSEE EXERCISING THE OPTION, ONLY THE LOSSES OF THE YEAR BEGINNING FROM THE INITIAL A. Y. ARE TO BE BROUGHT FORWARD AND NOT THE LOSSES OF EARLIER YEAR WHICH HAVE BEEN ALREADY SET OFF AGAINST THE OTHER INCOME OF THE ASSESSEE. THE REVENUE CANNOT NOTIONALLY B RING FORWARD ANY LOSS OF EARLIER YEARS WHICH HAS ALREADY BEEN SET OFF AGA INST ANY OTHER INCOME OF THE ASSESSEE AND SET OFF THE SAME AGAINST THE CU RRENT INCOME OF THE ELIGIBLE BUSINESS. WE THUS SET ASIDE THE ORDERS OF TH E AUTHORITIES BELOW AND DIRECT THE A. O TO ALLOW THE CLAIMED DEDU CTION U/S. 80IA WITHOUT BRINGING THE NOTIONALLY BROUGHT FORWARD ANY LOSS OR DEPRECIATION OF EARLIER YEARS WHICH HAS ALREADY BEEN SET OFF AGAINST OTHER INCOME OF THE ASSESSEE. THE DECISION OF PUNE BENCH OF T HE TRIBUNAL IN THE CASE OF PRIMA PAPER ENGINEERING P. LTD. VS. ITO (SUPR A) CITED BY THE LD. DR IS ALSO NOT HELPFUL TO THE REVENUE SINCE FIRSTLY THE DECISION OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF VELAYUDHASWA MY SPINNING MILLS (P) LTD. VS. ACIT (SUPRA) ON THE ISSUE WAS NOT CIT ED BEFORE THE BENCH AND SECONDLY THE ID. AR FAIRLY AGREED THAT THE ISSUE RAISED WAS COVERED AGAINST THE ASSESSEE BY THE DECISION OF SPECIAL BENCH IN THE CASE OF ACIT VS. GOLDMINE SHARES & FINANCE (P) LTD. (SUPRA ) FOLLOWED BY THE AUTHORITIES BELOW. THE ID. AR THEREIN THUS CONTENDED THAT THOUGH THE ISSUE MAY BE DECIDED AGAINST THE ASSESSEE IN VIEW OF THE S PECIAL BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. GOLDMINE SHARES & FINANCIAL (P) LTD., BUT IT SHOULD NOT BE CONSTRUED AS ACQUIESCENCE FROM THE SIDE OF THE ASSESSEE AS THE LEGAL POSITION ON THE SUBJECT IS YET NOT SET TLED. THE GROUND NO. 2 IS THUS DECIDED IN FAVOUR OF THE ASSESSE'. THE ABOVE DECISION HAS BEEN FURTHER FOLLOWED BY OUR COORDINATE BENCH IN A SUBSEQUENT DECISION IN THE CASE OF LAP FINANCE & CONSULT ANCY P. LTD. (SUPRA). THEREFORE, FOLLOWING THE PRECEDENTS, WE CONF IRM THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) ON THIS GROUND. TH E REVENUE FAILS ON THIS GROUND OF APPEAL. 9. IN THE CASE OF M/S. LAXMI RIKSHAW BODY PVT. LTD. (SU PRA) AGAIN THE ISSUE HAS COME BEFORE THE TRIBUNAL WHETHER THE EARLIER LOSSES FROM THE POWER GENERATION UNIT WHICH ARE OTHERWISE SET OFF OR ADJUSTED AGAINST THE OTHER INCOME FROM OTHER HEADS ARE TO BE NOTIONAL LY BROUGHT FORWARD AND THEN TO DETERMINE THE ELIGIBLE PROFIT VIS--VIS THE INITIAL ASSESSMENT YEAR FOR ALLOWING THE CLAIM OF DEDUCTION U/S. 80IA(4 )(IV)(A) OF THE ACT. THE TRIBUNAL FOLLOWED THE DECISION OF THE ITAT, PUNE IN THE CASE OF SERUM INTERNATIONAL LTD. (SUPRA) AND HELD THAT SEC. 80IA(5) DOES NOT CONTEMPLATE SUCH NOTIONAL BROUGHT FORWARD LOSSES IF THE SAME HAD ALREADY SET OFF OR ADJUSTED IN THE PRECEDING YEARS. IN THE PRESENT CASE ALSO IT IS NOT DISPUTED THAT THERE WERE LOSSES IN THE A. YS. 2002-03 AND 2003-04 WHICH WERE SET OFF AND ADJUSTED AGAINST THE O THER INCOMES OR HEADS. THE ASSESSEE EXERCISES HIS OPTION FOR THE INITIAL ASS ESSMENT YEAR IN THE A.Y. 2004-05. IN OUR OPINION THE ASSESSEES CASE IS SQUARELY COVERED BY THE DECISION OF THE ITAT, PUNE IN THE CASE OF SERUM INTERNATIONAL LTD. (SUPRA) AND HENCE, ON THIS REASONS WE CONFIRM THE ORDER OF THE LD. CIT(A) IN BOTH THE ASSESSMENT YEARS. AC CORDINGLY, GROUNDS TAKEN BY THE REVENUE IN BOTH THE ASSESSMENT YEAR S ARE DISMISSED. 6 ITA NO.1552/PN/2014 6. RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL IN ASSE SSEES OWN CASE AND IN ABSENCE OF ANY CONTRARY MATERIAL BROUGH T TO OUR NOTICE WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A). ACCORDINGLY, THE SAME IS UPHELD AND THE GROUNDS RAISED BY THE REVENUE A RE DISMISSED. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 04-02-2016. SD/- SD/- ( VIKAS AWASTHY ) ( R.K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE ; DATED : 04 TH FEBRUARY, 2016. ) *#,! -! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. THE CIT(A ), AURANGABAD 4. 5. 6. THE CIT, AURANGABAD $ ''(, (, / DR, ITAT, B PUNE; - / GUARD FILE. / BY ORDER , $ ' //TRUE COPY// // $ ' //TRUE C // /0 ' ( / SR. PRIVATE SECRETARY (, / ITAT, PUNE