DCIT, Coimbatore V. Kasthuri Rajinikanth, Coimbatore

ITA 159/CHNY/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9151 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 29-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A B KOLI
• Keywords: Depreciation; Reasonable cause
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , B B ENCH, CHENNAI . . . , . , & BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.159/MDS/2016 ( / ASSESSMENT YEAR: 2012-13) THE DEPUTY COMMISSIONER OF INCOME TAX , NON-CORPORATE CIRCLE-I 63A, RACE COURSE ROAD, COIMBATORE. VS M/S. KASTHURI RAJINIKANTH, 603, C BLOCK, PIONEER COMPLEX, 1075, AVINASHI ROAD, COIMBATORE-641 018. PAN:AADPR3075L ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. A.B. KOLI, JCIT /RESPONDENT BY : NONE /DATE OF HEARING : 31 ST MARCH, 2016 /DATE OF PRONOUNCEMENT : 9 TH JUNE, 2016 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THIS APPEAL IS FILED BY THE REVENUE AGGRIEVED BY TH E ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS)- 1, COIMBATORE DATED 28.10.2015 IN ITA NO.406/14-15 PASSED UNDER SECTION 143(3) R.W.S 250(6) OF THE ACT. 2. THE APPEAL FILED BY THE REVENUE IS BARRED BY LIM ITATION OF 3 DAYS. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE DELAY WAS DUE TO MISPLACEMENT O F THE FILE AND NOT WILLFUL, HENCE IT WAS PLEADED THAT THE DEL AY MAY BE CONDONED. CONSIDERING THE SUBMISSIONS OF THE REVEN UE, WE 2 ITA NO.159 /MDS/2016 ARE SATISFIED THAT THERE WAS REASONABLE CAUSE FOR T HE DELAY IN FILING THE APPEAL. HENCE IN THE INTEREST OF JUSTICE , WE HEREBY CONDONE THE DELAY IN FILING OF THE APPEAL AND ADMIT THE SAME. 3. THOUGH THE REVENUE HAS RAISED SEVERAL GROUNDS IN ITS APPEAL, THE CRUX OF THE ISSUE IS THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN A LLOWING THE CLAIM OF DEDUCTION UNDER SECTION 80IA OF THE AC T BY THE ASSESSEE TOWARDS PROFITS AND GAINS DERIVED BY GENER ATING POWER THROUGH WINDMILL. 4. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS THE PROPRIETOR OF M/S. RAJINIKANTH FOUNDATION ENGAGED I N THE BUSINESS OF MANUFACTURING AUTO COMPONENTS FOR HEAVY VEHICLES AND GENERATING POWER THROUGH WINDMILLS, FI LED ITS RETURN OF INCOME ON 31.08.2012 FOR THE ASSESSMENT YEAR 2012-13 DECLARING INCOME OF ` 1, 41,32,660/-. DURING THE COURSE OF SCRUTINY PROCEEDINGS, THE LEARNED ASSESSI NG OFFICER NOTICED THAT THE ASSESSEE HAD CLAIMED DEDUCTION OF ` 1,07,29,090/- UNDER SECTION 80IA OF THE ACT TOWARDS INCOME GENERATED FROM WINDMILL BY TREATING THE ASSESSMENT YEAR 3 ITA NO.159 /MDS/2016 2010-11 AS THE INITIAL YEAR FOR WINDMILL UNIT III A ND ASSESSMENT YEAR 2008-09 FOR WINDMILL UNIT II, THOUGH THE WIND MILL UNIT III WAS ESTABLISHED IN THE ASSESSMENT YEAR 2004-05 AND WINDMILL UNIT II WAS ESTABLISHED IN THE YEAR ASSESS MENT YEAR 2002-03, WHICH HE OPINED TO BE IN VIOLATION OF SEC TION 80IA(5) OF THE ACT. THEREAFTER THE LEARNED ASSESSIN G OFFICER DISALLOWED THE CLAIM OF DEDUCTION U/S. 80IA OF THE ACT BY OBSERVING AS FOLLOWS IN HIS ORDER:- 4.2 AS PER SECTION 80IA(5), PROFITS AND GAINS OF AN ELIGIBLE BUSINESS HAS TO BE WORKED OUT AS SUCH AS IF SUCH ELIGIBLE BUSINESS WERE THE ONLY SOURCE OF INCOME OF THE ASSESSEE RIGHT FROM THE COMMENCEMENT OF THE BUSINESS AND IN SUBSEQUENT YEARS UPTO THE COMPUTATION IS MADE AND BUSINESS LOSSES, DEPRECIATION AND INVESTMENT ALLOWANCE OF EARLIER YEARS SHOULD BE TAKEN INTO ACCOUNT IN DETERMINING THE QUANTUM OF DEDUCTION ADMISSIBLE UNDER THE NEW SECTION 80IA, EVEN THOUGH THEY MAY HAVE BEEN SET OFF AGAINST THE PROFITS OF THE TAX PAYER FROM OTHER SOURCES. THERE IS NO CHANGE IN THE WORDINGS WITH REGARD TO COMPUTATION OF PROFITS AND GAINS OF THE ELIGIBLE BUSINESS RIGHT FROM THE IMPORT AND UNTIL NOW. IN THE LIGHT OF THE ABOVE DISCUSSION, THE ASSESSEE DOES NOT HAVE ELIGIBLE PROFITS TO CLAIM DEDUCTION UNDER SECTION 80IA. 4.3 HOWEVER, THE ASSESSEE HAS CLAIMED 80IA DEDUCTION ON THE BASIS OF HONBLE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF SRI VELAYUDHAAMY SPINNINGS MILLS PVT.LTD., 231 CTR 368 ON SIMILAR ISSUE. NEVERTHELESS, THIS ISSUE HAS NOT BECOME FINAL AS THE DEPARTMENT HAS PREFERRED 4 ITA NO.159 /MDS/2016 A SLP BEFORE THE HONBLE SUPREME COURT WHICH IS PENDING FOR DECISION. CONSIDERING THE FACT THAT THE ISSUE HAS NOT BECOME FINAL, THE ASSESSING OFFICER IS COMPELLED TO MAKE NECESSARY ADDITION ON ACCOUNT OF THIS ISSUE. HENCE, AN AMOUNT OF RS.1,07,29,090/- CLAIMED AS DEDUCTION UNDER SECTION 80IA ON ACCOUNT OF WINDMILLS IS DISALLOWED, HOWEVER, IT IS NOTICED THAT WITH ABUNDANT CAUTION THE DEMAND RAISED ON ACCOUNT OF THIS DEPARTMENTAL STAND SHALL BE ENFORCEABLE ONLY WHEN THE STAND OF THE DEPARTMENT IS UPHELD BY THE HONBLE SUPREME COURT (SC) TILL SUCH TIME THE DEMAND RAISED ON ACCOUNT OF THIS ISSUE IS HELD TO BE STAYED. 5. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS) FOLLOWING THE DECISION OF THE JURISDICTIO NAL HIGH COURT IN THE CASE OF SRI VELAYUTHASAMY SPINNING MIL LS REPORTED IN 231 ITR 368 ALLOWED THE APPEAL OF THE A SSESSEE BY HOLDING AS FOLLOWS:- ON THIS ISSUE THE HIGH COURT OF MADRAS HAS ALREAD Y HELD IN THE CASE OF VELAYUDHASWAMY SPINNING MILLS P.LTD. (SUPRA) THAT THE INITIAL ASSESSMENT YEAR IS THE ASSESSMENT YEAR IN WHICH THE DEDUCTION OF PROFIT OF UNDERTAKING WAS FIRST CLAIM U/S.80IA AND THIS JUDGE MENT IS BINDING ON ALL SUBORDINATE APPELLATE AUTHORITIES SO LONG AS IT IS NOT REVERSED BY THE HONBLE SUPREME COURT. IN FACT THE CHENNAI BENCH OF THE TRIBUNAL HAS FOLLOWED THIS JUDGEMENT IN A NUMBER OF CASES AND DIRECTED TO TREA T THE INITIAL ASSESSMENT YEAR ACCORDINGLY. RESPECTFULLY F OLLOWING THE SAME, I DIRECT THE ASSESSING OFFICER TO TREAT T HE INITIAL ASSESSMENT YEAR OF THE WIND MILL UNIT ACCORDINGLY A ND 5 ITA NO.159 /MDS/2016 ALLOW THE ASSESSEES CLAIM OF DEDUCTION U/S.80IA AF TER NECESSARY VERIFICATION. 6. BEFORE US, THE LEARNED DEPARTMENTAL REPRESENTATI VE ARGUED IN SUPPORT OF THE ORDER OF THE LEARNED ASSES SING OFFICER WHILE AS THE LEARNED AUTHORIZED REPRESENTAT IVE RELIED IN ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS). 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFULL Y PERUSED THE MATERIAL ON RECORD. SINCE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAD FOLLOWED T HE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CA SE OF SRI VELAYUDHASWAMY SPINNING MILLS PVT.LTD., CITED SUPRA AND ALLOWED THE CLAIM OF THE ASSESSEE UNDER SECTION 80I A OF THE ACT, WE DO NOT HAVE ANY HESITATION TO CONFIRM THE O RDERS OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), A S THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT I S BINDING ON ALL THE LOWER AUTHORITIES UNDER ITS JURISDICTION. A CCORDINGLY, WE HEREBY CONFIRM THE ORDER OF THE LEARNED COMMISSIONE R OF INCOME TAX (APPEALS). 6 ITA NO.159 /MDS/2016 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 9 TH JUNE, 2016 SD/- SD/- ( . . . ) ( . ) (N.R.S.GANESAN) ( A.M OHAN ALANKAMONY ) # % / JUDICIAL MEMBER % / ACCOUNTANT MEMBER # /CHENNAI, ( /DATED 9 TH JUNE, 2016 SOMU *+ ,+ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. - () /CIT(A) 4. - /CIT 5. + 1 /DR 6. /GF