DCIT, CHENNAI V. Orient Impex, CHENNAI

ITA 1635/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8542 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2016
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 02-06-2016
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: A S SRIRAMAN
• Keywords: Depreciation

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C' BENCH : CHENNAI . . . , ! . '#'$ , % !& ' [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER ] ./ I.T.A.NO.1634 & 1635/MDS/2016 / ASSESSMENT YEAR : 2011-12 & 2012-13 THE DY. COMMISSIONER OF INCOME-TAX NON-CORPORATE CIRCLE 2 CHENNAI VS. M/S ORIENT IMPEX GROUND FLOOR, PADMALAYA TOWERS JANAKI AVENUE, MRC NAGAR CHENNAI 600 028 [PAN AAAFO 0102 D ] ( () / APPELLANT) ( *+() /RESPONDENT) / APPELLANT BY : SHRI A.V. SREEKANTH, JCIT /RESPONDENT BY : SHRI A.S. SRIRAMAN, ADVOCATE / DATE OF HEARING : 23 - 0 8 - 2016 ! / DATE OF PRONOUNCEMENT : 09 - 0 9 - 2016 / O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER THESE APPEALS OF THE REVENUE ARE DIRECTED AGAINS T THE COMMON ORDER OF THE COMMISSIONER OF INCOME-TAX (AP PEALS)-2, CHENNAI, DATED 1.3.2016, FOR ASSESSMENT YEARS 2011- 12 AND 2012-13. 2. THE ONLY GRIEVANCE OF THE REVENUE IN THESE APPEALS IS THAT THE CIT(A) IS NOT JUSTIFIED IN DELETING THE DISALLO WANCE OF THE CLAIM OF DEDUCTION U/S 80IA OF THE ACT ON THE WINDMILL RUN BY THE ASSESSEE. SUCH CLAIMS WHICH WERE DISALLOWED CAME TO ` 67,77,615/- FOR ITA NOS. 1634 & 1635/16 :- 2 -: ASSESSMENT YEAR 2011-12 AND ` 51,87,875/- FOR ASSESSMENT YEAR 2012-13. 3. FACTS APROPOS ARE THAT THE ASSESSEE HAD FILED I TS RETURN DECLARING TOTAL INCOME OF ` .4,70,76,099/- FOR ASSESSMENT YEAR 2011-12 AND ` 2,82,31,510/- FOR ASSESSMENT YEAR 2012-13. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS NOTED BY TH E ASSESSING OFFICER THAT THE ASSESSEE HAD CLAIMED DEDUCTION U/S 80IA(4) OF THE ACT FOR AN INCOME OF ` 67,77,615/- FOR ASSESSMENT YEAR 2011-12 AND ` 51,87,875/- FOR ASSESSMENT YEAR 2012-13 FROM THE WINDMILLS OWNED BY IT. THE ASSESSING OFFICER WAS OF THE OPINION THAT BY VIRTUE OF SUB- SECTION (5) OF SEC. 80IA, THE INCOME OF THE ELIGIBL E BUSINESS HAD TO BE COMPUTED AFTER SETTING OFF THE LOSSES SUFFERED IN S UCH ELIGIBLE BUSINESS IN THE EARLIER YEAR. AS PER THE ASSESSING OFFICE R, THE BENEFIT OF SEC. 80IA(4) OF THE ACT WAS NOT AVAILABLE TO THE ASSESS EE WHO OPERATED ONLY THE WINDMILL UNDERTAKING AND WAS NOT ENGAGED I N ANY OTHER BUSINESS. ACCORDINGLY, HE DISALLOWED THE DEDUCTION CLAIMED BY THE ASSESSEE FOR BOTH THE ASSESSMENT YEARS UNDER CONSID ERATION. ON APPEAL, THE CIT(A), BY FOLLOWING THE JUDGMENT OF TH E MADRAS HIGH COURT IN THE CASE OF VELAYUDHAWAMY SPINNING MILLS P . LTD 340 ITR 477, HELD THAT THE ASSESSEE WAS ELIGIBLE FOR DEDUCTION U/S 80IA(4) OF THE ACT. ITA NOS. 1634 & 1635/16 :- 3 -: 4. THE LD. DR SUBMITTED THAT UNLESS DEPRECIATION ON WI NDMILLS FOR THE EARLIER YEARS WERE SET OFF AGAINST THE INCO ME FOR THE IMPUGNED ASSESSMENT YEARS, DEDUCTION CLAIMED BY THE ASSESSE E U/S 80IA(4) OF THE ACT WOULD RESULT IN EXCESS ALLOWANCE. 5. PER CONTRA, LD. AR SUBMITTED THAT THIS ISSUE WAS SQ UARELY COVERED BY THE JUDGMENT OF THE MADRAS HIGH COURT IN THE CASE OF VELAYUDHASWAMY SPINNING MILLS P. LTD, 340 ITR 477, AND THEREFORE, THE CIT(A) HAD RIGHTLY DELETED THE DISALLOWANCE MAD E BY THE ASSESSING OFFICER. 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUS ED THE ORDERS OF THE AUTHORITIES BELOW. THE GRIEVANCE OF THE REVENUE IS THAT THE ASSESSEE HAD CLAIMED DEDUCTION U/S 80IA(4) OF THE ACT ON PROFITS OF THREE WIND ENERGY GENERATORS AT THENKASI, THIRUN ELVELI DIST. WITHOUT SETTING OFF OF THE DEPRECIATION OF THE SAID UNITS IN THE EARLIER YEARS. AS AGAINST THIS, THE CLAIM OF THE ASSESSEE IS THAT SUCH DEPRECIATION LOSS WAS ALREADY ADJUSTED AND THEREFOR E, NOTIONAL LOSS COULD NOT BE FORCIBLY SET OFF AGAINST THE PROFITS O F THE IMPUGNED ASSESSMENT YEARS. WE FIND THAT THE ISSUE RAISED IN THESE APPEALS SQUARELY COVERED BY THE JUDGMENT OF THE JURISDICTIO NAL HIGH COURT IN THE CASE OF VELAYUDHASWAMY SPINNING MILLS P. LTD (S UPRA). ONCE EARLIER LOSSES HAD BEEN SET OFF AGAINST OTHER INCOM E, THERE IS NO ITA NOS. 1634 & 1635/16 :- 4 -: QUESTION OF NOTIONAL ADJUSTMENT OF SUCH LOSSES AGAI NST THE PROFITS OF A GIVEN YEAR AS PER THE ABOVE JUDGMENT IN RELATION TO THE DEDUCTION CLAIMED U/S 80IA OF THE ACT. SINCE THE CIT(A) HAD FOLLOWED THE JUDGMENT OF THE MADRAS HIGH COURT, WE DO NOT FIND A NY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A). 7. IN THE RESULT, THE APPEALS OF THE REVENUE ARE DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH SEPTEMBER, 2016, AT CHENNAI. SD/- SD/- ( . . . ' ) (N.R.S. GANESAN) / JUDICIAL MEMBER ( ! . '#'$ ) (ABRAHAM P. GEORGE) % / ACCOUNTANT MEMBER #$ / CHENNAI %& / DATED: 9 TH SEPTEMBER, 2016 RD &' ()*) / COPY TO: 1 . / APPELLANT 4. + / CIT 2. / RESPONDENT 5. ),- . / DR 3. +/' / CIT(A) 6. -01 / GF