M/s. Topaz Investments Pvt., Ltd., Bangalore V. Joint Commissioner of Income Tax (OSD), Bangalore

ITA 1687/BANG/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7356 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-11-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 22-09-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PADMA MEENAKSHI
• Assessee Lawyers: R G NAHAR
• Keywords: Business income; Depreciation
• Section: 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER IT A NO. 1687/BANG/2016 ASSESSMENT YEAR : 20 1 1 - 12 M/S. TOPAZ INVESTMENTS PVT. LTD., 204, 28 TH CROSS, 7 TH CROSS, JAYANAGAR, BANGALORE 560 082. PAN: AAACT 6199C VS. THE JOINT COMMISSIONER OF INCOME TAX (OSD), BANGALORE. APPELLANT RESPONDENT ASSESSEE BY : SHRI R.G. NAHAR, CA REVENUE BY : SMT. PADMA MEENAKSHI, JCIT (DR) DATE OF HEARING : 06 . 1 1 .201 7 DATE OF PRONOUNCEMENT : .1 1 .2017 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER THIS IS AN ASSESSEES APPEAL DIRECTED AGAINST THE O RDER OF LD. CIT(A)-7, BANGALORE DATED 29.07.2016 FOR ASSESSMENT YEAR 2011 -12. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER. 1. ON FACTS AND CIRCUMSTANCES PREVAILING IN THE CAS E AND AS PER PROVISIONS & SCHEME OF THE LAW IT BE HELD THAT THE INTEREST RECEIVED OF RS. 2,29,86,794/- AS INCOME FROM BUSINESS INSTEAD O F CONSIDERING IT AS INCOME FROM OTHER SOURCES. JUST IN PROPER RELIEF B E GRANTED TO THE APPELLANT. 2. WITHOUT PREJUDICE TO GROUND NO. 1 & ON FACTS AND CIRCUMSTANCES PREVAILING IN THE CASE AND AS PER PROVISIONS & SCHE ME OF THE LAW IT BE HELD THAT ONLY THE NET INTEREST (GROSS INTEREST REC EIPT LESS INTEREST PAID) AS INCOME FROM OTHER SOURCES. 3. WITHOUT PREJUDICE TO GROUND NO. 1 & 2 ON FACTS A ND CIRCUMSTANCES PREVAILING IN THE CASE AND AS PER PROVISIONS & SCHE ME OF THE LAW IT BE HELD THAT DEDUCTION U/S 80IA(4) BE ALLOWED AT RS. 2 ,31,61,748/- IN PLACE OF RS. 1,72,26,213/- UNDER THE GUISE OF RESTR ICTING THE SAME TO THE INCOME FROM BUSINESS. THE DEDUCTION U/S 80IA(4) SHOULD BE ALLOWED FROM THE GROSS TOTAL INCOME. ITA NO.1687/BANG/2016 PAGE 2 OF 6 4. THE APPELLANT PRAYS TO BE ALLOWED TO ADD, AMEND, MODIFY, RECTIFY, DELETE, RAISE ANY GROUNDS OF APPEAL AT THE TIME OF HEARING. 3. IT WAS SUBMITTED BY LD. AR OF ASSESSEE THAT GROU ND NOS. 1 AND 2 ARE NOT PRESSED AND ACCORDINGLY THESE TWO GROUNDS ARE REJEC TED AS NOT PRESSED. 4. REGARDING GROUND NO. 3, HE SUBMITTED THAT AS PER THE ASSESSMENT ORDER, THE AO HAS DETERMINED THE BUSINESS INCOME AT RS. 1,72,2 6,213/- AFTER REDUCING INTEREST INCOME FROM TOTAL BUSINESS INCOME AS PER R ETURN OF INCOME OF RS. 4,02,13,007/- HE SUBMITTED THAT AS PER THE COMPUTA TION IN THE PAGE NO. 5 OF THE ASSESSMENT ORDER ALSO, THE GROSS TOTAL INCOME (GTI) OF THE ASSESSEE IS COMPUTED AT RS. 14,59,81,627/- BUT STILL THE DEDUCT ION CLAIMED BY THE ASSESSEE U/S. 80IA(4) WAS RESTRICTED TO THE BUSINESS INCOME COMPUTED BY THE AO AT RS. 1,72,26,213/- IN PLACE OF DEDUCTION CLAIMED BY THE ASSESSEE U/S. 80IA(4) AT RS. 2,31,61,748/-. HE SUBMITTED THAT AS PER THE COMPUT ATION OF INCOME AVAILABLE ON PAGE NO. 19 OF THE PAPER BOOK, THE GTI IS MORE TH AN THE INCOME ELIGIBLE FOR DEDUCTION U/S. 80IA (4) AND THEREFORE, THE QUANTUM OF DEDUCTION U/S 80IA (4) CANNOT BE RESTRICTED TO THE BUSINESS INCOME ASSESSE D BY THE AO. IN SUPPORT OF THIS CONTENTION, HE PLACED RELIANCE ON THE TRIBUNAL ORDER RENDERED IN THE CASE OF JINDAL ALUMINIUM LTD. VS. ACIT AS REPORTED IN 54 SO T 283 (BANGALORE), COPY AVAILABLE ON PAGES 99 TO 106 OF PAPER BOOK. HE ALS O PLACED RELIANCE ON A JUDGMENT OF HONBLE BOMBAY HIGH COURT RENDERED IN T HE CASE OF CIT VS. TRIDOSS LABORATORIES LTD. AS REPORTED IN 328 ITR 44 8, COPY AVAILABLE ON PAGES 107 TO 109 OF PAPER BOOK. THE LD. DR OF REVENUE SU PPORTED THE ORDERS OF AUTHORITIES BELOW. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FI ND THAT THE ISSUE IN DISPUTE IS REGARDING QUANTUM OF DEDUCTION ALLOWABLE U/S. 80IA (4) OF THE I.T. ACT. FOR THE SAKE OF READY REFERENCE, FIRST WE REPRODUCE THE PRO VISIONS OF SUB SECTION 4 OF SECTION 80IA. THE SAME READS AS UNDER. (4) THE AMOUNT OF DEDUCTION IN THE CASE OF AN INDUS TRIAL UNDERTAKING IN AN INDUSTRIALLY BACKWARD STATE SPECIFIED IN THE EIGHTH SCHEDULE SHALL BE HUNDRED PER CENT OF THE PROFITS AND GAINS DERIVED FROM SUCH INDUSTRIAL UNDERTAKING FOR FIVE ASSESSMENT YEARS BE GINNING WITH THE INITIAL ASSESSMENT YEAR AND THEREAFTER TWENTY-FIVE PER CENT (OR THIRTY ITA NO.1687/BANG/2016 PAGE 3 OF 6 PER CENT WHERE THE ASSESSEE IS A COMPANY) OF THE PR OFITS AND GAINS DERIVED FROM SUCH INDUSTRIAL UNDERTAKING : 6. FROM THE PROVISIONS OF SUB SECTION 4 OF SECTION 80IA AS REPRODUCED ABOVE, IT IS SEEN THAT THE AMOUNT OF DEDUCTION ALLOWABLE IS 100% OF THE PROFITS AND GAINS DERIVED FROM UNDERTAKING FOR 5 YEARS BEGINNING WITH THE INITIAL ASSESSMENT YEAR AND THEREAFTER, 30% OF THE PROFITS AND GAINS DERIVE D FROM THE ELIGIBLE INDUSTRIAL UNDERTAKING IS ALLOWABLE AS DEDUCTION. IN THE PRES ENT CASE, THE AO HAS HELD ON PAGE NO. 4 OF THE ASSESSMENT ORDER THAT AFTER EXCLU SION OF INTEREST INCOME, THE REMAINING BUSINESS INCOME IS FROM GENERATION OF ELE CTRICITY THROUGH WINDMILL AND IN RESPECT OF THIS INCOME, THE ASSESSEE IS ELIG IBLE FOR DEDUCTION U/S. 80IA OF THE I.T. ACT AND THEREFORE, NO INCOME IS TAXABLE UNDER THE HEAD INCOME FROM BUSINESS IN THE PRESENT CASE. HENCE, I T IS SEEN THAT TO THE EXTENT OF 100% OF BUSINESS INCOME FROM THE ELIGIBLE BUSINE SS ACTIVITY OF ASSESSEE COMPANY TOWARDS GENERATION OF ELECTRICITY FROM WIND MILL HAS BEEN ALLOWED AS DEDUCTION BY THE AO U/S. 80IA. AS PER THE STATEMEN T OF TOTAL INCOME AVAILABLE ON PAGE NO. 19 OF THE PAPER BOOK, THE ASSESSEE HAS CLAIMED DEDUCTION U/S. 80IA TO THE EXTENT OF RS. 2,31,61,748/- AND THE COM PUTATION OF THIS AMOUNT IS AVAILABLE IN SCHEDULE VII AS STATED ON PAGE NO. 19 BUT SCHEDULE VII IS NOT AVAILABLE IN THE PAPER BOOK. BUT STILL THERE IS NO DISPUTE THAT THE BUSINESS INCOME ASSESSED BY THE AO IS ONLY RS. 1,72,26,213/- . UNDER THESE FACTS, WE FIND THAT AS PER THE PROVISIONS OF SECTION 80IB(4) AS REPRODUCED ABOVE, THE AMOUNT OF DEDUCTION ALLOWED BY THE AO IS 100% OF TH E PROFIT AND GAINS DERIVED FROM ELIGIBLE UNDERTAKING AND IN OUR CONSIDERED OPI NION, AS PER THE PROVISIONS OF SECTION 80IA (4) ALSO, THE ELIGIBLE AMOUNT IS ONLY RS. 1,72,26,213/- BEING BUSINESS INCOME ASSESSED BY THE AO AND IT CANNOT BE MORE THAN THAT. NOW IN THE LIGHT OF THESE FACTS, WE EXAMINE THE APPLICABIL ITY OF TWO JUDGMENTS CITED BY LD. AR OF ASSESSEE. THE FIRST JUDGMENT IS TRIBUNAL ORDER RENDERED IN THE CASE OF JINDAL ALUMINIUM LTD. VS. ACIT (SUPRA). IT IS NOTE D BY THE TRIBUNAL ON PAGE NO. 104 OF PAPER BOOK THAT IT IS MANDATORY TO WORK OUT THE ELIGIBLE AMOUNT OF DEDUCTION UNDER VARIOUS SECTIONS OF CHAPTER VI-A IN DIVIDUALLY AND THEN SUCH AGGREGATE AMOUNT HAS TO BE RESTRICTED TO THE AMOUNT OF GROSS TOTAL INCOME AS COMPUTED UNDER SECTION 80B (5), WHICH MEANS THE INC OME AVAILABLE AFTER ADJUSTING ALL THE BROUGHT FORWARD LOSSES AND UNABSO RBED DEPRECIATION ETC. HENCE IT IS SEEN THAT FOR QUANTIFYING THE DEDUCTION ALLOWABLE UNDER CHAPTER VI-A ITA NO.1687/BANG/2016 PAGE 4 OF 6 OF THE I.T. ACT, THE RELIEF ALLOWABLE UNDER RELEVAN T SECTION HAS TO BE WORKED OUT FIRST AND IF THE TOTAL AMOUNT OF DEDUCTION ALLOWABL E UNDER VARIOUS SECTIONS OF CHAPTER VI A IS LESS THAN THE GTI THAN WHOLE OF THE SUCH ELIGIBLE AMOUNT IS TO BE ALLOWED AS DEDUCTED UNDER CHAPTER VI-A AND IF THE T OTAL AMOUNT OF ELIGIBLE DEDUCTION UNDER VARIOUS SECTIONS IS MORE THAN THE G TI THEN DEDUCTION ALLOWABLE UNDER CHAPTER VIA HAS TO BE RESTRICTED TO THE AMOUNT OF GTI. HENCE IN THE PRESENT CASE, BEFORE COMPARING THE AMOUNT OF DEDUCTION ALLOWABLE TO ASSESSEE U/S. 80IA (4) WITH THE AMOUNT OF GTI, WE H AVE TO FIRST SEE HOW MUCH IS THE AMOUNT ELIGIBLE FOR DEDUCTION U/S.80IB AND T HEREAFTER WE HAVE TO DECIDE AS TO WHETHER FULL SUCH AMOUNT IS ALLOWABLE OR IT I S TO BE SUBJECT TO SOME UPPER CAP IF GTI IS LESS THAN THAT. IN THE PRESENT CASE, THE ELIGIBLE AMOUNT OF DEDUCTION IS LESS THAN GTI AND THEREFORE, NO UPPER CAP LESS THAN ELIGIBLE AMOUNT OF DEDUCTION IS REQUIRED IN THE PRESENT CASE . BUT ELIGIBLE AMOUNT OF DEDUCTION CANNOT BE MORE THAN 100% OF PROFITS AND G AINS DERIVED FROM ELIGIBLE UNDERTAKING EVEN IF GTI IS MORE. THE AMOUNT OF SUC H PROFIT AND GAINS FROM ELIGIBLE UNDERTAKING OF THE ASSESSEE COMPANY IS ONL Y RS. 1,72,26,213/- AND THEREFORE, THE DEDUCTION ALLOWABLE U/S. 80IA(4) CAN NOT EXCEED THIS AMOUNT ALTHOUGH THE GTI IS MUCH MORE. THEREFORE IT IS SEE N THAT THIS TRIBUNAL ORDER IS NOT RENDERING ANY HELP TO ASSESSEE IN THE PRESENT C ASE. 7. THE SECOND JUDGMENT ON WHICH RELIANCE HAS BEEN P LACED BY ASSESSEE IS JUDGMENT OF HONBLE BOMBAY HIGH COURT RENDERED IN T HE CASE OF CIT VS. TRIDOSS LABORATORIES LTD. (SUPRA). IN THIS CASE, T HIS WAS THE ARGUMENT ON BEHALF OF THE REVENUE BEFORE THE HONBLE BOMBAY HIGH COURT THAT A MAJOR PORTION OF THE INCOME OF THE ASSESSEE COMPRISED OF INCOME FROM OTHER SOURCES AND THIS INCOME WAS NOT DERIVED FROM THE ELIGIBLE BUSINESS A ND THEREFORE, THE ASSESSEE WAS NOT ENTITLED TO A DEDUCTION UNDER SECTION 80-IA TO THE EXTENT OF THE TAXABLE INCOME OF RS. 14.57 LAKHS COMPUTED BY THE AO AS GRO SS TOTAL INCOME ALTHOUGH THE PROFIT OF UNIT AT DAMAN WAS COMPUTED AT RS. 98. 43 LAKHS WHICH WAS FOUND TO BE THE ELIGIBLE UNDERTAKING FOR THE PURPOSE OF D EDUCTION U/S. 80IA(4) OF THE I.T. ACT. UNDER THESE FACTS, IT WAS HELD BY HONBL E BOMBAY HIGH COURT THAT THE SUBMISSIONS MADE BY THE REVENUE CANNOT BE ACCEPTED. IN THE RESULT, THE APPEAL OF THE REVENUE WAS DISMISSED. IN PARA NO. 6 OF JUDGMENT OF HONBLE BOMBAY HIGH COURT, IT WAS HELD BY HONBLE BOMBAY HI GH COURT THAT IN THAT ITA NO.1687/BANG/2016 PAGE 5 OF 6 CASE, THE TRIBUNAL HAS NOTED THAT THE GROSS TOTAL I NCOME OF THE ASSESSEE AFTER SETTING OFF THE LOSSES FROM ALL OTHER SOURCES OF IN COME IS RS. 14,57,200/-, WHILE THE PROFIT OF THE ELIGIBLE UNIT WAS COMPUTED AT RS. 98.43 LAKHS. THE TRIBUNAL IN THAT CASE RESTRICTED THE DEDUCTION TO THE EXTENT OF THE GROSS TOTAL INCOME, NAMELY, RS. 14,57,200/- AND IT WAS HELD BY HONBLE BOMBAY HIGH COURT THAT THE DECISION OF THE TRIBUNAL IS IN ACCORDANCE WITH THE PROVISIONS OF THE ACT. HENCE IT IS SEEN THAT IN THAT CASE, THE AMOUNT OF DEDUCTI ON WAS RESTRICTED TO THE EXTENT OF GROSS TOTAL INCOME BECAUSE THE INCOME OF THE ELI GIBLE UNIT WAS MORE THAN THAT. THE RATIO OF THIS JUDGMENT IS NOT THIS THAT IF THE INCOME OF ELIGIBLE UNDERTAKING IS LESS THAN GTI THAN ALSO, DEDUCTION I S ALLOWABLE TO THE EXTENT OF GTI. THE RATIO OF THIS JUDGMENT IS THIS THAT TO THE EXTENT OF GTI, DEDUCTION IS ALLOWABLE IF THE ELIGIBLE INCOME IS NOT LESS THAN G TI. IN THE PRESENT CASE, THE AO HAS ALREADY ALLOWED DEDUCTION TO THE EXTENT OF B USINESS INCOME OF ELIGIBLE UNDERTAKING AND THEREFORE, IN THE FACTS OF PRESENT CASE, THIS JUDGMENT OF HONBLE BOMBAY HIGH COURT IS ALSO NOT RENDERING ANY HELP TO THE ASSESSEE. 8. AS PER ABOVE DISCUSSION, WE HAVE SEEN THAT NONE OF THE JUDGMENTS CITED BY THE LEARNED AR OF THE ASSESSEE IS RENDERING ANY HELP TO THE ASSESSEE IN THE PRESENT CASE. WE HAVE ALSO SEEN THAT THE DEDUCTION ALLOWED BY THE AO U/S. 80IA(4) IS TO THE EXTENT OF 100% OF BUSINESS INCOME OF ELIGIBLE UNDERTAKING OF THE ASSESSEE COMPANY AND HENCE, WE HOLD THAT THERE IS NO INFIRMITY IN THE ASSESSMENT ORDER AND IN THE ORDER OF CIT(A). WE TH EREFORE, DECLINE TO INTERFERE IN THE ORDER OF CIT(A). 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. SD/- SD/- (SUNIL KUMAR YADAV) (ARUN KUMAR GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 15 TH NOVEMBER, 2017. /MS/ ITA NO.1687/BANG/2016 PAGE 6 OF 6 .COPY TO: 1. APP ELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.