DCIT, Tiruppur V. M.Palanisamy, Tiruppur

ITA 1700/CHNY/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81275 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 27-11-2014
• Assessment Year: 2010-2011
• Appeal Filed On: 13-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S DASGUPTA
• Assessee Lawyers: T BANUSEKAR

Judgement Text

, , IN THE INCOME-TAX APPELLATE TRIBUNAL A BENCH, CHE NNAI . , . ! ! ! ! , ' ' ' ' # # # # BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER & SHRI V. DURGA RAO, JUDICIAL MEMBER ./ I.T.A.NO.1700/MDS/2014 ' ! $! / ASSESSMENT YEAR :2010-11 THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE I, 121, SIXTY FEET ROAD, TIRUPUR. VS. SMT. P. LOGANAYAKI & OTHERS, L/RS OF LATE M. PALANISAMY, KALLIKADU THOTTAM, KVR NAGAR, KARUVAMPALAYAM, TIRUPUR 641 604. [PAN : AHRPP5208K] ( %& %& %& %& /APPELLANT ) ( '(%& '(%& '(%& '(%& / RESPONDENT ) %& ) * / APPELLANT BY : SHRI S. DAS GUPTA, JCIT '(%& ) * / RESPONDENT BY : SHRI T. BANUSEKAR, C.A. ) + / DATE OF HEARING : 27.11.2014 ,$ ) + /DATE OF PRONOUNCEMENT : 28.11.2014 - - - - / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) II, COIMBATORE , DATED 27.03.2014 RELEVANT TO THE ASSESSMENT YEAR 2010-11. 2. BRIEF FACTS OF THE CASE ARE THAT THE DECEASED A SSESSEE, AN INDIVIDUAL, WAS ENGAGED IN THE BUSINESS OF TEXTILE PROCESSING A ND WIND MILL POWER GENERATION. THE ASSESSEE HAD FILED RETURN DECLARING TOTAL INCOME OF .45,60,630/- AND CLAIMED DEDUCTION OF .17,99,439/- UNDER SECTION 80IA OF I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.1 11 1700 700700 700/M/ /M/ /M/ /M/1 11 14 44 4 2 THE INCOME TAX ACT. IN THE ASSESSMENT ORDER, THE AS SESSING OFFICER HAS DISALLOWED THE DEDUCTION CLAIMED BY THE ASSESSEE OF .17,99,439/- UNDER SECTION 80IA OF THE ACT ONLY ON THE GROUND THAT THE DEPARTMENT HAS FILED SLP BEFORE THE HONBLE SUPREME COURT CHALLENGING THE DE CISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. VEL AYUDHASWAMY SPINNING MILLS P. LTD. V. ACIT 231 CTR (MAD) 368): [2012] 34 0 ITR 477. 3. AGAINST THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(APPEALS). THE L D. CIT(APPEALS), BY FOLLOWING THE DECISION IN THE CASE OF CIT V. VELAYU DHASAMY SPINNING MILLS LTD. 231 CTR 368 (MAD), ALLOWED THE CLAIM OF THE AS SESSEE. 4. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 5. THE LD. DR RELIED ON THE ORDER PASSED BY THE AS SESSING OFFICER. 6. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSE SSEE STRONGLY SUPPORTED THE ORDER PASSED BY THE LD. CIT(APPEALS) AND RELIED ON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT I N THE CASE OF CIT V. VELAYUDHASAMY SPINNING MILLS LTD. (SUPRA). 7. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE ONLY I SSUE INVOLVED IN THIS APPEAL IS WHETHER THE ASSESSEE IS ELIGIBLE FOR CLAI MING DEDUCTION UNDER SECTION 80IA OF THE ACT OR NOT. WE FIND THAT THIS I SSUE HAS ALREADY BEEN I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.1 11 1700 700700 700/M/ /M/ /M/ /M/1 11 14 44 4 3 DECIDED BY THE JURISDICTIONAL HIGH COURT IN THE CAS E OF VELAYUDHASAMY SPINNING MILLS P. LTD., (SUPRA). THE HONBLE HIGH C OURT HAS HELD AS UNDER:- 13. SEC.80-IA READS AS FOLLOWS: [(1) WHERE THE GROSS TOTAL INCOME OF AN ASSESSEE IN CLUDES ANY PROFITS AND GAINS DERIVED BY AN UNDERTAKING OR AN ENTERPRISE FR OM ANY BUSINESS REFERRED TO IN SUB-SECTION (4) (SUCH BUSINESS BEING HEREINAFTER REFERRED TO AS THE ELIGIBLE BUSINESS), THERE SHALL, IN ACCORDAN CE WITH AND SUBJECT TO THE PROVISIONS OF THIS SECTION, BE ALLOWED, IN COMPUTIN G THE TOTAL INCOME OF THE ASSESSEE, A DEDUCTION OF AN AMOUNT EQUAL TO HUNDRED PER CENT OF THE PROFITS AND GAINS DERIVED FROM SUCH BUSINESS FOR TE N CONSECUTIVE ASSESSMENT YEARS.] (2) THE DEDUCTION SPECIFIED IN SUB-SECTION (1) MAY, AT THE OPTION OF THE ASSESSEE, BE CLAIMED BY HIM FOR ANY TEN CONSECUTIVE ASSESSMENT YEARS OUT OF FIFTEEN YEARS BEGINNING FROM THE YEAR IN WHICH T HE UNDERTAKING OR THE ENTERPRISE DEVELOPS AND BEGINS TO OPERATE ANY INFRA STRUCTURE FACILITY OR STARTS PROVIDING TELECOMMUNICATION SERVICE OR DEVEL OPS AN INDUSTRIAL PARK [OR DEVELOPS A SPECIAL ECONOMIC ZONE REFERRED TO IN CLAUSE (III) OF SUB- SECTION (4)] OR GENERATES POWER OR COMMENCES TRANSM ISSION OR DISTRIBUTION OF POWER [OR UNDERTAKES SUBSTANTIAL RE NOVATION AND MODERNISATION OF THE EXISTING TRANSMISSION OR DISTR IBUTION LINES ): (4) THIS SECTION APPLIES TO (I) ANY ENTERPRISE CARRYING ON THE BUSINESS [OF (I ) DEVELOPING OR (II) OPERATING AND MAINTAINING OR (III) DEVELOPING, OPERATING AND MAINTAINING] ANY INFRASTRUCTURE FACILITY WHICH FULF ILS ALL THE FOLLOWING CONDITIONS, NAMELY : (A) IT IS OWNED BY A COMPANY REGISTERED IN INDIA OR BY A CONSORTIUM OF SUCH COMPANIES [OR BY AN AUTHORITY OR A BOARD OR A CORPORATION OR ANY OTHER BODY ESTABLISHED OR CONSTI TUTED UNDER ANY CENTRAL OR STATE ACT;] (B) IT HAS ENTERED INTO AN AGREEMENT WITH THE CENTR AL GOVERNMENT OR A STATE GOVERNMENT OR A LOCAL AUTHORI TY OR ANY OTHER STATUTORY BODY FOR (I) DEVELOPING OR (II) OPE RATING AND MAINTAINING OR (III) DEVELOPING, OPERATING AND MAIN TAINING A NEW INFRASTRUCTURE FACILITY;] (C) IT HAS STARTED OR STARTS OPERATING AND MAINTAIN ING THE INFRASTRUCTURE FACILITY ON OR AFTER THE 1ST DAY OF APRIL, 1995: I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.1 11 1700 700700 700/M/ /M/ /M/ /M/1 11 14 44 4 4 5) NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISION OF THIS ACT, THE PROFITS AND GAINS OF AN ELIGIBLE BUSINESS TO WH ICH THE PROVISIONS OF SUB- SECTION (1) APPLY SHALL, FOR THE PURPOSES OF DETERM INING THE QUANTUM OF DEDUCTION UNDER THAT SUB-SECTION FOR THE ASSESSMENT YEAR IMMEDIATELY SUCCEEDING THE INITIAL ASSESSMENT YEAR OR ANY SUBSE QUENT ASSESSMENT YEAR, BE COMPUTED AS IF SUCH ELIGIBLE BUSINESS WERE THE O NLY SOURCE OF INCOME OF THE ASSESSEE DURING THE PREVIOUS YEAR RELEVANT TO T HE INITIAL ASSESSMENT YEAR AND TO EVERY SUBSEQUENT ASSESSMENT YEAR UP TO AND INCLUDING THE ASSESSMENT YEAR FOR WHICH THE DETERMINATION IS TO B E MADE. FROM READING OF SUB-S (1), IT IS CLEAR THAT IT PROV IDES THAT WHERE THE GROSS TOTAL INCOME OF AN ASSESSEE INCLUDES ANY PROFITS AN D GAINS DERIVED BY AN UNDERTAKING FOR AN ENTERPRISE FROM ANY BUSINESS REF ERRED TO IN SUB-S(4) I.E. REFERRED TO AS THE ELIGIBLE BUSINESS, THERE SHALL, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THE SECTION, BE ALLOWE D, IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE, A DEDUCTION OF AN AMOUNT EQ UAL TO 100 PERCENT OF THE PROFITS AND GAINS DERIVED FROM SUCH BUSINESS FO R TEN CONSECUTIVE ASSESSMENT YEARS. DEDUCTION IS GIVEN TO ELIGIBLE B USINESS AND THE SAME IS DEFINED IN SUB-S (4). SUBS-S(2) PROVIDES OPTION TO THE ASSESSEE TO CHOOSE 10 CONSECUTIVE ASSESSMENT YEARS OUT OF 15 YEARS. OPTI ON HAS TO BE EXERCISED. IF IT IS NOT EXERCISED, THE ASSESSEE WILL NOT BE GE TTING THE BENEFIT. FIFTEEN YEARS IS OUTER LIMIT AND THE SAME IS BEGINNING FROM THE YEAR IN WHICH THE UNDERTAKING OR THE ENTERPRISE DEVELOPS AND BEGINS T O OPERATE ANY INFRASTRUCTURE ACTIVITY ETC. SUB-S(5) DEALS WITH QU ANTUM OF DEDUCTION FOR AN ELIGIBLE BUSINESS. THE WORDS INITIAL ASSESSMENT YEAR ARE USED IN SUB- S(5) AND THE SAME IS NOT DEFINED UNDER THE PROVISIO NS. IT IS TO NOTED THAT INITIAL ASSESSMENT YEAR EMPLOYED IN SUB-S(5) IS D IFFERENT FROM THE WORDS BEGINNING FROM THE YEAR REFERRED TO IN SUB-S(2) I MPORTANT FACTORS ARE TO BE NOTED IN SUB-S(5) AND THEY ARE AS UNDER:- (1) IT STARTS WITH NON OBSTANTE CLAUSE WHICH MEAN S IT OVERRIDES ALL THE PROVISIONS OF THE ACT AND OTHER PROVISIONS ARE TO B E IGNORED. (2) IT IS FOR THE PURPOSE OF DETERMINING THE QUANT UM OF DEDUCTION; (3) FOR THE ASSESSMENT YEAR IMMEDIATELY SUCCEEDING THE INITIAL ASSESSMENT YEAR; (4) IT IS A DEEMING PROVISION; (5) FICTION CREATED THAT THE ELIGIBLE BUSINESS IS T HE ONLY SOURCE OF INCOME; AND (6) DURING THE PREVIOUS YEAR RELEVANT TO THE INITIA L ASSESSMENT YEAR AND EVERY SUBSEQUENT ASSESSMENT YEAR. FROM READING THE ABOVE, IT IS CLEAR THAT THE ELIGIB LE BUSINESS WERE THE ONLY SOURCE OF INCOME DURING THE PREVIOUS YEAR RELEVANT TO INITIAL ASSESSMENT YEAR AND EVERY SUBSEQUENT ASSESSMENT YEARS. WHEN T HE ASSESSEE EXERCISES I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.1 11 1700 700700 700/M/ /M/ /M/ /M/1 11 14 44 4 5 THE OPTION, THE ONLY LOSSES OF THE YEARS BEGINNING FROM INITIAL ASSESSMENT YEAR ALONE ARE TO BE BROUGHT FORWARD AND NO LOSSES OF EARLIER YEARS WHICH WERE ALREADY SET OFF AGAINST THE INCOME OF THE ASSE SSEE. LOOKING FORWARD TO A PERIOD OF TEN YEARS FROM THE INITIAL ASSESSMEN T IS CONTEMPLATED. IT DOES NOT ALLOW THE REVENUE TO LOOK BACKWARD AND FIN D OUT IF THERE IS ANY LOSS OF EARLIER YEARS AND BRING FORWARD NOTIONALLY EVEN THOUGH THE SAME WERE SET OFF AGAINST OTHER INCOME OF THE ASSESSEE A ND THE SET OFF AGAINST THE CURRENT INCOME OF THE ELIGIBLE BUSINESS, ONCE THE S ET OFF IS TAKEN PLACE IN EARLIER YEAR AGAINST THE OTHER INCOME OF THE ASSESS EE, THE REVENUE CANNOT REWORK THE SET OFF AMOUNT AND BRING IT NOTIONALLY. FICTION CREATED IN SUB- SECTION DOES NOT CONTEMPLATE TO BRING SET OFF AMOUN T NOTIONALLY. FICTION IS CREATED ONLY FOR THE LIMITED PURPOSE AND THE SAME C ANNOT BE EXTENDED BEYOND THE PURPOSE FOR WHICH IT IS CREATED. 8. BEFORE US, THE REVENUE COULD NOT CONTROVERT THE ABOVE FINDINGS OF THE HONBLE JURISDICTIONAL HIGH COURTS DECISION OR FIL ED ANY HIGHER COURT DECISION HAVING MODIFIED OR REVERSED THE ABOVE DECI SION OF THE HONBLE JURISDICTIONAL HIGH COURT. THE LD. CIT(APPEALS) HAS RIGHTLY FOLLOWED THE ABOVE JUDGEMENT AND WE FIND NO INFIRMITY IN THE ORD ER PASSED BY THE LD. CIT(APPEALS). ACCORDINGLY, THE APPEAL FILED BY THE REVENUE IS DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED ON FRIDAY, THE 28 TH OF NOVEMBER, 2014 AT CHENNAI. SD/- SD/- (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER (V. DURGA RAO) JUDICIAL MEMBER CHENNAI, DATED, THE 28.11.2014 VM/- I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.1 11 1700 700700 700/M/ /M/ /M/ /M/1 11 14 44 4 6 - ) ''+./ 0/$+ /COPY TO: 1. %& / APPELLANT, 2. '(%& / RESPONDENT, 3. 1 ( ) /CIT(A), 4. 1 /CIT, 5. /2 ''+' /DR & 6. 3! 4 /GF.