DCIT, Tiruppur V. Prabath Mills, Tiruppur

ITA 1716/CHNY/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96199 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2015
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 24-07-2015
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTHJCIT
• Assessee Lawyers: R KUMAR
• Keywords: Depreciation; Unabsorbed depreciation

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . , , !' # , $ % BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./ I.T.A.NO.1716/MDS/2015 ( / ASSESSMENT YEAR : 2011-12) DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2, 121.SIXTY FEET ROAD, TIRUPUR. 641 602. VS. M/S.PRABATH MILLS., ARUL INDUSTRIAL ESTATE ARULPRAM,PALLADAM ROAD, TIRUPUR 641 606. PAN AADFP 7442 E ( &' / APPELLANT ) ( #(&' / RESPONDENT ) / APPELLANT BY : MR.A.V.SREEKANTH,JCIT D.R / RESPONDENT BY : MR.R.KUMAR, ADVOCATE / DATE OF HEARING : 30.09.2015 /DATE OF PRONOUNCEMENT : 09 .10.2015 ) / O R D E R PER A.MOHAN ALANKAMONY , ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE REVENUE, AGGRIEVED B Y THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(A)-3, COIMBA TORE DATED ITA NO. 1716/MDS/15 2 29.05.2015 PASSED UNDER SECTION-143(3) READ WITH SECTION 250 OF THE ACT IN APPEAL NO.4/14-15 FOR THE ASSESSMENT Y EAR 2011-12. 2. THE REVENUE HAS RAISED FIVE GROUNDS IN ITS APPE AL, HOWEVER THE CRUX OF THE ISSUE IS THAT THE REVENUE IS AGGRIE VED BY THE ORDER OF THE LD. CIT (A), WHO HAD ERRED IN ALLOWING DEDUCTIO N U/S 80-IA OF THE ACT FOLLOWING THE DECISION OF THE HONBLE JURISDICT IONAL HIGH COURT IN THE CASE OF VELAYUDHASWAMY SPINNING MILLS (P) LTD V S. ACIT REPORTED IN 231 CTR (MAD.) 368, THOUGH THE SLP FILE D BY THE REVENUE BEFORE THE HONBLE APEX COURT IS PENDING. 3. THE ASSESSEE IS A COMPANY, ENGAGED IN THE BUSI NESS OF PURCHASE, MANUFACTURE, SALES OF POWER LOOM CLOTH & GENERATION OF ELECTRICITY THROUGH WIND ENERGY, FILED ITS RETURN O F INCOME ON 06.09.2011 ADMITTING TOTAL INCOME AS ` 97,99,280/- AFTER CLAIMING DEDUCTION OF ` 35,46,623/- U/S.80-IA OF THE ACT. THE CASE WAS TAK EN FOR SCRUTINY THROUGH CASS AND ASSESSMENT U/S.143 (3 ) WAS COMPLETED ON 15.03.2014 WHEREIN THE LD. A.O DISALLO WED THE DEDUCTION U/S. 80-IA OF THE ACT ON WINDMILLS. ITA NO. 1716/MDS/15 3 3.1. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS OBSERVED BY THE LD. ASSESSING OFFICER THAT THE ASSESSEE HAD CLAIMED THE DEDUCTION U/S.80-IA OF THE ACT RELYING UPON THE DEC ISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF VELAYUDHAS WAMY SPINNING MILLS (P) LTD VS. ACIT REPORTED IN 231 CTR (MAD) 36 8 [2010]. HOWEVER THE LD. A.O OPINED THAT SINCE THE REVENUE I S IN APPEAL AND THE MATTER IS PENDING BEFORE THE HON. APEX COURT, H E IS JUSTIFIED IN DISALLOWING THE CLAIMED OF DEDUCTION OF ` 35,46,623/- TOWARDS THE WINDMILL DIVISION U/S.80-IA OF THE ACT FOR THE A.Y 2011-12. 4. ON APPEAL BY THE ASSESSEE, LD.CIT (A) DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY FOLLOWING THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF VELAYUDHASWAMY SPINNING M ILLS (P) LTD VS. ACIT SUPRA WHEREIN IT WAS HELD THAT:- I) EACH ELIGIBLE UNIT OF THE INDUSTRIAL UNDERTAKIN G HAS TO BE CONSIDERED AS IF SUCH ELIGIBLE BUSINESS WHERE THE ONLY SOURCE OF INCOME OF THE ASSESSEE DURING THE PREVIOUS YEAR RELEVANT TO THE I NITIAL ASSESSMENT ITA NO. 1716/MDS/15 4 YEAR AND TO EVERY SUBSEQUENT ASSESSMENT YEAR UPTO T HE PERIOD PRESCRIBED UNDER THE ACT FOR THE BENEFIT OF SECTION 80IA OF THE ACT. II) THAT THE INITIAL ASSESSMENT YEAR REFERRED TO SE CTION-80-IA(5) OF THE ACT WOULD MEAN THE YEAR IN WHICH THE ASSESSEE OPTS IN SELECTING THE YEAR OF CLAIMING RELIEF U/S.80-IA OF THE ACT. III) THAT THE UNABSORBED DEPRECIATION AND CARRY FO RWARD LOSSES OF THE EARLIER YEARS WHICH HAD ALREADY BEEN SET OFF AGAINS T THE OTHER INCOME CANNOT BE NOTIONALLY CARRY FORWARD AND TAKEN INTO C ONSIDERATION FOR THE PURPOSE OF COMPUTATION OF DEDUCTION U/S.80-IA O F THE ACT. 5. BEFORE US, THE LD. D.R ARGUED IN SUPPORT OF THE ORDER OF THE LD. ASSESSING OFFICER. LD. D.R FURTHER SUBMITTED THAT THE LD. ASSESSING OFFICER HAD ARRIVED AT THIS DECISION OUT OF ABUNDAN T CAUTION, BECAUSE THE REVENUE HAS CARRIED THE MATTER BEFORE THE HONB LE APEX COURT AND THE MATTER WAS PENDING. THE LD. A.R. ON THE OT HER HAND, RELIED ON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF ITA NO. 1716/MDS/15 5 VELAYUDHASWAMY SPINNING MILLS (P) LTD., SUPRA AND P RAYED THAT THE ORDER OF THE LD. CIT(A) MAY BE UPHELD. 6. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY PE RUSED THE MATERIALS AVAILABLE ON RECORD. FROM THE FACTS OF TH E CASE IT APPEARS THAT THE LD. ASSESSING OFFICER WAS OF THE VIEW THAT SINCE THE REVENUE WAS ON APPEAL AGAINST THE DECISION OF THE HONBLE M ADRAS HIGH COURT IN THE CASE VELAYUDHASWAMY SPINNING MILLS P. LTD (S UPRA) BEFORE THE HONBLE APEX COURT, HE NEED NOT FOLLOW THAT DECISIO N. HE DID NOT REALIZE THAT MERE FILING OF THE SLP BEFORE THE APEX COURT IS NOT A VALID GROUND FOR NOT FOLLOWING THE JUDGMENT OF THE HONBL E MADRAS HIGH COURT. FURTHER, IT IS NOT THE CASE OF THE REVENUE THAT THE JUDGMENT OF THE HONBLE MADRAS HIGH COURT IN THE CASE VELAYUDHA SWAMY SPINNING MILLS P. LTD (SURPA) IS STAYED BY THE HON BLE APEX COURT. IT IS PERTINENT TO MENTION THAT IN THE ABSENCE OF ANY STAY GRANTED BY THE HONBLE APEX COURT AGAINST THE OPERATION OF THE JUD GMENT OF THE HONBLE MADRAS HIGH COURT, ALL THE LOWER JUDICIARIE S AS WELL AS QUASI JUDICIAL AUTHORITIES ARE BOUND TO FOLLOW THE DECISI ON OF THE HONBLE JURISDICTIONAL HIGH COURT. SINCE THE LD.CIT(A) HAS RIGHTLY FOLLOWED ITA NO. 1716/MDS/15 6 THE DECISION OF THE DECISION OF THE JURISDICTIONAL HIGH COURT CITED SUPRA AND HELD THE ISSUES IN FAVOUR OF THE ASSESSEE , WE DO NOT FIND IT NECESSARY TO INTERFERE WITH THE ORDERS OF THE LD.CI T(A). THEREFORE WE HEREBY CONFIRM THE ORDERS OF THE LD. LD. CIT (A). 7. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSE D. ORDER PRONOUNCED ON 09 TH OCTOBER, 2015 AT CHENNAI. SD/- SD/- ( !' # ) ((CHALLA NAGENDRA PRASAD) ( . ) (A.MOHAN ALANKAMONY) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 09 TH OCTOBER, 2015. K S SUNDARAM. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE