ACIT, Tuticorin V. M/s. Pondicherry Chlorate Ltd., Kovilpatti

ITA 1728/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58015 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 07-03-2012
• Assessment Year: 2002-2003
• Appeal Filed On: 24-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A C JOSEPH JT
• Keywords: Depreciation; Unabsorbed depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI [BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER] I.T.A.NO.1727, 1728 AND 1729/MDS/2011 ASSESSMENT YEARS : 2001-02, 2002-03 AND 200 3-04 THE ACIT CIRCLE I TUTICORIN VS M/S PONDICHERRY CHLORATE LTD 110, MAIN ROAD KOVILPATTI [PAN AABCP 6168J] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.C.JOSEPH, JT. CIT RESPONDENT BY : NONE DATE OF HEARING : 07-03-2012 DATE OF PRONOUNCEMENT : 07-03-2012 O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER THESE ARE THE APPEALS FILED BY THE REVE NUE AGAINST THE CONSOLIDATED ORDER OF THE LD.CIT(A)-I, MADURAI, DA TED 01.07.2011, PASSED FOR ASSESSMENT YEARS 2001-02, 2002-03 AND 20 03-04. 2. THE REVENUE HAS TAKEN THE FOLLOWING COMMON GROUNDS OF APPEAL IN ALL THE APPEALS UNDER CONSIDERATION: 1. THE ORDER OF THE COMMISSIONER OF LNCOME-TAX(AP PEAL) IS OPPOSED TO LAW ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE. I .T.A.NOS. 1727, 1728 & 1729/2011 :- 2 -: 2. THE COMMISSIONER OF LNCOME-TAX(A) HAS NOT APPRECIATED THE FACT THAT FOR COMPUTING THE INCOME FROM THE WIND ELECTRIC GENERATORS, THE TERMS AND CONDITIONS SPECIFIED IN THE PROVISIONS OF SEC. 80LA SHOULD BE STRICTLY FOLLOWED, 'TREATING THE WIND MIL L BUSINESS AS THE ONLY SOURCE OF INCOME FOR THE I NITIAL ASSESSMENT YEAR AND TO EVERY SUBSEQUENT ASSESSMENT YEAR UP TO AND INCLUDING THE ASSESSMENT YEAR FOR WHICH THE DETERMINATIONS IS TO BE MADE'. 3. THE COMMISSIONER OF LNCOME-TAX(A) FAILED TO NOTE THAT THE ASSESSEE HAD COMPUTED THE DEDUCTION UNDER SECTION 80LA WITHOUT TAKING INTO ACCOUNT THE PROVIS IONS OF SECTION 80LA(5) WHICH WAS CONSIDERED BY THE ASSESSING OFFICER AS OMISSION ON THE PART OF THE ASSESSEE AND THE ASSESSMENT WAS RIGHTLY REOPENED. 4. THE DECISION OF JURISDICTIONAL HIGH COURT IN TH E CASES OF M/S VELAYUTHASAMY SPINNING MILLS (P) LTD., VS ACIT(231 CTR 368) AND M/S ROSE MATCHES PVT LTD . ,(TC(A)NO.705 OF 2010 DATED 03.08.2010) FOLLOWED BY THE COMMISSIONER OF LNCOME-TAX(APPEAL) HAS NOT BECOME FINA L . 5. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING IT IS PRAYED THAT T HE ORDER OF THE CIT(A) MAY BE REVERSED AND THAT OF THE ASSESSING OFFICER RESTORED. 3. THE ONLY ISSUE INVOLVED IN THESE APPEALS IS THAT T HE LD.CIT(A) WAS NOT JUSTIFIED IN HOLDING THAT THE ASSESSEE IS ENTITLED TO DEDUCTION U/S 80IA OF THE ACT ON WINDMILL. 4. THE LD. DR RELIED ON THE GROUNDS OF APPEAL TAKEN BY THE REVENUE IN THESE APPEALS. 5. NOTICE OF HEARING DATED 30.12.2011 WAS SENT TO THE RESPONDENT- ASSESSEE FIXING THE APPEALS FOR HEARING ON 07.03.20 12, WHICH WAS RECEIVED BY THE ASSESSEE ON 2.1.2012 AS EVIDENCED BY THE ACKNOWLEDGEMENT CARD OF THE POST OFFICE PLACED ON R ECORD. WHEN THE I .T.A.NOS. 1727, 1728 & 1729/2011 :- 3 -: CASE WAS CALLED FOR HEARING, NONE APPEARED ON BEHAL F OF THE ASSESSEE AND NEITHER ANY ADJOURNMENT APPLICATION WAS FILED. HENCE, THE APPEALS WERE HEARD EX-PARTE QUA THE RESPONDENT- ASSESSEE AN D DISPOSED OF ON MERITS. 6. WE HAVE HEARD THE SUBMISSIONS OF THE LD. DR AND PE RUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIALS AVAIL ABLE ON RECORD. THE UNDISPUTED FACTS OF THE CASE ARE THAT THE ASSESSEE IS IN THE BUSINESS OF MANUFACTURE OF CHLORATE AND ALSO INSTALLED WIND MILL IN ASSESSMENT YEAR 1999-2000. ALTHOUGH THE YEAR OF COMMENCEMENT WAS ASSESSMENT YEAR 1999-2000, THE ASSESSEE OPTED ASSE SSMENT YEAR 2002-03 AS THE INITIAL YEAR FOR THE PURPOSE OF CLAI MING DEDUCTION U/S 80IA OF THE ACT IN RESPECT OF WINDMILLS. INITIAL LOSS FROM WINDMILLS WAS SET OFF AGAINST PROFITS OF MANUFACTURE OF CHLORATE BUSINESS. THE ASSESSEE DID NOT CLAIM DEDUCTION U/S 80IA OF THE A CT DURING THE ASSESSMENT YEARS 1999-2000 AND 2000-01 WHERE THE A SSESSEE SUFFERED LOSS. THE ASSESSING OFFICER HELD THAT THE INITIAL YEAR SHOULD BE TAKEN AS THE YEAR OF COMMENCEMENT OF BUSINESS AND NOT THE YEAR OF CLAIM OF DEDUCTION AND THAT UNABSORBED DEPRECIATION OF THE EARLIER YEARS WHICH HAD ALREADY BEEN ABSORBED CAN NOTIONALL Y CARRIED FORWARD AND TAKEN INTO CONSIDERATION FOR COMPUTING DEDUCTIO N U/S 80IA OF THE ACT. I .T.A.NOS. 1727, 1728 & 1729/2011 :- 4 -: 7. IN APPEAL, THE LD.CIT(A) HAS HELD AS UNDER: 6.2 ON MERITS ALSO, THE HON'BLE MADRAS HIGH COURT I N THE CASE OF VELAYUDHASAMY SPINNING MILLS (F) LTD . VS. ACIT (231 CTR 368) DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE. RELEVANT PORTION OF THE ORDER IS QUOT ED BELOW:- ' LOSS IN YEAR EARLIER TO INITIAL ASST. YEAR ALREADY ABSORBED AGAINST PROFIT OF OTHER BUSINESS CANNOT BE NOTIONALLY BROUGHT FORWARD AND SET OFF AGAINST PROFITS OF ELIGIBLE BUSINESS AS NO SUCH MANDATE I S PROVIDED IN SEC. 80 IA(5) 5)' . HON'BLE MADRAS HIGH COURT IN T.C. (A) NO. 705/2010 DATED 03.08.2010 (I.E.) CIT, MADURAI VS. M/S. R OSE MATCHES PVT . LTD., DISMISSED THE DEPARTMENTAL APPEAL ON THIS ISSUE CITING ITS DECISION REPORTED IN 231 CTR 368 (CITED SUPRA). 6.3. IT IS NOTED THAT FOR BOTH UNITS OF WIND MILL, ASSESSEE HAS CONSIDERED ASSESSMENT YEAR 2001-02 AS THE INITIAL ASSESSMENT YEAR. HENCE AS PER JURISDICT IONAL HIGH COURT ORDER, ASSESSEE IS ENTITLED FOR ITS CLAI M. IN VIEW OF THE ABOVE, I HAVE TO HOLD THAT ASSESSEE IS ENTITLED TO CLAIM DEDUCTION U/S 80LA OF THE ACT AND ASSESSIN G OFFICER IS DIRECTED TO DELETE THE DISALLOWANCE MADE IN THIS REGARD FOR THE ASSESSMENT YEARS 2001-02, 2002-03 AN D 2003-04 RESPECTIVELY. 4. NO SPECIFIC ERROR IN THE ORDER OF THE LD. CIT(A) C OULD BE POINTED OUT BY THE LD. DR. THE LD. D.R. ALSO COULD NOT FIL E ANY MATERIAL BEFORE US TO SHOW THAT THE ORDER OF THE HON'BLE HIGH COURT RELYING ON WHICH THE LD. CIT(A) GRANTED RELIEF TO THE ASSESSEE WAS V ARIED IN APPEAL BY THE HON'BLE SUPREME COURT. WE, THEREFORE, DO NOT FI ND ANY GOOD REASONS TO INTERFERE WITH THE ORDERS OF THE LD. CIT (A), WHICH STAND I .T.A.NOS. 1727, 1728 & 1729/2011 :- 5 -: CONFIRMED AND THE GROUNDS OF APPEALS TAKEN BY THE REVENUE ARE DISMISSED. 8. IN THE RESULT, ALL THE THREE APPEALS OF THE REVE NUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH MARCH, 2011. SD/- SD/- (GEORGE MATHAN) JUDICIAL MEMBER (N.S.SAINI) ACCOUNTANT MEMBER DATED: 7 TH MARCH, 2012 RD COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR