The Dy. CIT., Circle-4(1)(2), Ahmedabad V. M/s. Vishal Fabrics Pvt. Ltd., Ahmedabad

ITA 1734/AHD/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7337 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 28-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Rule of consistency; Revised return
• Section: 143(3); 142(1); 143(1); 80IA

Judgement Text

, D - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER &SMT. MADHUMITA ROY, JUDICIAL MEMBER . ITA NO. 1734/AHD/2016 / ASSTT. YEAR: 2012-13 DCIT CIR-4(1)(2), AHMEDABAD VS. VISHAL FABRICS PVT. LTD. B/H, KASHIRAM MIL COMPOUND, RANIPUR, NAROL AHMEDABAD- 380245 PAN:AAA CV6 304 R / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI VINODTANWANI, SR. DR REVENUE BY : SHRI GAURAVNAHTA, AR ' #$% /DATE OF HEARING : 31/01/2019 &' $% /DATE OF PRONOUNCEMENT: 29/04/2019 () / O R D E R PER MADHUMITA ROY- JM : THE INSTANT APPEAL IS DIRECTED AGAINST THE ORDER DA TED 26.04.2016 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS)-7, AHMEDABA D U/S. 143(3) OF THE INCOME TAX ACT, 1961(HEREINAFTER REFERRED TO AS THE ACT) ARISING OUT OF THE ORDER DATED 09.03.2015 PASSED BY THE DCIT, CIR-4(1)(2), AH MEDABAD FOR ASSESSMENT YEAR 2012-13. 2. THE ASSESSEE COMPANY ENGAGED IN THE BUSINESS OF P ROCESSING MANUFACTURING AND TRADING OF CLOTHES FILED ITS RETURN OF INCOME O N 25.09.2012 DECLARING TOTAL INCOME OF RS. NIL, FOLLOWED BY A REVISED RETURN FILE D ON 28.09.2013 DECLARING TOTAL INCOME OF NIL WHICH WAS PROCESSED U/S. 143(1) OF THE ACT. UNDER SCRUTINY NOTICE U/S. 143(2) DATED 02.09.2013 FOLLOWED BY A FURTHER NOTICE U/S. 143(2) R.W.S 129 ALONG WITH 142(1) DATED 18.11.2014 WAS ISSUED. ITA NO. 1734/AHD/2016 A.Y. 2012-13 2 DURING THE COURSE OF ASSESSMENT PROCEEDING IT WAS FOUND THAT THE ASSESSEE WAS HAVING CAPTIVE POWER PLANT ON WHICH THE ASSESSE E WAS CLAIMING DEDUCTION U/S. 80IA OF THE ACT. IT ALSO APPEARS THAT OUT OF THE T OTAL SALES OF RS. 20,44,51,202/- MADE BY THE CAPTIVE POWER PLANT TO PROCESS DIVISION OF THE ASSESSEE RS. 7,83,66,133/- WAS IN RESPECT OF SALE OF POWER AND A T RS. 12,60,85,069/- WAS IN RESPECT OF SALE OF STEAM. ULTIMATELY SUCH CLAIM OF THE ASSESSEE WAS NOT ACCEPTED BY THE LD. AO AND THE PROFIT OF RS. 2,51,27,5478/- WAS IN RESPECT OF SALE OF STEAM TO PROCESS WAS DISALLOWED WHICH WAS IN TURN CONFIRM ED BY THE LD. CIT(A). HENCE, THE INSTANT APPEAL BEFORE US. 3. AT THE TIME OF HEARING OF THE INSTANT APPEAL LD. COUNSEL APPEARING FOR THE ASSESSEE SUBMITTED BEFORE US THAT THE ISSUE IS SQUA RELY COVERED IN ASSESSEES OWN MATTER FOR ASSESSMENT YEAR 2011-12 BY THE JUDGMENT DATED 24.01.2018 PASSED BY THE CO-ORDINATE BENCH OF THE LD. TRIBUNAL COPY WHEREO F HAS ALSO BEEN HANDED OVER TO US IN ITA NO. 125/AHD/2015. THE LD. DR, HOWEVER, FAILED TO CONTROVERT THE SAME. 4. WE HAVE HEARD THE LD. COUNSEL APPEARING FOR THE RESPECTIVE PARTIES, WE HAVE ALSO PERUSED THE RELEVANT MATERIALS AVAILABLE ON RE CORD AND ALSO CAREFULLY CONSIDERED THE JUDGMENT PASSED BY THE CO-ORDINATE B ENCH IN ASSESSEES OWN CASE IN APPEAL PREFERRED BY REVENUE IN ITA NO. 125/AHD/2 015 FOR A.Y. 2011-12. THE IDENTICAL ISSUE HAS BEEN CONSIDERED BY THE CO-ORDIN ATE BENCH IN THE SAID JUDGMENT, THE RELEVANT WHEREOF IS AS FOLLOWS:- 6. IN EARLIER YEARS, ON THE BASIS OF SUCH VALUATION, D EDUCTION U/S. 80IA (4)(IV) OF THE ACT WERE ALLOWED FROM A.Y. 2006-07. IN OUR CONSIDERED OPINI ON, ASSESSEE IS THEREFORE ON THE PRINCIPLE OF CONSISTENCY, ELIGIBLE FOR SUCH DEDUCTION. FURTH ER AS REQUIRED ASSESSEE FILED A CERTIFICATE INFORM 10CCB FROM A CHARTED ACCOUNTANT FOR CLAIM AN D THEREFORE THE REASONABLENESS AND VALUATION OF STEAM IS CERTIFIED THROUGH THAT CERTIF ICATE IS ELIGIBLE DEDUCTION. IN SUPPORT OF ITS CONTENTION, ASSESSEE ALSO FILED A RATE CHART AT PAG E NO. 13 OF PAPER BOOK AND SAME IS REPRODUCED AS UNDER: VISHAL FABRICS PRIVATE LIMITED STATEMENT OF COMPUTATION OF COST OF STEAM AND POWER SN PARTICULARS 2010 - 11 2009 - 10 20008 - 09 2007 - 08 2006 - 07 2005 - 06 A QUANTITATIVE DETAILS 1 TOTAL STEAM GENERATION KGS 157762938 KGS 159223900 KGS 154169059 154614 653 155172583 146106760 2 STREAM TO KGS 117695051 KGS 11433615 KGS 109171082 107678291 110573541 106190960 ITA NO. 1734/AHD/2016 A.Y. 2012-13 3 PROCESS 3 STEAM POWER PLANT KGS 49967887 KGS 44890285 KGS 44997977 46936360 44599042 39915800 4 FUEL COSUMED (LIGNITE) KGS 46007204 KGS 43078021 KGS 43371340 38118207 37910326 35607106 5 STEM/FUEL RATIO A1/A3 3.43 3.70 3.55 4.06 4.09 4.10 0 TOTAL POWER GENERATED UNITS 14023208 UNITS 15220300 UNITS 14708800 148 89700 14890900 14060310 POWER PLANT CONSUMPTION UNITS 3011739 UNITS 3035967 UNITS 2960203 303264 8 3047536 2952422 POWER TO PROCESS UNITS 11011469 UNITS 12184333 UNITS 11748597 11857052 11843364 11107888 B EXPRENSES INCURRED TOTAL RS/ KC TOTAL RS/ KC TOTAL *S/ KG 1 LIGNITE & COAL RS. 117202086 RS. 111244176 RS. 125388619 88141936 73476124 58649912 2 MAINTENANCE EXPENSES RS. 13569303 RS. 7530700 RS. 11263070 8103337 7 048532 625896 3 SALARIES & WAGES RS. 3371517 RS. 3459680 RS. 3096961 3730681 2906145 1977572 4 INTEREST RS. 361661 RS. 859515 RS. 1495029 2321120 2382390 2845500 5 DEPRECIATION RS. 11149377 RS. 11149458 RS. 11149556 11149446 11107858 11107858 0 TOTAL EXPENSES RS. 145653944 0.92 RS. 134243523 0.34 RS. 152393235 0.99 113446520 0.73 96921049 0.62 75206738 0.51 C COST PER KG OF STEAM RS. RS. RS. 0.73 0.62 0.51 D STEAM USED IN PROCESS KGS 117695051 KGS 114333615 KGS 109171082 107678 291 110573541 106190960 E STEAM COST CHARGED TO PROCESS RS. 135349309 1.15 RS. 131483657 1.15 RS. 128546744 1.15 86142633 0.80 71872809 0.65 47785932 0.45 GENERATING POWER RS. 10304635 RS. 2759866 RS. 26846491 27303887 25048240 27420806 7. WE HAVE ALSO GONE THROUGH THE ASSESSMENT ORDER I N DETAILS IN THAT THERE IS A FINDING OF THE AO IN PAGE NO. 9 PARA II, WHEREIN SHE HAS STATED TH AT 80IA(4) IS AN ALLOWABLE DEDUCTION ON STEAM AND THERE IS NO DISPUTE ON IT, STEAM HAS ALRE ADY BEEN HELD TO BE POWER WITHIN THE MEANING OF SECTION 80IA(4) OF THE ACT. WHEN ON ONE HAND AO HERSELF IS ACCEPTING THE STEAM IS ELIGIBLE FOR DEDUCTION AND ON THE OTHER HAND SHE IS DISALLOWING THE DEDUCTION, IT ITSELF IS CONTRADICTORY, WHEN ONCE THE AO IS OF THE OPINION T HAT DEDUCTION IS AVAILABLE ON STEAM THEN NO DISALLOWANCE SHOULD HAVE BEEN MADE ONLY ON ASSUM PTIONS BASIS. THE ASSESSEE HAS SUBMITTED SEVERAL DECISIONS IN SUPPORT OF ITS CONTE NTION AND SAME ARE STATED THEREIN, THE STEAM WAS TRANSFERRED AT A HIGHER PRICE. FURTHER ASSESSE E HAS SUBMITTED ENGINEERING CERTIFICATE AT PAGE NO. 10 OF PAPER BOOK IN WHICH ALSO THE COST OF GENERATION OF STEAM CAN BE CONSIDERED IN THE RANGE OF RS. 1.16/- TO 1.25 PER KG OF STEAM. F URTHER THE SAVING IN COST DUE TO CAPTIVE PRODUCTION ALSO CANNOT BE RULED OUT WHICH HAS BEEN ELABORATED DISCUSSED BY THE LD. CIT(A). 8. WE THEREFORE, RELYING ON VARIOUS DECISION IN SUP PORT OF THE CLAIM MADE BY THE ASSESSEE AND ACCEPTANCE BY THE AO THAT STEAM IS A F ORM OF POWER AND ELIGIBLE FOR DEDUCTION AND FOR THE BASIS OF DEDUCTION RELYING ON THE ENGIN EERS CERTIFICATE AS WELL DIFFERENT CASE LAWS HELD. CIT(A) HAS RIGHTLY DELETED THE ADDITION AND PROFIT AND MARGIN KEPT BY THE ASSESSEE IN CAPTIVE CONSUMPTION IS FAIR AND REASONABLE. IN OUR CONSIDERED OPINION ON THE BASIS OF CONSISTENCY AND LD. CIT(A) HAS PASSED A DETAILED AN D REASONED ORDER. WE UPHELD THE ORDER OF LD. CIT(A). 5. RESPECTFULLY, FOLLOWING THE SAME WE FIND NO INFI RMITY IN THE ORDER PASSED BY THE LD. CIT(A) IN DELETING SUCH ADDITION MADE BY THE LD. AO FOLLOWING THE DECISION TAKEN BY HIS PREDECESSOR IN THE EARLIER YE AR IN ALLOWING THE DEDUCTION U/S. 80IA OF THE ACT TAKING IN CONSIDERATION OF THE JUDG MENT PASSED BY THE CO-ORDINATE ITA NO. 1734/AHD/2016 A.Y. 2012-13 4 BENCH A DISCUSSED ABOVE, HENCE THE SAME IS CONFIRME D. REVENUES APPEAL IS FOUND TO BE DEVOID OF ANY MERIT AND HENCE DISMISSED. 6. IN THE RESULT, REVENUES APPEAL IS DISMISSED. [ORDER PRONOUNCED IN THE COURT ON 29-04-2019.] SD/- SD /- ( WASEEM AHMED ) ( MADHUMITA ROY ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 29/04/2019 TANMAY TRUE COPY ()$*+,(+ /COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. - / THE RESPONDENT. 3. ' . / CONCERNED CIT 4. ' . ( ) / THE CIT(A) 5. +/0 , / DR, ITAT, 6. 012# / GUARD FILE. () ' / BY ORDER 3 / 4 (DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION : 04-04-2019 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING MEMBER. : 15-04-2019 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P.S./P.S : 25-04-2019 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT. : 25-04-2019 5. DATE ON WHICH FAIR ORDER PLACED BEFORE OTHER MEMBER : 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P.S./P.S. : 30-04-2019 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK. : 30-04-2019 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK. : 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER. : 10. DATE OF DESPATCH OF THE ORDER :