ACIT, CHENNAI V. M/s. Natesan Synchrones (P) Ltd., CHENNAI

ITA 1735/CHNY/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64607 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 17-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MDS; A S SRIRAMAN ITA NOS
• Keywords: Depreciation; Additional depreciation
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH CHENNAI BEFORE DR. O. K. NARAYANAN, VICE PRESIDENT AND SHRI V. DURGA RAO, JUDICIAL MEMBER ------- ITA NOS.1735 & 1737/MDS/2012 ASSESSMENT YEARS: 2005-06 & 2008-09 THE ASST. COMMISSIONER OF INCOME-TAX, COMPANY CIRCLE-IV(4), CHENNAI. V. M/S. NATESAN SYNCHROCONES (P) LTD., NO.6, 1 ST CROSS STREET, KASTURBA NAGAR, ADYAR, CHENNAI-600 020. (PAN : AAACN2399N) (APPELLANT) (RESPONDENT) A N D ITA NO. 1736/MDS/2012 ASSESSMENT YEAR 2005-06 THE ASST. COMMISSIONER V. M/S. NATES AN PRECISION OF INCOME TAX, COMPO NENTS (P) LTD. COMPANY CIRCLE-IV(4), NO.6, 1 ST CROSS STREET, CHENNAI. KASTURBA NAGAR, ADYAR, CHENNAI-600 020. (PAN : AAACN9992M) (APPELLANT) (RESPONDENTS) APPELLANT BY : SHRI SHAJI P. JACOB, ADDL. CIT RESPONDENTS BY : SHRI A.S. SRIRAMAN, ADVOCATE ITA NOS. 1735,1737 & 1736/MDS /2012 : 2 : DATE OF HEARING : 04.1 2.2012 DATE OF PRONOUNCEMENT : 04.12.201 2 O R D E R PER V. DURGA RAO, JUDICIAL MEMBER : AS COMMON ISSUES ARE INVOLVED IN ALL THESE THREE APPEALS, THEY WERE HEARD TOGETHER AND ARE BEING DIS POSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. ITA NO. 1735 /MDS/2012: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER PASSED BY THE CIT(APPEALS)-V, CHENNAI DATED 29-06-2 012 FOR THE ASSESSMENT YEAR 2005-06. 3. BRIEF FACTS ARE THAT THE ASSESSEE IS ENGAGED IN T HE BUSINESS OF MANUFACTURING SYNCHROCONES AND SYNCHRON IZER RINGS (AUTOMOBILE PARTS). FOR THE ASSESSMENT YEAR 2005-06 THE ASSESSMENT WAS COMPLETED U/S 143(3) DETERMINING THE TOTAL INCOME OF ` 1,01,64,750/- AND BOOK PROFIT AT ` 6,28,22,098/-. LATER ON THE ASSESSMENT WAS RE-OPEN ED BY ISSUING A NOTICE UNDER SECTION 148 OF THE INCOME TA X ACT, 1961 ('THE ACT' FOR SHORT) AND THE ASSESSMENT WAS C OMPLETED UNDER SECTION 143(3) READ WITH SECTION 147 OF THE A CT ITA NOS. 1735,1737 & 1736/MDS /2012 : 3 : DETERMINING THE TOTAL INCOME AT ` 1,62,16,500/-. WHILE DETERMINING THE SAID TOTAL INCOME, THE ASSESSING OF FICER DISALLOWED THE ASSESSEES CLAIM OF ADDITIONAL DEPRE CIATION. 4. THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT(APPEALS). IT WAS SUBMITTED BEFORE THE LEARNED CIT(APPEALS) THAT THE ASSESSEE IS ELIGIBLE FOR ADDI TIONAL DEPRECIATION ON WIND MILLS AND THE ISSUE IS SQUAREL Y COVERED BY THE DECISIONS OF THE HONBLE JURISDICTIONAL HIGH CO URT IN THE CASES OF CIT V. HI TECH ARAI LTD. (321 ITR 477) AND CIT V. TEXMO PRECISION CASTINGS (321 ITR 481). THE LEARNE D CIT(APPEALS) AFTER CONSIDERING THE SUBMISSIONS OF T HE ASSESSEE BY FOLLOWING THE AFORESAID DECISIONS OF THE HONBLE JURISDICTIONAL HIGH COURT, ALLOWED ADDITIONAL DEPRE CIATION TO THE ASSESSEE. THE RELEVANT PORTION OF THE ORDER OF THE LEARNED CIT(APPEALS) IS EXTRACTED BELOW : 6.2 I HAVE GONE THROUGH THE DECISIONS RELIED ON BY THE APPELLANT. IN THE CASE OF HI TECH ARAI LTD. (SUPRA) ON THE FACTS- THAT THE ASSESSEE COMPANY WAS ENGAGED IN THE BUSINESS OF MANUFACTURE OF OIL SEEDS, MOULDED RUBBER PARTS, REED VALUE ASSEMBLIES APART FROM GENERATION OF POWER HAD SET UP TWO WINDMILLS IN ADDITION TO THE ALREADY EXISTING FOUR WINDMILLS AND ITA NOS. 1735,1737 & 1736/MDS /2012 : 4 : THEREBY INCREASED ITS POWER GENERATION CAPACITY BY ABOVE 50 PER CENT AND IT CLAIMED ADDITIONAL DEPRECIATION ON THE WINDMILLS: IT HAS BEEN HELD THAT, SECTION 32(1)(IIA) DOES NOT STATE THAT THE SETTING UP OF A NEW MACHINERY OR PLANT, WHICH WAS ACQUIRED AND INSTALLED UPTO 31-3- 2002, SHOULD HAVE ANY OPERATIONAL CONNECTIVITY TO THE ARTICLE OR THING THAT WAS ALREADY BEING MANUFACTURED BY THE ASSESSEE. THEREFORE, THE CONTENTION THAT THE SETTING UP OF A WINDMILL HAD NOTHING TO DO WITH THE POWER INDUSTRY, NAMELY, MANUFACTURE OF OIL SEEDS, ETC., WAS TOTALLY NOT GERMANE TO THE SPECIFIC PROVISION CONTAINED IN SECTION 32(1)(IIA). IT COULD NOT ALSO BE SAID THAT SETTING UP OF A WINDMILL WILL NOT FALL WITHIN THE EXPRESSION SETTING UP OF A NEW MACHINERY OR PLANT. HENCE, THE ASSESSEE WAS HELD TO BE ENTITLED TO ADDITIONAL DEPRECIATION. SIMILARLY IN THE CASE OF TEXMO PRECISION CASTINGS (321 ITR 481) ON THE FACTS- THAT THE ASSESSEE, ENGAGED IN THE BUSINESS OF PRODUCTION OF AGRICULTURAL MOTORS AND PUMP SETS, INSTALLED NEW WINDMILLS AND CLAIMED ADDITIONAL DEPRECIATION ON THE NEW WINDMILLS WHICH WAS ALLOWED BY THE TRIBUNAL: THE JURISDICTIONAL HIGH COURT HELD THAT, THE TRIBUN ALS DECISION THAT WHEN THE ASSESSEE WAS ALREADY HAVING THE WINDMILLS FOR GENERATION OF POWER AND THE ITA NOS. 1735,1737 & 1736/MDS /2012 : 5 : INSTALLATION OF TWO NEW WINDMILLS HAD INCREASED THE CAPACITY OR GENERATION OF POWER BY MORE THAN 50 PER CENT, THEN THE VIEW TAKEN BY THE AUTHORITIES TH AT THE INCREASE OF THE CAPACITY SHOULD HAVE BEEN IN TH E BUSINESS OF INVESTMENT CASTINGS WAS NOT CORRECT. HENCE, THE ASSESSEES CASE WAS COVERED BY SECTION 32(1)(IIA). IN VIEW OF THE DECISION OF THE INSTANT HIGH COURT IN CIT V. HI TECH ARAI LTD. (2010) 321 ITR 477 , THE ORDER OF THE TRIBUNAL REQUIRED NO INTERFERENCE. 6.3 I FIND FORCE IN THE CONTENTIONS OF THE APPELLAN T THAT THE OBJECTION OF THE AO WITH REGARD TO CAPTIVE CONSUMPTION IS NOT BORNE OUT OF THE PROVISIONS OF THE ACT WITH REGARD TO ADDITIONAL DEPRECIATION AS CONTAINED IN SECTION 32(1)(IIA). THERE IS NO SUCH REQUIREMENT THAT THE ENERGY SHOULD BE USED FOR CAPTIVE CONSUMPTION. THE OBJECTION OF THE AO WITH REGARD TO CAPTIVE CONSUMPTION, IN ANY CASE, IN MY VIEW, IS ALSO MET WITH THE ARGUMENT OF THE APPELLAN T THAT IT IS DRAWING POWER FROM THE SAME STATE GRID T O WHICH THE POWER GENERATED BY THE APPELLANT IS ALSO CONNECTED. IN VIEW OF THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT, AS DISCUSSED ABOVE, IT C AN ALSO NOT BE SAID THAT SETTING UP OF A WINDMILL WILL NOT FALL WITHIN THE EXPRESSION SETTING UP OF A NEW MACHINERY OR PLANT. HENCE, THE OBJECTION OF THE AO ITA NOS. 1735,1737 & 1736/MDS /2012 : 6 : THAT THE APPELLANT HAS NOT PROVED THE INCREASE IN THE INSTALLED CAPACITY CAN ALSO NOT BE ACCEPTED. IN VIEW OF THE ABOVE FACTS, RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE JURISDICTIONA L HIGH COURT IN THE AFORESAID CASES I HOLD THAT THE DECISION OF THE AO IN DENYING ADDITIONAL DEPRECIATION TO THE APPELLANT IS NOT CORRECT AND TH US CANNOT BE SUSTAINED. THEREFORE, THE AO IS DIRECTED TO ALLOW THE CLAIM OF ADDITIONAL DEPRECIATION ON TH E WINDMILL INSTALLED BY THE APPELLANT. THE GROUNDS O F APPEAL WITH REGARD TO THIS ISSUE, THEREFORE, ARE ALLOWED. 5. ON BEING AGGRIEVED, THE REVENUE HAS CARRIED THE MATTER BEFORE THE TRIBUNAL. THE LEARNED COUNSEL FOR THE A SSESSEE SUBMITTED THAT THE ISSUE IS SQUARELY COVERED BY THE DECISIONS OF THE HONLE JURISDICTIONAL HIGH COURT IN THE CASE S OF CIT V. HI TECH ARAI LTD. (SUPRA) AND M/S. CIT V./ TEXMO PRECI SION CASTINGS (SUPRA). THE LEARNED DR ALSO FAIRLY CONCE DED THAT THE ISSUE IS COVERED BY THE AFORESAID DECISIONS OF THE HONBLE JURISDICTIONAL HIGH COURT. 6. WE HAVE HEARD BOTH THE SIDES, PERUSED THE RECORD S AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE ONLY ISSUE INVOLVED IN THIS APPEAL IS WHETHER THE ASSESS EE IS ELIGIBLE ITA NOS. 1735,1737 & 1736/MDS /2012 : 7 : FOR ADDITIONAL DEPRECIATION OR NOT. THE LEARNED CI T(APPEALS) BY FOLLOWING THE DECISIONS OF THE HONBLE JURISDICT IONAL HIGH COURT IN THE CASES OF CIT V. HI TECH ARAI LTD. (SUP RA) AND CIT V. TEXMO PRECISION CASTINGS (SUPRA) HAS HELD THAT T HE ASSESSEE IS ELIGIBLE FOR THE ADDITIONAL DEPRECIATION. WE FI ND NO INFIRMITY IN THE ORDER PASSED BY THE LEARNED CIT(APPEALS). A CCORDINGLY WE CONFIRM HIS ORDER AND DISMISS THE APPEAL FILED B Y THE REVENUE. 7. ITA NO. 1737/MDS/2012: THE FACTS IN THIS APPEAL ARE THAT THE LEARNED CIT(APPEALS) HAS PASSED SIMILA R ORDER FOR THE ASSESSMENT YEAR 2008-09 BY FOLLOWING THE AFORES AID DECISIONS OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASES OF CIT V. HI TECH ARAI LTD. (SUPRA) AND CIT V. TEXM O PRECISION CASTINGS (SUPRA). WE FIND NO INFIRMITY IN THE ORDE R PASSED BY THE LEARNED CIT(APPEALS). FOR THE REASONS STATED I N ITA NO. 1735/MDS/2012 ABOVE, WE DISMISS THE REVENUES APPEA L FOR THE ASSESSMENT YEAR 2008-09 ALSO. 8. ITA NO. 1736/MDS/2012: THE ISSUE INVOLVED IN THIS APPEAL FILED BY THE REVENUE IS SIMILAR TO THE ABOVE APPEALS. THE LEARNED CIT(APPEALS) PASSED A SIMILAR ORDER AND ALLOWED THE CLAIM OF ADDITIONAL DEPRECIATION BY FOL LOWING THE ITA NOS. 1735,1737 & 1736/MDS /2012 : 8 : AFORESAID DECISIONS OF THE HONBLE JURISDICTIONAL H IGH COURT IN THE CASES OF CIT V. HI TECH ARAI LTD. (SUPRA) AND C IT V. TEXMO PRECISION CASTINGS (SUPRA). WE FIND NO INFIRMITY I N THE ORDER PASSED BY THE LEARNED CIT(APPEALS). FOR THE REASON S STATED IN ITA NO. 1735/MDS/2012 ABOVE, WE DISMISS THE REVENUE S APPEAL IN THIS CASE ALSO. 9. IN THE RESULT, ALL THE APPEALS FILED BY THE REVE NUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON TUESDAY, THE 04 TH OF DECEMBER, 2012, AT CHENNAI. SD/- SD/- (DR. O. K. NARAYANAN) (V.DURGA RAO) VICE PRESIDENT JUDICIAL MEMBER CHENNAI, DATED THE 04 TH DECEMBER, 2012. H. COPY TO: ASSESSEES/AO/CIT(A)/CIT/D.R./GUARD FILE