Deputy Commissioner of Income-tax, V. M/s. Pranav Agro Industries Ltd., Pune

ITA 175/PUN/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9444 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 11 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 23-01-2018
• Assessment Year: 2011-2012
• Appeal Filed On: 08-02-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIVEK AGGARWAL
• Keywords: Depreciation
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO. 1 75 /P U N/201 6 / ASSESSMENT YEAR : 20 1 1 - 1 2 THE DY. COMMISSIONER OF INCOME TAX, CIRCLE - 4, PUNE . / APPELLANT VS. M/S. PRANAV AGRO INDUSTRIES LTD., 5 TH FLOOR, NAV MAHARASHTRA HOUSE, 43, SHANIWAR PETH, PUNE 4 11030 . / RESPONDENT PAN: AABCP8009Q ASSESSEE BY : NONE REVENUE BY : SHRI VIVEK AGGARWAL / DATE OF HEARING : 2 3 . 0 1 . 201 8 / DATE OF PRONOUNCEMENT: 25 . 0 1 .201 8 / ORDER PER SUSHMA CHO WLA, J M : TH E APPEAL FILED BY THE REVENUE IS AGAINST THE ORDER OF CIT (A) - 3 , PUNE , DATED 30 . 11 .201 5 RELATING TO ASSESSMENT YEAR 20 1 1 - 1 2 AGAINST ORDER PASSED UNDER SECTION 143(3) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2. DESPITE SERVICE OF NOTIC E, NONE APPEARED ON BEHALF OF THE ASSESSEE NOR ANY APPLICATION WAS MOVED FOR ADJOURNMENT. ITA NO. 1 7 5 /P U N/20 1 6 PRANAV AGRO INDUSTRIES LTD. 2 3. THE APPEAL FILED BY THE REVENUE HAS BEEN LISTED FOR HEARING ON 20.11.2017, 15.01.2018 AND THEREAFTER ON 23.01.2018. HOWEVER, THE ASSESSEE HAS FAILED TO PUT ANY A PPEARANCE IN ANY OF THE DATES OF HEARING ; BUT WE FIND THAT THE ISSUE RAISED IN THE PRESENT APPEAL IS SQUARELY COVERED BY THE ORDER OF TRIBUNAL IN ASSESSEES OWN CASE IN EARLIER YEARS. ACCORDINGLY, WE PROCEED TO DISPOSE OF THE APPEAL AFTER HEARING THE LEAR NED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE. 4. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF CIT(A) AND HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1 . THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN ALLOWING THE DEDUCTION U/S 80JJA OF THE AC T WITHOUT APPRECIATING THAT BAGGASE/HUNK IS NOT A WASTE BUT IS A BY - PRODUCT OF AGRI - PRODUCE PROCESSING INDUSTRY WHICH WAS PURCHASED AND NOT COLLECTED & PROCESSED OR TREATED BY THE ASSESSEE, WHICH IS A PRE - REQUISITE FOR CLAIMING DEDUCTION U/S. 80JJA OF THE ACT. 2 . THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN ALLOWING THE ASSESSEE'S CLAIM OF DEPRECIATION ON WINDMILLS WHEN THE ASSESSEE WAS NOT A REGISTERED OWNER OF THE WINDMILLS AND IT WAS PURCHASING ELECTRICITY FROM NAV MAHARASHTRA CHAKAN OIL MILLS LTD (NMCOML) THUS HAVING NO TITLE/DOMINION AND RIGHT TO USE THE ASSET. 3 . THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN FAILING TO APPRECIATE THE SO CALLED PURCHASE OF WINDMILLS BY THE ASSESSEE FROM ITS SISTER CONCERN NMCOML, A LOSS MAKING COMPA NY WAS SHOWN TRANSACTION CARRIED OUT IN ORDER TO MERELY AVAIL THE BENEFIT OF DEPRECIATION. 4 . THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN ALLOWING THE ASSESSEE'S CLAIM OF DEDUCTION U/S 80IA(4) WHEN THE PROVISIONS OF SECTION 80IA(5) ARE ALSO APP LICABLE IN THE ASSESSEE'S CASE SINCE THE ELIGIBLE BUSINESS I S NOT THE ONLY SOURCE OF INCOME OF THE ASSESSEE. 5 . THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN ALLOWING THE ASSESSEE'S CLAIM OF DEDUCTION U/S 80IA(4) WHEN FACTS SHOW THAT ASSESSEE IS NOT GENERATING POWER AND ALSO THAT PURCHASES OF WINDMILL BY ASSESSEE HAS BEEN FOUND TO BE A SHAM TRANSACTION. 6 . THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DELETING THE ADDITION ON ACCOUNT OF DISALLOWANCE ON ACCOUNT OF EMPLOYEES CONTRIBUTION T O PF, ESIC AND MAHARASHTRA LABOUR WELFARE FUND, IGNORING THE FACT THAT EMPLOYEE'S CONTRIBUTION TO SUCH WELFARE FUNDS IS GOVERNED BY THE PROVISIONS OF SECTION 36( 1 )(VA) OF THE I.T. ACT AS CLARIFIED BY BOARD CIRCULAR NO.22 OF 2015 DATED 17 - 12 - 2015 AND HENCE THE SAME HAS BEEN RIGHTLY DISALLOWED BY THE AO. ITA NO. 1 7 5 /P U N/20 1 6 PRANAV AGRO INDUSTRIES LTD. 3 5. THE FIRST ISSUE RAISED BY THE REVENUE VIDE GROUND OF APPEAL NO.1 IS AGAINST THE ORDER OF CIT(A) IN ALLOWING THE DEDUCTION UNDER SECTION 80JJA OF THE ACT. 6. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSE E WAS ENGAGED IN THE BUSINESS OF ANIMAL FEED, EDIBLE OIL, FUEL FROM BIODEGRADABLE WASTE, WIND POWER GENERATION AND FEED SUPPLEMENTS. FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD FURNISHED THE RETURN OF INCOME DECLARING TOTAL INCOME OF 3,12,86,684/ - . THE ASSESSEE HAD CLAIMED THE DEDUCTION UNDER SECTION 80JJA OF THE ACT, WHICH WAS DENIED BY THE ASSESSING OFFICER AS SIMILAR DEDUCTION WAS NOT ALLOWED IN ASSESSMENT YEAR 2011 - 12. 7. THE TRIBUNAL IN ITA NO.714/PN/2012 RELATING TO ASSESSMENT YEAR 2008 - 09 AND IN ITA NO.362/PN/2013, RELATING TO ASSESSMENT YEAR 2009 - 10 IN THE APPEALS FILED BY THE REVENUE, VIDE ORDER DATED 09.05.2016 HAD ALLOWED SIMILAR CLAIM OF DEDUCTION. THE TRIBUNAL AFTER DELIBERATING UPON THE ISSUE AND RELYING ON THE RATIO L AID DOWN BY THE HONBLE BOMBAY HIGH COURT IN CIT VS. SM. PADMA S. BORA REPORTED IN 29 TAXMANN.COM 230 (BOM) ALLOWED THE CLAIM OF DEDUCTION UNDER SECTION 80JJA OF THE ACT ON BAGGASE AND GROUNDNUT HUSK. THE ASSESSING OFFICER HAD DENIED THE SAID DEDUCTION ON THE GROUND THAT THE BAGGASE AND GROUNDNUT HUSK WERE NOT BIO DEGRADABLE WASTE BUT A BY - PRODUCT OF THE PROCESS UNDERTAKEN BY THE ASSESSEE. HOWEVER, SIMILAR CLAIM HAS BEEN ALLOWED BY THE HONBLE BOMBAY HIGH COURT AND THE TRIBUNAL IN PARAS 11 TO 13 OF THE OR DER DATED 09.05.2 016 HAD ALLOWED SIMILAR CLAIM IN THE HANDS OF ASSESSEE. WE ARE REFERRING TO THE FINDINGS OF TRIBUNAL BUT WE ARE NOT REPRODUCING THE SAME FOR THE SAKE OF BREVITY. HOWEVER, RELYING ON SIMILAR ITA NO. 1 7 5 /P U N/20 1 6 PRANAV AGRO INDUSTRIES LTD. 4 REASONING, WE UPHOLD THE ORDER OF CIT(A) AND DI SMISS THE GROUND OF APPEAL NO.1 RAISED BY THE REVENUE. 8. NOW, COMING TO THE GROUNDS OF APPEAL NO.2 AND 3 RAISED BY THE REVENUE. 9. WE FIND THAT SIMILAR ISSUE OF CLAIM OF DEPRECIATION ON WINDMILLS WAS ALSO ADJUDICATED BY THE TRIBUNAL (SUPRA) IN ASSESSMEN T YEARS 2008 - 09 AND 2009 - 10 IN THE CASE OF ASSESSEE. THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT FOR THE YEAR UNDER APPEAL HAD RELIED ON EARLIER ORDERS IN ASSESSEES OWN CASE STARTING FROM ASSESSMENT YEAR 2008 - 09 ONWARDS . THE TRIBUNAL DECIDED T HE CLAIM OF DEPRECIATION ON WINDMILL, WHEREIN THE OBJECTION WAS WHETHER THE ASSESSEE HAD PURCHASED WINDMILL FOR TOTAL CONSIDERATION OF RS.1.10 CRORES OR NOT. THE TRIBUNAL NOTED THAT THE PAYMENT TOWARDS CONSIDERATION OF WINDMILL WAS MADE THROUGH BANK ON VA RIOUS DATES STARTING FROM 06.08.2007 TO 14.03.2008 AND ALSO CONSIDERED THE APPROVAL OF TRANSFER OF WINDMILL IN FAVOUR OF ASSESSEE AND ALSO PERUSED THE SALES TAX ENTITLEMENT CERTIFICATE FOR AVAILING SALES TAX BENEFITS DATED 12.12.2007 ISSUED BY THE JOINT CO MMISSIONER OF SALES TAX (HQ)2, MAHARASHTRA STATE, MUMBAI, WHEREIN THE MODIFICATION WAS CARRIED OUT IN RESPECT OF UNDERTAKING ELIGIBLE TO CLAIM THE SALES TAX BENEFITS. THE SAID MODIFICATION WAS IN FAVOUR OF ASSESSEE W.E.F. 05.12.2007. IN VIEW OF THE TOTAL FACTUAL ASPECTS, THE TRIBUNAL HELD THAT THE ASSESSEE HAD PURCHASED THE WINDMILL FROM NMCOML DURING THE FINANCIAL YEAR 2007 - 08 AND WAS ELIGIBLE TO CLAIM DEPRECIATION ON THE SAID WINDMILL. FOLLOWING THE SAME PARITY OF REASONING, WE HOLD THAT THE ASSESSEE I S ENTITLED TO CLAIM THE DEPRECIATION ON WINDMILL AS THE ASSESSEE WAS REGISTERED OWNER OF WINDMILL AND ITA NO. 1 7 5 /P U N/20 1 6 PRANAV AGRO INDUSTRIES LTD. 5 HENCE, THERE IS NO MERIT IN THE GROUNDS OF APPEAL NO.2 AND 3 RAISED BY THE REVENUE. 10. THE NEXT ISSUE RAISED VIDE GROUNDS OF APPEAL NO.4 AND 5 IS AGAINS T THE ORDER OF CIT(A) IN ALLOWING THE ASSESSEES CLAIM UNDER SECTION 80IA(4) OF THE ACT. THE SAID CLAIM OF DEDUCTION UNDER SECTION 80IA(4) OF THE ACT WAS DENIED TO THE ASSESSEE IN VIEW OF SIMILAR DISALLOWANCE BEING MADE FROM ASSESSMENT YEARS 2008 - 09 TO 20 10 - 11. THE ASSESSING OFFICER WAS OF THE VIEW THAT WHERE THE ASSESSEE WAS NOT GENERATING POWER, IT WAS NOT ENTITLED TO CLAIM THE AFORESAID DEDUCTION. 11. HOWEVER, WE FIND THAT SIMILAR ISSUE AROSE IN THE CROSS OBJECTIONS FILED BY THE ASSESSEE IN ASSESSMENT YEAR 2008 - 09 BEING CO NO.29/PN/2015 AND IN THE APPEAL FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 2009 - 10 IN ITA NO.166/PN/2013 VIDE GROUND OF APPEAL NO.2, THE TRIBUNAL VIDE CONSOLIDATED ORDER PASSED ON 09.05.2016 CONSIDERED THE ISSUE VIDE PARA 18 ONWARDS A ND HELD AS UNDER: - 20. THE ASSESSEE HAS CLAIMED DEDUCTION U/S. 80IA(4) ON THE ENTIRE SALE PROCEEDS WHICH INCLUDE SALES TAX INCENTIVE. THE LD. AR OF THE ASSESSEE FAIRLY CONCEDED THAT THE ASSESSEE IS NOT ELIGIBLE TO CLAIM DEDUCTION U/S. 80IA(4) ON THE SALES TAX INCENTIVE RECEIPTS IN VIEW OF THE DECISION OF CO - ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF LAP FINANCE AND CONSULTANCY P. LTD. VS. ADDL. COMMISSIONER OF INCOME TAX (SUPRA). HOWEVER, THE ASSESSEE IS CLAIMING DEDUCTION U/S. 80IA(4) IN RESPECT OF REM AINING AMOUNT. IN SUPPORT OF HIS SUBMISSIONS THE LD. AR HAS DRAWN SUPPORT FROM THE DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF SERUM INTERNATIONAL LTD. VS. ADDL. CIT IN ITA NOS. 290 TO 292/PN/2010 FOR THE ASSESSMENT YEARS 2004 - 05 TO 2006 - 07 DECID ED ON 28 - 09 - 2011. WE ARE OF THE CONSIDERED VIEW THAT THIS ISSUE NEEDS A REVISIT TO THE FILE OF ASSESSING OFFICER. THE ASSESSING OFFICER SHALL REEXAMINE THE CLAIM OF ASSESSEE IN RESPECT OF DEDUCTION U/S. 80IA(4) IN THE LIGHT OF DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF SERUM INTERNATIONAL LTD. VS. ADDL. CIT (SUPRA). THE ASSESSING OFFICER BEFORE DECIDING THE ISSUE AFRESH SHALL GIVE AN OPPORTUNITY OF HEARING TO THE ASSESSEE, IN ACCORDANCE WITH LAW. ACCORDINGLY, THE ISSUE RAISED BY THE ASSESSEE IN CROSS OBJECTION FOR ASSESSMENT YEAR 2008 - 09 AND GROUND NO. 2 RAISED IN THE APPEAL FOR THE ASSESSMENT YEAR 2009 - 10 ARE PARTLY ALLOWED FOR STATISTICAL PURPOSE. ITA NO. 1 7 5 /P U N/20 1 6 PRANAV AGRO INDUSTRIES LTD. 6 12. THE ISSUE HAS BEEN SET ASIDE TO THE FILE OF ASSESSING OFFICER BY THE TRIBUNAL AND FOLLOWIN G THE SAME PARITY OF REASONING, WE REMIT THIS ISSUE ALSO BACK TO THE FILE OF ASSESSING OFFICER TO DECIDE THE SAME IN LINE WITH THE ORDER OF TRIBUNAL IN EARLIER YEARS. 13. NOW, COMING TO THE LAST ISSUE RAISED BY THE REVENUE I.E. AGAINST THE ORDER OF CIT(A) IN DELETING THE ADDITION ON ACCOUNT OF DISALLOWANCE MADE BY THE ASSESSING OFFICER AGAINST EMPLOYEES CONTRIBUTION TO PF, ESIC AND MAHARASHTRA LABOUR WELFARE FUND. 14. THE TRIBUNAL RELYING ON THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN CIT VS. ALO M EXTRUSIONS LTD. (2009) 319 ITR 306 (SC) AND THE JURISDICTIONAL HIGH COURT IN CIT VS. GHATGE PATIL TRANSPORTS LTD. (2014) 368 ITR 749 (BOM) HAD ALLOWED THE CLAIM OF ASSESSEE AS THE CONTRIBUTION TO EMPLOYEES PF, ESIC AND MAHARASHTRA LABOUR WELFARE FUND WA S PAID WITHIN DUE DATE OF FILING THE RETURN OF INCOME. APPLYING THE SAID RATIO TO THE FACTS OF PRESENT CASE, WE ALSO UPHOLD THE ORDER OF CIT(A) IN THIS REGARD AND DISMISS THE GROUND OF APPEAL NO.6 RAISED BY THE REVENUE. 15 . IN THE RESULT, APPEAL OF REVENUE IS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 25 TH DAY OF JANUARY , 201 8 . SD/ - SD/ - (ANIL CHATURVEDI ) (SUSHMA CHOWLA ) / ACCOUNTANT MEMBER / JUDICIAL ME MBER / PUNE ; DATED : 25 TH JANUARY , 201 8 . GCVSR ITA NO. 1 7 5 /P U N/20 1 6 PRANAV AGRO INDUSTRIES LTD. 7 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) - 3 , PUNE ; 4. THE PR. CIT - 2 , PUNE ; 5. , , / DR B , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE