Pranav Agro Industries Ltd., Pune V. Deputy Commissioner Income-tax,

ITA 1812/PUN/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 0267 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-12-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 01-10-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANIL CHAWARE
• Keywords: Capital asset; Gift; Depreciation; Set aside; Capital Gains
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 43B; 271(1)(b); 139; 92; 191; 13

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE , . . , # BEFORE MS. SUSHMA CHOWLA, JM AND SHRI R.K. PANDA, AM . / ITA NO.1749/PUN/2014 % % / ASSESSMENT YEAR : 2010-11 A CIT, C IRCLE - 4 , PUNE . / APPELLANT V/S M/S. PRANAV AGRO INDUSTRIES LTD., 5 TH FLOOR, NAV MAHARASHTRA HOUSE, 43, SHANIWAR PETH, PUNE 411 030 PAN :AABCP8009Q . /RESPONDENT . / ITA NO.1812/PUN/2014 % % / ASSESSMENT YEAR : 2010-11 M/S. PRANAV AGRO INDUSTRIES LTD., 5 TH FLOOR, NAV MAHARASHTRA HOUSE, 43, SHANIWAR PETH, PUNE 411 030 PAN :AABCP8009Q . / APPELLANT V/S DCIT, CIRCLE - 4, PUNE . /RESPONDENT ASSESSEE BY : SHRI SHARAD SHAH REVENUE BY : SHRI ANIL CHAWARE / ORDER PER R.K.PANDA, AM : THESE ARE CROSS APPEALS. THE FIRST ONE IS FILED BY THE REV ENUE AND THE SECOND ONE FILED BY THE ASSESSEE AND ARE DIRECT ED AGAINST THE ORDER DATED 30-05-2014 OF THE CIT(A)-II, PUNE RELATING TO ASSESSMENT YEAR 2010-11. / DATE OF HEARING :22.12.2016 / DATE OF PRONOUNCEMENT:28.12.2016 2 ITA NOS.1749 & 1812/PUN/2014 2. GROUND OF APPEAL NO1. BY THE REVENUE READS AS UNDER : THE LD.CIT(A) ERRED IN ALLOWING THE DEDUCTION U/S.8 0JJA OF THE ACT WITHOUT APPRECIATING THAT BAGGASE/HUSK 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-REQUI SITE FOR CLAIMING DEDUCTION U/S.80JJA OF THE ACT. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING AND DEALING IN A NIMAL FEEDS, FOOD SUPPLEMENTS, EDIBLE OILS, FUEL PELLETS AND GENERATION OF W IND POWER ETC. THE COMPANY IS HAVING ITS MAJOR PARTS AT SANGLI AND IS HAVING SOLVENT EXTRACTIONS, REFINERIES AND ANIMAL FEED PLANTS. IT FILED ITS RETURN OF INCOME ON 14-10-2010 DECLARING TOTAL INCOME OF RS.1,70,58,1 90/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESS ING OFFICER NOTICED THAT THE ASSESSEE HAS CLAIMED DEDUCTION U/S.80JJA AMOUNTING TO RS.2,32,74,413/- BEING PROFIT AND GAINS FROM BUSINESS OF BIODEGRADABLE WASTE. ACCORDING TO THE ASSESSING OFFICER TH E WASTE TO WHICH SECTION 80JJA WOULD APPLY IS ONLY THE BIO-DEGRADAB LE WASTE WHICH IS GENERATED OUT OF VARIOUS ACTIVITIES OF THE URBAN P OPULATION WITHIN THE MUNICIPAL LIMIT AND NOT ANY WASTE WHICH IS GENERAT ED IN RURAL AREAS OR HAS NO DIRECT NEXUS WITH THE ACTIVITIES OF THE URBAN POPULATION IN MUNICIPAL LIMITS. REFERRING TO PROVISIONS OF SECTION 80JJA AND CIRCULAR NO.712 DATED 23-12-1998 AND CIRCULAR NO.779 DATED 14- 09-1999 ISSUED BY CBDT THE ASSESSING OFFICER HELD THAT FOR CLAIMING DEDUCTION U/S.80JJA THE CONDITIONS ENVISAGED SHOULD BE SAT ISFIED. HOWEVER, IN THE INSTANT CASE THE ASSESSEE HAS NOT SATIS FIED MOST OF THE CONDITIONS BECAUSE OF THE FOLLOWING REASONS : 1. THE BAGASSE OR GROUNDNUT HUSK OR KHARDI HUSK WAS NOT A WASTE AT ALL OF THE NATURE INTENDED U/S.80JJA. 2. IT WAS NOT GENERATED IN MUNICIPAL/URBAN LIMITS. 3. IT WAS NOT CAUSING ANY SERIOUS PROBLEM IN DISPOSAL TO THE LOCAL AUTHORITIES. 4. IT WAS NOT COLLECTED RATHER PURCHASES. 3 ITA NOS.1749 & 1812/PUN/2014 5. THE PROCESS DID NOT INVOLVE ANY BIO-DEGRADATION AS REQUIRED IN THE CASE OF TREATMENT OR RECYCLING OF A BIODEGRADE WASTE. RATHER ACTIVITY OF ASSESSEE CANNOT BE SAID TO BE EVEN RECYCLING AS THE RAW M ATERIAL AND THE END PRODUCT ARE HARDLY ANY DIFFERENT IN INTRINSIC CO NTENT AND USAGE. 4. THE CONTENTION OF THE ASSESSEE THAT THE TRIBUNAL HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE WAS ALSO NOT ACCEPTED BY THE ASSESSING OFFICER ON THE GROUND THAT THE REVENUE HAS PREFERRED AN APPEAL BEFORE THE HONBLE HIGH COURT AGAINST THE ORDER OF THE TRIBUNAL. REJECTING THE VARIOUS EXPLANATIONS GIVEN BY THE ASSESSEE AND FOLLOWING HI S ORDER FOR THE A.Y. 2009-10, THE ASSESSING OFFICER DISALLOWED THE CLAIM O F DEDUCTION U/S.80JJA AMOUNTING TO RS.2,32,74,413/-. 5. BEFORE CIT(A) THE ASSESSEE MADE DETAILED SUBMISSION. I T WAS SUBMITTED THAT IDENTICAL ISSUE HAD COME UP BEFORE THE CI T(A) FOR A.Y. 2009-10 WHEREIN THE CIT(A) ELABORATELY DISCUSSED THE ISS UE AND ALLOWED THE CLAIM OF THE ASSESSEE. THE CIT(A) FOLLOWING THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. PADMA S. BOR A HAS ALLOWED THE CLAIM. 6. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE THE LD.CIT(A) FOLLOWING HIS ORDER FOR A.Y. 2008-09 AND 2009-10 AND THE D ECISION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. PADM A S. BORA WHICH HAS BEEN UPHELD BY THE HONBLE BOMBAY HIGH COURT, ALLOWED THE CLAIM OF THE ASSESSEE. 7. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVENUE IS IN APPEAL BEFORE US. 8. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET FILED A COPY OF THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.YRS. 20 08-09 & 2009- 10. HE SUBMITTED THAT THE TRIBUNAL VIDE ITA NO.714/PN/20 12 AND CO 4 ITA NOS.1749 & 1812/PUN/2014 NO.29/PN/2015 FOR A.Y. 2008-09, ITA NO.362/PN/2013 AND ITA NO.166/PN/2013 FOR A.Y. 2009-10 ORDER DATED 09-05-2016 HAS DISCUSSED THE ISSUE AT PARA 11 TO 13 OF THE ORDER AND HAS ALLOWED THE CLAIM OF DEDUCTION U/S.80JJA. THEREFORE, THIS BEING A COVERED MATTER THE GROUNDS RAISED BY THE REVENUE SHOULD BE DISMISSED. 9. THE LD. DEPARTMENTAL REPRESENTATIVE FAIRLY CONCEDED T HAT THE ISSUE STANDS DECIDED IN FAVOUR OF THE ASSESSEE BY THE D ECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y.2 008-09 AND 2009-10. 10. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOT H THE SIDES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIO US DECISIONS CITED BEFORE US. WE FIND THE ISSUE RELATING TO DENIAL OF DE DUCTION U/S.80JJA HAD COME UP BEFORE THE TRIBUNAL IN ASSESSEES O WN CASE IN THE 2 PRECEDING ASSESSMENT YEARS. THE TRIBUNAL AFTER CON SIDERING THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND DISMISSED THE GROUND RAISED BY THE RE VENUE ON THIS ISSUE BY OBSERVING AS UNDER : 11. THE FIRST ISSUE RAISED BY THE DEPARTMENT IN GROUND NO. 1 RELATES TO CLAIM OF DEDUCTION U/S. 80JJA OF THE ACT ALLOWED BY THE COMMISSIONER OF INCOME TAX (APPEALS). THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING PELLETS FOR FUEL FROM BIO DEGRADABLE W ASTE. THE ASSESSEE IS COLLECTING BIO-DEGRADABLE WASTE SUCH AS GROUNDNUT HUSK, BAGGASE FROM NEARBY AREAS AND AFTER PROCESSING THE SAME THE ASSESSEE IS M AKING SMALL SIZES FUEL PELLETS TO BE USED AS FUEL. THE ASSESSING OFFICE R REJECTED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE BAGGASE AND GROUN DNUT HUSK ARE NOT BIO DEGRADABLE WASTE BUT A BY-PRODUCT. THE ASSESSING OF FICER HELD THAT THE ASSESSEE DOES NOT SATISFY THE CONDITIONS FOR CLAIMING DEDUC TION U/S. 80JJA OF THE ACT AND REJECTED THE CLAIM OF THE ASSESSEE. THE C OMMISSIONER OF INCOME TAX (APPEALS) AFTER APPRECIATING THE FACTS OF THE CASE AND IN VIEW OF THE DECISION OF TRIBUNAL IN THE CASE OF DCIT VS. SMT. PADMA S. BORA (SUPRA) ACCEPTED THE CLAIM OF THE ASSESSEE. 12. BEFORE US THE LD. AR HAS PLACED ON RECORD THE JUD GMENT OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF COMMISSIONER OF INCOM E TAX VS. SMT. PADMA S. BORA (SUPRA) WHEREIN THE HON'BLE JURISDICTIO NAL HIGH COURT HAS 5 ITA NOS.1749 & 1812/PUN/2014 UPHELD THE FINDINGS OF TRIBUNAL. THE QUESTIONS OF LAW FOR CONSIDERATION BEFORE THE HON'BLE HIGH COURT WERE : A) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE TRIBUNAL WAS JUSTIFIED IN ALLOWING DEDUCTION U/S.80 JJA OF THE INCOME TAX ACT ON THE PROFITS DERIVED FROM THE BUSINESS OF MANUFAC TURING FUEL BRIQUETTES FROM BAGASSE? B) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE TRIBUNAL WAS CORRECT IN NOT APPRECIATING THAT BAGAS SE IS NOT A WASTE BUT IS A BY PRODUCT OF SUGAR INDUSTRY AND IS A BASIC RAW MAT ERIAL FOR MANY INDUSTRIAL PRODUCTS APART FROM BEING USED AS FUEL BY THE SUGAR INDUSTRY TO RUN BOILERS? THE HON'BLE HIGH COURT AFTER CONSIDERING THE PROVISIO NS OF SECTION 80JJA AND CIRCULAR NO. 772 DATED 23-12-1998 ISSUED BY THE C BDT HELD AS UNDER: 7) WE HAVE CONSIDERED THE SUBMISSIONS. WE FIND THA T ON EXAMINATION OF THE EVIDENCE BOTH COMMISSIONER OF INCOME TAX (APPEALS) AS WELL AS TRIBUNAL HAVE REACHED A FINDING OF FACT THAT BAGASSE IS A BI ODEGRADABLE WASTE USED FOR MAKING BRIQUETTES FOR FUEL BY THE RESPONDENT ASSESS EE. THIS FINDING OF FACT WAS BASED ON EVIDENCE LED BEFORE THE AUTHORITIES BY THE RESPONDENT ASSESSEE. WE FIND THAT BAGASSE IS A WASTE OF THE SUGAR FACTOR Y. THIS WASTE IS A BIO- DEGRADEABLE WASTE AND THE SAME IS COLLECTED ON CONS IDERATION BY THE RESPONDENT ASSESSEE FROM THE FACTORY. THERE COULD B E NO UNIVERSAL DEFINITION OF THE WORD 'WASTE'. THE TERM WASTE HAS TO BE UNDER STOOD CONTEXTUALLY I.E. PLACE WHERE IT ARISES AND THE MANNER IN WHICH IT AR ISES DURING THE PROCESSING OF SOME ARTICLE. THE FACT THAT SUGAR INDUSTRY ALSO REGARDS BAGASSE AS WASTE IS EVIDENT FROM CIRCULAR DATED 4/2/2006 ISSUED BY THE SUGAR COMMISSIONER, MAHARASHTRA STATE, PUNE. BESIDES THE ITC CLASSIFICA TION OF THE EXIM POLICY ALSO CLASSIFIES BAGASSE AS A WASTE OF SUGAR INDUSTR Y UNDER CHAPTER 23 HEADING 23.20 THEREOF. FURTHER, THE CENTRAL EXCISE TARIFF ACT 1985 ALSO REGARDS BAGASSE AS WASTE OF SUGAR MANUFACTURE AND I S CLASSIFIED UNDER CHAPTER 23 HEADING 23.01 OF THE CENTRAL EXCISE TARI FF ACT, 1985. WE DO NOT AGREE WITH THE SUBMISSIONS OF THE APPELLANT'S COUNS EL THAT COLLECTION WOULD MEAN COLLECTING FREE OF CHARGE AND NOT BY PURCHASIN G THE SAME. THE WORD 'COLLECTING' MEANS TO GATHER; TO FETCH. IT IS A NEU TRAL WORD AND DOES NOT MEAN COLLECTION FOR CONSIDERATION OR COLLECTION WITHOUT CONSIDERATION. IT IS AN ADMITTED/UNDISPUTED POSITION THAT THE RESPONDENT AS SESSEE HAS COLLECTED BAGASSE FROM SUGAR FACTORIES AFTER HAVING MADE PAYM ENT FOR THE SAME. THEREFORE, THE AFORESAID REQUIREMENT OF COLLECTING AS PROVIDED UNDER SECTION 80JJA OF THE ACT IS SATISFIED. IT IS A UNDISPUTED F INDING OF FACT THAT THE COLLECTED BAGASSE HAS BEEN USED BY THE RESPONDENT A SSESSEE TO MAKE BRIQUETTES FOR FUEL AS THAT INDEED IS THE BUSINESS OF THE RESPONDENT-ASSESSEE. THE RELIANCE UPON THE CIRCULAR NO.772 DATED 23/12/1 998 BY THE APPELLANT IS MISPLACED. THE AFORESAID CIRCULAR DOES NOT RESTRICT ITS BENEFITS ONLY TO LOCAL BODIES. IN ANY EVENT THE CIRCULAR CANNOT OVERRIDE T HE CLEAR WORDS OF SECTION 80JJA OF THE ACT WHICH PROVIDES DEDUCTION IN RESPEC T OF PROFITS AND GAINS DERIVED FROM THE BUSINESS OF COLLECTING AND PROCESS ING/TREATING OF BIO- DEGRADABLE WASTE I.E. BAGASSE INTO BRIQUETTES FOR F UEL. IN THESE CIRCUMSTANCES, WE FIND NO FAULT WITH THE ORDER OF THE TRIBUNAL BOT H ON FACTS AS WELL AS IN LAW. 13. THUS, IN VIEW OF THE FACTS OF THE CASE AND THE JUD GMENT OF HON'BLE HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX V S. SMT. PADMA S. BORA (SUPRA) WE ARE OF THE CONSIDERED VIEW THAT THE A SSESSEE IS ELIGIBLE TO CLAIM DEDUCTION U/S. 80JJA. THE FINDINGS OF COMMISSION ER OF INCOME TAX (APPEALS) ON ISSUE ARE WELL REASONED AND THUS, NO INTERF ERENCE IS CALLED FOR. ACCORDINGLY, GROUND NO. 1 RAISED IN THE CONCISE GROUN DS OF THE APPEAL OF THE DEPARTMENT IS DISMISSED BEING DEVOID OF ANY MERITS. 6 ITA NOS.1749 & 1812/PUN/2014 11. SINCE THE CIT(A) WHILE ALLOWING THE CLAIM OF DEDUCTION U/S .80JJA HAS FOLLOWED THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE, THEREFORE, IN ABSENCE OF ANY CONTRARY MATERIAL BROUGHT T O OUR NOTICE AGAINST THE ORDER OF THE TRIBUNAL, WE FIND NO INFIRMITY IN TH E ORDER OF THE CIT(A) ON THIS ISSUE. ACCORDINGLY, THE SAME IS UPHEL D AND THE GROUND RAISED BY THE REVENUE ON THIS ISSUE IS DISMISSED. 12. GROUNDS OF APPEAL NO.2 AND 3 BY THE REVENUE READS AS UNDER : 2. THE LD.CIT(A) ERRED IN ALLOWING THE ASSESSEES CLAIM OF DEPRECIATION ON WINDMILLS WHEN THE ASSESSEE WAS NOT A REGISTERED OWNER OF THE WINDMILLS AND IT WAS PURCHASING ELECTRICITY FROM NAV M AHARASHTRA CHAKAN OIL MILLS LTD. (NMCOML), THUS HAVING NO TITLE/DOMINIO N AND RIGHT TO USE THE ASSET. 3. THE LD.CIT(A) ERRED IN FAILING TO APPRECIATE THE SO CALLED PURCHASE OF WINDMILLS BY THE ASSESSEE FROM ITS SISTER CONCERN NMCOM L, A LOSS MAKING COMPANY WAS A SHAM TRANSACTION CARRIED OUT IN O RDER TO MERELY AVAIL THE BENEFIT OF DEPRECIATION. 13. FACTS OF THE CASE, IN BRIEF, ARE THAT DU RING THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICED THAT THE ASSESS EE HAS CLAIMED DEPRECIATION ON WINDMILLS AT RS . 83,97,926/- . THE ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THE DEPRECIATIO N CLAIMED ON 2 WINDMILLS TO THE EXTENT OF RS.4,38,400/- SHOULD NOT BE DISA LLOWED FOR THE YEAR UNDER CONSIDERATION ON THE BASIS OF THE DISALLOWA NCE MADE IN A.Y. 2009-10 SINCE THE 2 WINDMILLS ARE NOT OWNED BY THE AS SESSEE. THE ASSESSEE EXPLAINED THAT THE WINDM I LL WAS PURCHASED FROM M/S NAV MAHARASHTRA CHAKAN OIL MILLS (NMCOML) AND THE SALE BILL HAS BE EN ISSUED IN ITS FAVOUR AND THE WINDMILL WAS IN ITS POSSESSION AN D IT WAS BEING USED AS AN OWNER TO THE EXCLUSION OF ALL OTHERS. 7 ITA NOS.1749 & 1812/PUN/2014 14. THE ASSESSING OFFICER OBSERVED THAT THE MONTHLY ' WINDMILL READING SHEETS ' FOR THE ELECTRICITY GENERATION PRODUCED BY THE ASSESSEE SHOWED THE NAME OF THE OWNER AS NMCOML . THE ASSESSING OFFICER ALSO FOUND THAT THE WINDMILL WAS NOT REGISTERED OR TRANSFERRED IN THE NAME OF ASSESSEE AND . THE ELECTRICITY GENERATED IS PURCHASED BY THE ASSESSEE FROM NMCOML BY MEANS OF BOOK ENTRIES . THE ASSESS I NG OFFICER HELD THE TRANSACT I ON OF TRANSFER BY WAY OF THE PU R CHASE OF WINDMILL BY THE ASSESSEE TO BE A SHAM TRANSACTION . THE ASSESSING OFFICER, THEREFORE, DISALLOWED THE DEP R ECIATION ON THE TWO WINDMILLS AMOUNTING TO RS . 4,38 , 400/- AS NEITHER THE ASSET STOOD I N THE NAME OF THE ASSESSEE NOR PUT TO USE BY THE ASSESSEE DURING THE YEAR , 15. BEFORE CIT(A) IT WAS SUBMITTED THAT T HE W I NDMILL WAS PURCHASED AND THE SALE BILLS ISSUED IN ITS FAVOUR AND THE POSSESSION OF THE WINDMILL HAS ALSO BEEN DELIVERED, IT WAS STATED THAT THE AS SESSEE HAS CONSUMED ELECTRICITY FOR ITS OWN MANUFACTURING PROCESS AND THE INCOME FROM ELECTRICITY GENERATED BY THE WINDMILL HAS BEEN INCLUDED IN THE TO TAL INCOME OF THE ASSESSEE COMPANY AND THUS ALL THE ATTRIBUT ES OF BENEFICIAL OWNERSHIP IS VESTED IN THE ASSESSEE COMPANY. THE ASSESSE E ALSO RELIED ON A NUMBER OF JUDICIAL DECISIONS WITH RESPECT T O THE ISSUE OF ACTUAL OWNERSHIP VS BENEFICIAL OWNERSHIP. 16. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE THE LD.CIT(A) FOLLOWING HIS ORDER FOR A.Y. 2009-10 ALLOWED THE CLAIM OF THE AS SESSEE BY OBSERVING AS UNDER : '5.2 THE ISSUE REGARDING DEPRECIATION ON WINDMILL HA S ALSO BEEN ELABORATELY DISCUSSED BY THE UNDERSIGNED IN THE APPELL ATE ORDER DATED 18-09-2012 AS UNDER : 5.2 I HAVE CONSIDERED THE SUBMISSION MADE BY THE APPELL ANT IN THIS REGARD AND ALSO PERUSED MATERIAL ON RECORD. I N ORDER TO AVAIL DEPRECIATION ONE SHOULD SATISFY THE FOLLOWING CONDITIO NS: . 8 ITA NOS.1749 & 1812/PUN/2014 1) ASSET MUST BE OWNED BY THE ASSESSEE. 2) IT MUST BE USED FOR THE PURPOSE OF BUSINESS AND PROFES SION . 3) IT SHOULD BE USED DURING THE RELEVANT PREVIOUS YEAR . 4) DEPRECIATION IS AVAILABLE ON TANGIBLE AS WELL AS INTANGIBLE ASSET. IN ORDER TO BE ENTITLED TO DEPRECIATION ALLOWANCE , THE ASSESSEE HAS TO SHOW THAT THE ASSET IS OWNED BY IT OR THE ASSESSEE IS THE CO-OWNER OF THE ASSET AS IT IS ONLY THE OWNER OF THE ASSET WHO IS ENTI TLED TO CLAIM DEPRECIATION ON THEM. THE ASSESSING OFFICER HAS DISALLOWE D THE DEPRECIATION ON THE GROUND THAT THE ASSET NEITHER STAN DS IN THE NAME OF THE APPELLANT NOR IT HAS BEEN PUT TO USE BY THE ASSE SSEE DURING THE YEAR. THE A . O. IS THUS DISPUTING THE FACT THAT THE APPELLANT BEING NOT THE ABSOLUTE OWNER OF THE ASSET AND IS IN A WAY NOT EN TITLED TO DEPRECIATION. THE VIEW THAT THE ASSESSEE MUST BE THE OWN ER IS NOT . CONTROVERSIAL AS HAD BEEN LAID DOWN LONG SINCE , IN THE CASE OF CIT VS BUCKINGHAM & CARNATIC CO . LTD . (1935) 3 ITR 384 (PC). IN THE CASE OF CIT VS NANDANAM CONSTRUCTIONS (1996) 222 ITR 737 (AP) , THE HIGH ' COURT HAD FOLLOWED THE SUPREME COURT'S DECISION IN TH E CASE OF R.B. JODHA MAL KUTHIALA (1971) 82 ITR 570 , AS CLEAR AND BINDING IN THAT IT HAS HELD THE BENEFICIAL OWNERSHIP IS ALONE RELEVANT AN D THAT SUCH DECISION SHOULD BE TREATED AS APPLICABLE IN ALL TAX MA TTERS BY RECOGNIZING THE BENEFICIAL OWNER FOR LIABILITY AS WE LL AS ANY DEDUCTION. IT TOOK THE VIEW THAT, SUCH VIEW IS CLEAR , EQUITABLE AND CONSISTENT WITH JUSTICE AND SUCH A VIEW CANNOT BE LIGHT LY DISMISSED, WHILE THE FINANCE ACT, 1987 RECOGNISED BENEFICIAL OW NERSHIP FOR COMPUTATION OF PROPERTY INCOME FOR INCOME-TAX, CAPITAL GAINS TAX, WEALTH-TAX AND GIFT-TA X, THE NEED FOR CLARIFICATION IN RESPECT OF DEPRECIATION ALLOWANCE WAS OVERLOOKED . THE CONTROVERSY GOT SETTLED IN RESPECT OF RIGHT TO DEPRECIATION FOR BENEFICIAL O WNER IN THE DECISION OF THE SUPREME COURT IN THE CASE OF MYSORE MI NERALS LTD. CITED SUPRA AND ALSO RELIED UPON BY THE APPELLANT. T HE CONCEPT OF OWNERSHIP IN DIFFERENT CONTEXT NOW GETS RECONCILED CO NSISTENT WITH EARLIER DECISION IN THE CASE OF R.B. JODHA MAL KUTHIA LA VS CIT CITED SUPRA AND CIT VS PODDAR CEMENT PVT . LTD . (1997) 226 ITR 625 (SC). HENCE, IN VIEW OF THESE PRECEDENTS , THE KARNATAKA HIGH COURT HAD LITTLE DIFFICULTY IN GRANTING DEPRECIATION IN RESPEC T OF A PROPERTY WHERE THE ASSESSEE HAD THE USE OF THE PROPERTY, THOUGH T ITLE VESTED WITH A COOPERATIVE SOCIETY IN THE CASE OF SURANA PHAR MACEUTICALS P. LTD. VS CIT (2000) 243 ITR 248 (KAR). THE SAME VIEW I S TAKEN IN THE CASE OF CIT VS DEEPAK NITRITE LTD . (2000) 243 ITR 825 (GUJ) , WHERE POSSESSION HAD BEEN TAKEN OVER BY THE ASSESSEE AFTER PART P AYMENT OF THE PRICE THOUGH NOT REGISTERED . 5.3 . IN THE PRESENT CASE, THE APPELLANT HAS BEEN USING THE W INDMILLS, SALES BILL HAS BEEN ISSUED IN ITS FAVOUR, IT HAS CONSUMED E LECTRICITY FOR ITS OWN MANUFACTURING PROCESS. THE FACTS BROUGHT ON RECORD CLEARLY INDICATE THAT THE APPELLANT HAS ACQUIRED THE POSSESSION OVER THE WINDMILLS AND HAS BEEN PRODUCING ELECTRICITY FOR ITS OWN CONSUMPTION AND THE ASSET IS UTILIZED . THE A . O. HAS NOT QUESTIONED THIS ASPECT DURING THE ASSESSMENT PROCEEDINGS . IT IS IN THIS CONTEXT THAT THE APEX COURT'S DECISION OF MYSORE MINERALS LTD. VS CIT CITED SUPRA BECOMES IMPORTANT AND WHICH HAS HELD THAT THE TE RM ' OWNED ' AS OCCURRING IN SECTION 32(1) MUST BE ASSIGNED A WIDER M EANING. 9 ITA NOS.1749 & 1812/PUN/2014 ANYONE IN POSSESSION OF PROPERTY IN HIS OWN TITLE EXER CISING SUCH DOMINION OVER THE PROPERTY AS WOULD ENABLE OTHERS BEI NG EXCLUDED THEREFROM AND HAVING RIGHT TO USE AND OCCUPY THE PRO PERTY AND / OR TO ENJOY I TS USUFRUCT IN HIS OWN RIGHT WOULD BE THE OWNER OF THE BUILDING THOUGH A FORMAL DEED OF TITLE MAY NOT HAVE BEEN EXECUTED AND REGISTERED AS CONTEMPLATED BY TRANSFER OF PROPERT Y ACT, REGISTRATION ACT ETC . THE VERY CONCEPT OF DEPRECIATION SUGGEST THAT THE TAX BENEFITS ON ACCOUNT OF DEPRECIATION LEGITIMA TELY BELONGS TO ONE WHO HAS INVESTED IN THE CAPITAL ASSET, IS UTILIZING THE CAPITAL ASSET AND THEREBY LOSING GRADUALLY INVESTMENT CAUSED BY WEAR AND TEAR, AND WOULD NEED TO REPLACE THE SAME BY HAVING L OST ITS VALUE OVER A PERIOD OF TIME. IT IS WELL SETTLED THAT THERE CANNOT BE TWO OWNERS OF THE PROPERTY SIMULTANEOUSLY AND IN THE SAME SE NSE OF THE TERM. THE INTENTION OF THE LEGISLATURE IN ENACTING SE CTION 32 WOULD BE BEST FULFILLED BY ALLOWING DEDUCTION IN RESPECT OF DEPRECIATION TO THE PERSON IN WHOM FOR THE TIME BEING VESTS THE DOMINI ON OVER THE BUILDING AND WHO IS ENTITLED TO USE IT IN HIS OWN RIGH T AND IS USING THE SAME FOR HIS BUSINESS OR PROFESSION. ASSIGNING ANY DIFFE RENT MEANING WOULD NOT SUB-SERVE THE LEGISLATIVE INTENT . IN CIT VS NATIONAL COOPERATIVE CONSUMERS FEDERATION LTD . (2002) 254 ITR 599 DEL), THE DELHI HIGH COURT FOLLOWED ITS FULL BEN CH DECISION IN GOWERSONS PUBLISHERS (P) LTD. VS CIT (1999) 240 ITR 191 (DEL)(FB) AND HELD THAT THE ASSESSEE WAS ENTITLED TO DEPRECIATION ALLOWANCE IN RESPECT OF GODOWN-CUM-SHOWROOM PURCHASED BUT, NOT REGI STERED IN ITS NAME. 5.4 IN VIEW OF THE ABOVE FACTS AND THE RATIO OF THE JUDICIAL CITATIONS THE DISALLOWANCE MADE BY THE A.O. WITH RESPE CT TO THE DEPRECIATION ON WINDMILLS AMOUNTING TO RS.21,92,000/- IS LIABLE TO BE DELETED. GROUND NO.4 RAISED BY THE APPELLANT IS A LLOWED. 5.3 IN VIEW OF THE ABOVE, AS THE FACTS AND THE LEGAL POSITION HAS NOT UNDERGONE ANY CHANGE IN THE YEAR UNDER CONSIDERATION , THE GROUND BEING THE SAME AS IN A.Y. 2009-10, FOLLOWING THE DECISION TA KEN BY ME FOR THE ABOVE YEAR, THE GROUND RAISED IN THIS REGARD IS LIABL E TO BE ALLOWED FOR THE YEAR UNDER CONSIDERATION ALSO. 5.4 IN VIEW OF THE ABOVE, GROUND OF APPEAL NO.4 RAI SED BY THE APPELLANT IS ALLOWED. 17. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVENUE IS IN APPEAL BEFORE US. 18. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET SUBM ITTED THAT THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2008-09 AND 20 09-10 HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND THE GROU NDS RAISED BY THE REVENUE HAVE BEEN DISMISSED. THEREFORE, THIS BEING A COVERED 10 ITA NOS.1749 & 1812/PUN/2014 MATTER THE GROUNDS RAISED BY THE REVENUE ON THIS ISSUE SHOULD BE DISMISSED. 19. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HA ND FAIRLY CONCEDED THAT THE ISSUE STANDS DECIDED BY THE TRIBUNA L IN ASSESSEES OWN CASE IN THE IMMEDIATELY 2 PRECEDING ASSESSMENT YEARS. 20. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIO US DECISIONS CITED BEFORE US. WE FIND THE ASSESSING OFFICER FOLLOWING HIS OR DER FOR A.Y. 2009-10 DISALLOWED THE CLAIM OF DEPRECIATION ON WINDMILL AMOUNTING TO RS.4,38,400/- ON THE GROUND THAT THE WINDMIL L WAS NOT REGISTERED/TRANSFERRED IN THE NAME OF THE ASSESSEE AT A NY TIME DURING THE YEAR AND STOOD IN THE NAME OF THE PREVIOUS OWNER N MCOML. FURTHER THE ASSESSEE HAS NOT PAID THE REQUISITE CHARGE S/FEES FOR THE TRANSFER OF THE WINDMILL IN ITS NAME TILL DATE. EVEN THE ELECTR ICITY GENERATED BY THE WINDMILL IS PURCHASED BY THE ASSESSEE FR OM NMCOML BY MEANS OF BOOK ENTRIES ONLY. THEREFORE, THE TRANSACTIO N OF PURCHASE OF WINDMILL BY THE ASSESSEE FROM NMCOML IS A SHAM TRANSACTION. 21. WE FIND THE LD.CIT(A) FOLLOWING HIS ORDER FOR A.Y. 2008-09 & 2009-10 ALLOWED THE CLAIM OF DEPRECIATION. WE FIND THE TRIBUNA L IN ASSESSEES OWN CASE UPHELD THE ORDER OF THE CIT(A) FOR A.Y . 2008-09 AND 2009-10 AND DISMISSED THE APPEAL FILED BY THE REVENUE BY OBSERVING AS UNDER : 14. THE SECOND ISSUE RAISED BY THE DEPARTMENT IN GROUN D NOS. 2 AND 3 RELATE TO CLAIM OF DEPRECIATION ON WINDMILLS. THE A SSESSING OFFICER REJECTED THE DEPRECIATION CLAIM ON THE GROUND THAT THE ASSESSEE IS NOT A REGISTERED OWNER OF THE WINDMILLS. WHEREAS, THE CONTENTION OF THE LD. AR IS THAT THE ASSESSEE HAS PURCHASED WINDMILL FOR A TOTAL CONSIDERATION OF `1,10,00,000/-. IN SUPPORT OF HIS SUBMISSIONS THE LD. AR HAS REFERRED TO T HE LEDGER ACCOUNT 11 ITA NOS.1749 & 1812/PUN/2014 AT PAGES 121 AND 122 OF THE PAPER BOOK. A PERUSAL OF THE SAME SHOWS THAT THE PAYMENT TOWARDS THE CONSIDERATION OF WINDMILL HAS BEEN MADE BY THE ASSESSEE THROUGH BANK ON VARIOUS DATES STARTING FROM 06-0 8-2007 TO 14- 03-2008. THE LD. AR HAS ALSO PLACED ON RECORD THE LE TTERS ADDRESSED BY THE NMCOML TO MEDA, THE IMPLEMENTING AGENCY FOR TRANSFER /APPROVAL OF TRANSFER OF WINDMILL IN FAVOUR OF THE ASSESSEE. THE SAID LETTERS ARE DATED 22-01-2007 AND 02-08-2007. A FURTHER PERUSAL OF SAL ES TAX ENTITLEMENT CERTIFICATE FOR AVAILING SALES TAX BENEFIT DATED 12-1 2-2007 ISSUED BY JOINT COMMISSIONER OF SALE TAX (HQ)2, MAHARASHTRA STATE, MUM BAI CLEARLY SHOWS THE MODIFICATION CARRIED OUT IN RESPECT OF THE UNDER TAKING ELIGIBLE TO CLAIM SALES TAX BENEFIT. THE SAID MODIFICATION AS PER THE C ERTIFICATE ISSUED BY THE SALES TAX DEPARTMENT IS EFFECTIVE FROM 05-12-2007 IN F AVOUR OF THE ASSESSEE. THE LD. AR ALSO REFERRED TO MEMORANDUM OF UNDERSTANDI NG DATED 01-06- 2007 BETWEEN NMCOML AND THE ASSESSEE WITH REGARD TO TRA NSFER OF WINDMILL AND MOBILITY IN RESPECT THEREOF AT PAGES 137 TO 143 OF THE PAPER BOOK, AS WELL AS THE LETTER WRITTEN BY NMCOML DATED 0 1-06-2007 ADDRESSED TO ENERCON FOR TRANSFER OF A.M.C. IN THE NAM E OF THE ASSESSEE AT PAGE 130 OF THE PAPER BOOK. THUS, FROM THE PERUSAL O F DOCUMENTS ON RECORD IT IS CLEARLY EVIDENT THAT THE ASSESSEE HAD PURC HASED WINDMILL FROM NMCOML DURING THE FINANCIAL YEAR 2007-08 AND IS ELI GIBLE TO CLAIM DEPRECIATION ON THE WINDMILL. THE COMMISSIONER OF IN COME TAX (APPEALS) HAS ACCEPTED THE DEPRECIATION CLAIM OF THE ASSESSEE AFT ER CONSIDERING THE FACTS OF THE CASE AND DOCUMENTS ON RECORD. THE COMMISSI ONER OF INCOME TAX (APPEALS) HAS OBSERVED AS UNDER: 5.3 IN THE PRESENT CASE, THE APPELLANT HAS BEEN US ING THE WINDMILLS, SALES BILL HAS BEEN ISSUED IN ITS FAVOUR, IT HAS CO NSUMED ELECTRICITY FOR ITS OWN MANUFACTURING PROCESS. THE FACTS BROUGHT ON RECORD CLEARLY INDICATE THAT THE APPELLANT HAS ACQUIRED THE POSSES SION OVER THE WINDMILLS AND HAS BEEN PRODUCING ELECTRICITY FOR IT S OWN CONSUMPTION AND THE ASSET IS UTILIZED. THE A.O. HAS NOT QUESTI ONED THIS ASPECT DURING THE ASSESSMENT PROCEEDINGS. IT IS IN THIS CO NTEXT THAT THE APEX COURT'S DECISION OF MYSORE MINERALS LTD. VS. CIT CI TED SUPRA BECOMES IMPORTANT AND WHICH HAS' HELD THAT THE TERM 'OWNED' AS OCCURRING IN SECTION 32(1) MUST BE ASSIGNED A WIDER MEANING. ANY ONE IN POSSESSION OF PROPERTY IN HIS OWN TITLE EXERCISING SUCH DOMINI ON OVER THE PROPERTY AS WOULD ENABLE OTHERS BEING EXCLUDED THEREFROM AND HAVING RIGHT TO USE AND OCCUPY THE PROPERTY AND / OR TO ENJOY ITS U SUFRUCT IN HIS OWN RIGHT WOULD BE THE OWNER OF THE BUILDING THOUGH A F ORMAL DEED OF TITLE MAY NOT HAVE BEEN EXECUTED AND REGISTERED AS CONTEM PLATED BY TRANSFER OF PROPERTY ACT, REGISTRATION ACT ETC. THE VERY CONCEPT OF DEPRECIATION SUGGEST THAT THE TAX BENEFIT ON ACCOU NT OF DEPRECIATION LEGITIMATELY BELONGS TO ONE WHO HAS INVESTED IN THE CAPITAL ASSET, IS UTILIZING THE CAPITAL ASSET AND THEREBY LOSING GRAD UALLY INVESTMENT CAUSED BY WEAR AND TEAR, AND WOULD NEED TO REPLACE THE SAME BY HAVING LOST ITS VALUE OVER A PERIOD OF TIME. IT IS WELL SETTLED THAT THERE CANNOT BE TWO OWNERS OF THE PROPERTY SIMULTANEOUSLY AND IN THE SAME SENSE OF THE TERM. THE INTENTION OF THE LEGISLATURE IN ENACTING SECTION 32 WOULD BE BEST FULFILLED BY ALLOWING DEDUCTION IN RESPECT OF DEPRECIATION TO THE PERSON IN WHOM FOR THE TIME BEI NG VESTS THE DOMINION OVER THE BUILDING AND WHO IS ENTITLED TO U SE IT IN HIS OWN RIGHT AD IS USING THE SAME FOR HIS BUSINESS OR PROF ESSION. ASSIGNING ANY DIFFERENT MEANING WOULD NOT SUB-SERVE THE LEGISLATI VE INTENT. IN CIT VS NATIONAL COOPERATIVE CONSUMERS FEDERATION LTD. (200 2),254 ITR 599 (DEL), THE DELHI HIGH COURT FOLLOWED ITS FULL BENCH DECISION IN GOWERSONS PUBLISHERS (P) LTD. VS CIT (1999) 240 ITR 191 (DEL)(FB) 12 ITA NOS.1749 & 1812/PUN/2014 AND HELD THAT THE ASSESSEE WAS ENTITLED TO DEPRECIA TION ALLOWANCE IN RESPECT OF GODOWN-CUM-SHOWROOM PURCHASED BUT, NOT R EGISTERED IN ITS NAME. 5.4 IN VIEW OF THE ABOVE FACTS AND THE RATIO OF THE JUDICIAL CITATIONS THE DISALLOWANCE MADE BY THE A.O. WITH RESPECT TO THE D EPRECIATION ON WINDMILLS AMOUNTING TO RS.1,09,60,000/- IS LIABLE T O BE DELETED. GROUND NO. 4 RAISED BY THE APPELLANT IS ALLOWED. THE LD. DR HAS NOT BEEN ABLE TO CONTROVERT THE FINDI NGS OF FIRST APPELLATE AUTHORITY. THUS, IN VIEW OF THE DOCUMENTS ON RECORD WE DO NOT FIND ANY INFIRMITY IN THE FINDINGS OF COMMISSIONER OF INCOME TA X (APPEALS) IN ACCEPTING THE CLAIM OF DEPRECIATION OF THE ASSESSEE. A CCORDINGLY, GROUND NOS. 2 AND 3 RAISED BY THE DEPARTMENT IN THE RESPECTIV E APPEALS ARE DISMISSED BEING DEVOID OF ANY MERIT. 15. THE THIRD ISSUE RAISED BY THE DEPARTMENT IN GROUND NO. 4 IS WITH RESPECT TO DISALLOWANCE ON ACCOUNT OF EMPLOYEES CONTR IBUTION TO PROVIDENT FUND AND ESIC AND LABOUR WELFARE FUND AS THE ASSESSEE HA D MADE CONTRIBUTIONS IN THE RESPECTIVE FUNDS AFTER THE DUE DA TE AS SPECIFIED UNDER THE PROVISIONS OF RELEVANT ACTS. THE LD. AR HAS CONTE NDED THAT ALTHOUGH THE CONTRIBUTION TO THE ABOVE FUNDS WERE MADE AFTER DUE DATE AS SPECIFIED UNDER THE RELEVANT ACTS, BUT BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME UNDER THE INCOME TAX ACT. THIS FACT HAS NOT BEEN DI SPUTED BY THE DEPARTMENT. THE HON'BLE SUPREME COURT OF INDIA IN THE CASE OF COMMISSIONER OF INCOME TAX VS. ALOM EXTRUSIONS LTD. (SUPR A) HAS HELD THAT THE CONTRIBUTIONS MADE AFTER DUE DATE AS PRESCRIBED UN DER THE PROVIDENT FUND ACT BUT BEFORE THE DUE DATE OF FILING OF RETUR N OF INCOME, THE ASSESSEE IS ELIGIBLE TO CLAIM DEDUCTION THEREOF. THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. GHATGE PATIL TRANSPORT LTD. (SUPRA) WHILE DEALING WITH THE SIMILAR ISSUE HAS HELD TH AT THE CONTRIBUTION TOWARDS THE EMPLOYEES SHARE OF PROVIDENT FUND ETC. IS ALLOWABLE IF DEPOSITED BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME. THE RELEVANT EXTRACT OF THE FINDINGS OF HON'BLE HIGH COURT IS REPR ODUCED HERE-IN-BLOW: 13. IN THAT JUDGMENT, THIS COURT HELD THAT NO SUBS TANTIAL QUESTIONS OF LAW WOULD ARISE SINCE SECTION 43B IS INSERTED IN THE I.T. ACT WITH EFFECT FROM 1ST APRIL, 1984 BY WHICH THE MERCANTILE SYSTEM OF ACCOUNTING WITH REGARD TO TAX, DUTY AND CONTRIBUTION TO WELFAR E FUNDS STOOD DISCONTINUED. UNDER SECTION 43B OF THE I.T. ACT, IT BECAME MANDATORY FOR THE ASSESSEE TO ACCOUNT FOR SUCH PAYMENT INCLUD ING TO WELFARE FUNDS NOT ON MERCANTILE BASIS BUT ON CASH BASIS. TH E JUDGMENT FURTHER MENTIONS THAT THIS SITUATION CONTINUED BETWEEN 1 ST APRIL, 1984 AND 1ST APRIL, 1988. IT IS ALSO NOTICED THATSECTION 43B WAS AGAIN AMENDED AND THE FIRST PROVISO THERETO HAS BEEN ADDED WHICH WAS RESTRICTED TO TAX, DUTY, CESS OR FEE EXCLUDING LABOUR WELFARE. IN VIEW THEREOF, THE SECOND PROVISO AS FOLLOWS CAME TO BE INSERTED:- ' PROVIDED FURTHER THAT NO DEDUCTION SHALL, IN RESP ECT OF ANY SUM REFERRED TO IN CLAUSE (B), BE ALLOWED UNLESS SUCH S UM HAS ACTUALLY BEEN PAID DURING THE PREVIOUS YEAR ON OR BEFORE THE DUE DATE AS DEFINED IN THE EXPLANATION BELOW CLAUSE (VA) OF SUB-SECTION (1 ) OF SECTION 36 .' THE SECOND PROVISO WAS FURTHER AMENDED WITH EFFECT FROM 1ST APRIL, 1989 TO READ AS UNDER:- 13 ITA NOS.1749 & 1812/PUN/2014 ' PROVIDED FURTHER THAT NO DEDUCTION SHALL, IN RESP ECT OF ANY SUM REFERRED TO IN CLAUSE (B), BE ALLOWED UNLESS SUCH S UM HAS ACTUALLY BEEN PAID IN CASH OR BY ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE ON OR BEFORE THE DUE DATE AS DEFINED IN THE EXPLANATIO N BELOW CLAUSE (VA) OF SUB-SECTION (1) OF SECTION 36 , AND WHERE SUCH PAYMENT HAS BEEN MADE OTHERWISE THAN IN CASH, THE SUM HAS BEEN REALI SED WITHIN FIFTEEN DAYS FROM THE DUE DATE.' 14. FROM A READING OF ABOVE, IT IS CLEAR THAT THE E MPLOYER-ASSESSEE WOULD BE ENTITLED TO DEDUCTION ONLY IF THE CONTRIBU TION TO THE EMPLOYEE'S WELFARE FUND STOOD CREDITED ON OR BEFORE THE DUE DATE AND NOT OTHERWISE. IT TRANSPIRES THAT INDUSTRY ONCE AGA IN MADE REPRESENTATIONS TO THE MINISTRY OF FINANCE TO REMOV E THIS ANOMALY. THE RESULT WAS THAT AN AMENDMENT WAS INSERTED WHICH CAME INTO FORCE WITH EFFECT FROM 1ST APRIL, 2004 AND TWO CHAN GES WERE MADE IN SECTION 43B FIRSTLY BY DELETING THE SECOND PROVISO AND FURTHER AMENDMENT IN THE FIRST PROVISO WHICH READS AS UNDER :- PROVIDED THAT NOTHING CONTAINED IN THIS SECTION SH ALL APPLY IN RELATION TO ANY SUM WHICH IS ACTUALLY PAID BY THE ASSESSEE O N OR BEFORE THE DUE DATE APPLICABLE IN HIS CASE FOR FURNISHING THE RETU RN OF INCOME UNDER SUB-SECTION (1) OF SECTION 139 IN RESPECT OF THE PREVIOUS YEAR IN WHICH THE LIABILITY TO PAY SUCH SUM WAS INCURRED AS AFORE SAID AND THE EVIDENCE OF SUCH PAYMENT IS FURNISHED BY THE ASSESS EE ALONG WITH SUCH RETURN.' 15. IN THIS MANNER, THE AMENDMENT PROVIDED BY FINAN CE ACT , 2003 PUT ON PAR THE BENEFIT OF DEDUCTIONS OF TAX, DUTY, CESS AND FEE ON THE ONE HAND WITH CONTRIBUTIONS TO VARIOUS EMPLOYEES' WELFA RE FUNDS ON THE OTHER. ALL THIS CAME UP FOR CONSIDERATION BEFORE TH E HON'BLE SUPREME COURT IN THE CASE OF ALOM EXTRUSIONS LTD. (SUPRA). THE TRIBUNAL IN THE CASE AT HAND RELIED UPON THE SAID JUDGMENT. THERE I S NO REASON TO FAULT THE ORDER PASSED BY THE TRIBUNAL. WE ARE OF THE VIE W THAT THE DECISION OF THE SUPREME COURT IN ALOM EXTRUSIONS LTD. APPLIE S TO EMPLOYEES' CONTRIBUTION AS WELL AS EMPLOYERS' CONTRIBUTION. Q UESTION NOS.2, 3 & 4 ARE ACCORDINGLY ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 16. THUS, IN VIEW OF THE UNDISPUTED FACT AND THE DECI SION OF HON'BLE JURISDICTIONAL HIGH COURT THE GROUND NO. 4 RAISED IN THE CONCISE GROUNDS OF APPEAL BY THE DEPARTMENT IS DISMISSED BEING DEVOID OF A NY MERIT. 22. SINCE THE ISSUE HAS ALREADY BEEN DECIDED BY THE TRIBU NAL IN ASSESSEES OWN CASE IN THE IMMEDIATELY 2 PRECEDING ASSE SSMENT YEARS, THEREFORE, IN ABSENCE OF ANY CONTRARY MATERIAL BROUGHT TO OUR NOTICE WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A) ALLOWING THE CLAIM OF DEPRECIATION ON THE WINDMILL. GROUNDS RAISED BY THE REVENU E ARE ACCORDINGLY DISMISSED. 14 ITA NOS.1749 & 1812/PUN/2014 23. GROUND OF APPEAL NOS. 4 & 5 BY THE REVENUE READS AS UNDER : 4. THE LD.CIT(A) ERRED IN ALLOWING THE ASSESSEES CLAIM OF DEDUCTION U/S.80IA(4) WHEN THE PROVISIONS OF SECTION 80IA(5) ARE ALSO APPLICABLE IN THE ASSESSEES CASE SINCE THE ELIGIBLE BUSINESS IS NOT THE ONLY SOURCE OF INCOME OF THE ASSESSEE. 5. THE LD.CIT(A) ERRED IN ALLOWING THE ASSESSEES CLAIM OF DEDUCTION U/S.80IA(4) WHEN FACTS SHOW THAT ASSESSEE IS NOT GENERATI NG POWER AND ALSO THAT PURCHASE OF WINDMILL BY ASSESSEE HAS BEEN FOUND TO BE A SHAM TRANSACTION. 24. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSING O FFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS OBSERVED THAT TH E ASSESSEE HAS CLAIMED DEDUCTION U/S.80IA(4) ON WINDMILL AMOUNTING TO RS. 7,91,087/-. IN RESPONSE TO THE QUERY RAISED BY THE ASSESSING OFFICER THE ASSESSEE FILED DETAILED SUBMISSION JUSTIFYING ITS C LAIM OF DEDUCTION. HOWEVER, THE ASSESSING OFFICER REJECTED THE CO NTENTION OF THE ASSESSEE ON THE GROUND THAT ASSESSEE IN ITS COMPU TATION OF DEDUCTION U/S.80IA(4) HAS COMPUTED THE PROFIT FROM RUNNING OF WINDMILL AFTER INCLUDING SALE OF SALES TAX BENEFIT RECEIVED IN RESPECT OF THE WINDMILL. THE ASSESSEE HAS ALSO CLAIMED THAT THE SALES TAX WAS INEXTRICABLY LINKED TO THE PRODUCTION OF THE ELECTRICITY BY THE WINDMILL AND THEREFORE IT IS ENTITLED TO DEDUCTION. ACCORDING TO TH E ASSESSING OFFICER, IF THE GAIN ON SALE OF SALES TAX ENTITLEMENTS OVER THE YEARS WAS REDUCED FROM THE COMPUTATION OF PROFITS ATTRIBUTABLE TO WIN DMILLS, THEN THERE WAS NO POSITIVE INCOME EARNED BY THE ASSESSEE FRO M THE WINDMILL TILL THE YEAR UNDER CONSIDERATION. RELYING ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF PANDIAN CHEMICALS LTD. VS. CI T REPORTED IN 262 ITR 278 AND STERLING FOODS LTD. REPORTED IN 237 I TR 579 AND LIBERTY INDIA LTD. REPORTED IN 317 ITR 218 HE HELD THAT SALES TAX ENTITLEMENT DO NOT CONSTITUTE PROFIT AND GAINS DERIVED FROM THE ASSESSEES INDUSTRIAL UNDERTAKING FOR THE PURPOSE OF COMP UTING 15 ITA NOS.1749 & 1812/PUN/2014 DEDUCTION U/S.80IA(4). HE ACCORDINGLY DISALLOWED CLAIM OF DED UCTION OF RS.7,91,827/-. 25. BEFORE CIT(A) THE ASSESSEE SUBMITTED THAT THE WINDMILL O WNED WAS ENGAGED IN THE ACTIVITY OF GENERATION OF POWER AND TH EREFORE ANY INCOME OF THE ACTIVITY OF THE UNDERTAKING QUALIFIES FOR DEDUC TION U/S.80IA(4) OF THE ACT. THEREFORE, THE ASSESSEE IS ENTITLED TO DEDUCTION U/S.80IA(4). FURTHER, THERE WAS NO SALE OF SALES TAX BENEFIT DURING THE YEAR UNDER CONSIDERATION. 26. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE THE LD.CIT(A) ALLOWED THE CLAIM OF DEDUCTION BY OBSERVING AS UNDER : 5.2 THE FACTS BROUGHT ON RECORD HAVE BEEN CONSIDERE D AND PERUSED CAREFULLY. THE ONLY ISSUE DISPUTED RELATES TO THE DISALL OWANCE OF THE CLAIM OF DEDUCTION U/S 80IA(4) OF RS. 7;91,827/-. THE MATERIA L ON RECORD INDICATES THAT THE ASSESSING OFFICER DISALLOWED THE SAID CLAIM OF T HE APPELLANT BASED ON THE DISALLOWANCE MADE DURING THE EARLIER YEAR FOR AY . 2009-10 WHEREIN THE PROFIT FROM RUNNING OF WINDMILL HAD BEEN CALCULATED AFTER INCLUDING 'SALE OF SALES TAX BENEFIT' RECEIVED IN RESPECT OF THE WINDMILL . THE ASSESSING OFFICER DURING THE YEAR , UNDER CONSIDERATION HAS REITERATED THE FINDINGS BASED ON THE EARLIER YEARS AND HAS NOTED THAT THE WORKING OF T HE COMPUTATION OF DEDUCTION U/S 80IA(4) INDICATING THAT THE PROFIT FR OM RUNNING OF WINDMILL HAD BEEN CALCULATED AFTER INCLUDING 'SALE, OF SALES TA X BENEFIT' RECEIVED IN RESPECT OF WINDMILL. THE AFORESAID OBSERVATION OF THE ASSESSING OFFICER IS FACTUALLY INCORRECT AS WORKING OF THE CLAIM OF DEDUC TION U/S 80IA(4) CLEARLY INDICATES THAT THERE IS NO SALE OF 'SALES TAX BENEFIT' D URING THE YEAR UNDER CONSIDERATION. THOUGH DURING THE EARLIER YEARS VIZ. A YRS. 2007-08, SALE OF SALES TAX BENEFIT WERE RS.18,05,750/-,RS.19,09,000/-AN D RS.19,20,000/- RESPECTIVELY. THE CLAIM OF DEDUCTION U/S.80IA(4) MAD E BY THE APPELLANT HAD BEEN DISALLOWED BY THE ASSESSING OFFICER AND THE SAME HA D ALSO BEEN CONFIRMED IN VIEW OF THE DECISION OF APEX COURT. HO WEVER, AS THE APPELLANT HAS NOT SOLD ANY SALES TAX BENEFIT DURING THE YEAR UN DER CONSIDERATION THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IS ON INCORREC T PREMISES AND WRONG SET OF REASONING WHICH IS ALSO FACTUALLY NOT CORR ECT. IN VIEW OF THE ABOVE MATTER THE DISALLOWANCE MADE BY THE ASSESSING OFF ICER IS NOT LIABLE TO BE SUSTAINED AND THE SAME IS DIRECTED TO BE DELETED. 6.3 IN VIEW OF THE ABOVE, GROUND OF APPEAL NO.5 RAI SED BY THE APPELLANT IS ALLOWED. 27. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVENUE IS IN APPEAL BEFORE US. 16 ITA NOS.1749 & 1812/PUN/2014 28. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET SUBM ITTED THAT THE TRIBUNAL IN ASSESSEES OWN CASE HAS RESTORED THE ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH CERTAIN DIRECTIONS. THEREFORE, THIS ISS UE MAY BE SET-ASIDE TO THE FILE OF THE ASSESSING OFFICER TO ADJUDICATE THE ISSUE IN THE LIGHT OF THE DIRECTION OF THE TRIBUNAL. 29. THE LD. DEPARTMENTAL REPRESENTATIVE ALSO HAS NO OB JECTION IF THE MATTER IS RESTORED TO THE FILE OF THE ASSESSING OFFICER. 30. AFTER HEARING BOTH THE SIDES, WE FIND IDENTICAL ISSUE HAD COME UP BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE IN THE IMMEDIAT ELY 2 PRECEDING ASSESSMENT YEARS. THE TRIBUNAL RESTORED THE ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH THE FOLLOWING DIRECTION : 20. THE ASSESSEE HAS CLAIMED DEDUCTION U/S. 80IA(4) ON THE ENTIRE SALE PROCEEDS WHICH INCLUDE SALES TAX INCENTIVE. THE LD. A R OF THE ASSESSEE FAIRLY CONCEDED THAT THE ASSESSEE IS NOT ELIGIBLE TO CLAIM DEDU CTION U/S. 80IA(4) ON THE SALES TAX INCENTIVE RECEIPTS IN VIEW OF THE DEC ISION 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, TH E ASSESSEE IS CLAIMING DEDUCTION U/S. 80IA(4) IN RESPECT OF REMAINI NG AMOUNT. IN SUPPORT OF HIS SUBMISSIONS THE LD. AR HAS DRAWN SUPPORT FRO M THE DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF SERUM I NTERNATIONAL LTD. VS. ADDL. CIT IN ITA NOS. 290 TO 292/PN/2010 FOR THE ASSESSM ENT YEARS 2004- 05 TO 2006-07 DECIDED 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 RE-EXAMINE THE CLAIM OF ASSESSEE IN RESPECT OF DEDUCTION U/S. 80IA(4) IN THE LIGHT OF DECISION OF PUNE BENCH OF TH E 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 OBJEC TION FOR ASSESSMENT YEAR 2008-09 AND GROUND NO. 2 RAISED IN THE A PPEAL FOR THE ASSESSMENT YEAR 2009-10 ARE PARTLY ALLOWED FOR STATISTICA L PURPOSE. 31. SINCE THE FACTS OF THE INSTANT CASE ARE IDENTICAL TO TH E FACTS OF THE CASE DECIDED BY THE TRIBUNAL IN ASSESSEES OWN CASE IN T HE IMMEDIATELY 2 PRECEDING ASSESSMENT YEARS, THEREFORE, WE DEEM IT PROP ER TO RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH THE DIREC TION TO DECIDE 17 ITA NOS.1749 & 1812/PUN/2014 THE ISSUE AFRESH IN THE LIGHT OF THE DECISION OF THE TRIBUNAL AND IN ACCORDANCE WITH LAW AFTER GIVING DUE OPPORTUNITY OF BEING H EARD TO THE ASSESSEE. WE HOLD AND DIRECT ACCORDINGLY. GROUNDS RAISE D BY THE REVENUE ARE ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. ITA NO.1812/PUN/2014 (BY ASSESSEE) : 32. THE LD. COUNSEL FOR THE ASSESSEE AT THE TIME OF HEAR ING DID NOT PRESS GROUND OF APPEAL NOS. 1 AND 2 FOR WHICH THE LD. DE PARTMENTAL REPRESENTATIVE HAS NO OBJECTION. ACCORDINGLY, THE ABOVE 2 GROUNDS ARE DISMISSED AS NOT PRESSED. 33. GROUND OF APPEAL NO.3 BY THE ASSESSEE READS AS UNDER : 3. THE LD. AO ERRED IN (AND CIT-A IN CONFIRMING) IN DISALLOWING THE EMPLOYEES CONTRIBUTION TO THE PROVIDENT FUND (PF) T HE EMPLOYEES STATE INSURANCE CORPORATION (ESIC) AND THE MAHARASHTRA LABO UR WELFARE FUND, ALL AGGREGATING TO RS.3,74,577/- UNDER THE PRETEXT T HAT SAME IS TO BE TREATED AS INCOME UNDER SECTION 2(24)(X) AND DEDUCTION CLAIME D UNDER SECTION 36(1)(V) DISALLOWED. 34. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSING O FFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTED THAT THE A SSESSEE FAILED TO DEPOSIT EMPLOYEES CONTRIBUTION TO PF AND ESIC BEFORE TH E DUE DATES AND THE AUDITOR HAD ALSO MADE A REMARK IN THE AUDIT REP ORT. THE TOTAL OF SUCH DELAYED PAYMENT WORKED OUT TO RS.3,74,577/- WHICH THE ASSESSING OFFICER DISALLOWED AND ADDED TO THE TOTAL INCOME W ITHIN THE MEANING OF SECTION 2(24)(X) R.W.S. 36(1)(VA) OF THE I.T. ACT. 35. IN APPEAL THE LD.CIT(A) UPHELD THE ACTION OF THE ASSESSING OFFICER. THE ARGUMENT OF THE ASSESSEE THAT IT HAS PAID THE DEPO SITS BEFORE THE DUE DATE OF FILING OF RETURN WAS ALSO NOT ACCEPTED BY HIM. 36. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. 18 ITA NOS.1749 & 1812/PUN/2014 37. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET FILED A CHART SHOWING THE DETAILS OF PAYMENT OF EMPLOYEES CONTRIBUTION T O PF AND ESIC. REFERRING TO THE SAID CHART HE SUBMITTED THAT THE ENTIRE PAYMENT HAS BEEN MADE BEFORE THE DUE DATE OF FILING OF RETURN OF INC OME. REFERRING TO THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF GHATGE PATIL TRANSPORTS LTD. REPORTED IN 368 ITR 749 HE SUBMITTED THAT SINCE THE ASSESSEE HAS MADE THE PAYMENTS BEFORE THE D UE DATE OF FILING OF THE RETURN, THERE CANNOT BE ANY DISALLOWANCE. FURTHER , IDENTICAL ISSUE HAS BEEN DECIDED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.YRS. 2008-09 AND 2009-10. HE ACCORDINGLY SUBMITTED TH AT THE GROUND RAISED BY THE ASSESSEE SHOULD BE ALLOWED. 38. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER H AND HEAVILY RELIED ON THE ORDER OF THE CIT(A). 39. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIO US DECISIONS CITED BEFORE US. WE FIND THE ASSESSING OFFICER DISALLOWED AN AMOUNT OF RS.3,74,577/- BEING EMPLOYEES CONTRIBUTION TO PF AND ESIC ON THE GROUND THAT THE ASSESSEE HAS NOT MADE THE DEPOSIT BE FORE THE DUE DATE PRESCRIBED UNDER THE RESPECTIVE ACT. WE FIND THE LD.CIT(A) REJECTING THE CONTENTION OF THE ASSESSEE THAT SAME HAS BEEN PAID BEFO RE THE DUE DATE OF FILING OF THE RETURN UPHELD THE ACTION OF THE ASSESSING O FFICER. WE FIND IDENTICAL ISSUE HAD COME UP BEFORE THE TRIBUNAL IN ASSES SEES OWN CASE FOR A.Y. 2008-09. THE TRIBUNAL FOLLOWING THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. GHATGE PATIL TRA NSPORTS LTD. (SUPRA) ALLOWED THE CLAIM OF THE ASSESSEE AND UPHELD THE OR DER OF THE CIT(A) ON THIS ISSUE. GROUND RAISED BY THE REVENUE WAS D ISMISSED. 19 ITA NOS.1749 & 1812/PUN/2014 SINCE THE ASSESSEE IN THE INSTANT CASE HAS MADE THE P AYMENTS BEFORE THE DUE DATE OF FILING OF THE RETURN, THEREFORE, IN VIEW OF THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF GHATGE PATIL TRA NSPORTS LTD. (SUPRA), THE CIT(A) IS NOT JUSTIFIED IN SUSTAINING THE ADDITION M ADE BY THE ASSESSING OFFICER. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE CIT(A) AND THE GROUND RAISED BY THE ASSESSEE IS ALLOWED. 40. IN THE RESULT, THE APPEAL FILED BY THE REVENUE AS WELL A S THE ASSESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 28-12-2016. SD/- SD/- (SUSHMA CHOWLA) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE; ! DATED : 28 TH DECEMBER, 2016. ' (*+ ,+/ COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. THE CIT(A)-II, PUNE 4. THE CIT- II, PUNE 5. # &&' , ' , / DR, ITAT, A PUNE; 6. * / GUARD FILE. / BY ORDER, / // # & //TRUE COPY // ,- & ' / SR. PRIVATE SECRETARY ' , / ITAT, PUNE