DCIT, Pondicherry V. Grace Infrastructure Pvt. Ltd., Pondicherry

ITA 1813/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7751 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2017
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 16-06-2016
• Court: TRIBUNAL
• Department Lawyers: MRS H KABILA JT
• Assessee Lawyers: MRS J SREE VIDYA
• Keywords: Depreciation
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL BENCH A, CHENNAI , . , ! ' BEFORE SHRI SANJAY ARORA, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ITA NO.1813/MDS/2016 ! # $# / ASSESSMENT YEAR : 2011-12 DEPUTY COMMISSIONER OF INCOME TAX, PONDICHERY CIRCLE, NO.378-386, MAHATMA GANDHI ROAD, PONDICHERRY 605 001. ( %& /APPELLANT) VS. GRACE INFRASTRUCTURE PVT. LTD., A-5, INDUSTRIAL ESTATE, THATTANCHAVADY, PONDICHERRY 605 009. [PAN: AACCG 1992N] ( '(%& /RESPONDENT) %& ) * /APPELLANT BY : MRS. H.KABILA, JT. CIT '(%& ) * /RESPONDENT BY : MRS. J. SREE VIDYA, ADVOC ATE ) + /DATE OF HEARING : 30.11.2016 ,$ ) + /DATE OF PRONOUNCEMENT : 21.02.2017 /O R D E R PER SANJAY ARORA, AM : THIS IS AN APPEAL BY THE REVENUE AGITATING THE ORD ER BY THE COMMISSIONER OF INCOME TAX (APPEALS), PUDUCHERRY (CIT(A) FOR S HORT) DATED 24.03.2016, ALLOWING THE ASSESSEES APPEAL CONTESTING ITS ASSE SSMENT U/S. 143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) DATED 06.03.2014 FOR ASSESSMENT YEAR (AY) 2011-12. 2. THE ISSUE ARISING IN THE INSTANT CASE IS THE COR RECT DEPRECIATION UNDER SECTION 32(1) OF THE ACT TO WHICH THE ASSESSEE IS E NTITLED ON THE WINDMILLS ACQUIRED AND PUT TO USE DURING THE CURRENT YEAR. TH E CONTROVERSY HAS ARISEN AS THE ACT PROVIDES THE ASSESSEE TO EXERCISE AN OPTION (BEFORE THE DUE DATE OF FILING 2 ITA NO.1813/MDS/2016 (AY 2011-12) GRACE INFRASTRU CTURE PVT. LTD. V. DCIT THE RETURN OF INCOME) TO CHOOSE THE RATE/S AS PROVI DED UNDER RULE 5(1) READ WITH APPENDIX-I OF THE INCOME TAX RULES, 1962 (THE RULE S HEREINAFTER), I.E., AS APPLICABLE TO A BLOCK OF ASSETS, IN RESPECT OF ASSE TS OF AN UNDERTAKING ENGAGED IN THE GENERATION AND DISTRIBUTION OF POWER, AS AGAINS T A PERCENTAGE RATE ON THE ACTUAL COST THEREOF AS PROVIDED U/R. 5(1A) R/W APPE NDIX-IA, I.E., THE SLM RATE. AS PER THE ASSESSING OFFICER (AO), THE ASSESSEE FAI LING TO EXERCISE THE SAID OPTION, I.E., FOR DEPRECIATION ON WRITTEN DOWN VALU E (WDV) RATE/S, WAS ENTITLED TO THE PRESCRIBED SLM RATE OF 7.69% ON THE COST OF THE SAID ASSETS. THE ASSESSEES CASE, WHICH FOUND FAVOUR WITH THE FIRST APPELLATE AUTHORITY, IS THAT THERE IS NO PRESCRIBED FORMAT OR MANNER FOR EXERCIS ING THIS OPTION, SO THAT THE RETURN OF INCOME, FILED BEFORE THE DUE DATE OF ITS FILING PRESCRIBED U/S.139 (1), ALONG WITH THE AUDITORS REPORT FURNISHED ALONG WIT H, MUST ITSELF BE REGARDED AS IN COMPLIANCE WITH THE PROVISIONS OF THE STATUTE, A ND THAT THEREFORE IT HAD RIGHTLY CLAIMED DEPRECIATION AT THE WDV RATE OF 80%. RELIAN CE IS PLACED ON THE DECISION BY THE HONORABLE JURISDICTIONAL HIGH COURT IN CIT V. KIKANI EXPORTS (P.) LTD . [2014] 369 ITR 500 (MAD), UPHOLDING THE TRIBUNAL S DECISION TO THAT EFFECT, BESIDES SEVERAL BY THE TRIBUNAL. 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. WE SEE NO REASON FOR A VIEW OTHER THAN THAT ADOPTED AND UPHELD IN KIKANI EXPORTS (P.) LTD (SUPRA), AND CONSISTENTLY BY THE TRIBUNAL. AS CLARI FIED BY THE LD. CIT(A), THE PRESCRIBED FORM FOR THE RETURN OF INCOM E ITSELF HAS A PROVISION FOR EXERCISING THE OPTION IN RESPECT OF CLAIM OF DEPREC IATION, SO THAT NO SEPARATE PROCEDURE IS REQUIRED (FOR THE PURPOSE) (REFER PARA 7 OF THE IMPUGNED ORDER). IN ANY CASE, AN ABSENCE OF A PRESCRIBED FORMAT WOULD N ECESSARILY WARRANT THE ASSESSEES RETURN OF INCOME, CONTAINING THE REQUIRE D PARTICULARS, TO BE REGARDED AS THE ASSESSEES CLAIM, INCLUDING THE EXERCISE OF THE OPTION BY IT IN ITS RESPECT. IT WOULD BE A DIFFERENT MATTER THOUGH, WE AGREE, WHERE THE RETURN OF INCOME IS NOT 3 ITA NO.1813/MDS/2016 (AY 2011-12) GRACE INFRASTRU CTURE PVT. LTD. V. DCIT FURNISHED BEFORE THE DUE DATE THEREFOR U/S. 139(1), WHILE IT STANDS SO PRIOR TO THE SAID DATE, ON 28.09.2011, IN THE PRESENT CASE. THE MERITS OF THE SECOND PART OF THE ASSESSEES AR GUMENT, THAT THE OPTION ONCE EXERCISED SHALL APPLY FOR SUBSEQUENT YEARS AS WELL, I.E., FOR THE ACQUISITIONS MADE SUBSEQUENTLY, DOES NOT PASS MUSTER; IN FACT, S TANDS BELIED BY THE ASSESSEES CLAIMING DEPRECIATION AT DIFFERENT RATES ON WINDMIL LS ACQUIRED AT DIFFERENT TIMES, BEING IN FACT AT SLM RATE FOR THE IMMEDIATELY PRECE DING YEAR. THAT, HOWEVER, WOULD NOT IMPACT THE ASSESSEES CLAIM, WHICH IS IN RESPECT OF THE WINDMILLS ACQUIRED DURING THE RELEVANT YEAR. WE MAY, HOWEVER, MAKE SOME OBSERVATIONS DEEMED REL EVANT IN THE MATTER. FIRSTLY, EVEN AS NOTED BY THE LD. CIT(A), T HOUGH THE AO COMPUTES THE EXCESS DEPRECIATION AT . 1660.91 LACS, HAS IN FACT MADE DISALLOWANCE U/S.3 2 (1) ONLY FOR .770.82 LACS. TWO, HE HAS ALLOWED DEPRECIATION AT 5 0% OF THAT EXIGIBLE IN VIEW OF THE RELEVANT ASSETS (WINDMILLS ) ACQUIRED DURING THE CURRENT YEAR HAVING BEEN PUT TO USE FOR LESS THAN 180 DAYS DURING THE YEAR. THE FACTS BEING NOT IN DISPUTE, THE AO SHALL COMPUTE THE EXCE SS DEPRECIATION (WITH REFERENCE TO THAT CLAIMED), IF ANY, AFRESH, DELETIN G THE DEPRECIATION DISALLOWANCE AS INITIALLY MADE. TWO, THE LOSS TO BE CARRY FORWAR D SHALL BE COMPUTED BY HIM IN TERMS OF UNABSORBED BUSINESS LOSS AND UNABSORBED DE PRECIATION. WE DECIDE ACCORDINGLY. 4. IN THE RESULT, THE REVENUES APPEAL IS DISPOSED OF ON THE AFORESAID TERMS. ORDER PRONOUNCED ON FEBRUARY 21, 2017 AT CHENNAI . SD/- SD/- ( . ) ( ) (G. PAVAN KUMAR) (SANJAY ARORA) ! /JUDICIAL MEMBER /ACCOUNTANT MEMBER /CHENNAI, - /DATED, FEBRUARY 21, 2017. EDN. 4 ITA NO.1813/MDS/2016 (AY 2011-12) GRACE INFRASTRU CTURE PVT. LTD. V. DCIT . ) '!+/0 10$+ /COPY TO: 1. %& /APPELLANT 2. '(%& /RESPONDENT 3. 2+ ( )/CIT(A) 4. 2+ /CIT 5. 034 '!+! /DR 6. 45# 6 /GF