Assistant Commissioner of Income-tax, V. M/s. Yeshshree Press Comps Pvt. Ltd., Aurangabad

ITA 1831/PUN/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 85043 (ITAT-PUNE)
• Duration Of Justice: 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 10-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P S NAIK
• Keywords: Business income; Depreciation

Judgement Text

INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO. 1831/PN/2013 (ASSESSMENT YEAR : 2010-11) ACIT, CIRCLE-1, AURANGABAD .. APPELLANT VS. M/S. YESHSHREE PRESS COMPS. PVT. LTD., PLOT NO.B-48, MIDC WALUJ, AURANGABAD. PAN NO.AAACY0908Q .. RESPONDENT ASSESSEE BY : SHRI NIKHIL PATHAK DEPARTMENT BY : SHRI P.S. NAIK DATE OF HEARING : 16-09-2014 DATE OF PRONOUNCEMENT : 17-09-2014 ORDER PER R.S. PADVEKAR, JM : THIS APPEAL IS FILED BY THE REVENUE CHALLENGING THE IMPUGNED ORDER OF THE LD.CIT(A) AURANGABAD DATED 31-07-2013 FOR THE A.Y. 2010-11. 2. THE FIRST ISSUE IS IN RESPECT OF DEDUCTION U/S.8 0IA(4) R.W.S. 80IA(5) OF THE ACT. BRIEFLY STATED FACTS ARE AS UN DER. THE ASSESSEE IS A PRIVATE LIMITED COMPANY WHICH IS IN THE BUSINESS OF AUTOMOBILE PRESS COMPONENTS AND WIND MILL POWER GENERATION. T HE ASSESSEE FILED THE RETURN OF INCOME FOR THE A.Y. 2010-11 DEC LARING TOTAL INCOME OF RS.4,23,,24,880/-. THE ASSESSEE HAS CLAIMED THE DEDUCTION OF RS.19,37,945/- FROM THE BUSINESS OF GENERATION OF W IND MILL POWER U/S. 80IA(4) OF THE ACT. THE ASSESSING OFFICER HAS RESERVATION IN ALLOWING THE DEDUCTION TO THE ASSESSEE AS ASSESSEE HAS STARTED GENERATION OF POWER ON 30-04-2000 AND IN HIS OPINIO N HE SHOULD HAVE STARTED CLAIMING THE DEDUCTION FROM THE A.Y. 2001-0 2, THE TERMINAL 2 YEAR TILL WHICH THIS DEDUCTION IS AVAILABLE WHICH I S A.Y. 2010-11 FOR THE PERIOD OF 10 CONSECUTIVE ASSESSMENT YEARS. THE ASS ESSING OFFICER ALSO REFERRED TO SEC. 80IA(5) AND OBSERVED THAT INI TIAL ASSESSMENT YEAR IN CONTEXT OF SEC. 80IA(5) SIGNIFIES THE YEAR IN WHICH THE ELIGIBLE BUSINESS COMMENCES. THE A.Y. 2009-10 IS THE FIRST YEAR IN WHICH THE ASSESSEE HAS CLAIMED THE DEDUCTION U/S. 80IA(4)(IV) (A) OF THE ACT FROM THE PROFITS OF THE WIND MILL POWER GENERATION. IN THE A.Y. 2010- 11 ALSO THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE U/S.80IA OF RS.1,93,27,947/- AS IN THE A.Y. 2009-10 . THE LD.CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE FOLLOWING HIS ORD ER FOR THE A.Y. 2009-10. NOW THE REVENUE IS IN APPEAL BEFORE US. 3. WE HAVE HEARD THE PARTIES. THE LD. COUNSEL SUBM ITS THAT THE ASSESSEE CLAIMED THE DEDUCTION FOR THE FIRST TIME I N THE A.Y. 2009-10 WHICH WAS DENIED BY THE ASSESSING OFFICER BUT ALLOW ED BY THE LD.CIT(A) AND THE HONBLE TRIBUNAL CONFIRMED THE OR DER OF THE LD.CIT(A). AS THE ASSESSEE HAS BEEN ALLOWED THE DE DUCTION IN A.Y. 2009-10, HENCE, THE ORDER OF THE LD.CIT(A) FOR A.Y. 2010-11 MAY BE CONFIRMED AS IT HAS ALREADY BEEN DECIDED IN FAVOUR OF THE ASSESSEE IN THE IMMEDIATE PRECEDING ASSESSMENT YEAR. THE LD. C OUNSEL FILED A COPY OF THE ORDER OF THIS TRIBUNAL IN ASSESSEES OW N CASE FOR A.Y. 2009-10 IN ITA NO.2198/PN/2012 DATED 24-12-2013. T HE LD. DEPARTMENTAL REPRESENTATIVE FAIRLY CONCEDED THAT TH E ISSUE STANDS DECIDED IN FAVOUR OF THE ASSESSEE. 3.1 IN THE A.Y. 2009-10, FOR THE IDENTICAL REASON, THE ASSESSING OFFICER DENIED THE DEDUCTION TO THE ASSESSEE BUT TH E LD.CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE. THE REVENUE CHA LLENGED THE ORDER 3 OF THE LD.CIT(A) BUT WITHOUT SUCCESS. THE OPERATIV E PART OF THE ORDER OF THE TRIBUNAL IS AS UNDER : 4. WE HAVE HEARD THE PARTIES. WE FIND THAT THE IS SUE STANDS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION O F THE ITAT, PUNE IN THE CASE OF LAXMI RIKSHAW BODY PVT. LTD. (SUPRA) TH E IDENTICAL CONTROVERSY HAS COME FOR THE CONSIDERATION AND TRIB UNAL HAS HELD AS UNDER: 9. NOW LET US EXAMINE THE LEGAL POSITION IN RESPECT OF THE CLAIM IN THE A.YS. 2005-06, 2006-07 AND 2008-09. AS DISCUSS ED HERE-IN- ABOVE IN ASSESSEES OWN CASE THE TRIBUNAL HAS EXAMI NED THE ISSUE IN CONTROVERSY REGARDING THE INITIAL ASSESSMENT YEAR A ND AS WELL AS WHETHER THE LOSSES OR DEPRECIATION OF THE POWER GEN ERATION UNIT WHICH HAVE ALREADY BEEN SET OFF AGAINST THE OTHER INCOME IN THE PRECEDING YEARS CAN BE NATIONALLY BROUGHT FORWARD AND SET OFF FOR DETERMINING THE QUANTUM OF DEDUCTION. THE OPERATIVE PART OF TH E TRIBUNAL ORDER IN ITA NO. 134/PN/2011 (A.Y. 2007-08) DATED 30-03-2012 IN ASSESSEES OWN CASE IS AS UNDER: 7. THE COMMISSIONER OF INCOME-TAX (APPEALS), HOWEV ER, HAS NOT UPHELD THE STAND OF THE ASSESSING OFFICER. THE PLEA OF THE ASSESSEE WAS THAT AS PER THE PROVISIONS OF SECTION 80IA(2) OF THE ACT, DEDUCTION CAN BE CLAIMED AT THE OPTION OF THE ASSESSEE FOR ANY 10 CONSECUTIVE ASSESSMENT YEARS OUT OF 15 Y EARS STARTING FROM THE YEAR IN WHICH THE UNDERTAKING HAS STARTED GENERATION OF POWER. THEREFORE, AS PER THE ASSESSEE THE LEGISLATURE HAS NOT INTENDED THAT THE INITIAL YEAR (AS REFERRED TO IN SECTION 80IA(5)) TO BE FIRST YEAR OF OPERATION, BUT THE ASSESSEE HAD AN OPTION TO SELECT SUCH INITIAL ASSES SMENT YEAR, NOT FALLING BEYOND 15 YEARS STARTING FROM THE PREVI OUS YEAR IN WHICH THE UNDERTAKING STARTS GENERATION OF POWER. I T WAS THEREFORE HELD THAT THE LOSSES PERTAINING TO THE AS SESSMENT YEARS 2003-04 AND 2004-05 WHICH WERE SOUGHT TO BE A DJUSTED BY THE ASSESSING OFFICER, WAS NOT JUSTIFIED INASMUC H AS SUCH ASSESSMENT YEARS WERE PRIOR TO THE INITIAL ASSESSME NT YEAR SELECTED BY THE ASSESSEE AND, THEREFORE, THE CONTEN TION OF THE ASSESSEE HAS BEEN UPHELD BY THE COMMISSIONER OF INC OME-TAX (APPEALS). IN SUPPORT, THE COMMISSIONER OF INCOME-T AX (APPEALS) REFERRED AND RELIED UPON THE DECISION OF THE CHENNAI BENCH OF THE TRIBUNAL IN THE CASE OF MOHAN BREWERIE S & DISTILLERIES LTD. V CIT 116 ITD 241 (CHENNAI). HE A CCORDINGLY DIRECTED THE ASSESSING OFFICER TO ALLOW THE CLAIM O F DEDUCTION UNDER SECTION 80IA(4)(IV)(A) OF THE ACT, AS CLAIMED BY THE ASSESSEE. AGGRIEVED WITH THE AFORESAID, THE REVENUE IS IN APPEAL BEFORE US. 8. IT WAS A COMMON POINT BETWEEN THE PARTIES THAT S IMILAR ISSUE WAS CONSIDERED BY OUR CO-ORDINATE BENCH IN TH E CASE OF SERUM INTERNATIONAL LTD. PUNE (SUPRA), WHEREIN THE TRIBUNAL HAS DECIDED THIS ISSUE AGAINST THE REVENUE AND IN F AVOUR OF THE ASSESSEE. THE RELEVANT PORTION OF THE ORDER OF THE TRIBUNAL IN THE AFORESAID DECISION IS EXTRACTED BELOW: '13. HAVING BEEN CONSIDERED THE ABOVE SUBMISSIONS, WE FIND THAT THE ISSUE RAISED IN GROUND NO. 1 AS TO WHAT WO ULD BE THE INITIAL A.Y FOR THE PURPOSES OF SECTION 80IA(5) OF THE ACT HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF POONAWALLA STUD AND AGR O FARM PVT. LTD. VS. ACIT (SUPRA). IN THAT CASE AFTER DISCUSSIN G THE ISSUE IN DETAIL, THE TRIBUNAL HAS COME TO THE CONCLUSION THA T THE INITIAL 'A. Y' FOR THE PURPOSE OF CLAIMING DEDUCTION U/S. 8 0IA WAS THE FIRST YEAR IN WHICH THE ASSESSEE CLAIMED THE DEDUCT ION U/S. 4 80IA (1) AFTER EXERCISING HIS OPTION AS PER THE PRO VISIONS OF 80IA (2) OF THE ACT. IT WAS HELD THAT THE LD. CIT(A ) HAS ERRED IN HOLDING THAT THE INITIAL A. Y FOR THE PURPOSES OF S ECTION 80IA(2) R.W.S. 80IA (5) WAS THE YEAR IN WHICH THE ASSESSEE STARTED GENERATING ELECTRICITY FROM THE WIND MILL ACTIVITY. WE ALSO FIND THAT THE ISSUE RAISED IN GROUND NO. 2 REGARDING THE ELIGIBILITY OF THE ASSESSEE TO CLAIM DEDUCTION U/S. 80IA UNDIMINIS HED BY UNABSORBED LOSSES AND DEPRECIATION ALSO SET OFF IN EARLIER YEARS AGAINST THE OTHER INCOME, IS FULLY COVERED BY THE D ECISION OF HON'BLE MADRAS HIGH COURT IN THE CASE OF VELAYUDHAS WAMY SPINNING MILLS (P) LTD VS. ACIT (SUPRA) HOLDING THA T AS PER SUB- SECTION (5) OF SECTION 801 A, PROFITS ARE TO BE COM PUTED AS IF SUCH ELIGIBLE BUSINESS IS THE ONLY SOURCE OF INCOME OF THE ASSESSEE. WHEN THE ASSESSEE EXERCISES THE OPTION, O NLY THE LOSSES OF THE YEARS BEGINNING FROM THE INITIAL A. Y . ARE TO BE BROUGHT FORWARD AND NOT THE LOSSES OF THE EARLIER Y EARS WHICH HAVE BEEN ALREADY SET OFF AGAINST THE INCOME OF THE ASSESSEE. THE HON'BLE MADRAS HIGH COURT HAS BEEN FURTHER PLEA SED TO HOLD THAT REVENUE CANNOT NOTIONALLY BRING FORWARD A NY LOSS OF EARLIER YEARS WHICH HAD ALREADY BEEN SET OFF AGAINS T THE OTHER INCOME OF ASSESSEE AND SET OFF AGAINST THE CORRECT INCOME OF THE ELIGIBLE BUSINESS. FICTION CREATED BY SUB-SECTI ON (5) OF SECTION 80IA DOES NOT CONTEMPLATE SUCH NOTIONAL SET OFF, HELD THE HON'BLE HIGH COURT. THE HON'BLE MADRAS HIGH COU RT IN THAT DECISION HAS ALSO REFERRED THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF LIBERTY INDIA VS. CIT (SUPRA) AND THE DECISION OF SPECIAL BENCH OF THE TRIBUNAL IN THE CA SE OF GOLDMAN SHARES & FINANCE (P) LTD. (SUPRA). THERE IS NO DISPUTE THAT EVEN A DECISION OF NON-JURISDICTIONAL HIGH COURT IS A BINDING PRECEDENT FOR THE TRIBUNAL UNTIL A CONTRA RY DECISION IS GIVEN BY ANY OTHER COMPETENT HIGH COURT. IN THIS RE GARD, WE FIND STRENGTH FROM THE RECENT DECISION OF HON'BLE J URISDICTIONAL BOMBAY HIGH COURT IN THE CASE OF COMMISSIONER OF CE NTRAL EXCISE VS. VALSON DYEING, BLEACHING AND PRINTING WO RKS (SUPRA) WHEREIN THE HON'BLE BOMBAY HIGH COURT HAS B EEN PLEASED TO HOLD IN A CASE OF EXCISE MATTER THAT TRI BUNAL IS BOUND BY THE DECISION OF HIGH COURT, EVEN OF A DIFF ERENT STATE, SO LONG AS THERE IS NO CONTRARY DECISION OF ANY OTH ER HIGH COURT. THE HON'BLE BOMBAY HIGH COURT HAS BEEN PLEAS ED TO HOLD FURTHER THAT THE TRIBUNAL HAD NO OPTION BUT TO FOLLOW THE JUDGMENT OF THE MADRAS HIGH COURT. AN AUTHORITY LIK E AN INCOME TAX TRIBUNAL ACTING ANYWHERE IN THE COUNTRY HAS TO RESPECT THE LAW LAID DOWN BY THE HIGH COURT, THOUGH OF A DIFFERENT STATE, SO LONG AS THERE IS NO CONTRARY DE CISION OF ANY OTHER HIGH COURT ON THAT QUESTION. WE THUS RESPECTF ULLY FOLLOWING THE RATIO LAID DOWN BY THE HON'BLE JURISD ICTIONAL HIGH COURT IN THE CASE OF COMMISSIONER OF CENTRAL EXCISE VS. VAKSON DYEING, BLEACHING AND PRINTING WORKS (SUPRA) HOLD T HAT THE TRIBUNAL IS BOUND BY THE DECISION OF THE HON'BLE MA DRAS HIGH COURT ON AN IDENTICAL ISSUE IN THE CASE OF VELAYUDH ASWAMY SPINNING MILLS (P) LTD VS. ACIT (SUPRA). WE THUS RE SPECTFULLY FOLLOWING THE DECISION TAKEN BY THE HON'BLE MADRAS HIGH COURT IN THAT CASE ON AN IDENTICAL ISSUE UNDER ALMOST SIM ILAR FACTS, HOLD THAT WHEN THE ASSESSEE EXERCISING THE OPTION, ONLY THE LOSSES OF THE YEAR BEGINNING FROM THE INITIAL A. Y. ARE TO BE BROUGHT FORWARD AND NOT THE LOSSES OF EARLIER YEAR WHICH HAVE BEEN ALREADY SET OFF AGAINST THE OTHER INCOME OF TH E ASSESSEE. THE REVENUE CANNOT NOTIONALLY BRING FORWARD ANY LOS S OF EARLIER YEARS WHICH HAS ALREADY BEEN SET OFF AGAINST ANY OT HER INCOME OF THE ASSESSEE AND SET OFF THE SAME AGAINST THE CU RRENT INCOME OF THE ELIGIBLE BUSINESS. WE THUS SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DIRECT THE A. O TO ALLOW THE CLAIMED DEDUCTION U/S. 80IA WITHOUT BRINGING THE NOTIONALLY BROUGHT FORWARD ANY LOSS OR DEPRECIATION OF EARLIER YEARS W HICH HAS 5 ALREADY BEEN SET OFF AGAINST OTHER INCOME OF THE AS SESSEE. THE DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF PRIMA PAPER ENGINEERING P. LTD. VS. I TO (SUPRA) CITED BY THE LD. DR IS ALSO NOT HELPFUL TO THE REVENUE SINCE FIRSTLY TH E DECISION OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF VELAYU DHASWAMY SPINNING MILLS (P) LTD. VS. ACIT (SUPRA) ON THE ISS UE WAS NOT CITED BEFORE THE BENCH AND SECONDLY THE ID. AR FAIR LY AGREED THAT THE ISSUE RAISED WAS COVERED AGAINST THE ASSES SEE BY THE DECISION OF SPECIAL BENCH IN THE CASE OF ACIT VS. G OLDMINE SHARES & FINANCE (P) LTD. (SUPRA) FOLLOWED BY THE A UTHORITIES BELOW. THE ID. AR THEREIN THUS CONTENDED THAT THOUG H THE ISSUE MAY BE DECIDED AGAINST THE ASSESSEE IN VIEW OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. GOLDM INE SHARES & FINANCIAL (P) LTD., BUT IT SHOULD NOT BE CONSTRUE D AS ACQUIESCENCE FROM THE SIDE OF THE ASSESSEE AS THE L EGAL POSITION ON THE SUBJECT IS YET NOT SETTLED. THE GRO UND NO. 2 IS THUS DECIDED IN FAVOUR OF THE ASSESSEE'. THE ABOVE DECISION HAS BEEN FURTHER FOLLOWED BY OUR CO- ORDINATE BENCH IN A SUBSEQUENT DECISION IN THE CASE OF LAP FINANCE & CONSULTANCY P. LTD. (SUPRA). THEREFORE, FOLLOWING THE PRECEDENTS, WE CONFIRM THE ORDER OF THE COMMISSIONE R OF INCOME-TAX (APPEALS) ON THIS GROUND. THE REVENUE FA ILS ON THIS GROUND OF APPEAL. 10. WE, THEREFORE, FOLLOWING THE ORDER OF THE TRIBU NAL IN ASSESSEES OWN CASE IN THE A.Y. 2007-08 HOLD THAT THERE CANNOT BE NOTIONAL CARRY FORWARD OF THE LOSSES OR DEPRECIATION WHICH HAVE AL READY BEEN SET OFF IN THE PRECEDING YEARS FOR DETERMINING THE QUANTUM OF DEDUCTION U/S. 80IA(4)(IV)(A) OF THE ACT. WE, ACCORDINGLY, CONFIR MED THE ORDERS OF THE LD. CIT(A) FOR THE A.YS. 2005-06, 2006-07 AND 2 008-09. THE ASSESSING OFFICER IS DIRECTED TO RE-WORK OUT THE QU ANTUM OF THE DEDUCTION IN ALL THE ASSESSMENT YEARS WITHOUT NOTIO NALLY SETTING OFF OF THE LOSSES OR DEPRECIATION PERTAINING TO THE POWER GENERATION UNIT IN ALL THE ASSESSMENT YEARS AS PER THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE A.Y. 2007-08. 5. IN THE PRESENT CASE ON EXAMINATION OF THE CHART GIVEN IN THE ASSESSMENT ORDER WE FIND THAT THE LOSSES PERTAINING TO THE PRECEDING YEARS HAVE ALREADY BEEN SET OFF BY THE ASSESSEE AGA INST THE OTHER BUSINESS INCOME / OTHER INCOME AND THERE IS NO CARR Y FORWARD LOSSES IN THE A.Y. 2009-10 REMAINED TO BE SET OFF PERTAINI NG TO THE WIND MILL POWER GENERATION UNIT. IN OUR OPINION, THE LD. CIT (A) HAS RIGHTLY ALLOWED THE CLAIM OF THE ASSESSEE AS IT IS SQUAREL Y COVERED BY THE DECISION OF THIS TRIBUNAL IN THE CASE OF LAXMI RIKS HAW BODY PVT. LTD. (SUPRA). WE FIND NO REASON TO INTERFERE WITH THE O RDER OF THE LD. CIT(A). ACCORDINGLY, SAME IS CONFIRM. 3.2 WE, THEREFORE, FOLLOWING THE ORDER OF THE TRIBU NAL IN ASSESSEES OWN CASE IN THE A.Y. 2009-10, CONFIRM THE ORDER OF THE LD.CIT(A) ON THIS ISSUE AS A.Y. 2010-11 IS A CONTINUING ASSESSME NT YEAR. ACCORDINGLY, GROUND NOS.1 TO 3 ARE DISMISSED. 4. WITH REGARD TO GROUND NOS. 4 TO 6 TAKEN BY THE R EVENUE, THE LD. COUNSEL SUBMITS THAT THESE GROUNDS ARE NOT DECI DED IN FAVOUR OF 6 THE ASSESSEE BY THE LD.CIT(A). HE FURTHER SUBMITS THAT SO FAR AS THE ISSUE OF DISALLOWANCE U/S.14A R.W.RULE 8D IS CONCER NED, THE ASSESSEE HAS NOT PRESSED THE SAID GROUND BEFORE THE LD.CIT(A ). HE FURTHER SUBMITS THAT GROUND NO. 6 IS NOT AT ALL ARISING FRO M THE ORDER OF THE LD.CIT(A). HENCE, GROUND NOS. 4 TO 6 ARE TOTALLY M ISPLACED AND INFRUCTUOUS. THE LD. DEPARTMENTAL REPRESENTATIVE A LSO CONCEDED THE SAME. AS GROUND NOS. 4 TO 6 ARE INFRUCTUOUS AS WRO NGLY TAKEN BY THE REVENUE AND THE SAME ARE DISMISSED. 5. IN THE RESULT, REVENUES APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 17-09-2014. SD/- SD/- (G.S.PANNU) (R.S. PADV EKAR) ACCOUNTANT MEMBER JUDICIAL MEM BER PUNE DATED: 17 TH SEPTEMBER 2014 SATISH COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. CIT(A), AURANGABAD 4. CIT, AURANGABAD 5. THE D.R, B PUNE BENCH 6. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY ITAT, PUNE BENCHES, PUNE