ACIT, Tiruppur V. Sri C.Chandramohan, Tiruppur

ITA 1940/CHNY/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0973 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 01-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T N BETGERI
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AN D SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ITA NOS.1939 & 1940/MDS/2012 ASST. YEARS : 2006-07 & 2009-10 THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE I, TIRUPUR. (APPELLANT) V. SHRI C. CHANDRAMOHAN, NO.7, COTTON MILL STREET, P.N. ROAD, TIRUPUR 2 . PAN : ACMPC8334K. (RESPONDENT) APPELLANT BY : MR. TN BETGERI, JCIT RESPONDENT BY : NONE DATE OF HEARING : 24 JAN 2013 DATE OF PRONOUNCEMENT : 24 JAN 2013 O R D E R PER CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER : ITA NO.1939/MDS/2013 : A.Y. 2006-07 : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST TH E ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) II, COIMB ATORE, FOR THE ASST. YEAR 2006-07. THE ONLY ISSUE IN THIS APPEAL IS THAT THE ITA 1939&1940/MDS/12 2 COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN ALLOW ING HIGHER DEPRECIATION CLAIMED BY THE ASSESSEE UNDER SEC.32(1 )(I)OF THE I.T. ACT EVEN THOUGH THE OPTION FOR CLAIMING SUCH HIGHER DE PRECIATION WAS NOT EXERCISED BEFORE THE DUE DATE. 2. DESPITE ISSUE OF NOTICE OF HEARING, THE ASSESSE E CHOSE TO REMAIN ABSENT ON THE DATE OF HEARING OF THESE APPEA LS. THE ASSESSEE DID NOT ALSO FILE ANY PETITION SEEKING ADJOURNMENT OF HEARING. HENCE, WE PROCEED TO DECIDE THIS APPEAL AFTER HEARING THE DEPARTMENTAL REPRESENTATIVE. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN EXPORT OF HOSIERY GARMENTS. THE ASSESSEE, DURING THE ASST. YEAR INSTALLED FIVE WIND MILLS FOR GENERATION OF POWER AND COMMENCED BUSINESS OF GENERATION OF POWER. THE ASSESSEE FILED HIS RETURN OF INCOME ON 31.10.2006 DECLARING TOTAL INCOME AT C34,32,780/-. THE ASSESSMENT WAS COMPLETED UNDER S EC.143(3) OF THE I.T. ACT ON 27.12.2011 DETERMINING INCOME AT C. 7,61,06,092/-. WHILE COMPLETING THE ASSESSMENT THE ASSESSING OFFIC ER DISALLOWED DEPRECIATION ON WIND MILL CLAIMED BY THE ASSESSEE O N THE GROUND THAT THE ASSESSEE DID NOT SATISFY THE CONDITION OF EXERC ISING OPTION BEFORE ITA 1939&1940/MDS/12 3 THE DUE DATE FOR FURNISHING OF RETURN OF INCOME UND ER SEC.139(1) OF THE ACT FOR CLAIMING HIGHER DEPRECIATION. ON APPE AL, THE COMMISSIONER OF INCOME TAX (APPEALS) ALLOWED THE CL AIM OF THE ASSESSEE FOLLOWING THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF KKSK LEATHER PROCESSORS PVT . LTD. V. ITO. 4. AT THE TIME OF HEARING DEPARTMENTAL REPRESENTAT IVE SUBMITS THAT THE COMMISSIONER OF INCOME TAX (APPEAL S) FOLLOWED THE DECISION OF THIS TRIBUNAL AND ALLOWED THE CLAIM OF THE ASSESSEE. HE SUPPORTED THE ORDER OF THE ASSESSING OFFICER IN DIS ALLOWING THE CLAIM OF THE ASSESSEE. 5. WE HAVE GONE THROUGH THE ORDER OF THE COMMISSIO NER OF INCOME TAX (APPEALS). THE COMMISSIONER OF INCOME T AX (APPEALS) HELD AS UNDER :- 5. I HAVE CONSIDERED THE FACTS OF THE CASE AND SU BMISIONS OF THE ASSESSEE. THE ASSESSEE HAS FILED THE OPTION ON 31. 10.2006 IE. ON THE DUE DATE OF FILING OF THE RETURN. THIS ISSUE I S SQUARELY COVERED BY THE DECISION OF THE HON'BLE ITAT CHENNAI D BEN CH IN THE CASE OF KKSK LEATHER PROCESSORS (P) LTD VS. ITO WHEREIN THE ITAT HELD AS FOLLOWS : .. THAT THE REQUIREMENT OF SECOND PROVISO TO R.5(1A) I S SATISFIED IF THE OPTION IS EXERCISED BEFORE THE EXP IRY OF DUE DATE OF FILING OF RETURN OF INCOME UNDER S.139( 1). THE MEANING OF THE TERM BEFORE DUE DATE SHALL BE UNDERSTOOD AS IT IS UNDERSTOOD BY A MAN OF ORDINARY ITA 1939&1940/MDS/12 4 PRUDENCE. BEFORE DUE DATE SIMPLY REFERS AND MEANS THAT NOT AFTER THE EXPIRY OF DUE DATE THE PROVISION HAS TO BE UNDERSTOOD WITH REFERENCE T O THE INTENT OF THE LEGISLATURE AND NOT UPON THE LANGUAGE IN WHICH THE INTENT IS CLOTHED. SINCE THE ASSESSEE HAS NOT EXERCISED THE OPTION AFTER THE EXPIRY OF DUE DATE, IT CAN WELL BE CONSUMED AS HAVI NG EXERCISED THE OPTION WITHIN THE DUE DATE. HENCE THE ASSESSING OF FICER IS DIRECTED TO DELETE THE ADDITION MADE TOWARDS DISALLOWANCE OF DEPRECIATION TO THE TUNE OF C.7,26,73,312/-. ACCORDINGLY, THIS GRO UND OF APPEAL IS ALLOWED. THE COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT THE ASSESSEE HAD FILED HIS OPTION ON 31.10.2006 IE., ON THE DUE DATE FOR FILING OF RETURN AND THIS IS AS GOOD AS FILING THE OPTION WIT HIN THE DUE DATE FOR FILING THE RETURN. THEREFORE, THE COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT THE ASSESSEE IS ENTITLED FOR CL AIMING HIGHER DEPRECIATION IN VIEW OF THE DECISION OF THE CO-ORDI NATE BENCH OF THIS TRIBUNAL (SUPRA). AS THE COMMISSIONER OF INCOME TA X (APPEALS) FOLLOWED THE ORDER OF THIS TRIBUNAL IN DECIDING THE ISSUE IN FAVOUR OF THE ASSESSEE, WE SEE NO INFIRMITY IN THE ORDER PASS ED BY THE COMMISSIONER OF INCOME TAX (APPEALS) ON THIS ISSUE AND HENCE THE SAME IS CONFIRMED. ITA 1939&1940/MDS/12 5 6. THE APPEAL OF THE REVENUE IS DISMISSED. 7. ITA NO.1940/MDS/2012 : A.Y. 2009-10 : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST TH E ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) II, COIMB ATORE, FOR THE ASST. YEAR 2009-10. THE REVENUE HAS RAISED THE FO LLOWING GROUNDS OF APPEAL :- THE LEARNED CIT(A) OUGHT TO HAVE CONSIDERED THAT THE ASSESSEE HAS CLAIMED DEDUCTION U/S 80IA OF THE ACT FROM THE INITIAL ASSESSMENT YEAR TAKEN AS THE YEAR IN WHICH HE HAS CLAIMED DEDUCTION U/S 80IA AND NOT THE YEAR OF COMMENCEMENT OF ELIGIBLE BUSINESS. THE LEARNED CIT(A) OUGHT TO HAVE OBSERVED THAT AS PER THE PROVISIONS OF SECTION 80IA(5) OF THE IT ACT ASSESSEE IS REQUIRED TO COMPUTE THE PROFITS OF THE ELIGIBLE BUSINESS AS IF SUCH ELIGIBLE BUSINESS IS T HE ONLY SOURCE OF INCOME OF THE ASSESSEE FROM THE INITIAL ASSESSMENT YEAR ON WARDS, SUCH INITIAL ASSESSMENT YEAR BEING THE YEAR IN WHICH THE ASSESSEE COMMENCES ELIGIBLE BUSINESS. ITA 1939&1940/MDS/12 6 8. AT THE TIME OF HEARING, THE DEPARTMENTAL REPRE SENTATIVE FAIRLY CONCEDED THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. VELAYUDASWAMY SPINNING MILLS (231 IT R 368). 9. WE HAVE DONE THROUGH THE ORDER OF LOWER AUTHORI TIES. THE ASSESSING OFFICER IN PARA 8 OF HIS ORDER OBSERV ED AS UNDER :- 8. ISSUE OF INITIAL ASSESSMENT YEAR : AS PER T HE PROVISIONS OF SECTION 80IA(5) OF THE IT ACT, ASSESSEE IS REQUIRED TO COMPUTE THE PROFITS OF THE ELIGIBLE BUSINESS AS IF SUCH ELI GIBLE BUSINESS IS THE ONLY SOURCE OF INCOME OF THE ASSESSEE FROM THE INITIAL ASSESSMENT YEAR BEING THE HYEAR IN WHICH ASSESSEE COMMENCES THE ELIGIBLE BUSINESS. HOWEVER, ASSESSEE TOOK THE VIEW THAT INITIAL ASSESSMENT YEAR MEANS THE YEAR IN WHICH ASS ESSEE BEGINS TO CLAIM DEDUCTION U/S 80IA OF THE IT ACT. THIS QU ESTION OF LAW AS TO WHETHER INITIAL ASSESSMENT YEAR MEANS THE YEA R OF COMMENCE EN T OR THE YEAR OF INITIAL CLAIM OF DEDUC TION WAS DECIDED BY THE JURISDICTIONAL HIGH COURT IN THE CAS E OF CIT VS. SRI VELAYUDHASWAMY SPINNING MILLS LTD. THE HONOURABLE HIGH COURT OF MADRAS DECIDED IN THE SAID CASE THAT THE INITIA L ASSESSMENT YEAR MEANS THE YEAR IN WHICH ASSESSEE BEGINS TO CLA IM DEDUCTION U/S 80IA OF THE IT ACT AND ACCORDINGLY LOSSES OF EL IGIBLE BUSINESS WHICH WERE SET OFF EARLIER CANNOT BE NOTIONALLY CAR RIED FORWARD TO SET OFF AGAINST INCOME AGAINST WHICH DEDUCTION U/S 80IA IS COMPUTED. REVENUE CONTENDED THE SAID DECISION OF T HE HON'BLE HIGH COURT BY WAY OF FILING SLP BEFORE THE HON'BLE SUPREME ITA 1939&1940/MDS/12 7 COURT OF INDIA. IN LINE WITH THE CONTENTION OF TH E REVENUE, I HOLD THAT THE INITIAL ASSESSMENT ORDER YEAR MEANS T HE YEAR IN WHICH ASSESSEE COMMENCES THE ELIGIBLE BUSINESS FOR THE REASONS STATED THERE ON THE SAID SLP. THE COMMISSIONER OF INCOME TAX (APPEALS) FOLLOWING THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT CIT V. VELAYUDASW AMY SPINNING MILLS (SUPRA) ALLOWED THE CLAIM OF THE ASSESSEE UN DER SEC.80IA OF THE ACT. SINCE THE ISSUE IS SQUARELY COVERED BY THE DE CISION OF HON'BLE JURISDICTIONAL HIGH COURT, WE REJECT THE GROUNDS OF APPEAL OF THE REVENUE ON THIS ISSUE. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS DI SMISSED. 11. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON THURSDAY, THE 24 TH DAY OF JANUARY 2013, AT CHENNAI. SD/- SD/- ( ABRAHAM P. GEORGE ) (CHALLA NAGENDR A PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED : 24 TH JANUARY 2013. JLS. C.C : APPELLANT/RESPONDENT/CIT(A)/CIT/D.R./G. FILE.