ACIT, Tiruppur V. M/s. Sri Matha Spinning Mills (P) Ltd., Tiruppur

ITA 1945/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61087 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-05-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 15-05-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 05-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIRUDH RAI
• Assessee Lawyers: N VIJAY KUMAR
• Keywords: Depreciation; Unabsorbed depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER I.T.A. NO. 1939/MDS/2011 ASSESSMENT YEAR : 2007-08 THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE, TIRUPUR. (APPELLANT) V. M/S PRABHU SPINNING MILLS (P) LTD., 207/86, MANGALAM ROAD, TIRUPUR 641 604. PAN : AABCP0750E (RESPONDENT) I.T.A. NO. 1940/MDS/2011 ASSESSMENT YEAR : 2007-08 THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE, TIRUPUR. (APPELLANT) V. SMT. V. DHANALAKSHMI, 207/86, MANGALAM ROAD, TIRUPUR 641 604. PAN : AANPV5412C (RESPONDENT) I.T.A. NO. 1941/MDS/2011 ASSESSMENT YEAR : 2007-08 THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE, TIRUPUR. (APPELLANT) V. M/S VEDA SPINNING (P) LTD., 207/86, MANGALAM ROAD, KARUVAMPALAYAM, TIRUPUR 641 604. PAN : AABCV2433Q (RESPONDENT) 2 I.T.A. NOS. 1939 TO 1946/MDS/11 I.T.A. NO. 1942/MDS/2011 ASSESSMENT YEAR : 2007-08 THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE, TIRUPUR. (APPELLANT) V. SHRI P.S. VELUSWAMY, 207/86, MANGALAM ROAD, KARUVAMPALAYAM, TIRUPUR 641 604. PAN : ABLPV6651Q (RESPONDENT) I.T.A. NO. 1943/MDS/2011 ASSESSMENT YEAR : 2007-08 THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE, TIRUPUR. (APPELLANT) V. M/S EXCEL COTSPIN INDIA (P) LTD., 18, KANNAPIRAN COLONY, B.S. SUNDARAM ROAD, TIRUPUR. PAN : AAACE9365K (RESPONDENT) I.T.A. NO. 1944/MDS/2011 ASSESSMENT YEAR : 2007-08 THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE, TIRUPUR. (APPELLANT) V. SMT. C.K. INDIRA, 207/86, MANGALAM ROAD, KARUVAMPALAYAM, TIRUPUR 641 604. PAN : AAEPI7557A (RESPONDENT) I.T.A. NO. 1945/MDS/2011 ASSESSMENT YEAR : 2007-08 THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE, TIRUPUR. (APPELLANT) V. M/S SRI MATHA SPINNING MILLS (P) LTD., 207/86, MANGALAM ROAD, KARUVAMPALAYAM, TIRUPUR 641 604. PAN : AAECS1881G (RESPONDENT) 3 I.T.A. NOS. 1939 TO 1946/MDS/11 I.T.A. NO. 1946/MDS/2011 ASSESSMENT YEAR : 2007-08 THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE, TIRUPUR. (APPELLANT) V. M/S INDIA DYEING MILLS (P) LTD., DOOR NO.10, 12, KUMAR NAGAR SOUTH, II STREET, TIRUPUR 641 603. PAN : AAECS1881G (RESPONDENT) APPELLANT BY : SHRI ANIRUDH RAI, CIT-DR RESPONDENTS BY : SHRI N. VIJAY KUMAR, CA DATE OF HEARING : 15.05.2012 DATE OF PRONOUNCEMENT : 15.05.2012 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : THESE ARE APPEALS FILED BY THE REVENUE AGAINST THE ORDERS OF COMMISSIONER OF INCOME TAX (APPEALS)-II, COIMBATORE , IN RESPECT OF THE CONCERNED ASSESSEES, FOR ASSESSMENT YEAR 2007-08. SINCE SIMILAR ISSUES ARE INVOLVED AND COMMON GROUNDS HAVE BEEN RA ISED IN ALL THE APPEALS OF THE REVENUE, WE DISPOSE OF THE APPEALS B Y A CONSOLIDATED ORDER. 2. THE COMMON GROUNDS APPEARING IN ALL THE APPEALS ARE REPRODUCED HERE:- 4 I.T.A. NOS. 1939 TO 1946/MDS/11 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN HOLDING THAT THE ASSESSEE IS ENTITLED TO DEDUCTION UNDER SECTION 80- IA. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN HOLDING THAT ASSESSMENT YEAR 2005-06 IS THE FIRST INITIA L ASSESSMENT YEAR IN WHICH THE ASSESSEE HAD CLAIMED THE DEDUCTIO N UNDER SECTION 80-IA AND THEREFORE THE UNABSORBED DEPRECIATION OF T HE EARLIER YEARS WHICH HAD ALREADY BEEN ABSORBED CANNOT BE NOT IONALLY CARRIED FORWARD AND TAKEN INTO CONSIDERATION FOR COMPUTING DEDUCTION U/S 80-IA. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) S HOULD HAVE OBSERVED THAT AS PER THE PROVISIONS OF SECTION 80-IA(2) THE ASSESSEE CAN OPT FOR DEDUCTION OF ANY TEN CONSECUTI VE YEARS OUT OF 15 YEARS TAKEN FROM THE FIRST YEAR IN WHICH THE UNDE RTAKING ENTERPRISE DEVELOPS AND BEGINS TO OPERATE INFRASTRU CTURAL FACILITY. 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE APPRECIATED THAT AS PER PROVISIONS OF SECTION 80-IA(5) THE UNDERTAKING ELIGIBLE FOR DEDUCTION U/S 80-IA SHOULD BE TREATED AS ONLY SOURCE OF INCOME FOR COMPUTING THE QUANTUM OF DEDUCTION. 6. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) S HOULD HAVE OBSERVED THAT SINCE SUB-SECTION 5 OF SECTION 80- IA STARTS WITH A NON OBSTANTE CLAUSE, THE RESTRICTION PUT IN SUB-S ECTION 5 WILL PREVAIL AND DEDUCTION U/S 80-IA HAS TO BE RESTRICTED ACCORDI NGLY. 3. WHEN THE APPEALS CAME UP BEFORE US, A.R. SUBMITT ED THAT THE CIT(APPEALS) FOLLOWED THE DECISION OF HONBLE JURIS DICTIONAL HIGH COURT IN THE CASE OF VELAYUDHASWAMY SPINNING MILLS (P) LTD. V. ACIT (340 ITR 477) AND THERE WAS NOTHING ON RECORD TO SHOW THAT T HE SAID DECISION OF JURISDICTIONAL HIGH COURT HAS BEEN OVERRULED BY HON BLE APEX COURT. 5 I.T.A. NOS. 1939 TO 1946/MDS/11 4. PER CONTRA, LEARNED D.R. SUBMITTED THAT REVENUE HAD MOVED IN APPEAL BEFORE HONBLE APEX COURT AGAINST THE DECISI ON OF JURISDICTIONAL HIGH COURT IN VELAYUDHASWAMY SPINNING MILLS (P) LTD .S CASE (SUPRA). 5. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL SUBMISSIONS. IN ALL THESE CASES, ASSESSEES HAD OPTED A DIFFERENT YE AR AS THEIR INITIAL ASSESSMENT YEAR OTHER THAN THE YEAR IN WHICH THEY H AD COMMENCED THE OPERATION OF THE WINDMILL. IN THE EARLIER YEARS, P RIOR TO SUCH INITIAL ASSESSMENT YEAR, THERE WERE LOSSES FROM THE WINDMIL L, BUT SUCH LOSSES WERE SET OFF AGAINST THEIR PROFITS FROM THE BUSINES S. IN SUCH EARLIER YEARS, ASSESSEES HAD NOT CLAIMED ANY DEDUCTION UNDER SECTI ON 80-IA OF INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). SINCE A SSESSEES CHOSE A DIFFERENT YEAR AS INITIAL ASSESSMENT YEAR FOR CLAIM ING DEDUCTION UNDER SECTION 80-IA OF THE ACT, IT DID NOT SET OFF ANY EA RLIER YEAR LOSSES WHICH ALREADY STOOD ABSORBED AGAINST EARLIER YEARS INCOM E. ASSESSING OFFICER, HOWEVER, HELD THAT SUCH LOSSES HAD TO BE S ET OFF NOTIONALLY BEFORE ALLOWING DEDUCTION UNDER SECTION 80-IA OF TH E ACT. ON ASSESSEES APPEALS, CIT(APPEALS) HELD IN FAVOUR OF ASSESSEES RELYING ON THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT I N THE CASE OF VELAYUDHASWAMY SPINNING MILLS (P) LTD. (SUPRA). TH E DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF VE LAYUDHASWAMY SPINNING MILLS (P) LTD. (SUPRA) IS CLEAR THAT NOTIO NAL LOSSES WHICH ALREADY 6 I.T.A. NOS. 1939 TO 1946/MDS/11 STOOD SET OFF AGAINST OTHER INCOME IN THE EARLIER Y EARS COULD NOT BE CARRIED FORWARD AND SET OFF AGAINST PROFITS OR INCO ME OF INITIAL/SUBSEQUENT YEARS IN RESPECT OF WINDMILL. WE ARE, THEREFORE, O F THE OPINION THAT THE CIT(APPEALS) WAS JUSTIFIED IN RELYING ON THE DECISI ON OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF VELAYUDHAS WAMY SPINNING MILLS (P) LTD. (SUPRA). NO INTERFERENCE IS CALLED FOR. 6. IN THE RESULT, ALL THE APPEALS FILED BY THE REVE NUE ARE DISMISSED. THE ORDER WAS PRONOUNCED IN THE COURT ON TUESDAY, T HE 15 TH OF MAY, 2012, AT CHENNAI. SD/- SD/- (CHALLA NAGENDRA PRASAD) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 15 TH MAY, 2012. KRI. COPY TO: (1) APPELLANT (2) RESPONDENTS (3) CIT(A)-II, COIMBATORE (4) CIT-III, COIMBATORE (5) D.R. (6) GUARD FILE