DCIT 10(2)(2), MUMBAI V. MINEX METALLURGICAL CO.LTD, MUMBAI

ITA 197/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8807 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-11-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 13-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMAR LD
• Assessee Lawyers: PARESH SHAPARIA LD
• Keywords: Business income; Depreciation; Unabsorbed depreciation
• Section: 143(3)

Judgement Text

ITA.NO.196 &197/MUM/2016 MINEX METALLURGICAL CO.LIMITED ASSESSMENT YEARS-2011-12 & 2012-13 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI . . , , BEFORE SHRI D.T. GARASIA, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.196 &197/MUM/2016 ( / ASSESSMENT YEARS: 2011-12 & 2012-13) DEPUTY COMMISSIONER OF INCOME TAX 10(2)(2) R.NO.216-A AAYKAR BHAVAN,M.K.ROAD MUMBAI-400 020 / VS. M INEX METALLURGICAL CO. LIMITED 302,RAJGURU APARTMENTS NEW NAGARDAS ROAD NEW PINKY TALKIES, ANDHERI(E) MUMBAI-400 069 ! ./ ./PAN/GIR NO. AAACM-7315-B ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) A SSESSEE BY : PARESH SHAPARIA ,LD.AR RE VENUE BY : SUMAN KUMAR , LD. DR / DATE OF HEARING : 26/10/2017 / DATE OF PRONOUNCEMENT : 01/11 /2017 / O R D E R PER BENCH 1. THE CAPTIONED APPEALS BY REVENUE FOR ASSESSMENT YEARS [AY] 2011-12 & 2012-13 ASSAILS THE COMMON ORDER OF THE L D. COMMISSIONER OF INCOME-TAX (APPEALS)-17 [CIT(A)], MUMBAI, APPEAL NO. CIT(A)-17/IT- 82/14-15 AND CIT(A)-17/IT-361/14-15 DATED 30/10/2015. THE ASSESSMENT FOR AY 2011-12 WAS FRAMED BY LD. ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE 8(2), MUMBAI [AO] U/S 143(3) O F THE INCOME TAX ITA.NO.196 &197/MUM/2016 MINEX METALLURGICAL CO.LIMITED ASSESSMENT YEARS-2011-12 & 2012-13 2 ACT, 1961 ON 25/03/2014 WHEREAS THE ASSESSMENT FOR AY 2012-1 3 WAS FRAMED BY LD. DEPUTY COMMISSIONER OF INCOME TAX, RANGE 10(2)( 2), MUMBAI [AO] U/S 143(3) OF THE INCOME TAX ACT,1961 ON 06/02/2015. SINCE, COMMON ISSUE IN INVOLVED IN BOTH THE APPEALS , WE DISPOSE-OFF THE SAME BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CO NVENIENCE & BREVITY. FIRST WE TAKE UP ITA NO.196/MUM/2016 FOR A Y 2011-12 WHERE THE REVENUE HAS RAISED FOLLOWING EFFECTIVE GROUNDS OF APPEAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE AND IN LAW, THE LD. CIT(A) IS NOT JUSTIFIED IN DIRECTING THE A.O TO ALLOW DEDUCTI ON OF RS.45,50,492/- U/S.80IA(4)(IV)(A) OF THE ACT AS CLAIMED BY THE ASS ESSEE BY IGNORING THE PROVISIONS OF SECTION 80IA(5) OF THE ACT? 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) IS NOT JUSTIFIED IN HOLDING THAT THE INITIAL YEAR OF T HE DEDUCTION U/S.80IA(5) IS THE FIRST YEAR OF A CLAIM BEING MADE RATHER THAN THE YEAR OF COMMENCEMENT OF BUSINESS AS PER PLAIN READING OF THE SECTION? 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) IS NOT JUSTIFIED IN HOLDING THAT THE NOTIONAL BROUGHT FORWARD LOSSES AND UNABSORBED DEPRECIATION COULD NOT BE ADJUSTED AGAINST THE PROF ITS OF THE ELIGIBLE UNDERTAKING WITHOUT APPRECIATING THE FACT AS PER THE PROVISION S OF SECTION 80IA(5), WHILE QUANTIFYING THE AMOUNT OF DEDUCTION U/S.80IA, IT HA S TO BE PRESUMED THAT THE ELIGIBLE BUSINESS IS THE ONLY SOURCE OF INCOME AND THEREFORE, LOSSES INCURRED IN EARLIER YEAR HAS TO BE FIRST SET OFF AND BALANCE PR OFIT, IF ANY, IS ONLY ELIGIBLE FOR DEDUCTION U/S.80IA? 2.1 FACTS LEADING TO THE SAME ARE THAT THE ASSESSEE BEING RESIDENT CORPORATE ASSESSEE ENGAGED IN MANUFACTURING OF FERRO ALLOYS & CORED WIRE WAS ASSESSED FOR IMPUGNED AY U/S 143(3) ON 25/03/2 014 AT RS.25.75 CRORES AS AGAINST RETURNED INCOME OF RS.24 .50 CRORES E-FILED BY THE ASSESSEE ON 29/09/2011. 2.2 THE ASSESSEE COMPANY WAS ENGAGED IN THE BUSINES S OF GENERATION OF POWER THROUGH ITS WINDMILL PLANT AND OPTED TO CL AIM DEDUCTION U/S 80IA AGAINST THE SAME FOR THE FIRST TIME DURING AY 2009- 10. THE IMPUGNED AY WAS THIRD YEAR OF CLAIMING DEDUCTION U/S 80IA WHERE THE ASSESSEE CLAIMED A DEDUCTION OF RS.45.50 CRORES U/S 80IA. IT WAS NOTED THAT THE WINDMILL WAS INSTALLED IN AY 2006-07 WHERE THE ASSE SSEE CLAIMED ITA.NO.196 &197/MUM/2016 MINEX METALLURGICAL CO.LIMITED ASSESSMENT YEARS-2011-12 & 2012-13 3 DEPRECIATION @100% ON WINDMILL AND INCURRED LOSSES OF RS.34.18 CRORES. THE ASSESSEE SUFFERED SIMILAR LOSSES OF RS.1.87 CRO RES & RS.1.41 LACS IN AY 2007-08 & 2008-09 ALSO. ALL THESE LOSSES WERE SET OFF AGAINST NORMAL BUSINESS INCOME EARNED BY ASSESSEE IN THOSE YEARS. THE LD. AO OPINED THAT, IN TERMS OF PROVISIONS OF SECTION 80IA (5), EARLIER YEARS LOSSES HAD TO BE FIRST BROUGHT FORWARD NOTIONALLY A ND ADJUSTED FROM INCOME OF THE ELIGIBLE UNDERTAKING BEFORE COMPUTING DEDUCTION U/S 80IA. THE INCOME, COMPUTED IN THIS MANNER, RESULTED INTO LOSSES FROM ELIGIBLE UNDERTAKING AND THEREFORE, LD. AO CONCLUDED THAT TH E ASSESSEE WAS NOT ELIGIBLE TO CLAIM DEDUCTION U/S 80IA IN THE IMPUGNE D AY. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME BEFOR E LD. CIT(A) VIDE IMPUGNED ORDER DATED 30/10/2015 WHERE THE ASSE SSEE CONTENDED THAT THE INITIAL ASSESSMENT YEAR UNDER THE PROVISIONS OF SECTION 80IA WOULD BE THE FIRST YEAR OF CLAIMING DEDUCTION BY TH E ASSESSEE AND NOT THE FIRST YEAR OF COMMENCEMENT OF OPERATIONS AND THEREF ORE, EARLIER YEARS LOSSES WHICH HAD ALREADY BEEN ADJUSTED FROM BUSINES S INCOME OF THOSE YEARS WERE NOT REQUIRED TO BE NOTIONALLY BROUGHT FO RWARD. THE LD. CIT(A) REVERSED THE STAND OF LD. AO UPON NOTICING THAT THE ISSUE STOOD SQUARELY COVERED IN ASSESSEES FAVOR BY THE ORDER OF TRIBUNA L FOR AY 2009-10. AGGRIEVED, THE REVENUE IS IN FURTHER APPEAL BEFORE US. 4. THE RESPECTIVE REPRESENTATIVES, AT THE OUTSET, D REW OUR ATTENTION TO THE FACT THAT THE REVENUES APPEAL AGAINST TRIBUNAL S ORDER FOR AY 2009- 10 HAS BEEN DISMISSED BY HONBLE BOMBAY HIGH COURT VIDE ITA NO. 76 OF 2015 DATED 17/07/2015 AND HENCE, THE ISSUE STOOD COVERED IN ASSESSEES FAVOR. THE COPY OF RELEVANT JUDGMENT HAS BEEN PLACED ON RECORD. ITA.NO.196 &197/MUM/2016 MINEX METALLURGICAL CO.LIMITED ASSESSMENT YEARS-2011-12 & 2012-13 4 5. HEARD AND PERUSED RELEVANT MATERIAL ON RECORD IN CLUDING CITED JUDICIAL PRONOUNCEMENTS. WE FIND THAT TRIBUNAL IN I TA NO.5409/M/2012 DATED 28/03/2014 FOR AY 2009-10 & ITA NO.3308/M/201 4 DATED 01/06/2016 FOR AY 2010-11 HAS DECIDED THE ISSUE IN ASSESSEES FAVOR. FURTHER, THE REVENUE CONTESTED THE ORDER OF THE TRI BUNAL FOR AY 2009-10 BEFORE HONBLE BOMBAY HIGH COURT IN ITA NO. 76 OF 2 015 DATED 17/07/2017 WHERE THE HONBLE COURT DISMISSED THE AP PEAL IN THE FOLLOWING MANNER:- 2] MR. PINTO, THE LEARNED COUNSEL FOR THE APPELLANT SUBMITS THAT THE TRIBUNAL WAS NOT CORRECT IN HOLDING THAT THE INITIAL ASSESSMENT YEAR FOR THE DEDUCTION UNDER SECTION 80IA(5) OF THE INCOME TAX ACT, 1961 ( FOR SHORT THE ACT) IS THE FIRST YEAR OF CLAIM BEING MADE RATHER THAN THE YEAR OF COMMENCEMENT OF BUSINESS. THE PLAIN READING OF THE SECTION DOES NOT WARRANT THE INTERPRETATION MADE BY THE TRIBUNAL. AS SUCH, SAID DEDUCTION COULD NOT HAVE BEEN ALLOWED. 3] IN INCOME TAX APPEAL NO. 707 OF 2014 UNDER ORDER DATED 14 TH JUNE, 2017, WE HAVE HELD THAT WHEN THE ASSESSEE EXERCISE THE OPTIO N, THE ONLY LOSSES OF THE YEARS BEGINNING FROM THE INITIAL ASSESSMENT YEAR AL ONE ARE TO BE BROUGHT FORWARD AND NO LOSSES OF EARLIER YEARS WHICH IS ALR EADY SET OFF AGAINST THE INCOME OF THE ASSESSEE. ONCE THE SET-OFF TAKES PLAC E IN EARLIER YEARS AGAINST THE OTHER INCOME OF THE ASSESSEE, THE REVENUE CANNO T REWORK THE SET-OFF AMOUNT NOTIONALLY. IT HAS BEEN HELD THAT THE FIRST YEAR IS THE, FIRST YEAR OF THE ASSESSMENT AND NOT THE COMMENCEMENT OF THE BUSINES S FOR THE PURPOSE OF SECTION 80IA OF THE ACT. 4] IN THE LIGHT OF THE ABOVE, NO SUBSTANTIAL QUESTI ON OF LAW ARISES. THE APPEAL AS SUCH IS DISMISSED. NO COSTS. SIMILAR STAND HAS ALREADY BEEN REITERATED BY CBDT VIDE CIRCULAR NO.1/2016 [F.NO.200/31/2015-ITA-I], DATED 15/02/201 6. RESPECTFULLY FOLLOWING THE BINDING JUDICIAL PRECEDENT, WE UPHELD THE STAND OF LD. CIT(A) AND NO HESITATION IN DISMISSING REVENUES AP PEAL. 6. THE REVENUE, IN ITA NO.197/MUM/2016 FOR AY 2012- 13 IS SIMILARLY AGGRIEVED, AND HAS RAISED IDENTICAL WORDED GROUNDS. WE FIND THAT THE IMPUGNED ORDER IS COMMON ORDER FOR AY 2011-12 & 201 2-13 AND THE ISSUE IS IDENTICAL IN ALL RESPECT. THEREFORE, OUR D ECISION, AS FOR AY 2011- ITA.NO.196 &197/MUM/2016 MINEX METALLURGICAL CO.LIMITED ASSESSMENT YEARS-2011-12 & 2012-13 5 12, MUTATIS MUTANDIS, APPLIES TO THE SAME WHICH RESULT INTO DISMISSAL OF REVENUES APPEAL. 7. IN NUTSHELL, BOTH APPEALS OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 01 ST NOVEMBER, 2017. SD/- SD/- (D.T. GARASIA) (MANOJ KUMAR AGGARW AL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 01.11.2017 SR.PS:- THIRUMALESH ! / COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $%!# / THE RESPONDENT 3. + ( ) / THE CIT(A) 4. + / CIT CONCERNED 5. $'- , - , / DR, ITAT, MUMBAI 6. . / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI