DCIT, Coimbatore V. BRT Spinners Pvt Ltd., Coimbatore

ITA 1982/CHNY/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7847 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 28-12-2015
• Assessment Year: 2011-2012
• Appeal Filed On: 14-09-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR B NISCHAL
• Assessee Lawyers: S SENDAMARAI KANNAN
• Keywords: Depreciation; Opportunity of being heard; Additional depreciation; Question of law
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , B B ENCH, CHENNAI . . . , . , & BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NOS.1982 & 1983/MDS/2015 & C.O.NO.124/ MDS/2015 (IN ITA NO.1982/MDS/2015) ( / ASSESSMENT YEARS: 2011-12 & 12-13) THE DEPUTY COMMISSIONER OF INCOME TAX CORPORATE CIRCLE-I 63-A, RACE COURSE ROAD, COIMBATORE-641 018. VS M/S. BRT SPINNERS PVT.LTD. SF NO.336/1, PULLAKKADU THOTTAM, KOMBAKKADUPUDUR, ITCHIPATTI P.O. COIMBATORE-641 668. PAN:AAACB7320D ( /APPELLANT) (RESPONDENT/CROSS OBJECTOR) / APPELLANT BY : DR.B.NISCHAL, JCIT /RESPONDENT BY : MR. S.SENDAMARAI KANNAN, ADVOCATE /DATE OF HEARING : 28 TH DECEMBER, 2015 /DATE OF PRONOUNCEMENT : 4 TH MARCH, 2016 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THESE TWO APPEALS AND CROSS OBJECTION ARE FILED BY THE REVENUE AND ASSESSEE RESPECTIVELY AGGRIEVED BY THE ORDERS OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS )-1, COIMBATORE DATED 16.06.2015 IN ITA NOS.80A & 343/14 -15 PASSED UNDER SECTION 143(3) R.W.S. 250 OF THE ACT F OR THE ASSESSMENT YEAR 2011-12 & 2012-13 RESPECTIVELY. 2 ITA NOS.1982 & 1983 /MDS/2015 & C.O. NO.124/MDS/2015 2. THE REVENUE HAS RAISED SEVERAL GROUNDS IN ITS AP PEALS FOR BOTH THE ASSESSMENT YEARS AND THEY ARE CONCISED HEREIN BELOW FOR ADJUDICATION:- FOR THE ASSESSMENT YEAR 2011-12:- I) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN DIRECTING THE LEARNED ASSESSING OFFICER TO ALLOW THE CLAIM OF DEDUCTION UNDER SECTION 80-IA OF THE ACT BY FOLLOWING THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT I N THE CASE OF CIT VS. SRI VELAYUDHASAMY SPINNING MILLS PVT. LTD., REPORTED IN 231 CTR 368 WHEN THE REVENUE IS ON APPEAL BEFORE THE HONBLE APEX COURT. FOR THE ASSESSMENT YEAR 2012-13:- I) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN ALLOWING THE CLAIM OF DEPRECIATION @ 80% ON WINDMILL, WHEN THE ASSESSEE HAS NOT CLAIMED THE SAME IN ITS RETURN OF INCOME. II) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN DIRECTING THE LEARNED ASSESSING OFFICER TO ADOPT THE MARKET PRICE OF ELECTRICITY PRODUCED BY THE ASSESSEE AS PER THE DIRECTIONS OF THE TRIBUNAL IN ITA NO.1675/MDS/2014 FOR THE ASSESSMENT YEAR 2010-11 AND RE-COMPUTE THE DEDUCTION UNDER SECTION 80IA OF THE ACT WHEN THE ASSESSEE HAS NOT CLAIMED THE DEDUCTION UNDER SECTION 80IA IN ITS RETURN OF INCOME AND THE ASSESSING OFFICER HAS ALSO NOT MADE ANY DISALLOWANCE U/S.80IA OF THE ACT. 3 ITA NOS.1982 & 1983 /MDS/2015 & C.O. NO.124/MDS/2015 3. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS IN ITS CROSS OBJECTION FOR THE ASSESSMENT YEAR 2011-12:- I) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN NOT DISPOSING OF THE ADDITIO NAL GROUND RAISED BEFORE HIM WHICH IS AS UNDER:- FOR COMPUTING THE MARKET VALUE OF THE ELECTRICITY GENERATED BY THE WINDMILLS OF THE ASSESSEE COMPANY FOR THE PURPOSE OF CLAIMING DEDUCTION U/S.80IA THE LEARNED ASSESSING OFFICER SHOULD HAVE ADOPTED THE AVERAGE RATE AT WHICH THE TNEB WOULD HAVE CHARGED THE ASSESSEE, HAD THE ASSESSEE COMPANY HAD NOT PRODUCED THE ELECTRICITY THROUGH ITS OWN WINDMILLS AS AGAINST THE RATE OF RS.3.50 CLAIMED BY THE ASSESSEE ON THE BASIS OF VARIOUS DECISIONS OF TRIBUNAL. II) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN NOT DIRECTING THE ASSESSING OFFICER TO ADOPT THE RATE OF ` 4.66 PER UNIT AS STATED IN THE WRITTEN SUBMISSIONS OF THE ASSESSEE. FOR THE ASSESSMENT YEAR 2011-12:- (REVENUES APPEAL ): 4. BRIEF FACTS ARE THAT THE ASSESSEE IS A PRIVATE L IMITED COMPANY ENGAGED IN THE BUSINESS OF PURCHASE, MANUFA CTURE, SALES OF COTTON YARN AND WIND ENERGY GENERATION. TH E ASSESSEE FILED ITS RETURN OF INCOME FOR THE RELEVAN T ASSESSMENT YEAR ON 29/09/2011 ADMITTING INCOME OF R S. 2,97,25,340/-. SUBSEQUENTLY, THE CASE WAS TAKEN UP FOR SCRUTINY AND ASSESSMENT WAS COMPLETED UNDER SECTION 4 ITA NOS.1982 & 1983 /MDS/2015 & C.O. NO.124/MDS/2015 143(3) OF THE ACT ON 20/03/2014, WHEREIN THE LEARNE D ASSESSING OFFICER DISALLOWED THE CLAIM OF DEDUCTION UNDER SECTION 80IA OF THE ACT FOR ` 1,00,48,869/-. 5. THE LEARNED ASSESSING OFFICER HAD DISALLOWED THE CLAIM OF THE ASSESSEE UNDER SECTION 80IAOF THE ACT BECAUS E THE ASSESSEE HAD TAKEN THE INITIAL ASSESSMENT YEAR AS T HE YEAR IN WHICH THE ASSESSEE HAD BEGAN TO CLAIM THE DEDUCTION UNDER SECTION 80IA OF THE ACT. WHILE AS THE REVENUE WAS O F THE OPINION THAT THE INITIAL ASSESSMENT YEAR WILL BE TH E YEAR IN WHICH THE ASSESSEE COMMENCES ITS ELIGIBLE BUSINESS. THE LEARNED ASSESSING OFFICER FURTHER OBSERVED AS FOLLO WS IN HIS ASSESSMENT ORDER:- THE QUESTION OF LAW AS TO WHETHER INITIAL ASSESSMENT YEAR MEANS THE YEAR OF COMMENCEMENT OR THE YEAR OF INITIAL CLAIM OF DEDUCTION WAS DECIDED BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS.VELAYUDHASAMY SPINNING MILLS LTD., THE HONBLE HIGH COURT OF MADRAS CITED IN THE SAID CASE THAT THE INITIAL ASSESSMENT YEAR MEANS THE YEAR IN WHICH ASSESSEE BEGINS TO CLAIM DEDUCTION UNDER SECTION 80IA OF THE I.T. ACT AND ACCORDINGLY LOSSES OF ELIGIBLE BUSINESS WHICH WERE SET OFF EARLIER CANNOT BE NOTIONALLY CARRIED FORWARD TO SET OFF AGAINST INCOME AGAINST WHICH DEDUCTION U/S.80IA IS COMPUTED. REVENUE CONTESTED THE SAID DECISION 5 ITA NOS.1982 & 1983 /MDS/2015 & C.O. NO.124/MDS/2015 OF THE HONBLE HIGH COURT BY WAY OF FILING SLP BEFORE THE HONBLE SUPREME COURT OF INDIA. IN LINE WITH THE CONTENTION OF THE REVENUE, I HOLD THAT THE INITIAL ASSESSMENT YEAR MEANS THE YEAR IN WHICH ASSESSEE COMMENCES THE ELIGIBLE BUSINESS FOR THE REASONS STATED THEREON IN THE SAID SLP. 6 . ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FOLLOWING THE DECISION OF THE HONBLE JUR ISDICTIONAL HIGH COURT IN THE CASE OF CIT VS.VELAYUDHASAMY SPIN NING MILLS P.LTD., REPORTED IN 231 CTR 368 DIRECTED THE LEARNED ASSESSING OFFICER TO ALLOW THE CLAIM OF THE ASSESSE E UNDER SECTION 80IA OF THE ACT, AGAINST WHICH THE REVENUE IS IN APPEAL BEFORE US. 7. BEFORE US, THE LEARNED DEPARTMENTAL REPRESENTATI VE ARGUED IN SUPPORT OF THE ORDER OF THE LEARNED ASSES SING OFFICER WHILE AS THE LEARNED AUTHORIZED REPRESENTAT IVE ARGUED IN SUPPORT OF THE ORDER OF THE LEARNED COMMI SSIONER OF INCOME TAX (APPEALS). 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFULL Y PERUSED THE MATERIAL ON RECORD. ON A PERUSAL OF THE ASSESSMENT ORDER, IT APPEARS THAT THE LEARNED ASSES SING 6 ITA NOS.1982 & 1983 /MDS/2015 & C.O. NO.124/MDS/2015 OFFICER WAS OF THE VIEW THAT, SINCE THE REVENUE HAS PREFERRED AN APPEAL BEFORE THE HONBLE SUPREME COURT, AGAINST THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT I N THE CASE OF SRI VELAYUDHASWAMY SPINNING MILLS PVT.LTD., CITED S UPRA, THE ISSUE HAS NOT BECOME FINAL. THEREFORE HE DECIDED T HE ISSUE FOLLOWING HIS EARLIER ORDER AGAINST THE ASSESSEE. ON THE CONTRARY, THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS) PLACING RELIANCE IN THE DECISION OF THE HONBLE JUR ISDICTIONAL HIGH COURT IN THE CASE OF SRI VELAYUDHASWAMY SPINNI NG MILLS PVT.LTD., CITED SUPRA HAS ALLOWED THE CLAIM OF THE ASSESSEE UNDER SECTION 80IA OF THE ACT. SINCE THE DECISION OF THE HONBLE HIGH COURT IS BINDING ON ALL THE LOWER JUDI CIARY/QUASI- JUDICIAL AUTHORITIES ETC., WITHIN ITS JURISDICTION, WE DO NOT HAVE ANY HESITATION TO CONFIRM THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IN ALLOWING TH E CLAIM OF THE ASSESSEE UNDER SECTION 80IA OF THE ACT RELYI NG ON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT C ITED SUPRA. IT IS ORDERED ACCORDINGLY. THUS THE ONLY GROUND RAI SED BY THE REVENUE IN ITS APPEAL IS HELD AGAINST IT. CROSS OBJECTION (BY THE ASSESSEE ):- 7 ITA NOS.1982 & 1983 /MDS/2015 & C.O. NO.124/MDS/2015 9. THE ASSESSEE HAS SUBMITTED IN ITS CROSS OBJECTIO N THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) DI D NOT DISPOSE OF THE ADDITIONAL GROUND WITH RESPECT TO DE TERMINING THE MARKET VALUE OF ELECTRICITY GENERATED BY THE WI NDMILL OF THE ASSESSEE COMPANY FOR THE PURPOSE OF CLAIMING DE DUCTION U/S.80IA OF THE ACT. ON PERUSING THE MATERIALS ON R ECORD AND THE PAPER BOOK FILED BEFORE US, WE DO NOT FIND ANY SUCH ADDITIONAL GROUND RAISED BY THE ASSESSEE BEFORE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS). HOWEVER, IN THE INTEREST OF JUSTICE, WE REMIT THE MATTER BACK TO TH E FILE OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) TO CON SIDER THESE GROUNDS RAISED BY THE ASSESSEE AND DECIDE THE ISSUE IN ACCORDANCE WITH LAW AND MERIT AFTER AFFORDING SU FFICIENT OPPORTUNITY OF BEING HEARD. FOR THE ASSESSMENT YEAR 2012-13: (REVENUES APPEAL) : GROUND NO.1: DEPRECIATION @ 80%: 10. IT APPEARS THAT THE ASSESSEE HAS CLAIMED DEPREC IATION BEFORE THE LEARNED ASSESSING OFFICER @ 15% ON THE W INDMILLS WHICH THE LEARNED ASSESSING OFFICER ALLOWED. BEFORE THE 8 ITA NOS.1982 & 1983 /MDS/2015 & C.O. NO.124/MDS/2015 LEARNED COMMISSIONER OF INCOME TAX (APPEALS), THE L EARNED AUTHORIZED REPRESENTATIVE PLEADED THAT THE ASSESSEE IS ENTITLED TO DEPRECIATION @ 80% ON THE WINDMILL AS P ROVIDED IN APPENDIX 1 TO RULE 5(I) OF THE INCOME TAX RULES, 19 62. AFTER EXAMINING THE ISSUE THE LEARNED COMMISSIONER OF INC OME TAX (APPEALS) ALLOWED THE CLAIM RAISED BY THE LEARN ED AUTHORIZED REPRESENTATIVE BY OBSERVING AS UNDER:- I HAVE GONE THROUGH THE FACTS OF THE CASE AND AS DECIDED IN THE EARLIER GROUNDS OF APPEAL, THE 1 ST YEAR OF COMMISSIONING OF THE WINDMILL IS A.Y.2012-13. SINCE THE APPELLANT COMPANY HAS FILED THE RETURN BEFORE THE DUE DATE FOR FILING OF RETURN OF INCOME, IT IS ENTITLED TO DEPRECIATION AT 80% AS MENTIONED IN III(8)(XIII)(1) OF THE DEPRECIATION SCHEDULE. HOWEVER, SINCE THE USAGE OF THE WINDMILL WAS FOR LESS THAN 180 DAYS THE ASSESSEE COMPANY IS ENTITLED ONLY FOR 50% OF THE REGULAR DEPRECIATION AND 50% OF THE ADDITIONAL DEPRECIATION. THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE DEPRECIATION AT 50% OF THE ELIGIBLE DEPRECIATION. THIS GROUND OF APPEAL IS ALLOWED. 11. NOW, THE REVENUE IS IN APPEAL BEFORE US STATING THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN ALLOWING THE ASSESSEES APPEAL BECAUSE THE ASSESSEE HAS NOT CLAIMED DEPRECIATION BEFORE THE LE ARNED ASSESSING OFFICER @ 80%. AT THE OUTSET, WE DO NOT F IND ANY 9 ITA NOS.1982 & 1983 /MDS/2015 & C.O. NO.124/MDS/2015 MERIT IN THE CONTENTION OF THE REVENUE. THE LEARNE D ASSESSING OFFICER IS DUTY BOUND TO ALLOW DEDUCTION TO THE ASSESSEE AS PER THE PROVISIONS OF THE ACT AND THE R ULES. EVEN IF THE ASSESSEE HAS INADVERTENTLY OMITTED TO A DOPT THE CORRECT RATE OF DEPRECIATION, THE LEARNED ASSESSING OFFICER HAS ALL POWERS TO APPLY THE CORRECT RATE OF DEPRECI ATION FOR GRANTING DEDUCTION. IN THE GIVEN CASE BEFORE US, TH E LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS RIGHTLY DI RECTED THE LEARNED ASSESSING OFFICER TO ADOPT THE RATE PRE SCRIBED UNDER THE ACT FOR GRANTING DEPRECIATION BENEFIT TO THE ASSESSEE. THEREFORE, WE DO NOT FIND IT NECESSARY TO INTERFERE WITH THE ORDER OF THE LEARNED COMMISSIONER OF INCOM E TAX (APPEALS) ON THIS ISSUE. GROUND NO.2:- DETERMINATION OF MARKET VALUE OF THE ELECTRICITY: 12. BEFORE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), THE ASSESSEE HAD FILED AN ADDITIONAL GRO UND REQUESTING FOR COMPUTING THE MARKET VALUE OF THE EL ECTRICITY GENERATED BY THE WINDMILL OF THE ASSESSEE FOR THE P URPOSE OF CLAIMING DEDUCTION UNDER SECTION 80IA OF THE ACT BY RELYING IN 10 ITA NOS.1982 & 1983 /MDS/2015 & C.O. NO.124/MDS/2015 THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2010-11 IN ITA NO.1675/MDS/2014. ACCORDINGLY, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ADMITTING THE ADDITIONAL GROUND DIRECTED THE LEARNED ASSESSING OFFICER TO WORK OUT THE MARKET PR ICE OF THE ELECTRICITY PRODUCED BY THE ASSESSEE AS PER THE EAR LIER ORDER OF THE TRIBUNAL CITED SUPRA. THE REVENUE IS IN APP EAL BEFORE US AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSION ER OF INCOME TAX (APPEALS). WE DO NOT FIND ANY MERIT IN THE APPEAL FILED BY THE REVENUE ON THIS ISSUE BECAUSE T HE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ON LY FOLLOWED THE EARLIER ORDER OF THE TRIBUNAL IN DETER MINING THE RATE OF ELECTRICITY AND DIRECTED THE LEARNED ASSESS ING OFFICER TO COMPUTE DEDUCTION UNDER SECTION 80IA OF THE ACT ACCORDINGLY. HENCE, THIS GROUND RAISED BY THE REVEN UE IS DISMISSED. 13. IN THE RESULT, THE APPEAL OF THE REVENUE FOR TH E ASSESSMENT YEAR 2011-12 IS DISMISSED AND THE CROSS OBJECTION OF THE ASSESSEE IS ALLOWED FOR STATISTICA L PURPOSES 11 ITA NOS.1982 & 1983 /MDS/2015 & C.O. NO.124/MDS/2015 AND THE APPEAL OF THE REVENUE FOR THE ASSESSMENT YE AR 2012-13 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 4 TH MARCH, 2016 SD/- SD/- ( . . . ) ( . ) (N.R.S.GANESAN) ( A.M OHAN ALANKAMONY ) ! # / JUDICIAL MEMBER # / ACCOUNTANT MEMBER ! /CHENNAI, & /DATED 4 TH MARCH, 2016 SOMU *+ ,+ /COPY TO: 1. ASSESSEE 2. ASSESSING OFFICER 3. - () /CIT(A) 4. - /CIT 5. + 1 /DR 6. /GF