Gujarat Industries Power Co. Ltd., Baroda V. The Dy.CIT.,Circle-1(1), Baroda

ITA 20/AHD/2014

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 4599 (ITAT-AHMEDABAD)
• Duration Of Justice: 8 year(s) 3 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: D
• Assessment Year: 2007-2008
• Appeal Filed On: 02-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation
• Section: 11; 143(3); 250; 80IA; 13

Judgement Text

, ‘D’ । IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, AHMEDABAD (Convened through Virtual Court) BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMEBR & SHRI WASEEM AHMED, ACCOUNTANT MEMEBR आयकर अपील सं./I.T.A. Nos. 19 & 20/Ahd/2014 ( Assess ment Ye ars : 2 006-07 & 2007-08) Gu ja rat I n du str ie s Pow er Co. Lt d. P. O. P et ro ch e mica ls, D is t. - Bar od a - 39 13 46 / V s . De pu ty C o mmi ss io ner o f In co me tax Cir cl e- 1( 1), A a yk a r Bh ava n, V ad od ar a - 39 00 07 यी ल सं./ ीआ आर सं./P A N / G IR N o . : A A A C G 7 2 7 7 Q (Appellant) . . (Respondent) अपील र स /Assessee by : Shri Milin Mehta, A.R. र क र स /Revenue by : Sh ri M oh d. Us ma n, CI T D R & Sh ri Pu ru sh ot ta m Ku ma r, Sr. D R स क र D a t e o f H e a r i n g 18/01/2022 ! क र /D a t e o f P r o n o u n c e m e n t 13/04/2022 ORDER PER MAHAVIR PRASAD, JM: Both appeals have been filed at the instance of the assessee against the orders of the Co mmissioner of Inco me Tax (Appeals)-I, Baro da (‘CI T( A) ’ in short) both dated 15.10.2013 arising in the assess ment or ders dated 28.03.2008 & ITA Nos. 19 & 20/Ahd/2014 (Gujarat Industrial Power Co. Ltd. ) - 2 - 17.08.2009; respectively, passed b y the Assessing Officer (AO) under s. 143(3) r.w.s. 250 of the Inco me Tax Act , 1961 (the Act) concerning AYs. 2006-07 & 2007-08. 2. The Ground of appeal raised by assessee for A.Y. 2006-07 reads as under: “ 1 . T h e l e a r n e d C o m m i s s i o n e r o f I n c o m e T a x ( A p p e a l s) e r r e d i n f a c t a n d i n l a w i n c o n f i r m i n g t h e a c t i o n o f A O i n no t a l l o w i n g d e d u c t i o n u / s 8 0 I A o n t h e i n c o m e o f R s . 2 3 , 0 0 , 0 0 , 0 0 0 / - . ” 3. The grounds of appeal raised by assessee for A.Y. 2007-08 read as under: “ 1 . T h e l e a r n e d C o m m i s s i o n e r o f I n c o m e T a x ( A p p e a l s) e r r e d i n f a c t a n d i n l a w i n c o n f i r m i n g t h e a c t i o n o f A O i n no t a l l o w i n g d e d u c t i o n u / s 8 0 I A o n t h e i n c o m e o f R s . 3 9 , 0 0 , 0 0 , 0 0 0 . 2 . T h e l e a r n e d C o m m i s s i o n e r o f I n c o m e T a x ( A p p e a ls ) e r r e d i n f a c t a n d i n l a w i n c o n f i r m i n g t h e a c t i o n o f A O i n no t r e d u c i n g a n a m o u n t o f R s . 1 6 , 0 1 , 0 4 , 7 8 8 f r o m t h e b o o k p r o f i t s u / s . 1 1 5 J B . 3 . T h e l e a r n e d C o m m i s s i o n e r o f I n c o m e T a x ( A p p e a ls ) e r r e d i n f a c t a n d i n l a w i n c o n f i r m i n g t h e a c t i o n o f A O i n no t c o n s i d e r i n g m a t t e r r e l a t i n g t o r e d u c t i o n o f t h e a m ou n t o f R s . 1 6 , 0 1 , 0 4 , 7 8 8 f r o m t h e b o o k p r o f i t s u / s . 1 1 5 J B . ” 4. Issue No.1 relates to disallowance of deduction u nder section 80IA of the Ac t. The lear ned Counsel for the assessee submitted that there is no dispute that the Assessee has satisfied all the conditions for claiming deduction u/s 80IA of the Act. The learned AR fu rther sub mitted that regarding the issue of set off of losses as per section 80IA(5) for computation of income of eligible unit, the issue of "Initial Assess ment Ye ar" is settled ITA Nos. 19 & 20/Ahd/2014 (Gujarat Industrial Power Co. Ltd. ) - 3 - by CB DT Circular No. 1 of 2016 dated 15-02-2016. As per the Circular, the ter m 'initial assessment year' w ould mean the first year opted for by the assessee for claiming deduction u/s 80-IA. As per CBDT Circular, AY 2006-07 would be the Initial Assessmen t Year since for the SLPP unit, the Assessee has clai med the deduction u/s 80IA for the first time in AY 2006-07. Therefor e the require ment of setting off unabsorbed depreciation and losses shall arise fro m AY 20 07-08 i.e. i mmediatel y succeeding the initial assessment year i.e. AY 2006-07. 4.1. Relevant portion of CBDT Circular No. 1/2016 dated 15.02.2016 is extracted below: I n t h e a b o v e s u b - s e c t i o n , w h i c h p r e s c r i b e s t h e m a n ne r o f d e t e r m i n i n g t h e q u a n t u m o f d e d u c t i o n , a r e f e r e n c e ha s b e e n m a d e t o t h e t e r m ' i n i t i a l a s s e s s m e n t y e a r ' . I t h a s b e e n r e p r e s e n t e d t h a t s o m e A s s e s s i n g O f f i c e r s a r e i n t e r p r e t i n g t h e t e r m 'i n i t i a l a s s e s s m e n t y e a r ' a s t h e y e a r i n w h i c h t h e e l i g i b l e b u s i n e s s / m a n u f a c t u r i n g a c t i v i t y h a d c o m m e n c e d a n d a r e c o n s i de r i n g s u c h f i r s t y e a r o f c o m m e n c e m e n t / o p e r a t i o n e t c . i t s e l f a s t h e f i r s t y e a r f o r g r a n t i n g d e d u c t i o n , i g n o r i n g t h e c l e a r m a n d a t e p r o v i d e d u n d e r s u b - s e c t i o n ( 2 ) w h i c h a l l o w s a c h o i c e t o t h e a s s e s se e f o r d e c i d i n g t h e y e a r f r o m w h i c h i t d e s i r e s t o c l a i m d e d u c t i o n ou t o f t h e a p p l i c a b l e s l a b o f f i f t e e n ( o r t w e n t y ) y e a r s . T h e m a t t e r h a s b e e n e x a m i n e d b y t h e B o a r d . I t i s a bu n d a n t l y c l e a r f r o m s u b - s e c t i o n ( 2 ) t h a t a n a s s e s s e e w h o i s e l i g i bl e t o c l a i m d e d u c t i o n u / s 8 0 I A h a s t h e o p t i o n t o c h o o s e t h e i n it i a l / f i r s t y e a r f r o m w h i c h i t m a y d e s i r e t h e c l a i m o f d e d u c t i o n f o r t e n c o n s e c u t i v e y e a r s , o u t o f a s l a b o f f i f t e e n ( o r t w en t y ) y e a r s , a s p r e s c r i b e d u n d e r t h a t s u b - s e c t i o n . I t i s h e r e b y c l ar i f i e d t h a t o n c e s u c h i n i t i a l a s s e s s m e n t y e a r h a s b e e n o p t e d f o r b y t h e a s s e s s e e , h e s h a l l b e e n t i t l e d t o c l a i m d e d u c t i o n u / s 8 0 1 A f o r te n c o n s e c u t i v e y e a r s b e g i n n i n g f r o m t h e y e a r i n r e s p e c t o f w h i c h he h a s e x e r c i s e d s u c h o p t i o n s u b j e c t t o t h e f u l f i l l m e n t o f c o n d i t i o ns p r e s c r i b e d i n t h e s e c t i o n . H e n c e , t h e t e r m ' i n i t i a l a s s e s s m e n t y ea r ' w o u l d m e a n t h e f i r s t y e a r o p t e d f o r b y t h e a s s e s s e e f o r c l a i m in g d e d u c t i o n u / s 8 0 1 A . H o w e v e r , t h e t o t a l n u m b e r o f y e a r s f o r c l a i m in g d e d u c t i o n s h o u l d n o t t r a n s g r e s s t h e p r e s c r i b e d s l a b o f f i f t e en o r t w e n t y ITA Nos. 19 & 20/Ahd/2014 (Gujarat Industrial Power Co. Ltd. ) - 4 - y e a r s , a s t h e c a s e m a y b e a n d t h e p e r i o d o f c l a i m sh o u l d b e a v a i l e d i n c o n t i n u i t y . T h e A s s e s s i n g O f f i c e r s a r e , t h e r e f o r e , d i r e c t e d t o a l l o w d e d u c t i o n u / s 8 0 I A i n a c c o r d a n c e w i t h t h i s c l a r i f i c a t i o n s a t is f i e d t h a t a l l t h e p r e s c r i b e d c o n d i t i o n s a p p l i c a b l e i n a p a r t i c u l a r c as e a r e d u l y s a t i s f i e d . P e n d i n g l i t i g a t i o n o n a l l o w a b i l i t y o f d ed u c t i o n u / s 8 0 I A s h a l l a l s o n o t b e p u r s u e d t o t h e e x t e n t i t r e l a t e s t o i n t e r p r e t i n g ' i n i t i a l a s s e s s m e n t y e a r ' a s m e n t i o n e d i n s u b s e c t i on ( 5 ) o f t h a t s e c t i o n f o r w h i c h t h e S t a n d i n g C o u n s e l s / D . R . s b e s ui t a b l y i n s t r u c t e d . ” 4.2. In reply, the Ld DR appearing for the Revenue ad mitted that the above Circular No.1/2016 issued by the CBDT has put to end all the issues following the judge ment rendered by the High Court of Madras in the case of Vela yuthasa my Spinning Mills. 5. We have given our thoughtful consideration on the materials placed before us the issue is now settled by the Circular No.1/2016 issued by the CBDT that an assessee who is eligible to claim deduction u/s 80IA has the option to choose the initial/first year fro m which it ma y desire the claim of deduction for ten consecutive years , out of a slab of fifteen (or twent y) years , a s prescribed under that sub-section. The Circular further clarified that once such initial assessment year has been opted for by the assessee, he shall be entitled to clai m deduction u/s 801A for ten consecutive years beginning from the year in respect of which he has exercised such option subject to the fulfillment of co nditions prescribed in the section. Hence, t he ter m 'initial assessment year' would mean the first year opte d for b y the assessee for clai ming deduction u/s 80IA. Ho wever, the total nu mber of years for clai ming ITA Nos. 19 & 20/Ahd/2014 (Gujarat Industrial Power Co. Ltd. ) - 5 - deduction should not transgress the prescribed slab of fifteen or twent y years, as the case ma y be and the period of clai m should be availed in continuity. Thus the Assessing Officers are directed to allow deduction u/s 80IA in accordance with this clarification and Standing Counsels/D.R.s are suitably instructed pending litigation on allowability of deduction u/s 80 IA shall also not be pursued to the extent it relates to interpreting 'initial assessment year ' as mentioned in subsection (5) of section 80IA of the Act. 6. Following this Circular the SLP filed by the depart ment was also dis missed against High Court's ruling that loss in year earlier to initial assessment yea r alread y absorbed against profit of other business cannot be notionally brought forward and set off against profits of eligible business as no such mandate is provided in section 80-IA(5) of the IT Act reported in Assistant Co mmissioner of Inco me-tax, Tir upur -Vs- Vela yudhaswa my Spinning Mills (P.) Ltd. reported in [2016] 76 taxmann.co m 176 (SC). Following the same we hereb y reject the Grounds of appeal filed by the Revenue and allow the clai m of deduction u/s.80IA in favour of the assessee. 7. Next issue regarding disallowance of deduction of amount of Rs.16,01,04,788/- from the book profits under s.115JB of the Act. The findings of the CI T( A) is a s follows: 4 . 2 F r o m t h e a b o v e d e c i s i o n o f L d . C I T C A ) a s g i v e n b y h i m v i d e a p p e a l o r d e r d a t e d 2 2 - 0 5 - 2 0 1 2 a n d f r o m t h e f a c t o f t h e c a s e i t c a n b e s e e n t h a t t h e i s s u e i n q u e s t i o n w e r e m a i n l y t h e t a x a b i l i t y o f i n t e r e s t I n c o m e o f R s . 7 1 . 0 1 c r o r e u / s 1 1 5 J B o f t h e I T A c t . T h e A O h a d h e l d t h e e n t i r e a m o u n t o f R s . 7 8 . 0 1 c r o r e w a s a pp e l l a n t ’ s ITA Nos. 19 & 20/Ahd/2014 (Gujarat Industrial Power Co. Ltd. ) - 6 - i n c o m e b o t h a s p e r n o r m a l p r o v i s i o n s a n d a s p e r p r ov i s i o n s o f s e c t i o n 1 1 5 J B o f t h e I T A c t f o r A Y 2 0 0 4 - 0 5 . H o w e v er , t h e L d . C I T ( A ) h a s h e l d t h a t o u t o f i n t e r e s t i n c o m e o f R s . 7 1 . 0 1 c r o r e , o n l y R s . 1 6 . 0 1 c r o r e s h o u l d h a v e b e e n I n c l u d e d i n t he b o o k p r o f i t u / s 1 1 5 3 B a s w e l l a s I n t h e I n c o m e c h a r g e a b l e t o t ax u n d e r n o r m a l p r o v i s i o n o f t h e A c t . T h e L d , C I T ( A ) h a s f u r t h e r d ir e c t e d t h e A O t o t a x d e l a y e d p a y m e n t c h a r g e s ( i . e i n t e r e s t i n c o m e ) of R s . 2 3 c r o r e s i n A Y 2 0 0 6 - 0 7 a n d d e l a y p a y m e n t c h a r g e s o f R s . 3 9 . 0 9 c r o r e s f o r A Y 2 0 0 7 - 0 8 u n d e r t h e n o r m a l p r o v i s i o n s o f t h e A c t be s i d e s b e i n g i n c l u d e d i n b o o k p r o f i t f o r t h e p u r p o s e o f s e c t i o n 1 1 5 J B o f t h e A c t . A c c o r d i n g l y , t h e A O h a s p a s s e d t h e ‘ O r d e r G i v i n g E ff e c t t o A p p e a l O r d e r o f C I T ( A )' d a t e d 2 7 - 0 7 - 2 0 1 2 . A s p e r d i r e c t i o n g i v e n b y L d . C I T ( A ) v i d e h i s o r d e r N o . C A B - I / 2 6 4 / 0 8 - 0 9 d a t e d 1 2 -0 8 - 2 0 1 0 , t h e A O h a s a s s e s s e d R s . 3 9 c r o r e i n A Y 2 0 0 7 - 0 8 a n d h a s gi v e n t h e c r e d i t o f T D S o f R s . 8 , 0 1 , 3 2 , 0 0 0 / - t o t h e a p p e l l a n t f o r s u c h i n t e r e s t i n c o m e . I n m y o p i n i o n t h e A O i s r e q u i r e d t o g i v e ef f e c t t o t h e a b o v e o r d e r o f C 1 T ( A ) e x a c t l y a s p e r d i r e c t i o n a n d t h e A O c a n n o t t r a v e l b e y o n d t h a t . T h e A O i s r e q u i r e d t o c o n f i n e t o t h e d i r e c t i o n o f L d . C I T ( A ) w h i l e g i v i n g e f f e c t t o h i s o r d e r . O n p e r u s a l o f a b o v e o r d e r o f L d , C I T ( A ) , i t i s s e e n t h a t n o w h e r e I n s u ch o r d e r t h e I s s u e r e g a r d i n g a l l o w a b i l i t y o r d i s a l l o w a b i i i t y o f d e d u c t i o n u / s 8 0 I A o f t h e A c t f o r A Y 2 0 0 7 - 0 8 h a s b e e n d i s c u s s e d. O b v i o u s l y , t h e a p p e l l a n t h a s n o t r a i s e d a n y g r o u n d o f a p p e a l be f o r e t h e L d . C I T ( A ) a t t h e t i m e o f a p p e l l a t e p r o c e e d i n g s i n r e s pe c t o f a b o v e q u a n t u m a d d i t i o n f o r A Y 2 0 0 4 - 0 5 w i t h r e g a r d t o i t s c l a i m o f d e d u c t i o n u / s 8 0 I A o f t h e A c t f o r A Y 2 0 0 6 - 0 7 a n d 2 00 7 - 0 8 . R a t h e r t h e a p p e l l a n t h a s t a k e n d i f f e r e n t s t a n d b y wa y o f d i s c l o s i n g t h e a b o v e e n t i r e I n c o m e o f R s . 7 1 . 0 1 c r o r e i n t h e r ev i s e d r e t u r n f o r A Y 2 0 0 4 - 0 5 . T h u s , i t c a n b e s a i d t h a t i t w a s n o t t h e s t a n d o f a p p e l l a n t t h a t a b o v e i n t e r e s t i n c o m e o f R s . 3 9 c r o r es b e t a x e d f o r A Y 2 0 0 7 - 0 8 . T h u s , a l l o w a b i l i t y o r d i s a l l o w a b i l i t y o f d e d u c t i o n u / s 8 0 I A h a s n e v e r b e e n a s u b j e c t m a t t e r o f a p p e l l a t e pr o c e e d i n g s o f A Y 2 0 0 4 - 0 5 i n r e s p e c t o f w h i c h a b o v e a p p e a l o r d e r da t e d 2 7 - 0 7 - 2 0 1 2 h a s b e e n p a s s e d b y t h e L d . C I T ( A ) . T h u s , i n my o p i n i o n t h e A O h a s c o r r e c t l y g i v e n e f f e c t i n h i s ‘ O r d e r G i v i n g E f f e c t t o A p p e a l O r d e r o f C I T ( A ) ’ d a t e d 2 7 - 0 7 - 2 0 1 2 f o r t h e y e a r u n d e r c o n s i d e r a t i o n . C o n s i d e r i n g a l l t h e s e f a c t s , t h e g ro u n d o f a p p e a l o f t h e a p p e l l a n t i s h e r e b y d i s m i s s e d . ” 8. B y a co mmon order passed by the Tribunal in ITA No. 3003/Ahd/2010 & ors. relating to A.Ys. 2003-04 & ors., dated 28.02.2022, co-ordinate Bench of this Tribunal allowed the clai m of deduction under s. 80IA of the Act in favour of the assessee for earlier assessment yea rs. Considering above, this issue is also re mitting back to the AO for verification and ITA Nos. 19 & 20/Ahd/2014 (Gujarat Industrial Power Co. Ltd. ) - 7 - allowed the necessar y deductions in accordance with the provisions of law. 9. In the result, both appeals filed by t he assessee are partly allow ed. Sd/- Sd/- ( WASEEM AHMED) (MAHAVIR PRASAD) ACC OUNTANT MEMB ER JUDICIAL MEMBER Ahmedabad: Dated 13/04/2022 True Copy S.K.SINHA ेश ! " #े" / Copy of Order Forwarded to:- ". र / Revenue 2. आ दक / Assessee %. सं&ं'( आयकर आय ) / Concerned CIT 4. आयकर आय ) - अपील / CIT (A) ,. - . /ीय 01 1 '(2 आयकर अपील य अ'(कर!2 अ34द & द / DR, ITAT, Ahmedabad 5. / 67 8 ल / Guard file. By order/आद श स 2 उप/स3 यक पं ीक र आयकर अपील य अ'(कर!2 अ34द & द । This Order pronounced in Open Court on 13/04/2022