ITO, Ward 1(3), Pune V. Navalakha Translines, Pune

ITA 2044/PUN/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 8452 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 23-04-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 22-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K MODI
• Assessee Lawyers: V L JAIN
• Keywords: Business income; Depreciation

Judgement Text

INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 2044/PN/2012 (ASSESSMENT YEAR : 2007-08) ITO, WARD-1(3), PUNE .. APPELLANT VS. NAVALAKHA TRANSLINES, 50A, HADAPSAR, INDUSTRIAL ESTATE, HADAPSAR, PUNE 13 PAN NO.AABFN2783J .. RESPONDENT ASSESSEE BY : SHRI V.L. JAIN DEPARTMENT BY : A.K. MODI DATE OF HEARING : 08-08-2014 DATE OF PRONOUNCEMENT : 31-10-2014 ORDER PER R.S. PADVEKAR, JM : IN THIS APPEAL THE REVENUE HAS CHALLENGED THE IMPUGNED ORDER OF THE LD.CIT(A)-I, PUNE DATED 30-03 -2012 FOR THE A.Y. 2007-08. THE REVENUE HAS TAKEN MULTIP LE GROUNDS BUT FOLLOWING ARE THE EFFECTIVE GROUNDS : 1. THE ORDER OF THE LD.CIT(A) IS CONTRARY TO LAW A ND TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LD.CIT(A) GROSSLY ERRED IN DELETING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER OF THE ASSESSEES EXCESS CLAIM OF DEDUCTION OF RS.35,80,83 1/- (RS.1,16,05,440 RS.80,24,609/- U/S.80IA(D) INSTEA D OF THE CONFIRMING THE SAID DISALLOWANCE. 2. FACTS WHICH ARE REVEALED FROM THE RECORD AS UNDE R. THE ASSESSEE IS ENGAGED IN THE TRANSPORTATION OF GA SES, CHEMICALS AND ALSO HAS SET UP THE WINDMILLS FOR GEN ERATION OF ELECTRICITY. IT IS STATED THAT THE ASSESSEE HAS IN ALL SET 2 UP 8 WINDMILLS WHICH ARE SITUATED AT DIFFERENT LOCA TIONS. OUT OF THE 8 WINDMILLS, ASSESSEE CLAIMED THE DEDUCT ION U/S.80IA(4) ON THE 3 WINDMILLS WHICH WAS TO THE EXT ENT OF RS.1,16,05,440/-. AS OBSERVED BY THE ASSESSING OFF ICER, THE ASSESSEE HAS FILED AUDIT REPORT AS REQUIRED U/S .80IA(7) OF THE ACT AND ALSO HAS FILED THE PROFIT AND LOSS A CCOUNT WHICH WAS A CONSOLIDATED ONE. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS THE ASSESSEE ALSO FILED THE PROFIT AND LOSS ACCOUNT OF THE WINDMILL AND HAS DECLARED T HE NET SURPLUS OF RS.5,44,11,225/- BEFORE DEPRECIATION. T HE DEPRECIATION ON THE WINDMILL AS PER INCOME-TAX ACT WAS WORKED OUT AT RS.4,63,86,616/-. THE ASSESSING OFFI CER HAS RESERVATION IN GIVING DEDUCTION TO THE ASSESSEE U/S .80IA(4) OF THE INCOME TAX ACT TO THE EXTENT AS CLAIMED OF RS.1,16,05,440/-. IN HIS OPINION, NET SURPLUS FROM THE POWER GENERATION BUSINESS OF THE 8 WINDMILLS HAS TO BE CONSIDERED AFTER DEDUCTING THE DEPRECIATION ON ALL THE WINDMILLS AS PER THE I.T. ACT, THEN THE DEDUCTION S HOULD BE ALLOWED. HE ACCORDINGLY WORKED OUT THE ALLOWABLE DEDUCTION U/S.80IA(4) AS UNDER : NET SURPLUS ON POWER GENERATION BUSINESS : 5,44,11, 225/- LESS : DEPRECIATION ON WINDMILL AS PER I. T. ACT. 4,63,86,616/- ----------------- DEDUCTION U/S.80IA(4) 80,42,609/- ----------------- HE ACCORDINGLY RESTRICTED THE DEDUCTION U/S.80IA(4) TO RS.80,24,609/- AS AGAINST RS.1,16,05,440/- CLAIMED BY THE ASSESSEE. 3 3. THE ASSESSEE CHALLENGED THE ACTION OF THE ASSESS ING OFFICER BEFORE THE LD.CIT(A) AND LD.CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE. NOW THE REVENUE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTI ES AND PERUSED THE RECORD. THE SHORT CONTROVERSY IS W HETHER EACH WINDMILL IS TO BE CONSIDERED AS SEPARATE AND INDIVIDUAL UNIT FOR THE PURPOSE OF COMPUTING DEDUCT ION U/S.80IA(4) OR ALL THE WINDMILLS AS A BUSINESS HAS TO BE CONSIDERED AS A ONE AND AFTER CONSIDERING THEIR PRO FIT AND LOSSES THE DEDUCTION IS TO BE WORKED OUT. 4.1 IN THE CASE OF CIT VS. DEWAN KRAFT SYSTEM PVT. LTD., REPORTED IN 297 ITR 305 (DELHI) THE HONBLE HIGH CO URT OF DELHI HAS INTERPRETED THE PROVISIONS OF SECTION 80I A(7) AND HELD AS UNDER : 12. IT IS AN ADMITTED FACT THAT KALAMB UNIT IS THE ONLY UNIT OF THE ASSESSED WHICH IS ELIGIBLE FOR BENEFITS AVAILABLE UNDER SECTION 80IA OF THE ACT DURING THE YEARS UNDE R CONSIDERATION, WHEREAS THE OTHER UNITS SITUATED AT DELHI AND NOIDA ARE NOT ELIGIBLE FOR THIS BENEFIT. IT IS ALSO NOT IN DISPUTE THAT PROFITS DERIVED BY THE ASSESSED FROM K ALAMB UNIT AMOUNTED TO RS. 20,92,221/- WHEREAS THE OTHER UNITS AT DELHI AND NOIDA RESULTED IN THE LOSS OF RS. 9,11 ,270/-. PROVISION OF SUB-SECTION 7 OF SECTION 80IA OF THE A CT WHICH IS RELEVANT IN THIS CASE, IS REPRODUCED BELOW : (7) NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHE R PROVISION OF THIS ACT, THE PROFITS AND GAINS OF AN ELIGIBLE BUSINESS TO WHICH THE PROVISIONS OF SUB-SECTION (1) APPLY SHALL, FOR THE PURPOSE OF DETERMINING THE QUANTUM O F DEDUCTION UNDER SUB-SECTION (5) FOR THE ASSESSMENT YEAR IMMEDIATELY SUCCEEDING THE INITIAL ASSESSMENT YEAR OR ANY SUBSEQUENT ASSESSMENT YEAR, BE COMPUTED AS IF SUCH ELIGIBLE BUSINESS WERE THE ONLY SOURCE OF INCOME OF THE ASSESSED DURING THE PREVIOUS YEAR RELEVANT TO THE I NITIAL ASSESSMENT YEAR AND TO EVERY SUBSEQUENT ASSESSMENT YEAR UP TO AND INCLUDING THE ASSESSMENT YEAR FOR WH ICH THE DETERMINATION IS TO BE MADE. 4 13. PERUSAL OF THE ABOVE PROVISION SHOWS THAT IT I S A DISTINCT AND SEPARATE DEEMING PROVISION WHICH LAYS DOWN THE SPECIAL METHOD OF COMPUTING THE PROFITS AND GAI NS ENTITLED TO DEDUCTION UNDER SECTION 80IA OF THE ACT . MOREOVER, THIS PROVISION IS OF OVERRIDING NATURE PR OVIDING SPECIFICALLY THAT DURING EACH OF THE ASSESSMENT YEA RS IN THE TAX HOLIDAY, PERIOD IN WHICH THE ASSESSED IS EN TITLED TO DEDUCTION UNDER SECTION 80IA OF THE ACT, THIS PROVI SION WILL BE APPLIED AS IF THE INDUSTRIAL UNIT IS AN IND EPENDENT UNIT AND IS THE ONE AND ONLY SOURCE OF INCOME POSSE SSED BY THE ASSESSED. 14. IT IS CLEAR THAT WHILE COMPUTING DEDUCTION UND ER SECTION 80IA OF THE INCOME TAX ACT, 1961, THE PROFI TS AND GAINS OF KALAMB UNIT FOR THE PURPOSE OF DETERMINING THE QUANTUM OF DEDUCTION UNDER SECTION 80IA(5) OF THE A CT IS TO BE COMPUTED IF SUCH ELIGIBLE BUSINESS OF THE SAI D UNIT IS THE ONLY SOURCE OF INCOME OF THE ASSESSED. THE ASSE SSING OFFICER MIXED THE PROFITS OF THE KALAMB UNIT WITH T HE PROFITS OF UNITS AT DELHI AND NOIDA AND, THUS, HE ERRONEOUSLY RESTRICTED THE DEDUCTION TO THE EXTENT OF BUSINESS INCOME AND THIS WAS DONE BY HIM IN TOTAL DISREGARD OF THE PROVISIONS OF SUB-SECTION 7 OF SEC TION 80IA OF THE ACT AS MENTIONED ABOVE. 15. THUS, THE KALAMB UNIT BEING THE ONLY UNIT OF T HE ASSESSED ELIGIBLE FOR DEDUCTION UNDER SECTION 80IA OF THE ACT IS TO BE TREATED AS AN INDEPENDENT UNIT AND THE SAME IS TO BE TREATED AS THE ONLY SOURCE OF INCOME FOR A SSESSED FOR THE PURPOSE OF COMPUTING DEDUCTION UNDER SECTIO N 80IA OF THE ACT. THE DEDUCTION CLAIMED BY THE ASSES SED UNDER SECTION 80IA OF THE ACT, THUS, IS IN ACCORDAN CE WITH THE SAID PROVISIONS AND AS SUCH WE FIND THAT THERE IS NO INFIRMITY IN THE IMPUGNED ORDER PASSED BY THE INCOM E TAX APPELLATE TRIBUNAL. 4.2 IT IS TRUE THAT IN THE CASE OF DEWAN KRAFT SYST EM PVT. LTD., (SUPRA) THERE WAS ONLY ONE ELIGIBLE UNIT BUT THE CRUX OF THE MATTER IS WHETHER ALL THE UNITS ARE TO BE CO NSIDERED FOR COMPUTING THE DEDUCTION U/S.80IA(4) OR EACH UNI T IS TO BE CONSIDERED INDEPENDENTLY. IN THE PRESENT CASE, THERE IS NO DISPUTE THAT ASSESSEE HAS CLAIMED DEDUCTION ONLY ON THE 3 WINDMILLS AND NOT ON ALL THE 8 WINDMILLS. NOW TH E CONSISTENT VIEW HAS BEEN TAKEN BY THE OTHER COORDIN ATE BENCHES THAT SUB-SECTION (5) OF SECTION 80IA IS A N ON- OBSTANE CLAUSE AND THE PROFITS AND GAINS OF ANY ELI GIBLE BUSINESS IS TO BE COMPUTED AS IF SUCH ELIGIBLE BUSI NESS IS ONLY SOURCE OF INCOME OF THE ASSESSEE. EACH WINDMI LL IS A SEPARATE BUSINESS OF THE ASSESSEE AND MERELY BECAUS E THE 5 ASSESSEE HAS SET UP 8 WINDMILLS FOR GENERATION OF T HE ELECTRICITY, ALL THE 8 WINDMILLS CANNOT BE TREATED AS ONE BUSINESS FOR THE PURPOSE OF SECTION 80IA(5) OF THE ACT. IN OUR OPINION, NO INTERFERENCE IS CALLED FOR IN THE O RDER OF THE LD.CIT(A). ACCORDINGLY, SAME IS CONFIRMED AND THE GROUNDS TAKEN BY THE REVENUE ARE DISMISSED. 5. IN THE RESULT, REVENUES APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 31-10-2014. SD/- SD/- (R.K. PANDA) (R.S. PADVEK AR) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE DATED: 31 ST OCTOBER, 2014 SATISH COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. CIT(A)-I, PUNE 4. CIT-I, PUNE 5. THE D.R, B PUNE BENCH 6. GUARD FILE BY ORDER // TRUE COPY // ASSISTANT REGISTRAR, ITAT, PUNE BENCHES, PUNE