Dr.Punithavathy Kannan, CHENNAI V. DCIT, Trichy

ITA 2085/CHNY/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7433 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-03-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 19-12-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Depreciation; Additional depreciation; Difference of opinion; Change of opinion

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI BEFORE DR. O.K.NARAYANAN, VICE-PRESIDENT AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ITA NO. 2084(MDS)/2011 ASSESSMENT YEAR: 2006-07 DR. PUNITHAVATHY KANNAN, THE DEPUTY COMMISSIONER L/H OF LATE R. KANNAN VS. OF INCOME-TAX , K.P.HOSPITAL, NO.96, CIRCLE-II, KOVAI ROAD, KARUR. TRICHY. PAN AAEPK 1919 K (APPELLANT) (RESPONDENT) ITA NO. 2085(MDS)/2011 ASSESSMENT YEAR: 2006-07 DR. PUNITHAVATHY KANNAN, THE DEPUTY COMMISSIONER K.P.HOSPITAL, VS. OF INCOME-TAX, NO.96, KOVAI ROAD, CIRCLE-II, KARUR. TRICHY. PAN AAEPK 9325 D (APPELLANT) (RESPONDENT) APPELLANTS BY : SHRI SAROJ KUMAR PARIDA, ADVOCATE RESPONDENT BY : SHRI SHAJI P. JACOB, IRS, AD DL. COMMISSIONER OF INCOME-TAX DATE OF HEARING : 1 ST MARCH, 2012 DATE OF PRONOUNCEMENT : 1 ST MARCH, 2012 ITA 2084 & 2085/11 :- 2 -: O R D E R PER DR.O.K.NARAYANAN, VICE-PRESIDENT: THESE APPEALS ARE FILED BY TWO ASSESSEES. THE C OMMON ASSESSMENT YEAR IS 2006-07. THE APPEALS ARE DIRECT ED AGAINST THE ORDERS OF THE COMMISSIONER OF INCOME-TAX(APPEALS) A T TIRUCHIRAPALLI DATED13.09.2011 AND ARISE OUT OF THE ASSESSMENTS CO MPLETED UNDER SEC.143(3) READ WITH SEC.147 OF THE INCOME-TAX ACT, 1961. 2. IT IS STATED THAT THE ASSESSEES ARE CARRYING O N THE BUSINESS OF EXPORT OF TEXTILES. THE ASSESSEES ALSO ESTABLIS HED A WINDMILL. IN COMPUTING THE TOTAL INCOME, THEY ALSO CLAIMED ADDIT IONAL DEPRECIATION ON WINDMILL. IN THE ORIGINAL ASSESSME NTS COMPLETED UNDER SEC.143(3), THE CLAIM WAS ALLOWED. THE ASSES SMENTS WERE TAKEN IN APPEALS ON OTHER GROUNDS. SUBSTANTIAL REL IEF WAS GRANTED TO THE ASSESSEES. 3. WHILE THE MATTER WAS RESTING SO, THE ASSESSING O FFICER OBSERVED THAT THE ASSESSEES WERE NOT IN FACT ENTITL ED FOR THE ADDITIONAL DEPRECIATION CLAIM UNDER SEC.32(1)(IIA). THE ASSESSING OFFICER FOUND THAT THE ADDITIONAL DEPRECIATION IS A VAILABLE TO THE ASSESSEE ONLY IF THE ASSESSEE IS ENGAGED IN THE BUS INESS OF ITA 2084 & 2085/11 :- 3 -: MANUFACTURE OR PRODUCTION OF ANY ARTICLE OR THING. THE ASSESSING OFFICER ALSO OBSERVED THAT GENERATION OF ELECTRICIT Y DOES NOT AMOUNT TO MANUFACTURING OR PRODUCING OF ANY ARTICLE OR THI NG. 4. ACCORDINGLY, NOTICES WERE ISSUED UNDER SEC.148. THE ASSESSEES FILED RETURNS UNDER PROTEST. THE INCOME E SCAPING ASSESSMENTS WERE COMPLETED THEREAFTER, WHEREIN ADDI TIONAL DEPRECIATION ALLOWANCE EARLIER GRANTED WAS WITHDRAW N BY THE ASSESSING AUTHORITY. IN FIRST APPEALS, THE ORDERS WERE UPHELD. THE ASSESSEES ARE AGGRIEVED AND, THEREFORE, THE SECOND APPEALS BEFORE US. 5. TWO COMMON GROUNDS HAVE BEEN RAISED IN THESE APP EALS BEFORE US. THE FIRST COMMON GROUND IS THAT REOPENI NG OF THE ASSESSMENT IS BAD IN LAW. IT IS THE CASE OF THE AS SESSEES THAT THE REOPENING WAS MADE ONLY ON THE BASIS OF A CHANGE OF OPINION. 6. WE CONSIDERED THIS ISSUE. THE REOPENING WAS MAD E WITHIN THE PERIOD OF FOUR YEARS FROM THE END OF THE ASSESS MENT YEAR. IT IS NOT POSSIBLE TO HOLD THAT REASSESSMENTS WERE INITIA TED ON THE GROUND OF ANY CHANGE OF OPINION. IT WAS ON FINDING OF A P ARTICULAR FACT, WHICH DISABLED THE ASSESSEES TO CLAIM A BENEFIT, THAT THE ASSESSING AUTHORITY HAD ISSUED NOTICES UNDER SEC.148. IN THE SE CIRCUMSTANCES, ITA 2084 & 2085/11 :- 4 -: WE HOLD THAT THE PLEA AGAINST REOPENING OF ASSESSME NTS IS NOT SUSTAINABLE IN LAW. 7. THE NEXT GROUND OF APPEAL IS THAT THE COMMISSION ER OF INCOME-TAX(APPEALS) HAS ERRED IN CONFIRMING THE DIS ALLOWANCE OF ADDITIONAL DEPRECIATION ON WINDMILLS. THE LAW ON T HE SUBJECT IS VERY CLEAR. AN ASSESSEE ENGAGED IN THE BUSINESS OF MANU FACTURE OR PRODUCTION OF ANY ARTICLE OR THING ALONE IS ENTITLE D FOR ADDITIONAL DEPRECIATION. THE BUSINESS CARRIED ON BY THE ASSE SSEES IS THAT OF EXPORT OF TEXTILES. EXPORT OF TEXTILES DOES NOT CO ME UNDER THE PURVIEW OF MANUFACTURE OR PRODUCTION. AS ALREADY D ETAILED BY THE ASSESSING OFFICER, GENERATION OF ELECTRICITY ALSO D OES NOT COME UNDER THE CATEGORY OF MANUFACTURE OR PRODUCTION OF ANY AR TICLE OR THING. 8. THE ASSESSEES HAVE RELIED ON THE DECISIONS OF TH E HONBLE MADRAS HIGH COURT IN THE CASES OF CIT, MADURAI VS. VTM LTD. AND CIT, MADURAI VS. M/S. HI TECH ARAI LTD. TO SUPPORT THEIR ARGUMENTS. BUT IN THOSE CASES, THE FACTS ARE DIFFERENT. THE A SSESSEES IN THOSE CASES WERE ALREADY CARRYING ON THE BUSINESS OF MANU FACTURING OF OIL ETC. AND IT WAS IN ADDITION TO THAT MANUFACTURING B USINESS THAT THEY HAD STARTED THE BUSINESS OF WINDMILL GENERATION OF ELECTRICITY. THEREFORE, THEY HAVE SATISFIED THE CONDITIONS STIPU LATED IN THE ITA 2084 & 2085/11 :- 5 -: STATUTE. AS LAW STOOD FOR THE RELEVANT TIME, AN A SSESSEE HAS TO QUALIFY AS A MANUFACTURER SO AS TO CLAIM THE BENEFI T OF ADDITIONAL DEPRECIATION. THE ASSESSEES ARE NOT QUALIFIED SO. THEREFORE, IT IS APT ON THE PART OF THE LOWER AUTHORITIES TO DECIDE THAT THE ASSESSEES ARE NOT ENTITLED FOR ADDITIONAL DEPRECIATION. THE APPEALS FILED BY THE ASSESSEES ARE LIABLE TO BE DISMISSED. ORDERS PRONOUNCED IN THE OPEN COURT AT THE TIME O F HEARING ON THURSDAY, THE 1 ST OF MARCH, 2012 AT CHENNAI. SD/- SD/- (CHALLA NAGENDRA PRASAD) (DR. O.K.NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED THE 1 ST MARCH, 2012. MPO* COPY TO: (1) PETITIONE R (2) RESPONDENT (3) CIT (4) CIT(A) (5) D.R. (6) G.F.