Dy. CIT, Kolhapur V. M/s PREETAM ENTERPRISES, Kolhapur

ITA 2293/PUN/2012

• Counselvise Citation: 229324514 RSA 2012
• Duration Of Justice: 1 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 21-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K MODI
• Keywords: Depreciation; Unabsorbed depreciation
• Section: 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NOS.2293 TO 2295/PN/2012 (ASST. YEARS: 2007-08 TO 2009-10) ASST. CIT, CIRCLE 1, KOLHAPUR APPELLANT VS. M/S. PREETAM ENTERPRISES 1325/31, SHIVAJI UDYAMNAGAR, KOLHAPUR. PAN:AACFP2436P RESPONDENT DEPARTMENT BY : SHRI A.K. MODI ASSESSEE BY : SHRI NIKHIL PATHAK DATE OF HEARING : 27.11.2013 DATE OF PRONOUNCEMENT : 29.11.2013 ORDER PER SHAILENDRA KUMAR YADAV, JM: ALL THESE APPEALS FILED BY REVENUE PERTAINS TO SAM E ASSESSEE ON SAME ISSUES, THESE ARE BEING DISPOSED OFF BY COM MON ORDER FOR THE SAKE OF CONVENIENCE. 2. IN ITA NO.2293/PN/2012, THE REVENUE HAS TAKEN TH E FOLLOWING GROUNDS IN A.Y.2007-08. 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LEARNED CIT(APPEALS) WAS JUSTIFIED IN HOLDING THAT IN COMPUTATION OF DEDUCTION U/S 80IA(4)(A), TH E UNABSORBED DEPRECIATION AND BROUGHT FORWARD LOSSES OF EARLIER YEARS ARE NOT REQUIRED TO BE SET OFF BEFORE DETERMINING THE ELIGIBLE PROFITS? 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LEARNED CIT(APPEALS) WAS JUSTIFIED IN HOLDING THAT IN TERMS OF SECTION 80IA(5) OF THE I.T. ACT, 1 961 THE 'INITIAL YEAR' WOULD BE THE YEAR FROM WHICH THE ASS ESSEE CHOOSE THE CLAIM OF DEDUCTION ALLOWABLE U/S 80IA(4) (IV)(A)? 2 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LEARNED CIT(APPEALS) ERRED IN IGNOR ING THAT ON PARTING OF POSSESSION OF THE MACHINERY COUPLED WITH FREEDOM TO THE VENDOR FOR USAGE OF THE MACHINERY IN HIS BUS INESS, THE ASSESSEE CEASED TO HAVE BENEFICIAL OWNERSHIP OF THE MACHINERY IN TERMS OF SECTION 32 OF THE I.T. ACT, 1 961. 4. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT (APPEALS) WAS JUSTIFIED IN ALLOWING THE ASSESSEE'S APPEAL ON THE CLAIM OF DEPRECIATION OF MACHINERY GIVEN TO VENDORS? 3. FIRST ISSUE IS WITH REGARD TO CLAIM OF ASSESSEE MADE U/S.80IA(4)(A) OF INCOME GENERATED FROM WIND MILL C OMMON IN ALL THREE YEARS UNDER CONSIDERATION. CIT(A) HAS ALLOWE D THIS ISSUE BY FOLLOWING DECISION OF ITAT, PUNE BENCH A IN ASSES SEES OWN CASE IN ITA NOS.544, 545 AND 613/PN/2009, DATED 29.04.20 11 FOR A.Y. 2004-05, 2005-06 AND 2006-07, WHEREIN, TRIBUNAL HAS DECIDED THE ISSUE IN FAVOUR OF ASSESSEE BY OBSERVING AS UND ER: 2.1 WE ALSO FIND THAT IN THE CASE OF VELAYUDHASW AMY SPINNING MILLS (P) LTD., VS. ACIT (2010) 231 CTR (M AD) 368, HONBLE MADRAS HIGH COURT HAS HELD THAT LOSSES AND DEPRECIATION OF THE YEARS EARLIER TO THE INITIAL AS SESSMENT YEAR WHICH HAVE ALREADY BEEN ABSORBED AGAINST THE PROFIT S OF OTHER BUSINESS CANNOT BE NOTIONALLY BROUGHT FORWARD AND S ET OFF AGAINST THE PROFITS OF THE ELIGIBLE BUSINESS FOR CO MPUTING THE DEDUCTION UNDER SECTION 80IA. FOLLOWING THIS JUDGM ENT OF HONBLE MADRAS HIGH COURT, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE. THE ASSESSEE IS ENTITLED TO CLAIM FO R DEDUCTION U/S. 80IA(4)(IV)(A) OF THE ACT. 3.1 FACTS BEING SIMILAR, SO FOLLOWING THE SAME REAS ONING, WE ARE NOT INCLINED TO INTERFERE IN THE FINDING OF CIT(A) WHO HAS ALLOWED THE CLAIM OF ASSESSEE OF DEDUCTION U/S. 80IA(4)(A) BY OBSERVING THAT IN COMPUTATION OF DEDUCTION U/S.80IA(4)(A), TH E UNABSORBED DEPRECIATION AND BROUGHT FORWARD LOSSES OF EARLIER YEARS ARE NOT REQUIRED TO BE SET OFF BEFORE DETERMINING ELIGIBLE PROFIT. WE UPHOLD THE SAME IN ALL THESE YEARS. 4. COMING TO THE ISSUE OF DEPRECIATION ON MACHINERY GIVEN TO VENDOR, ASSESSING OFFICER HAS DISALLOWED THE DEPREC IATION OF 3 MACHINERY WITH VENDORS IN APPEAL, WHICH HAS BEEN AL LOWED BY CIT(A) BY FOLLOWING DECISION OF ITAT, PUNE BENCH A IN ITA NOS.544, 545 AND 613/PN/2009, DATED 29.04.2011 IN A SSESSEES OWN CASE FOR A.Y. 2004-05, 2005-06 AND 2006-07 ALLO WING THE CLAIM AFTER DEPRECIATION OF MACHINERY GIVEN TO THE VENDOR BY OBSERVING AS UNDER: 3. NEXT ISSUE IS WITH REGARD TO ENTITLEMENT FOR D EPRECIATION ON MACHINERY USED IN JOB WORK DONE BY ASSESSEES VE NDORS. THIS ISSUE HAS BEEN DEALT IN ITA NO.1237 AND 1238/P N/2008 FOR A.Y. 2004-05 AND 2005-06 WHEREIN FOLLOWING THE DECISION IN THE CASE OF A SISTER CONCERN THIS ISSUE HAS BEEN DISCUSSED AND DECIDED AS UNDER PARA 11 AND 12. . . 3.1 NOTHING CONTRARY IS BROUGHT TO OUR NOTICE AND, THEREFORE, FOLLOWING THE ABOVE DECISION, THIS ISSUE REGARDING DEPRECIATION ON MACHINERY USED IN JOB WORK DONE BY THE ASSESSEES VENDORS IS DECIDED IN FAVOUR OF THE ASSE SSEE. 4.1 NOTHING CONTRARY WAS BROUGHT TO OUR KNOWLEDGE. FACTS BEING SIMILAR, SO FOLLOWING THE SAME REASONING, WE HOLD T HAT CIT(A) WAS JUSTIFIED IN ALLOWING THE DEPRECIATION ON MACHINERY GIVEN TO THE VENDOR FOR THE YEARS UNDER CONSIDERATION. WE UPHOL D THE SAME IN ALL THESE YEARS. 5. IN THE RESULT, ALL THREE APPEALS FILED BY THE RE VENUE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 29 TH DAY OF NOVEMBER, 2013. SD/- SD/- (G.S. PANNU) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED 29 TH NOVEMBER, 2013 GCVSR 4 COPY TO:- 1) DEPARTMENT 2) ASSESSEE 3) THE CIT(A), KOLHAPUR 4) THE CIT, KOLHAPUR 5) THE DR, B BENCH, I.T.A.T., PUNE 6) GUARD FILE //TRUE COPY// BY ORDER SENIOR PRIVATE SECRETARY ITAT PUNE BENCHES, PUNE