DCIT, Coimbatore V. Suguna Automobiles, Coimbatore

ITA 2310/CHNY/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8019 (ITAT-CHENNAI)
• Duration Of Justice: 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2016
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 22-12-2015
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: T RAGHUNATHAN
• Keywords: Depreciation

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI , . ! ' , # '$ BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER . /ITA NO. 2310/MDS/2015 & C.O.NO.30/MDS/2016 / ASSESSMENT YEAR : 2012 -13 THE DEPUTY COMMISSIONER OF INCOME-TAX, NON-CORPORATE CIRCLE-I, COIMBATORE 641 018. ( /APPELLANT) V. M/S. SUGUNA AUTOMOBILES, 4, MUNUSAMY GARDEN ROAD, AVINASHI ROAD, COIMBATORE 641 018. PAN AAHFS8302E RESPONDENT/CROSS-OBJECTOR) / APPELLANT BY : SHRI A.V.SREEKANTH, JCIT / RESPONDENT BY : SHRI T. RAGHUNATHAN, CA / DATE OF HEARING : 18.02.2016 !' / DATE OF PRONOUNCEMENT : 18.02.2016 % / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THE APPEAL BY THE REVENUE AND THE CROSS OBJECTIO N BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER - - ITA 2310/15 & CO 30/16 2 OF INCOME-TAX(APPEALS) DATED 21.9.2015 FOR THE ASSE SSMENT YEAR 2012-13. 2. THE GROUND RAISED BY THE REVENUE IS THAT THE CIT(APPEALS) HAS ERRED IN LAW IN ALLOWING THE CLAIM OF DEDUCTION U/S.80IA OF THE ACT ON THE WIND MILLS. 3. THE FACTS OF THE CASE ARE THAT DURING THE ASSESS MENT PROCEEDINGS, THE AO EXAMINED THE DETAILS SUBMITTED BY THE ASSESSEE WITH REGARD TO THE CLAIM OF DEDUCTION U/S. 80IA OF THE ACT AND NOTED THAT THE 80IA DEDUCTION HAS BEEN CLAI MED TREATING ASSESSMENT YEAR 2012-13 AS THE INITIAL YEAR OF CLAI M FOR ITS WIND ENERGY GENERATED FROM THE WIND MILL DIVISION-II, WH ICH WAS ESTABLISHED DURING THE YEAR 2008-09. THE AO OPINED THAT IN VIEW OF PROVISIONS OF SUB-SEC.(5) OF SEC.80IA OF THE ACT , THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S.80IA IN THIS ASSE SSMENT YEAR. AS PER THE PROVISIONS OF SUB-SEC.(5) OF SEC. 80IA, THE PROFITS AND GAINS OF AN ELIGIBLE UNDERTAKING, FOR THE PURPOSES OF DETERMINING ALLOWABLE DEDUCTION, SHOULD BE COMPUTED TREATING TH E UNDERTAKING AS THE ONLY SOURCE OF INCOME DURING THE PREVIOUS YEAR RELEVANT TO THE INITIAL ASSESSMENT YEAR AND SU BSEQUENT ASSESSMENT YEARS. ACCORDING TO THE AO, THE INITIAL ASSESSMENT - - ITA 2310/15 & CO 30/16 3 YEAR MENTIONED IN THIS SUB-SECTION REFERS TO THE YE AR OF COMMENCEMENT OF ELIGIBLE BUSINESS AND ACCORDINGLY, THE LOSSES OF SUCH BUSINESS INCURRED FROM THAT YEAR ONWARDS, T HOUGH THEY HAVE BEEN ACTUALLY SET OFF AGAINST OTHER INCOMES IN THE EARLIER YEARS, SHOULD BE NOTIONALLY BROUGHT FORWARD AND SET OFF AGAINST PROFITS OF SUCH BUSINESS IN ANY SUBSEQUENT YEAR TO ARRIVE AT THE QUANTUM OF ELIGIBLE DEDUCTION FOR THAT YEAR. WHEN COMPUTED IN THIS MANNER, THE AO FOUND THAT PROFITS OF WIND MILL UNDERTAKINGS OF THE ASSESSEE FOR THIS YEAR WORK OUT TO NIL AND N O DEDUCTION IS ALLOWABLE. ACCORDINGLY, THE AO PROPOSED TO DISALLO W THE DEDUCTION AND INVITED ASSESSEES OBJECTIONS. THE A SSESSEE REPLIED THAT THE ISSUE IS COVERED IN ITS FAVOUR OF THE ASSESSEE BY THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN TH E CASE OF VELAYUDHASWAMY SPINNING MILLS (P) LTD. V. ACIT (340 ITR 477). THE ISSUE IN THAT CASE IS ALSO THE DEDUCTION OF PRO FITS OF WINDMILL UNDERTAKING U/S.80IB AND THE MANNER OF COMPUTING TH E ELIGIBLE DEDUCTION. THE HIGH COURT HELD THAT THE INITIAL AS SESSMENT YEAR IS THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEA R IN WHICH THE CLAIM OF DEDUCTION WAS FIRST MADE AND THEREFORE, LO SSES OF ELIGIBLE BUSINESS PRIOR TO THAT YEAR WHICH WERE ALR EADY SET OFF - - ITA 2310/15 & CO 30/16 4 AGAINST OTHER INCOMES CANNOT BE NOTIONALLY BROUGHT FORWARD AND SET OFF AGAINST CURRENT YEAR PROFITS OF SUCH BUSINE SS TO DETERMINE THE ELIGIBLE DEDUCTION. THE LOSSES INCURRED BY THE UNDERTAKING SUBSEQUENT TO THAT INITIAL ASSESSMENT YEAR ARE, HOW EVER, TO BE NOTIONALLY BROUGHT FORWARD AND SET OFF AGAINST CURR ENT YEAR PROFIT OF SUCH UNDERTAKINGS TO ARRIVE AT ELIGIBLE DEDUCTIO N AS PER PROVISIONS OF SEC.80-IA(5). THE AO HAD ACKNOWLEDGE D THE ABOVE JUDGMENT OF THE JURISDICTIONAL HIGH COURT, BU T, IN VIEW OF THE DEPARTMENTS PENDING APPEAL ON THAT JUDGMENT BE FORE THE SUPREME COURT, WENT AHEAD TO DISALLOW THE DEDUCTION U/S.80IA TO KEEP THE ISSUE ALIVE. AGGRIEVED BY THIS, THE ASSES SEE WENT IN APPEAL BEFORE THE CIT(APPEALS), WHO ALLOWED THE CL AIM OF THE ASSESSEE BY FOLLOWING THE AFORESAID JUDGMENT OF THE JURISDICTIONAL HIGH COURT. AGAINST THIS, THE REVEN UE IS IN APPEAL BEFORE US. 4. AFTER HEARING BOTH THE PARTIES, WE ARE OF THE OP INION THAT SIMILAR ISSUE WAS CAME FOR CONSIDERATION BEFORE THE JURISDICTIONAL HIGH COURT IN THE CASE OF VELAYUDHASWAMY SPINNING M ILLS (P) LTD. (340 ITR 477), WHEREIN IT WAS HELD THAT LOSSES AND DEPRECIATION OF THE YEARS EARLIER TO THE INITIAL AS SESSMENT YEAR - - ITA 2310/15 & CO 30/16 5 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 U/S.80IA OF THE ACT. BEING SO, THERE IS NO INFIRMITY IN THE ORDER OF THE CIT(APPEALS) IN HOLDING THAT THE A SSESSEE IS ENTITLED FOR DEDUCTION 80IA OF THE ACT. ACCORDINGL Y, WE CONFIRM THE ORDER OF THE CIT(APPEALS) ON THIS ISSUE AND THE APPEAL OF THE REVENUE IS DISMISSED. 5. SINCE THE CROSS OBJECTION FILED BY THE ASSESSEE IS ONLY IN SUPPORT OF THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS), IT HAS BECOME INFRUCTUOUS AND THE SAME IS DISMISSED. 6. IN THE RESULT, BOTH THE APPEAL OF THE REVENUE A ND THE CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED ON THURSDAY, THE 18 TH OF FEB., 2016 AT CHENNAI. SD/- SD/- ( #$ % ) ( & ' ( # ) )$*+,+-./0+1234+-51+*667+182 9 :; /JUDICIAL MEMBER :;<=>>6/-?+-?@A0BA1 &9 /CHENNAI, C: /DATED, THE 18 TH FEB., 2016. MPO* - - ITA 2310/15 & CO 30/16 6 :D EFGF /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. H2 /CIT(A) 4. H /CIT 5. FIJ K /DR 6. JLM /GF.