Asst. Commissioner of Income Tax, Circle-2(2), Hyderabad V. Hyderabad Chemical Products Private Limited , Hyderabad

ITA 2375/Hyd/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 2274 (ITAT-HYDERABAD)
• Duration Of Justice: 11 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB-B
• Next Hearing Date: 02-12-2019
• Assessment Year: 2014-2015
• Appeal Filed On: 26-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KIRAN KATTA
• Assessee Lawyers: A V RAGHURAM
• Section: 80IA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B, HYDERABAD BEFORE SHRI D.KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI V.DURGA RAO, JUDICIAL MEMBER ITA NO. A.Y. APPELLANT RESPONDENT 2374/HYD/18 2013-14 ACIT, CIRCLE-2(2), HYDERABAD M/S.HYDERABAD CHEMICAL PRODUCTS PRIVATE LIMITED, HYDERABAD [PAN: AAACH5507Q] 2375/HYD/18 2014-15 FOR REVENUE : SHRI KIRAN KATTA, DR FOR ASSESSEE : SHRI A.V.RAGHU RAM, AR DATE OF HEARING : 02-12-2019 DATE OF PRONOUNCEMENT : 04-12-2019 O R D E R PER D.KARUNAKARA RAO, A.M. : THESE APPEALS BY THE REVENUE ARE DIRECTED AGAINST THE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS)-2, HYDER ABAD, FOR THE AYS.2013-14 & 2014-15 RESPECTIVELY. SINCE THE ISSUE INVOLVED IN THESE APPEALS IS COMMON AND IDENTICAL, EXCEPT THE AMO UNTS MENTIONED THEREIN, THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED-OF BY WAY OF THIS COMMON ORDER. 2. FOR THE SAKE OF CONVENIENCE, THE APPEAL OF REVENUE FOR THE AY.2013-14 IS DISCUSSED HEREUNDER IN DETAIL. 3. BRIEF FACTS OF THE CASE ARE THAT, THE ASSESSEE IS A C OMPANY, ENGAGED IN THE BUSINESS OF MANUFACTURING PESTICIDES AN D POWER ITA NOS. 2374 & 2375/HYD/2018 :- 2 -: GENERATION (WIND POWER). FOR THE AY.2013-14, THE ASSE SSEE FILED ITS RETURN OF INCOME ON 28-09-2013, ADMITTING INCOME OF RS.7,74,62,750/-, UNDER THE NORMAL PROVISIONS, AFTER CLAIMING DEDUCTION U/S.80-IA OF THE INCOME TAX ACT [ACT] AMOUNTI NG TO RS.2,47,19,047/- IN RESPECT OF ITS WIND MILL PROJECTS. THE CASE WAS SELECTED FOR SCRUTINY AND DEDUCTION CLAIMED U/S.80-IA WAS REJECTED AND ADDED BACK. FURTHER DISALLOWANCE OF WEIGHTED DED UCTION OF RS.3,45,860/- WAS MADE IN THE ABSENCE OF FORM 3CL. FINALLY, THE ASSESSING OFFICER (AO) COMPLETED THE ASSESSMENT U/S.14 3(3) OF THE ACT WITH TOTAL ASSESSED INCOME OF RS.10,25,27,660/-. 3.1. AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE PREF ERRED AN APPEAL BEFORE THE CIT(A). 3.2. CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE , LD.CIT(A), FOLLOWING THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.1033/HYD/ 2015, DT.10- 06-2016 (AY.2008-09), ALLOWED THE APPEAL OF ASSESSE E PARTLY, STATING AS UNDER: 6. THE DECISION: IT IS SEEN FROM THE FACTS THAT THE A.O. DISALLOWED RS. 2,47,19,047/- BEING THE TOTAL QUANTUM OF DEDUCTION CLAIMED DURING THE A.Y. 2013-14 PERTAINING TO PHASE-II, III & IV OF THE WINDMILLS. IT WAS OBSERVED BY THE A.O. THAT THE APPELLANT DID NOT SET OFF UNABSORBED LOSSES OF PHASE-II TO IV AGAINST THE CURRENT YEAR PROFIT OF THE WINDMILL UNI T BEFORE CLAIMING DEDUCTION U/S. 80IA AS REQUIRED UNDER THE PROVISION S OF SEC 80IA(5). THE AR CONTENDED THAT THESE PHASES WERE HAVING LOSS ES FOR ASSESSMENT YEARS EARLIER TO INITIAL ASSESSMENT YEAR AND SUCH LOSSES WERE ALREADY ADJUSTED AGAINST INCOME FROM PESTICIDE BUSI NESS OF THE APPELLANT. THE AO NOTIONALLY BROUGHT FORWARD SUCH LOSSES AND A DJUSTED AGAINST THE INCOME OF RESPECTIVE UNIT IN THE CURRENT YEAR. ITA NOS. 2374 & 2375/HYD/2018 :- 3 -: THE HON'BLE ITAT, BENCH B, HYDERABAD IN ITA NO. 103 3/HYD/2015 DATED 10.06.2016 FOR A.Y. 2008-09 IN APPELLANT'S OWN CASE (AND ALSO IN A.Y. 2010-11) HELD AS UNDER:- THUS IT IS CLEAR THAT THE INITIAL ASSESSMENT YEAR IS NOT THE YEAR OF OPERATION OR COMMENCEMENT OF BUSINESS, AS INTERPRETED BY THE ASSESSING OFFICER, BUT IT IS THE FIRST YEAR IN WHICH THE APPELLANT HAS OPTED TO CLAIM THE DEDUCTION U/S. 80-IA. IN VIEW OF THIS CLARIFICATION OF BOARD, WHICH CLINCHES THE ISSUE IN FAVOUR OF THE APPELLANT, AND IS BINDING ON THE REVENUE AUTHORITIES, WE ACCEPT THE CONTENTIO NS OF THE APPELLANT IN THIS BEHALF, AND DIRECT THE ASSESSING OFFICER TO ALLOW THE CLAIM OF THE APPELLANT, AFTER VERIFYING THE RECORDS AS TO THE INITIAL ASSESSMENT YEAR IN WHICH THE APPELLA NT FOR THE FIRST TIME HAS CLAIMED THE DEDUCTION U/S 80-IA OF THE ACT, AND CONSIDER THE IN COME OF THE APPELLANT FROM THE ELIGIBLE UNIT FROM THAT YEAR ALONE ON A STANDALONE BASIS. AP PELLANT'S GROUNDS ON THIS ISSUE ARE ACCORDINGLY ALLOWED' 6.1 SINCE THE ISSUE INVOLVED IS SIMILAR FOR THE YEA R UNDER APPEAL ALSO, RESPECTFULLY FOLLOWING THE DECISION OF THE HON'BLE ITAT MENTIONED SUPRA, I DIRECT THE AO ALLOW TO ALLOW DEDUCTION OF RS. 27,57 ,794/- FOR PHASE-II, RS. 91,91,520/- FOR PHASE-III AND RS. 1,27,69,734/- FOR PHASE-IV CLAIMED BY THE APPELLANT U/S. 80-IA OF THE ACT AFTER VERIFYING THE RECORDS AS TO THE INITIAL ASSESSMENT YEAR IN WHICH THE APPELLANT FOR THE FIRST TIME HAS CLAIMED THE DEDUCTION U/ S 80-IA OF THE ACT. AS A R ESULT, THE GROUND NOS. 2,3,4 & 6 WHICH ARE PERTAINING TO DEDUCTION U/S.80- IA ARE ALLOWED IN FAVOUR OF THE APPELLANT. 6.2 THE GROUND NO. 1 BEING GENERAL NEEDS NO ADJUDIC ATION. 6.3 THE GROUND NO.5 PERTAINING TO DISALLOWANCE OF W EIGHTED DEDUCTION U/S.35(2AB) OF RS. 3,45,860/-. THE APPELLANT IN THE SUBMISSIONS HAS CONCEDED THAT IT WAS NOT ELIGIBLE FOR THE SAME, HOW EVER STATED THAT THE SAME SHOULD BE ALLOWED U/S.35(1)(II) BEFORE THE A.O ., WHO DISALLOWED THE SAME AS BEING NOT CLAIMED IN THE RETURN OF INCOME. THE DEDUCTION U/S. 35(1)(II) READS AS UNDER: 35(1)(II)- [AN AMOUNT EQUAL TO [ONE AND [THREE-FOUR TH]] TIMES OF ANY SUM PAID] TO A [RESEARCH ASSOCIATION] WHICH HAS AS ITS OBJECT THE UNDERTAKING OF SCIENTIFIC RESEARCH OR TO A UNIVERSITY, COLLEGE OR OTHER INSTITUTION TO BE US ED FOR SCIENTIFIC RESEARCH; [PROVIDED THAT SUCH ASSOCIATION, UNIVERSITY, COLLEG E OR OTHER INSTITUTION FOR THE PURPOSES OF THIS CLAUSE- (A) IS FOR THE TIME BEING APPROVED, IN ACCORDANCE W ITH THE GUIDELINES, IN THE MANNER AND SUBJECT TO SUCH CONDITIONS AS MAY BE PRESCRIBED; AN D (B) SUCH ASSOCIATION, UNIVERSITY, COLLEGE OR OTHER INSTITUTION IS SPECIFIED AS SUCH, BY NOTIFICATION IN THE OFFICIAL GAZETTE, BY THE CENTRA L GOVERNMENT. ITA NOS. 2374 & 2375/HYD/2018 :- 4 -: THE APPELLANT HAS GIVEN THREE BILLS, ONE OF THE BIL LS STATE THAT THE FUND OF RS. 82,500/- HAS NOT BEEN RECEIVED BY THE SAID INST ITUTION, WHEREAS THE OTHER TWO BILLS ARE ACKNOWLEDGEMENT OF RS. 1,50,000 /- & RS. 1,12,500/-. THE APPELLANT HAS NOT BEEN ABLE TO PRODUCE ANY OF T HE PRE-REQUISITE QUALIFICATION OF THESE INSTITUTIONS AS PRESCRIBED I N THE SECTION CITED ABOVE, THEREFORE, IN ABSENCE OF APPROVAL OR THE INSTITUTIO N BEING SPECIFIED IN THE NOTIFICATION, NO WEIGHTED DEDUCTION U/S. 35(1)(II) CAN BE ALLOWED. IN VIEW OF THE SAME, THIS GROUND NO.5 IS DISMISSED ACCORDINGLY. 6.4. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. 4. AGGRIEVED, NOW THE REVENUE IS IN APPEAL BEFORE US , RAISING THE FOLLOWING GROUND: WHETHER, ON THE FACTS AND CIRCUMSTANCES OF THE CAS E, THE CIT(A) IS CORRECT IN LAW IN DELETING THE DISALLOWANCE OF THE DEDUCTIO N U/S.80IA MADE BY THE AO ON THE BASIS OF SECTION 80IA(5) BY SETTING OFF T HE NOTIONALLY BROUGHT FORWARD UNABSORBED LOSSES AGAINST THE INCOME WHILE ARRIVING AT THE PROFITS TO BE ALLOWED U/S.80IA ? 5. WE HEARD BOTH THE COUNSELS AND THE MATERIAL PLACED ON RECORD, ALONG WITH THE DECISION OF THE CO-ORDINATE BENC H OF ITAT IN THIS REGARD. THERE IS NO DISPUTE ON THE FACT THAT THE ISS UE IS IDENTICAL IN RESPECT OF THE AYS.2011-12 AND 2012-13, W HEREIN THE CO-ORDINATE BENCH OF ITAT IN ASSESSEES OWN CASE IN ITA NOS.728 & 729/HYD/2017, DT.04-09-2017 HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. SINCE THE LD.CIT(A) ALSO FOLLOWED THE DE CISION OF THE HON'BLE ITAT IN THE ASSESSEES OWN CASE FOR THE EARL IER YEARS, WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE LD .CIT(A). RESPECTFULLY FOLLOWING THE SAID DECISION OF THE CO-ORD INATE BENCH OF THE ITAT, WE, THEREFORE, DISMISS THE APPEAL OF REVENUE FOR THIS ASSESSMENT YEAR. ITA NOS. 2374 & 2375/HYD/2018 :- 5 -: AY.2014-15: 6. SINCE THE FACTS OF THE PRESENT CASE ARE IDENTICAL TO ONE AS DECIDED BY US IN ITA NO.2374/HYD/2018, AY.2013-14 ( SUPRA) AND THEREFORE OUR FINDINGS IN THE SAID APPEAL, MUTATIS MUTANDIS , WOULD APPLY TO THIS APPEAL AS WELL. HENCE, THIS APPEAL OF REVENUE IS ALSO DISMISSED. 7. TO SUM-UP, APPEALS OF REVENUE FOR BOTH THE ASSESSM ENT YEARS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH DECEMBER, 2019 SD/- SD/- (V. DURGA RAO) (D. KARUNAKARA R AO) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED 4 TH DECEMBER, 2019 TNMM ITA NOS. 2374 & 2375/HYD/2018 :- 6 -: COPY TO : 1. THE ASST.COMMISSIONER OF INCOME TAX, CIRCLE-2(2) , HYDERABAD. 2. M/S.HYDERABAD CHEMICAL PRODUCTS PRIVATE LIMITED, A-24/25, APIE, BALANAGAR, HYDERABAD. 3. CIT(APPEALS)-2, HYDERABAD. 4. PR.CIT-2, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.