DCIT, CHENNAI V. M/s. Livia Polymer Bottles Pvt. Ltd., CHENNAI

ITA 2604/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4786 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-04-2017
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 16-03-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 07-09-2016
• Court: TRIBUNAL
• Department Lawyers: SUPRIYO PAL
• Assessee Lawyers: S SRIDHAR
• Keywords: Business income; Depreciation; Additional depreciation
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI , . , # $ BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A. NO. 2604/MDS/2016 / ASSESSMENT YEAR : 2012-13 DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE -4(1), CHENNAI - 600 034. VS . M/S. LIVIA POLYMER BOTTLES PVT. LTD., NO. 2-D, SRI DEVI APARTMENTS, WEST CIT NAGAR, NANDANAM, CHENNAI - 600 035. [PAN: AAACL 5958K] ( / APPELLANT) ( /RESPONDENT) & ' / APPELLANT BY : MR. SUPRIYO PAL, JCIT *+& ' / RESPONDENT BY : SHRI S. SRIDHAR, ADVOCATE ' /DATE OF HEARING : 10.04.2017 ' /DATE OF PRONOUNCEMENT : 18.04.2017 /O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER: THE REVENUE HAS FILED AN APPEAL AGAINST THE ORDE R OF COMMISSIONER OF INCOME TAX (APPEALS)-8, CHENNAI IN ITA NO. 200/2015-16 DATED 22.06.2016 PASSED U/S. 143(3) AND 250 OF THE INCOME TAX ACT. :-2-: I.T.A. NOS. 2604/MDS/2016 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: 2.1 THE CIT(A) ERRED IN DELETING THE DISALLOWANCE U /S. 32(1)(IIA) TO THE EXTENT OF RS. 3,45,52,281/-. 2.2 THE CIT(A) ERRED IN HOLDING THAT THE ASSESSEE I S ENTITLED TO ADDITIONAL DEPRECIATION ON THE PURCHASE OF WIND MILLS U/S. 32( 1)(IIA) EVEN THOUGH THE MAIN BUSINESS OF THE ASSESSEE IS NOT PRODUCING OR GENERATING ELECTRICITY. 2.3 THE CIT(A) ERRED IN ALLOWING THE CLAIM ON ADDIT IONAL DEPRECIATION ON WINDMILL FOR THE YEAR UNDER CONSIDERATION IN VIEW O F THE FACT THAT BENEFIT OF ADDITIONAL DEPRECIATION ON POWER GENERATION WILL APPLY IN RELATION TO ASSESSMENT YEAR 2013-14 ONWARDS AND WILL NOT APPLY TO THE YEAR UNDER CONSIDERATION AS PER AMENDED PROVISIONS OF SECTION 32(1)(IIA) OF FINANCE ACT, 2012 W.E.F. 01.04.2013. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY IS IN THE BUSINESS OF MANUFACTURE AND SALE OF PET BOTTLES AND CONTAINERS AND FILED THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2012-13 ON 19.08.2012. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY AN D THE LD. AR APPEARED FROM TIME TO TIME WITH THE BOOKS OF ACCOUNTS AND OT HER DETAILS. THE ASSESSING OFFICER ON EXAMINATION FOUND THAT THE ASS ESSEE COMPANY DURING THE RELEVANT PREVIOUS YEAR HAS PURCHASED WIND MILLS AND CLAIMED DEPRECIATION AT 80% AND FURTHER ALSO ADDITIONAL DEPRECIATION AT 20% BEING RS. 3,45,52,281/- :-3-: I.T.A. NOS. 2604/MDS/2016 UNDER THE PROVISIONS OF SECTION 32(1)(IIA) OF THE A CT. THE LD. AO IS OF THE OPINION THAT THE ASSESSEE'S MAIN BUSINESS IS NOT TO GENERATE ENERGY AND EARN BUSINESS INCOME OUT OF THE SALE OF ENERGY AND THERE FORE IS NOT ELIGIBLE FOR ADDITIONAL DEPRECIATION. WHEREAS, THE LD. AR SUPPO RTED HIS SUBMISSIONS WITH THE JUDICIAL DECISIONS AND JURISDICTIONAL HON'BLE H IGH COURT DECISION IN CASE OF CIT VS HI TECH ARAI LTD. (321 ITR 477) (MDS) AND CI T VS TEXMO PRECISION CASTINGS (321 ITR 481) (MDS). BUT THE LD. AO FOUND THAT THE JURISDICTIONAL HIGH COURT DECISION IS NOT ACCEPTED BY THE DEPARTME NT AND SLP WAS FILED BEFORE THE HON'BLE SUPREME COURT OF INDIA AND SAME IS PENDING. CONSIDERING THE ACTION OF THE REVENUE IN FILING THE SLP, THE LD AO IS OF THE OPINION THAT THE PRIMARY BUSINESS DOES NOT INCLUDE GENERATION OF WIND MILLS, THEREFORE ADDITIONAL DEPRECIATION CLAIMED BY THE ASSESSEE RS. 3,45,52,281/- U/S. 32(1)(IIA) OF THE ACT IS DISALLOWED AND ASSESSED TH E LOSS AND PASSED ORDER U/S. 143(3) OF THE ACT DATED 06.03.2015. 4. AGGRIEVED BY THE ORDER, THE ASSESSEE COMPANY FIL ED AN APPEAL WITH THE CIT(A). IN THE APPELLATE PROCEEDINGS THE LD. AR AR GUED THAT THE ASSESSING OFFICER HAS ERRED IN DISALLOWING THE ADDITIONAL DEP RECIATION AND ALSO ERRED IN NOT FOLLOWING THE DECISIONS OF THE HON'BLE HIGH COU RT OF MADRAS IN CIT VS TEXMO PRECISION CASTINGS (SUPRA) AND OBSERVED THAT THE GENERATION OF WIND ENERGY IS NOT A PART OF THE ASSESSEE BUSINESS. THE LD. CIT(A) CONSIDERED THE FINDINGS OF THE ASSESSING OFFICER AND SUBMISSIONS A ND JUDICIAL DECISIONS RELIED :-4-: I.T.A. NOS. 2604/MDS/2016 BY THE ASSESSEE AT PAGE 3 OF THE ORDER. THE LD. CI T(A) FOUND THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE D ECISION OF JURISDICTIONAL HIGH COURT IN CIT VS. ATLAS EXPORT ENTERPRISE (373 ITR 414) AND ALLOWED THE APPEAL AS REFERRED AT PARA 4.1 OF THE ORDER WHICH R EAD AS UNDER: '4.1 I HAVE CONSIDERED THE OBSERVATIONS OF THE AS SESSING OFFICER AND THE SUBMISSIONS MADE BY THE APPELLANT. THE ONL Y ISSUE UNDER CONSIDERATION IS WHETHER THE APPELLANT IS ELIGIBLE FOR ADDITIONAL DEPRECIATION U/S. 32(1)(II) WITH REGARD TO THE WIND MILLS OF THE APPELLANT. THE ASSESSING OFFICER DISALLOWED ADDITIONAL DEPRECI ATION CLAIMED ON WIND MILLS STATING THE WIND MILLS ARE NOT RELEVANT TO THE BUSINESS OF APPELLANT COMPANY. NEVERTHELESS, THE ASSESSING OFF ICER DOES NOT DISPUTE THE FACT THAT THE APPELLANT'S CASE IS COVER ED BY THE FOLLOWING DECISIONS OF THE JURISDICTIONAL HIGH COURT: 1. CIT VS. HI TECH ARAI LTD. (321 ITR 471) 2. CIT VS. TEXMO PRECISION CASTINGS (321 ITR 481) THE APPELLANT FURTHER RELIED ON THE CASE OF CIT VS. ATLAS EXPORT ENTERPRISE (373 ITR 414) BY THE JURISDICTIONAL HIGH COURT. THE JURISDICTIONAL HIGH COURT IN THE CASE OF HI TECH AR AI LTD (SUPRA) OBSERVED AS UNDER: WHERE THOUGH ASSESSEE WAS A COMPANY ENGAGED IN BUSINESS OF MANUFACTURE OF OIL SEEDS, MOULDED RUBBE R PARTS, REED VALUE ASSEMBLIES APART FROM GENERATION OF POWER BUT HAD SET UP TWO WINDMILLS IN ADDITION TO ALREADY EXISTING FOUR WINDMILLS AND THEREBY INCREASED ITS POWER GENERATION CAPACITY BY ABOVE 50 PER CENT, IT WAS ENTITLED TO ADDITIONAL DEPRECIATION. RESPECTFULLY FOLLOWING THE VIEW ENDORSED BY THE JUR ISDICTIONAL HIGH COURT TIME AND AGAIN, I HAVE NO HESITATION IN DELET ING THE DISALLOWANCE :-5-: I.T.A. NOS. 2604/MDS/2016 OF ADDITIONAL DEPRECIATION OF RS. 3,45,52,281/- MAD E BY THE ASSESSING OFFICER. THE APPELLANT SUCCEEDS ON THIS GROUND.' 5. AGGRIEVED BY THE CIT(A) ORDER, THE REVENUE HAS F ILED AN APPEAL WITH THE TRIBUNAL. BEFORE US, THE LD. DR ARGUED THAT TH E CIT(A) HAS ERRED IN HOLDING THAT THE ASSESSEE IS ENTITLED FOR ADDITIONA L DEPRECIATION ON PURCHASE OF WIND MILLS U/S. 32(1)(IIA) OF THE ACT, EVEN THOUGH THE MAIN BUSINESS IS NOT PRODUCING OR GENERATING ELECTRICITY AND THE DECISIO N OF THE HON'BLE JURISDICTIONAL HIGH COURT WAS NOT ACCEPTED BY THE D EPARTMENT AND SLP HAS BEEN FILED BEFORE THE HON'BLE SUPREME COURT. CONTR A, THE LD. AR RELIED ON THE ORDERS OF THE CIT(A) AND JUDICIAL DECISIONS. 6. WE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATE RIAL ON RECORD AND JUDICIAL DECISIONS. THE SOLE CRUX OF THE ISSUE THA T THE ASSESSEE CLAIMED ADDITIONAL DEPRECIATION U/S. 32(1)(IIA) OF THE ACT IN RESPECT OF PURCHASE OF WIND MILLS. THE CONTENTION OF THE LD. DR THAT THE ASSESSEE IS NOT IN THE BUSINESS OF PRODUCING ELECTRICITY AND THEREFORE, TH E ASSESSEE COMPANY IS NOT ENTITLED FOR ANY BENEFIT. WE, ON PERUSAL OF THE AS SESSMENT ORDER FOUND THAT THE REVENUE HAS NOT ACCEPTED THE DECISION AND FILED SLP. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT MERE PENDENCY OF SPECIA L LEAVE PETITION (SLP) BEFORE THE HON'BLE APEX COURT CANNOT BE A REASON TO TAKE A DIFFERENT VIEW. THE JUDGMENT OF MADRAS HIGH COURT IS BINDING ON ALL THE AUTHORITIES IN THE STATE OF TAMIL NADU AND UNION TERRITORY OF PONDICHE RRY. THEREFORE, THE :-6-: I.T.A. NOS. 2604/MDS/2016 COMMISSIONER OF INCOME TAX (APPEALS) HAS RIGHTLY AL LOWED THE CLAIM OF THE ASSESSEE BY FOLLOWING THE BINDING JUDGMENT OF MADRA S HIGH COURT. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE OR DER OF THE COMMISSIONER OF INCOME TAX (APPEALS) AND UPHELD THE SAME AND THE RE VENUE GROUNDS ARE DISMISSED. THE APPEAL OF THE REVENUE IS DISMISSED. IN THE RESULT, REVENUE APPEAL IS DISMISSED. ORDER PRONOUNCED ON TUESDAY, THE 18TH DAY OF APRIL, 2017 AT CHENNAI. SD/- ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER SD/- ( . ) (G. PAVAN KUMAR) /JUDICIAL MEMBER /CHENNAI, 0 /DATED: 18TH APRIL, 2017. JPV ' *#23 43 /COPY TO: 1. &/ APPELLANT 2. *+& /RESPONDENT 3. 5 ( )/CIT(A) 4. 5 /CIT 5. 3 *## /DR 6. 9 /GF