Pandian Chemicals Ltd., Madurai V. DCIT, Madurai

ITA 2613/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86262 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-01-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 16-10-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH IRS
• Assessee Lawyers: S CHANDRASEKARAN
• Keywords: Revised return

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI .. , , BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ./ I.T.A. NO.2613/MDS/2014 ( ! / ASSESSMENT YEAR : 2010 -2011) M/S. PANDIAN CHEMICALS LTD, 17-A, VALLABHAI ROAD, CHOKKIKLAM, MADURAI 625 002 . [PAN :AABCP 6618D] ( /APPELLANT) VS. THE DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE I, MADURAI. ( /RESPONDENT) ' # $ / APPELLANT BY : SHRI. S. CHANDRASEKARAN, C.A., %&' # $ / RESPONDENT BY : SHRI. A.V. SREEKANTH, IRS, JCIT. ' ( # )* /DATE OF HEARING : 22.01.2015. +,! # )* /DATE OF PRONOUNCEMENT : 27.01.2015. / O R D E R PER VIKAS AWASTHY, JUDICIAL MEMBER THE APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST T HE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-II, MADURAI DA TED 18.08.2014. 2. THE ASSESSEE IS A PUBLIC LIMITED COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING CHLORATE AND GENERATION O F POWER THROUGH I.T.A.NO2613/MDS/2014 . :- 2 -: WIND MILL. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2010-11 ON 27.09.2010 ADMITTING INCOME OF :.2, 58,83,550/-. THEREAFTER, THE ASSESSEE FILED REVISED RETURN ON 1 2.10.2010 DECLARING INCOME OF :.2,44,57,950/-. THE CASE OF ASSESSEE WA S SELECTED FOR SCRUTINY AND NOTICE U/S. 143(2) WAS ISSUED ON 30.08 .2011. DURING THE COURSE OF SCRUTINY ASSESSMENT, THE ASSESSING OFFICE R OBSERVED THAT THE ASSESSEE HAD CLAIMED EXPENDITURE UNDER THE HEAD RE PAIRS AND MAINTENANCE TO THE TUNE OF :.92,00,000/- FOR REPL ACING OLD WIND MILL WITH THE NEW ONE. THE ASSESSING OFFICER HELD THAT THE EXPENDITURE IS CAPITAL IN NATURE. AGGRIEVED BY THE ADDITION/DISALLOWANCE MADE BY THE ASSESSING OFFICER VIDE ORDER DATED 28.03.2013, THE ASSESSEE P REFERRED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). T HE COMMISSIONER OF INCOME TAX (APPEALS) VIDE IMPUGNED ORDER UPHELD THE FINDINGS OF ASSESSING OFFICER. NOW, THE ASSESSEE HAS COME IN S ECOND APPEAL AGAINST THE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS). 3. SHRI. S. CHANDRASEKARAN APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE LEARNED COMMISSIONER OF INCOME T AX (APPEALS) ERRED IN COMING TO THE CONCLUSION THAT THE ASSESSEE HAD REPLACED EXISTING WINDMILL WITH THE NEW WINDMILL. ONE OF THE WINDMILL INSTALLED BY THE ASSESSEE SUFFERED HUGE DAMAGE CAUSED BY NATU RAL CALAMITIES. I.T.A.NO2613/MDS/2014 . :- 3 -: THE ASSESSEE HAS ONLY REPLACED THE ROTOR BLADES AND PART OF THE STEM OF WINDMILL. IT IS NOT THE CASE WHERE THE ENTIRE WI NDMILL HAS BEEN REPLACED WITH THE NEW ONE. THE LEARNED AUTHORISED REPRESENTATIVE TO SUPPORT HIS SUBMISSION PLACED RELIANCE ON THE DE CISION OF HONBLE SUPREME COURT OF INDIA IN THE CASE OF SARAVANA SPIN NING MILLS (P) LTD REPORTED AS 293 ITR 201 AND THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. V. RENU SUGAR POWER CO . LTD REPORTED AS 298 ITR 94. 4. ON THE OTHER HAND, SHRI. A.V. SREEKANTH REPRESENTIN G THE DEPARTMENT SUPPORTED THE ORDER OF COMMISSIONER OF I NCOME TAX (APPEALS). THE LEARNED DEPARTMENTAL REPRESENTATIVE POINTED OUT THAT IN THE GROUNDS OF APPEAL RAISED BEFORE THE COMMISSI ONER OF INCOME TAX (APPEALS), THE ASSESSEE HAD ADMITTED THE FACT T HAT THE WIND MILL OF SIMILAR CAPACITY WAS PURCHASED AND INSTALLED IN PL ACE OF TOTALLY DAMAGED WIND MILL. THE LEARNED DEPARTMENTAL REPRES ENTATIVE FURTHER SUBMITTED THAT IT IS NO WHERE STATED BY ASSESSEE TH AT ONLY CERTAIN PARTS OF THE WINDMILL WHICH WERE DAMAGED WERE REPLACED. 5. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REP RESENTATIVES OF BOTH SIDES AND PERUSED THE ORDERS OF THE AUTHORITIE S BELOW. WE HAVE ALSO EXAMINED THE DECISION ON WHICH THE LEARNED AUT HORISED REPRESENTATIVE OF THE ASSESSEE HAS PLACED RELIANCE. THE CONTENTION OF I.T.A.NO2613/MDS/2014 . :- 4 -: THE LEARNED AUTHORISED REPRESENTATIVE BEFORE US IS THAT ONLY DAMAGED PARTS OF WINDMILL WERE REPLACED AND NOT THE WHOLE W INDMILL HAS BEEN REPLACED WITH THE NEW ONE. 6. WE FIND THAT THE AUTHORITIES BELOW HAVE DENIED T HE RELIEF CLAIMED BY THE ASSESSEE ON THE GROUND THAT THE ASSESSEE HAS REPLACED OLD WINDMILL WITH THE NEW ONE. AS POINTED OUT BY THE DE PARTMENTAL REPRESENTATIVE, IN THE GROUNDS OF APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS), THE ASSESSEE HAS MADE FOLLO WING SUBMISSIONS. IN YOUR APPELLANTS HTSC NO.2 THERE WERE TWO WIND MILLS EACH OF 250 KW CAPACITY. THE 500KW WIND MILLS USED TO GENE RATE POWER FOR SUPPLY TO THE GRID. IN THE ABOVE HTSC ONE NO.250 K W WIND TURBINE (TCL2) WAS TOTALLY DAMAGED DUE TO NATURAL CALAMITY. HENCE A SIMILAR CAPACITY WINDMILL WAS PURCHASED AND INSTALLED IN TH E PLACE OF THE TOTALLY DAMAGED WIND MILL... IT IS NOT CLEAR FROM THE RECORDS BEFORE US WHETHER THE ASSESSEE HAS REPLACED ONLY DAMAGED PARTS OF THE EXISTING WIN DMILL OR HAS REPLACED ENTIRE OLD WIND MILL WITH THE NEW ONE. THE SE FACTS HAVE TO BE ASCERTAINED FROM BOOKS, PURCHASE ORDER, JOB SHEET E TC. IN CASE, THE ASSESSEE HAS REPLACED ONLY DAMAGED PARTS OF THE WIN DMILL, WITHOUT THERE BEING SUBSTANTIAL CHANGE IN ORIGINAL PERFORMA NCE AND GENERATION CAPACITY OF WIND MILL THE EXPENDITURE IS ALLOWABLE AS CLAIMED BY THE ASSESSEE. WE FIND THAT THE JUDGMENT OF THE HONBLE ALLAHABAD HIGH COURT IN CASE OF RENA SUGAR POWER COMPANY LIMITED( SUPRA) ALSO SUPPORTS THE CONTENTIONS OF THE LEARNED AUTHORISED REPRESENTATIVE. I.T.A.NO2613/MDS/2014 . :- 5 -: NEEDLESS TO SAY THAT IF IT IS CASE OF REPLACING N EW WIND MILL IN THE PLACE OF OLD WIND MILL, THE EXPENDITURE WOULD C ERTAINLY BE CAPITAL IN NATURE. THE FILE IS REMITTED BACK TO THE ASSESSING OFFICER WITH A DIRECTION TO DECIDE THE ISSUE AFRESH AFTER VERIFYIN G THE FACTUAL ASPECT. THE ASSESSING OFFICER WHILE DECIDING THE ISSUE DE-N OVO SHALL GRANT AN OPPORTUNITY OF HEARING TO THE ASSESSEE, IN ACCORDAN CE WITH LAW. 7. THE SECOND ISSUE IN APPEAL WITH RESPECT TO TREATMENT OF INSURANCE CLAIM IS NOT PRESSED BY THE LD. AUTHORIS ED REPRESENTATIVE OF THE ASSESSEE. THE SAME IS DISMISSED AS NOT PRESSED . 8. IN THE RESULT, THE APPEAL OF THE ASSE SSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON TUESDAY, THE 27 TH OF JANUARY, 2015, AT CHENNAI. SD/- SD/- ( . . ) (B.R. BASKARAN) / ACCOUNTANT MEMBER ( ! ! ) (VIKAS AWASTHY) ' /JUDICIAL MEMBER - /DATED:27.01.2015. K.V . # %)/ 0!) /COPY TO: 1. '/ APPELLANT 2. %&' / RESPONDENT 3. ' 2) ( )/CIT(A) 4. ' 2) /CIT 5. 34 %) 5 /DR 6. 46 7( /GF. I.T.A.NO2613/MDS/2014 . :- 6 -: