ACIT, New Delhi V. Sh. Parveen Malhotra, New Delhi

ITA 2699/DEL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3654 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 10-04-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 02-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: F R MEENA
• Section: 143(3)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 2699/DEL/2014 A.Y. 2010 - 11 ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 23(1), NEW DELHI ROOM NO. 1302, 13 TH FLOOR, E- 2, PRATYKASHYA KAR BHAWAN, SHAYAMA PRASAD MUKHERJEE CIVIC CENTRE, JAWAHAR LAL NEHRU MARG, MINTO ROAD, NEW DELHI 110 002 VS. PRAVEEN MALHOTRA, E-147, MASJID MOTH, NEAR GREATER KAILASH-2, NEW DELHI 110 048 (PAN- AALPM1556E) (APPELLANT) (RESPONDENT) DEPARTMENT BY : SH. F.R. MEENA, SR. DR ASSESSEE BY : NONE ORDER PER H.S. SIDHU, JM : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-XXIII, NEW DELHI 2 DATED 18.2.2014 PERTAINING TO ASSESSMENT YEAR 2010- 11 ON THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND ON THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN LAW AND ON THE FACTS IN HOLDING THE YEAR OF CLAIMING DEDUCTION UNDER SECTION 80IA(5) AS THE INITIAL ASSESSMENT YEAR BY RELYING UPO N THE CASE LAWS, WHICH ARE STILL PENDING FOR ADJUDICAT ION BEFORE THE HONBLE SUPREME COURT. 2. ON THE FACTS AND ON THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN LAW AND ON THE FACTS IN HOLDI NG THAT THE INITIAL ASSESSMENT YEAR U/S. 80IA(5) WOULD MEAN THE YEAR OF CLAIM AND NOT THE YEAR OF COMMENCEMENT. 3. ON THE FACTS AND ON THE CIRCUMSTANCES OF THE CASE, TH E IMPUGNED ORDER PASSED BY THE LD. CIT(A) IS PERVERSE BOTH IN FACTS AND LAW. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND AN Y OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF HEARING OF THE APPEAL. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE FIL ED RETURN DECLARING INCOME OF RS.1,08,31,788/- ON 13.10.2010 WHICH WAS 3 PROCESSED U/S 143(1) OF THE I.T. ACT, 1961 AND LATER SELECTED FOR SCRUTINY. ACCORDINGLY, THE ASSESSING OFFICER ISSUED STATUTORY NOTICES U/S 143(2)/142(1) OF THE ACT WHICH WERE COMPLIED BY THE ASSESSEE. ASSESSEE IS A PROPRIETOR OF M/S PALMS EXPORTS AND M/ S PALMS ENERCON INC. WHICH WAS ENGAGED IN THE BUSINESS OF MA NUFACTURING OF GARMENTS AND ENERGY PRODUCTION. BESIDES BUSINESS INC OME, ASSESSEE HAD ALSO SHOWN INCOME FROM OTHER SOURCES. I T WAS NOTED BY THE ASSESSING OFFICER THAT, ASSESSEE HAD CLAIMED DE DUCTION U/S 80-IA OF THE ACT TO THE TUNE OF RS.32,55,010/- (CLAIMI NG ENERGY GENERATION BE THE 4TH YEAR OF OPERATION AND THE FIRS T YEAR OF DEDUCTION). ASSESSEE'S CLAIM OF DEDUCTION U/S 80-IA WAS REJECTED BY THE ASSESSING OFFICER IN THE ASSESSMENT YEAR 2009-10, THEREFORE, AUTHORISED REPRESENTATIVE OF THE ASSESSEE WAS ASKED T O JUSTIFY THE CLAIM MADE U/S 80-IA IN THE INSTANT YEAR. ASSESSEE FI LED THE SUBMISSIONS VIDE LETTER DATED 15.2.2013, WHICH HAVE B EEN MADE PART OF THE ASSESSMENT ORDER BY THE ASSESSING OFFICER IN PARA 3. THE ASSESSING OFFICER CONSIDERED THE SUBMISSIONS OF THE ASSESSEE BUT REJECTED THE SAME ON THE GROUND THAT ASSESSEE HAD RELI ED ON THE JUDGMENT OF HON 'BLE CHENNAI HIGH COURT IN THE CASE OF MOHAN BREWERIES AND DISTILLERIES LTD., WHICH IS NOT THE JUR ISDICTIONAL HIGH COURT AND CONSIDERING THE SPECIFIC PROVISIONS OF SEC TION 80-IA(5) OF THE ACT. CONSIDERING THE FACTS OF THE CASE AND RELYING UPON THE 4 JUDICIAL PRONOUNCEMENT OF THE APEX COURT IN THE CASE O F HIRALAL RATANLAL VS. SALES TAX OFFICER AIR 1973 SC 1034, AS SESSING OFFICER HELD THAT IN THE CASE OF THE ASSESSEE, PROVISIONS OF S ECTION 80-IA(5) ARE CLEARLY APPLICABLE AND HELD THAT ASSESSEE IS NOT ELIGIBLE TO CLAIM DEDUCTION UNDER SECTION 80- IA OF THE ACT. 2.1 FURTHER, ASSESSING OFFICER ALSO MADE ADDITION OF RS.60,996/- AS PER THE PROVISIONS OF SECTION 40(IA) OF THE ACT HO LDING THAT ASSESSEE HAS NOT DEDUCTED TDS WHILE MAKING PAYMENT OF BROKERAGE TO ONE SH. SHASTRI BALLABH BHATT. THUS, TOTAL TAXABLE INCOME OF THE ASSESSEE WAS COMPUTED AT RS.1,41,47,790/- AS AGAINST THE RETURNED INCOME OF RS. 1,08,31,788/- VIDE HIS ORDER DATED 15 .2.2013 PASSED ASSESSMENT ORDER U/S. 143(3) OF THE I.T. ACT, 1961. AGGRIEVED WITH THE ASSESSMENT ORDER, ASSESSEE FILED THE APPEAL BEFO RE THE LD. CIT(A) WHO VIDE HIS IMPUGNED ORDER DATED 18.2.2014 DELETED THE ADDITIONS BY ALLOWING THE APPEAL OF THE ASSESSEE. 3. AGGRIEVED WITH THE IMPUGNED ORDER OF THE LD. CIT( A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 4. LD. DR RELIED UPON THE ORDER OF THE AO AND REITERA TED THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL. 5. THIS APPEAL CAME UP BEFORE THE BENCH MANY TIMES A ND ADJOURNED FROM TIME TO TIME. ON 12.1.2017 NONE PRESE NT FROM THE 5 ASSESSEE AND CASE WAS ADJOURNED FOR 03.4.2017 AND NOTICE WAS ISSUED TO ASSESSEE THROUGH LD. DR AND AGAIN ON 3.4.20 17 NONE PRESENT ON BEHALF OF THE ASSESSEE AND CASE WAS ADJO URNED FOR 10.4.2017. ON 10.4.2017 AGAIN NONE PRESENT ON BEHA LF OF THE ASSESSEE NOR HIS AUTHORIZED REPRESENTATIVE APPEARED T O PROSECUTE THE MATTER IN DISPUTE, NOR FILED ANY APPLICATION FOR A DJOURNMENT. KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE P RESENT CASE AND THE ISSUE INVOLVED IN THE PRESENT APPEAL, WE ARE OF THE VIEW THAT NO USEFUL PURPOSE WOULD BE SERVED TO ISSUE NOTICE AGAIN AND AGAIN TO THE ASSESSEE, THEREFORE, WE ARE DECIDING THE PRESENT APPEAL EXPARTE QUA ASSESSEE, AFTER HEARING THE LD. DR AND PERUSING THE RECORDS. 6. WE HAVE HEARD THE LD. DR AND PERUSED THE RELEVANT RECORDS, ESPECIALLY THE ORDER OF THE LD. CTI(A). WE FIND THAT L D. FIRST APPELLATE AUTHORITY HAS ELABORATELY DISCUSSED AND AD JUDICATED THE ISSUE NO. 1 TO 2 RELATING TO ADDITION IN DISPUTE VIDE PARA NO. 4 AT PAGE NO. 3 TO 5 OF THE IMPUGNED ORDER. THE RELEVANT PARAS ARE REPRODUCED HEREUNDER:- 4. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MA DE BY THE APPELLANT AND THE JUDGMENTS CITED BY THE LD. AR IN FAVOUR OF HIS CLIENT. IN THE CASE OF SATBHAV ENGIN EERING 6 LTD. (SUPRA), HONBLE ITAT, AHMEDABAD HAS RELIED UPO N THE ORDER OF THE HONBLE MADRAS HIGH COURT IN THE CA SE OF VELAYUDHASWAMI SPINNING MILLS (SUPRA), WHILE HOLDIN G THAT WE FIND THAT SECTION 80IA OF THE ACT WHICH HAS B EEN SUBSTITUTED W.E.F. 1.04.2000 PROVIDES THAT WHERE THE GTI OF AN ASSESSEE INCLUDES ANY PROFITS AND GAINS DERIVE D BY AN UNDERTAKING FROM ANY ELIGIBLE BUSINESS REFERRED TO IN SUB-SECTION (4), THERE SHALL, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THIS SECTION, BE ALLOWED IN COMPUTING THE TOTAL INCOME, A DEDUCTION OF AN AMOUNT EQUAL TO 100% OF THE PROFITS AND GAINS DERIVED FROM S UCH BUSINESS FOR TEN CONSECUTIVE YEARS. SUBSTITUTED SUB- SECTION (2) OF SECTION 80IA PROVIDES THAT AN OPTION IS GIVEN TO THE ASSESSEE FOR CLAIMING ANY TEN CONSECUTIVE ASSESSMENT YEARS OUT OF FIFTEEN YEARS BEGINNING FROM THE YEAR IN WHICH THE UNDERTAKING OR THE ENTERPRISE DEVEL OPS AND BEGINS TO OPERATE. THE FIFTEEN YEARS IS THE OUTER LIMIT WITHIN WHICH THE ASSESSEE CAN CHOOSE THE PERIOD OF CLAIMING THE DEDUCTION. SUB-SECTION (5) IS A NON-OBS TANTE CLAUSE WHICH DEALS WITH THE QUANTUM OF DEDUCTION (OR AN ELIGIBLE BUSINESS .... THUS, THE FICTION CREATED IS THAT THE ELIGIBLE BUSINESS IS THE ONLY SOURCE OF INCOME AND THE 7 DEDUCTION WOULD BE ALLOWED FROM THE 'INITIAL ASSESSMEN T YEAR' OR ANY SUBSEQUENT ASSESSMENT YEAR. IT NOWHERE DEFINES AS TO WHAT IS THE 'INITIAL ASSESSMENT YEAR'. P RIOR TO 1.04.2000, THE 'INITIAL ASSESSMENT YEAR' WAS DEFINED FOR VARIOUS TYPES OF ELIGIBLE ASSESSEES U/S. 80IA(J 2). HOWEVER, AFTER THE AMENDMENT BROUGHT IN STATUTE BY THE FINANCE ACT, 1999, THE DEFINITION OF 'INITIAL ASSESSME NT YEAR' HAS BEEN SPECIFICALLY TAKEN AWAY. NOW, WHEN T HE ASSESSEE EXERCISES THE OPTION OF CHOOSING THE 'INITIAL ASSESSMENT YEAR', AS CULLED OUT IN SUB-SECTION (2) OF SECTION 80IA FROM WHICH IT CHOOSES ITS TEN YEARS OF DEDUCTION OUT OF FIFTEEN YEARS, THEN ONLY THE LOSSES O F THE YEARS STARTING FROM THE 'INITIAL ASSESSMENT YEAR' AL ONE ARE TO BE BROUGHT FORWARD AS STIPULATED IN SECTION 80IA(5). THE LOSS PRIOR TO THE 'INITIAL ASSESSMENT YEAR ' WHICH HAS ALREADY BEEN SET-OFF CANNOT BE BROUGHT FORWARD AND ADJUSTED INTO THE PERIOD OF TEN YEARS FRO M THE 'INITIAL ASSESSMENT YEAR' AS CONTEMPLATED OR CHOSEN BY THE ASSESSEE ... THIS IS THE TRUE IMPORT OF SECTION 80IA(5).' IN THE LIGHT OF THE ABOVE JUDGMENT, IF WE CONSIDER THE FACTS OF THE INSTANT CASE, WE FIND THAT TH ERE IS NO DISPUTE AS TO ELIGIBILITY OF DEDUCTION U/S. 80IA ( 1), 8 BUT, THE ONLY DISPUTE IS WHETHER COMPUTING PROVISION S OF SUB-SECTION (5) OF SECTION 80IA WOULD APPLY TO THE Y EARS EARLIER THAN A.Y. 2009-10 OR NOT. WHEN WE READ THE ABOVE JUDGMENT, IT BECOMES CLEAR THAT THE 'INITIAL ASSESSMENT YEAR' IN THE CASE OF THE APPELLANT IN A.Y. 2009-10, WHEN THE CLAIM OF DEDUCTION U/S. 80IA WAS MADE FOR THE FIRST TIME, AND THE CURRENT A.Y. 2010-11 IS THE SECOND YEAR OF THE APPELLANTS CLAIM U/S.80IA. THEREFORE, IN MY CONSIDERED OPINION AND IN THE LIGH T OF THE JUDGMENT CITED ABOVE, THE APPELLANT IS ELIGIBLE FO R DEDUCTION U/S. 80IA AS CLAIMED. THE ADDITION OF RS. 32,55,010/- IS HEREBY DELETED. 7. ON GOING THROUGH THE AFORESAID FINDINGS OF THE LD. CIT(A), WITH REGARD TO ADDITION IN DISPUTE ARE CONCERNED, WE NO TE THAT IN THE CASE OF SATBHAV ENGINEERING LTD. (SUPRA), ITAT, AHM EDABAD HAS RELIED UPON THE ORDER OF THE HONBLE MADRAS HIGH COU RT IN THE CASE OF VELAYUDHASWAMI SPINNING MILLS (SUPRA), WHILE HOL DING THAT WE FIND THAT SECTION 80IA OF THE ACT WHICH HAS BEEN SUBSTI TUTED W.E.F. 1.04.2000 PROVIDES THAT WHERE THE GTI OF AN ASSESSEE INCLUDES ANY PROFITS AND GAINS DERIVED BY AN UNDERTAKING FROM AN Y ELIGIBLE BUSINESS REFERRED TO IN SUB-SECTION (4), THERE SHALL , IN ACCORDANCE 9 WITH AND SUBJECT TO THE PROVISIONS OF THIS SECTION, BE ALLOWED IN COMPUTING THE TOTAL INCOME, A DEDUCTION OF AN AMOUNT E QUAL TO 100% OF THE PROFITS AND GAINS DERIVED FROM SUCH BUS INESS FOR TEN CONSECUTIVE YEARS. SUBSTITUTED SUB-SECTION (2) OF SE CTION 80IA PROVIDES THAT AN OPTION IS GIVEN TO THE ASSESSEE FOR C LAIMING ANY TEN CONSECUTIVE ASSESSMENT YEARS OUT OF FIFTEEN YEARS BEG INNING FROM THE YEAR IN WHICH THE UNDERTAKING OR THE ENTERPRISE DE VELOPS AND BEGINS TO OPERATE. THE FIFTEEN YEARS IS THE OUTER LIMI T WITHIN WHICH THE ASSESSEE CAN CHOOSE THE PERIOD OF CLAIMING THE D EDUCTION. SUB- SECTION (5) IS A NON-OBSTANTE CLAUSE WHICH DEALS WITH TH E QUANTUM OF DEDUCTION (OR AN ELIGIBLE BUSINESS .... THUS, THE FICTION CREATED IS THAT THE ELIGIBLE BUSINESS IS THE ONLY SOURCE OF INCOM E AND THE DEDUCTION WOULD BE ALLOWED FROM THE 'INITIAL ASSESSM ENT YEAR' OR ANY SUBSEQUENT ASSESSMENT YEAR. IT NOWHERE DEFINES A S TO WHAT IS THE 'INITIAL ASSESSMENT YEAR'. PRIOR TO 1.04.2000, THE 'INITIAL ASSESSMENT YEAR' WAS DEFINED FOR VARIOUS TYPES OF EL IGIBLE ASSESSEES U/S. 80IA(J2). HOWEVER, AFTER THE AMENDMENT BROUGHT I N STATUTE BY THE FINANCE ACT, 1999, THE DEFINITION OF 'INITIAL ASSE SSMENT YEAR' HAS BEEN SPECIFICALLY TAKEN AWAY. NOW, WHEN THE ASSES SEE EXERCISES THE OPTION OF CHOOSING THE 'INITIAL ASSESSMENT YEAR', A S CULLED OUT IN SUB-SECTION (2) OF SECTION 80IA FROM WHICH IT CHOOSES ITS TEN YEARS OF DEDUCTION OUT OF FIFTEEN YEARS, THEN ONLY THE LOSSES OF THE YEARS 10 STARTING FROM THE 'INITIAL ASSESSMENT YEAR' ALONE AR E TO BE BROUGHT FORWARD AS STIPULATED IN SECTION 80IA(5). THE LOSS P RIOR TO THE 'INITIAL ASSESSMENT YEAR' WHICH HAS ALREADY BEEN SET-OFF CANN OT BE BROUGHT FORWARD AND ADJUSTED INTO THE PERIOD OF TEN YEARS FROM THE 'INITIAL ASSESSMENT YEAR' AS CONTEMPLATED OR CHOSEN BY THE ASS ESSEE ... THIS IS THE TRUE IMPORT OF SECTION 80IA(5).' IN THE LIGHT OF THE ABOVE JUDGMENT, IF WE CONSIDER THE FACTS OF THE INSTANT CASE, WE FIND THAT THERE IS NO DISPUTE AS TO ELIGIBILITY OF DEDUCTION U/ S. 80IA(1), BUT, THE ONLY DISPUTE IS WHETHER COMPUTING PROVISIONS OF S UB-SECTION (5) OF SECTION 80IA WOULD APPLY TO THE YEARS EARLIER THAN A.Y. 2009-10 OR NOT. WHEN WE READ THE ABOVE JUDGMENT, IT BECOMES CLE AR THAT THE 'INITIAL ASSESSMENT YEAR' IN THE CASE OF THE ASSESS EE IN A.Y. 2009-10, WHEN THE CLAIM OF DEDUCTION U/S. 80IA WAS MADE FOR THE FIRST TIME, AND THE CURRENT A.Y. 2010-11 IS THE SEC OND YEAR OF THE ASSESSEES CLAIM U/S.80IA. THEREFORE, WE ARE OF TH E CONSIDERED OPINION AND IN THE LIGHT OF THE JUDGMENT CITED ABOVE, THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S. 80IA AS CLAIMED, THEREFOR E, THE LD. CIT(A) HAS DELETED THE ADDITION ION OF RS. 32,55,010/-, WHI CH DOES NOT NEED ANY INTERFERENCE ON OUR PART, HENCE, WE UPHO LD THE ACTION OF THE LD. CIT(A) ON THE ISSUE IN DISPUTE AND DISMISS T HE GROUND NOS. 1 TO 2 RAISED BY THE REVENUE. 11 8. IN THE+ RESULT, THE APPEAL FILED BY THE REVENUE STAN DS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10/04/2017. SD/- SD/- (PRASHANT MAHARISHI) (H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 10/04/2017 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES