ACIT, CHENNAI V. Kanishk Steel Industries Ltd., CHENNAI

ITA 2955/CHNY/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8281 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2006-2007
• Appeal Filed On: 05-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR B NISCHAL
• Assessee Lawyers: V RA VICHANDRAN
• Keywords: Depreciation; Additional depreciation

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI . . . , . !'# ! , % !& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO.2955/MDS/2014 ( )( / ASSESSMENT YEAR : 2006-07 THE ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE IV(2), CHENNAI - 600 034. V. M/S KANISHK STEEL INDUSTRIES LTD., NO.17 (NEW NO.26), MOOKAR NALLU MUTHU STREET, CHENNAI - 600 001. PAN : AABCK 2367 G (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : DR. B. NISCHAL, JCIT -.+, / 0 / RESPONDENT BY : SHRI V. RAVICHANDRAN, CA 1 / 2% / DATE OF HEARING : 29.12.2015 3') / 2% / DATE OF PRONOUNCEMENT : 01.01.2016 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-II, CHENNA I, DATED 21.07.2014 AND PERTAINS TO ASSESSMENT YEAR 2006-07. 2 I.T.A. NO.2955/MDS/14 2. DR. B. NISCHAL, THE LD. DEPARTMENTAL REPRESENTAT IVE, SUBMITTED THAT THE ASSESSEE CLAIMED ADDITIONAL DEPR ECIATION ON THE WINDMILL. THE ASSESSEE EXPLAINED BEFORE THE ASSESS ING OFFICER THAT THERE WAS NO SPECIFIC EXCLUSION IN SECTION 32(1)(II A) OF THE INCOME- TAX ACT, 1961 (IN SHORT 'THE ACT') TO EXCLUDE THE W INDMILL FOR ADDITIONAL DEPRECIATION. THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS NOT PRODUCED ANY ARTICLE OR THING BY USING THE WIND MILL. WINDMILL CONSUMES ELECTRICITY AND ALSO GENERATES ELECTRICITY . THEREFORE, THE ASSESSEE IS NOT ENTITLED FOR ADDITIONAL DEPRECIATIO N IN RESPECT OF THE WINDMILL. 3. ON THE CONTRARY, SHRI V. RAVICHANDRAN, THE LD. REPRESENTATIVE FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE, IN FACT, CLAIMED DEPRECIATION ON THE WINDMILL UNDER SE CTION 32(1)(IIA) OF THE ACT. ACCORDING TO THE LD. REPRESENTATIVE, THE ELECTRICITY GENERATED FROM WINDMILL IS USED FOR CAPTIVE CONSUMP TION. THE ASSESSEE CLAIMED ADDITIONAL DEPRECIATION TO THE EXT ENT OF 20% UNDER SECTION 32(1)(IIA) OF THE ACT. THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT GENERATION OF ELECTRICITY DOES NOT AMOUNT TO PRODUCTION OF THI NG OR ARTICLE. PLACING RELIANCE ON THE JUDGMENT OF THE JURISDICTIO NAL HIGH COURT IN 3 I.T.A. NO.2955/MDS/14 CIT V. VTM LTD. (2009) 319 ITR 336, THE LD. REPRESE NTATIVE SUBMITTED THAT THE ASSESSEE BEFORE THE MADRAS HIGH COURT CLAIMED ADDITIONAL DEPRECIATION ON THE WINDMILL. THE ELECT RICITY GENERATED BY THE WINDMILL WAS USED FOR CAPTIVE CONSUMPTION BY TH E ASSESSEE. THE MADRAS HIGH COURT FURTHER FOUND THAT THE PROVIS IONS OF THE ACT DOES NOT STATE THAT SETTING UP OF MACHINERY OR PLAN T SHOULD HAVE OPERATIONAL CONNECTIVITY TO THE ARTICLE OR THING TH AT WAS ALREADY BEING MANUFACTURED BY THE ASSESSEE. THEREFORE, ACCORDING TO THE LD. REPRESENTATIVE, THE CIT(APPEALS) HAS RIGHTLY ALLOWE D THE CLAIM OF THE ASSESSEE BY PLACING RELIANCE ON THE JUDGMENT OF THE MADRAS HIGH COURT (SUPRA). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICER ADMITTEDLY DISALLOWED THE CLAIM OF THE ASSE SSEE ON THE GROUND THAT GENERATION OF ELECTRICITY DOES NOT AMOU NT TO MANUFACTURING OF ARTICLE OR THING. THE ASSESSEE AD MITTEDLY IN THE BUSINESS OF MANUFACTURING IRON AND STEEL PRODUCTS. THE ELECTRICITY GENERATED BY THE WINDMILL WAS USED FOR CAPTIVE CONS UMPTION IN MANUFACTURING ACTIVITY. THEREFORE, THE QUESTION AR ISES FOR CONSIDERATION IS WHEN THE ASSESSEE USED THE ELECTRI CITY GENERATED 4 I.T.A. NO.2955/MDS/14 BY THE WINDMILL IN MANUFACTURING ACTIVITY, WHETHER THE ASSESSEE IS ENTITLED FOR ADDITIONAL DEPRECIATION UNDER SECTION 32(1)(IIA) OF THE ACT? AN IDENTICAL SITUATION WAS CONSIDERED BY THE MADRAS HIGH COURT IN VTM LTD. (SUPRA). IN THE CASE BEFORE MADR AS HIGH COURT, THE ASSESSEE WAS ENGAGED IN THE MANUFACTURING OF TE XTILE GOODS AND ELECTRICITY GENERATED BY THE WINDMILL WAS USED FOR CAPTIVE CONSUMPTION IN MANUFACTURING OF TEXTILE GOODS. IN THOSE CIRCUMSTANCES, THE MADRAS HIGH COURT FOUND THAT THE PROVISIONS OF THE ACT DOES NOT STATE THAT SETTING UP OF NEW MACHI NERY OR PLANT SHOULD HAVE OPERATIONAL CONNECTIVITY TO THE ARTICLE OR THING THAT WAS ALREADY BEING MANUFACTURED BY THE ASSESSEE. IN THO SE CIRCUMSTANCES, THIS TRIBUNAL IS OF THE CONSIDERED O PINION THAT THE CIT(APPEALS) HAS RIGHTLY PLACED HIS RELIANCE ON THE BINDING JUDGMENT OF MADRAS HIGH COURT. THEREFORE, THIS TRI BUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY. ACCORDINGLY, THE ORDER OF THE CIT(APPEALS) IS CONFI RMED. 5. IN THE RESULT, THIS APPEAL OF THE REVENUE IS DIS MISSED. 5 I.T.A. NO.2955/MDS/14 ORDER PRONOUNCED ON 1 ST JANUARY, 2016 AT CHENNAI. SD/- SD/- (. !'# ! ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 1 ST JANUARY, 2016. KRI. / -267 87)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. 1 92 () /CIT(A)-II, CHENNAI 4. 1 92 /CIT-II, CHENNAI 5. 7: -2 /DR 6. ( ; /GF.