ACIT, CHENNAI V. Century Flour Mills Limited, CHENNAI

ITA 3347/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4636 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-05-2017
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 14-12-2016
• Court: TRIBUNAL
• Department Lawyers: N MADHAVAN
• Assessee Lawyers: S NAGARAJAN
• Keywords: Depreciation; Additional depreciation; Unabsorbed depreciation
• Section: 43B; 143(3); 14A

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , . , BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ I T.A. NO. 3347 /MDS/201 6 / ASSESSMENT YEAR :20 1 3 - 1 4 THE ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 1( 2 ) , CHENNAI 600 034. VS. M/S. CENTURY FLOUR MILLS LTD., NO. 1 ST FLOOR, INDIAN CHAMBERS BUILDI NG, ESPLANADE, CHENNAI 600 108. [PAN: AA A C C 1223C ] ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI N. MADHAVAN , J CIT / RESPONDENT BY : SHRI S. NAGARAJAN , C.A. / DATE OF HEARING : 16 . 0 2 .201 7 / DATE OF P RONOUNCEMENT : 09 . 0 5 .201 7 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 1 , C HENNAI DATED 2 0 . 0 9 .201 6 RELEVANT TO THE ASSESSMENT YEAR 20 1 3 - 1 4 . 2. THE FIRST ISSUE RAISED IN THE APPEAL OF THE REVENUE IS THAT THE L D. CIT(A) HAS ERRED IN ALLOWING DEDUCTION UNDER SECTION 80 - IA OF THE INCOME TAX ACT , 1961 [ ACT IN SHORT] . I.T.A. NO . 3347 /M/ 16 2 3. T HE ASSESSEE IS A COMPANY , ENGAGED IN THE BUSINESS OF WHEAT FLOUR MILLING AND WINDMILL POWER GENERATION AND FILED ITS RETURN OF INCOME ON 3 0 . 0 9 .201 3 ADMITTING ITS INCOME OF . 8,42,39,360 / - . THE CASE WAS TAKEN FOR SCRUTINY THROUGH CASS AND ASSESSMENT U NDER SECTION 143(3) OF THE ACT WAS COMPLETED ON 11 . 0 1 .201 6 , WHEREIN , THE A SSESSING O FFICER MADE VARIOUS DISALLOWANCES INCLUDING DISALLOW ANCE OF DEDUCTION UNDER SECTION 80 - IA OF THE ACT ON WIND MILL . 4 . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS OBSERVED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAD CLAIMED THE DEDUCTION UNDER SECTION 80 - IA OF THE ACT FOR A SUM OF .16,14,274/ - FOR ONE UNIT WINDMILL ESTABLISHED IN 20 02 (VISTAS) AND ALSO CLAIMED LOSS ON ACCOUNT OF UNABSORBED DEPRECIATION FOR OTHER UNITS INSTALLED BY THE ASSESSEE BY RELYING UPON THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF RENGAMMA STEELS AND MALLEABLES V. ACIT 132 TTJ 365 . HOWEVER THE A SSESSING O FFICER OPINED THAT SINCE THE REVENUE IS IN FURTHER APPEAL HE WA S JUSTIFIED IN DISALLOWING THE TOTAL CLAIM OF DEDUCTION OF . 1,06,84,273 / - UNDER SECTION 80 - IA OF THE ACT. 5 . ON APPEAL BY THE ASSESSEE, L D.CIT (A) DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY FOLLOWING THE DECISION OF THE TRIBUNAL IN ASSESSEE S OWN CASE FOR EARLIER ASSESSMENT YEAR 2011 - 12, WHEREIN THE ORDER OF THE TRIBUNAL IN ASSESSEE S OWN CASE FOR THE ASSESSMENT YEAR 2010 - 11 HAS BEEN FOLLOWED. I.T.A. NO . 3347 /M/ 16 3 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE ASSESSEE HAS CLAIMED DEDUCTION UNDER SECTION 80IA OF THE ACT FOR THE WINDMILL UNIT ESTABLISHED IN 2002 (VISTAS). THE ASSESSEE HAS ALSO CLAIMED LOSS ON ACCOUNT OF UNABSORBED DEPRECIATION FOR OTHER SIX WINDMILL UNITS ESTABLISHED IN DIFFERENT PLACES AND COMMISSIONED IN DIFFERENT ASSESSMENT YEARS. SINCE ALL THE WINDMILLS HAVE B EEN CONSIDERED AS A SINGLE UNDERTAKING, THE ASSESSING OFFICER ALLOWED DEPRECIATION LOSS OF ONE OF THE WINDMILLS AGAINST THE OTHER WINDMILLS. IT WAS THE SUBMISSION OF THE ASSESSEE THAT EACH OF THE WINDMILL IS AN INDEPENDENT UNIT AND IS NOT DEPENDENT ON EACH OTHER. FURTHER, EACH OF THE WINDMILL HAS A SEPARATE POWER PURCHASE AGREEMENT WITH TANGEDCO AND HAS SEPARATE METER FOR RECORDING OF ELECTRICITY GENERATED AND SUPPLIED AND THAT EACH OF THE WINDMILL IS TO BE TREATED AS A SEPARATE UNDERTAKING FOR THE PURPOSE OF COMPUTING THE RELIEF UNDER SECTION 80IA OF THE ACT. WE FIND THAT ON AN IDENTICAL ISSUE IN SIMILAR FACTS, IN ASSESSEE S OWN CASE FOR THE ASSESSMENT YEAR 2010 - 11 IN I.T.A. NO. 2225/MDS/2015 DATED 29.01.2016, THE COORDINATE BENCHES OF THE TRIBUNAL HAS OBSE RVED AND HELD AS UNDER: 3. IN THIS CASE, THE ASSESSEE HAD DURING THE PREVIOUS YEAR RELEVANT TO THE ASST. YEAR 2010 - 11 SEVEN WINDMILLS FROM WHICH POWER WAS BEING GENERATED AND USED FOR OWN CONSUMPTION AS WELL AS BEING SUPPLIED TO TNEB. THE COMMISSIONER OF INCOME - TAX(APPEALS) OBSERVED THAT THESE WINDMILLS WERE COMMISSIONED BETWEEN 27.3.1995 AND 23.2.2010. EACH OF THESE WINDMILLS WERE INSTALLED IN DIFFERENT PLACES AND WERE GOVERNED BY SEPARATE POWER PURCHASE AGREEMENT, SEPARATE METER CONNECTION AND SEPARATE APPROVALS AS ALSO METER AND BILLING. THE ASSESSEE S CLAIM U/S.80IA OF THE ACT, RESTED ON THE PREMISE THAT EACH OF I.T.A. NO . 3347 /M/ 16 4 THE WINDMILL WAS A SEPARATE UNDERTAKING. WHILE DECIDING THE ISSUE RELATING TO GRANT OF DEPRECIATION ON WINDMILL, IN ASSESSEE S OWN CASE FOR TH E A.Y. 2006 - 07, THE TRIBUNAL IN ITA NO.1650/MDS/2015 DATED 16.10.2015, OBSERVED THAT EACH WINDMILL IS TO BE CONSIDERED INDEPENDENT AND SEPARATE AND AS A CONSEQUENCE DEDUCTION U/S.80IA TO BE COMPUTED AND DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. ACCORDI NGLY, THE CIT(APPEALS) IS JUSTIFIED IN ALLOWING THE CLAIM OF DEDUCTION U/S.80IA OF THE ACT TO THE ASSESS E E AND THIS GROUND OF THE APPEAL OF THE REVENUE IS DISMISSED. 7. RESPECTIVELY FOLLOWING THE ABOVE DECISION OF THE TRIBUNAL, THE LD. CIT(A) DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. THUS, WE FIND NO INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(A) ON THIS ISSUE AND ACCORDINGLY, WE DISMISS THE GROUND RAISED BY THE REVENUE. 8 . THE NEXT GROUND RAISED IN THE APPEAL OF THE REVENUE IS THAT THE LD. CIT(A) H AS ERRED IN DELETING THE ADDITION MADE IN RESPECT OF EMPLOYEES CONTRIBUTION TOWARDS PF/ESI OF .78,195/ - UNDER SECTION 43B OF THE ACT. THE DISALLOWANCE WAS MADE ON THE GROUND THAT THE SAID CONTRIBUTIONS HAVE BEEN PAID BELATEDLY. 9. ON APPEAL, THE LD. CIT(A) ALLOWED THE GROUND RAISED BY THE ASSESSEE. 10. ON BEING AGGRIEVED, THE REVENUE IS IN APP EAL BEFORE TRIBUNAL AND THE LD. DR DUTIFULLY SUPPORTED THE ORDER PASSED BY THE ASSESSING OFFICER. 11. WE HAVE HEARD THE RIVAL CONTENTIONS. THE ONLY DISPUTE OF THE ASSESSING OFFICER IS THAT ON VERIFICATION OF THE PROFIT AND LOSS ACCOUNT, AN AMOUNT OF .78 ,195/ - HAS BEEN BELATEDLY PAID BY THE EMPLOYER AND HENCE I.T.A. NO . 3347 /M/ 16 5 THE SAME WAS DISALLOWED UNDER SECTION 43B OF THE ACT AND ADDED TO THE INCOME OF THE ASSESSEE. THE LD. CIT(A) HAS OBSERVED THAT IN THE CBDT CIRCULAR NO. 22/2015 DATED 17.12.2015 IN F.NO. 279/MISC/140/ 2015 - ITJ, IT HAS BEEN CLARIFIED THAT THE APEX COURT DECISION IN THE CASE OF CIT V. ALOM EXTRUSIONS LTD. 185 TAXMAN 416, 319 ITR 306 (SC) HAS BEEN ACCEPTED WITH REGARD TO THE EMPLOYER S CONTRIBUTION TO THE PF FUND OR SUPERANNUATION FUND OR GRATUITY FUND IF DEPOSITED ON OR BEFORE THE DUE DATE AND NO DISALLOWANCE COULD BE MADE UNDER SECTION 43B OF THE ACT. THUS, THE LD. CIT(A) DIRECTED THE ASSESSING OFFICER TO DELETE THE DISALLOWANCE MADE UNDER SECTION 43B OF THE ACT. 12. IN THIS CASE, I T IS NOT DISPUTED BY THE REVENUE THAT THE ASSESSEE HAS NOT PAID THE EMPLOYER S CONTRIBUTION BEFORE THE DUE DATE OF FILING OF THE RETURN. VARIOUS COURTS INCLUDING THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. NEXUS COMPUTER (P) LTD. 313 ITR 144, IT WAS HELD THAT T HE PF AND ESI CONTRIBUTION PAID BELATEDLY, BUT PRIOR TO DUE DATE OF FILING OF RETURN COULD NOT BE DISALLOWED UNDER SECTION 43B OF THE ACT. THEREFORE, RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE HON BLE JURISDICTIONAL HIGH COURT ALSO, WE FIND NO REASON TO INTERFERE WITH THE ORDER PASSED BY THE LD. CIT(A) ON THIS ISSUE AND THUS, THE GROUND RAISED BY THE REVENUE IS DISMISSED. 13 . THE NEXT GROUND RAISED IN THE APPEAL OF THE REVENUE IS WITH REGARD TO DELETION OF ADDITION OF .1,55,483/ - MADE UNDER SECTION 32(1)(IIA) OF THE ACT I.T.A. NO . 3347 /M/ 16 6 ON ACCOUNT OF DEPRECIATION CLAIMED BY THE ASSESSEE. ON PERUSAL OF AUDIT REPORT, THE ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE HAS CLAIMED EXCESS DEPRECIATION AND ACCORDINGLY, HE DISALLOWED THE SA ME. 1 4. ON APPEAL, BY FOLLOWING ORDER OF THE TRIBUNAL AS WELL AS DECISION IN OTHER CASES, THE LD. CIT(A) ALLOWED THE GROUND RAISED BY THE ASSESSEE. 15. WE HAVE CONSIDERED THE RIVAL CONTENTIONS. THE DISALLOWANCE WAS MADE ON ACCOUNT THAT THE ASSESSEE HAS MADE EXCESS CLAIM OF DEPRECIATION. THE LD. CIT(A) HAS OBSERVED THAT ON AN IDENTICAL ISSUE IN THE CASE OF DEVI POLYMERS P. LTD. V. ACIT IN I.T.A. NO. 165/MDS/2014 DATED 09.04.2014, THE TRIBUNAL HAS CONSIDERED THE DECISIONS IN THE CASE OF DCIT V. BRAKES IN DIA LTD. IN ITA NO. 1069/MDS2010 DATED 06.01.2012 AND IN THE CASE OF CRI PUMPS P. LTD. V. ACIT , WHEREIN, IT HAS BEEN HELD THAT ADDITIONAL DEPRECIATION TO THE EXTENT NOT CLAIMED BY THE ASSESSEE IN THE EARLIER YEAR OUGHT TO BE ALLOWED . THUS, THE LD. CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE. WE FIND NO REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND HENCE, THE GROUND RAISED BY THE REVENUE IS DISMISSED. 16 . THE LAST GROUND RAISED IN THE APPEAL OF THE REVENUE IS THAT THE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE MADE UNDER SECTION 14A R.W. RULE 8D. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER DISALLOWED A SUM OF .5,25,897/ - UNDER SECTION 14A R.W. RULE 8D(2)(II) BY APPORTIONING THE I.T.A. NO . 3347 /M/ 16 7 INTEREST EXPENSES INCURRED THE ASSESSEE IN PR OPORTION TO THE INVESTMENTS THE INCOME FROM WHICH WAS EXEMPT AND THE TOTAL ASSETS. ON APPEAL, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND BY FOLLOWING THE DECISION OF THE TRIBUNAL IN ASSESSEE S OWN CASE, THE LD. CIT(A) PARTLY ALLOWED FOR STATISTI CAL PURPOSES. 17. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WHILE REITERATING THE SUBMISSIONS AS MADE BEFORE THE LD. CIT(A), THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE TRIBUNAL IN ASSESSEE S OWN CASE FOR THE ASSESSMENT YEARS 2008 - 09 AND 2009 - 10 IN I.T.A. NOS. 70 & 71/MDS/2014 DATED 21.11.2014 AND PRAYED THAT THE SAME SHOULD BE FOLLOWED FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, WHICH WAS FOLLOWED BY TH E LD. CIT(A). IN THE APPELLATE ORDER, THE LD. CIT(A) HAS OBSERVED AS UNDER: 30. I HAVE CAREFULLY CONSIDERED THE FACTS, ORDER OF THE AO, SUBMISSIONS MADE BY THE APPELLANT AND MATERIAL ON RECORD. I HAVE ALSO PERUSED THE RELIED UPON ORDER DATED 21.11.2014, WHEREIN THE DISALLOWANCE WAS DELETED ON THE OBSERVATION THAT THE AO S FINDINGS ALLEGING DIVERSION OF INTEREST BEARING FUNDS PROVED TO BE CONTRARY TO THE CASE RECORD . THE ITAT FOLLOWED THE SAME IN RESPECT OF THE DISALLOWANCE FOR A SUBSEQUENT PERIOD ALSO. RESPECTFULLY FOLLOWING THE DECISION, THE AO IS DIRECTED TO RECOMPUTE THE DISALLOWANCE AFTER EXCLUDING THE INTEREST ARISING FROM BORROWED FUNDS SPECIFICALLY RELATABLE TO THE BUSINESS AND SPECIFIC SOURCE OF INCOME OF THE APPELLANT. THE APPELLANT HAS EXPLAINE D THE SAME UNDER VARIOUS HEADS IN RESPECT OF INTEREST OF .95,71,009 IN ITS SUBMISSION REPRODUCED AS ABOVE AT PARA 23. THIS GROUND OF APPEAL IS PARTLY ALLOWED. I.T.A. NO . 3347 /M/ 16 8 IN VIEW OF THE ABOVE CONCURRENT OBSERVATIONS OF THE LD. CIT(A), WE FIND NO INFIRMITY IN THE O RDER PASSED BY THE LD. CIT(A) ON THIS ISSUE AND ACCORDINGLY, THE GROUND RAISED BY THE REVENUE IS DISMISSED. 18 . IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON THE 09 TH MAY , 201 7 AT CHENNAI. SD/ - SD/ - (CHANDRA POOJAR I) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 09 . 0 5 .201 7 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.