ACIT, Coimbatore V. GVG Paper Mills Limited, Udamalpet

ITA 454/CHNY/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4178 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 22-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , !, # !$ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ ITA NO.454/MDS/2017 ' (' / ASSESSMENT YEAR : 2012-13 THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 3, AAYAKAR BHAVAN, 63, RACE COURSE ROAD, COIMBATORE 641 018. V. M/S GVG PAPER MILLS LIMITED, NO.168/2, SIKKANDAR BATCHA STREET, GANDHI NAGAR, UDUMALPET 642 154. PAN : AABCG 1438 N (*+/ APPELLANT) (,-*+/ RESPONDENT) *+ . / / APPELLANT BY : SMT. ANN MARY BABY, JCIT ,-*+ . / / RESPONDENT BY : SHRI A. DHANANJAYAN, FCA 0 . 1# / DATE OF HEARING : 25.05.2017 23( . 1# / DATE OF PRONOUNCEMENT : 29.06.2017 / 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)-18, CHENNA I, DATED 18.11.2016 AND PERTAINS TO ASSESSMENT YEAR 2012-13. 2. THE FIRST ISSUE ARISES FOR CONSIDERATION IS DEDU CTION CLAIMED BY THE ASSESSEE UNDER SECTION 80-IA OF THE INCOME-T AX ACT, 1961 (IN SHORT 'THE ACT'). 2 I.T.A. NO.454/MDS/17 3. SMT. ANN MARY BABY, THE LD. DEPARTMENTAL REPRESE NTATIVE, SUBMITTED THAT THE ASSESSEE CLAIMED DEDUCTION UNDER SECTION 80-IA OF THE ACT TO THE EXTENT OF ` 2,52,99,350/-. ACCORDING TO THE LD. D.R., TURBINE DIVISION AND PAPER DIVISION FORM PART OF SI NGLE UNIT, THEREFORE, TURBINE UNIT CANNOT BE CONSIDERED TO BE AN INDEPEND ENT UNIT CAPABLE OF OPERATING ON ITS OWN. ACCORDING TO THE LD. D.R. , TURBINE UNIT WAS FORMED BY SPLITTING OF EXISTING PAPER UNIT BY REPLA CING THE OLD BOILERS AND PRESSURE REDUCTION STEAM VALVES. THE STEAM TUR BINE DIVISION USED FUELS COSTING VERY HIGH AMOUNT TO PRODUCE STEA M, WHICH IS ESSENTIAL FOR RUNNING THE TURBINE DIVISION FOR GENE RATING ELECTRICITY. THE COST OF FUEL WAS NEVER CHANGED TO TURBINE DIVIS ION. THEREFORE, ACCORDING TO THE LD. D.R., THE CIT(APPEALS) IS NOT JUSTIFIED IN ALLOWING THE CLAIM OF THE ASSESSEE. 4. REFERRING TO THE ORDER OF THIS TRIBUNAL FOR ASSE SSMENT YEAR 2011-12, THE LD. D.R. SUBMITTED THAT THE ISSUE WAS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER BY ORDER DATED 10 .08.2016 TO VERIFY WHETHER THE ASSESSEE WAS MAINTAINING SEPARATE BOOKS OF ACCOUNT OR NOT. THEREFORE, ACCORDING TO THE LD. D.R., THE CIT(APPEALS) IS NOT JUSTIFIED IN ALLOWING THE CLAIM OF THE ASSESSEE. 3 I.T.A. NO.454/MDS/17 5. ON THE CONTRARY, SHRI A. DHANANJAYAN, THE LD. RE PRESENTATIVE FOR THE ASSESSEE, SUBMITTED THAT THIS TRIBUNAL FOR ASSESSMENT YEAR 2011-12 REMITTED BACK THE ISSUE TO THE FILE OF THE ASSESSING OFFICER TO VERIFY WHETHER THE ASSESSEE MAINTAINS SEPARATE B OOKS OF ACCOUNT FOR TURBINE DIVISION AND HOW THE VALUE OF ELECTRICI TY PRODUCED WAS CALCULATED. CONSEQUENT TO THE ORDER OF THIS TRIBUN AL, THE ASSESSING OFFICER EXAMINED THE MATTER AND BY AN ORDER DATED 2 6.12.2016, AFTER VERIFYING THE BOOKS MAINTAINED BY THE ASSESSE E FOR TURBINE DIVISION AND THE AUDIT REPORT IN FORM 10CCB FOR POW ER GENERATING DIVISIONS, INCLUDING WINDMILL DIVISION, FOUND THAT THE CLAIM OF THE ASSESSEE IS JUSTIFIED. THEREFORE, ACCORDING TO THE LD. REPRESENTATIVE, THE CIT(APPEALS) HAS RIGHTLY ALLOWE D THE CLAIM OF THE ASSESSEE. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AN IDENTICAL ISSUE CAME BEFORE THIS TRIBUNAL FOR ASSESSMENT YEAR 2011-12 IN THE ASSESSEE'S OWN CASE IN I.T.A. NO.1452/MDS/2016. TH IS TRIBUNAL BY AN ORDER DATED 10.08.2016, AFTER REFERRING TO AN EA RLIER ORDER OF THIS TRIBUNAL FOR ASSESSMENT YEAR 2003-04, REMITTED BACK THE MATTER TO THE FILE OF THE ASSESSING OFFICER BY OBSERVING AS U NDER AT PARA 11:- 4 I.T.A. NO.454/MDS/17 11. A CLEAR FINDING GIVEN BY THE TRIBUNAL THAT THE ASSESSEE HAD MAINTAINED SEPARATE BOOKS OF ACCOUNT F OR THE TURBINE DIVISION IN THE YEARS IN APPEAL BEFORE IT. THIS WAS ONE OF THE REASONS WHY THE TRIBUNAL ACCEPTED TH E PLEA OF THE ASSESSEE THAT THE VALUE OF THE POWER GENERATED BY TURBINE DIVISION WAS ELIGIBLE FOR DEDU CTION U/S 80IA OF THE ACT. HOWEVER, FOR IMPUGNED ASSESSMEN T YEAR WE FIND THAT ONE OF THE AUTHORITIES BELOW HAS VERIFIED WHETHER THE ASSESSEE MAINTAINED SEPARATE B OOKS OF ACCOUNT FOR TURBINE DIVISION AND HOW THE VALUE O F THE ELECTRICITY PRODUCED WAS CALCULATED. WE ARE, THERE FORE, OF THE OPINION THAT THE MATTER REQUIRES FRESH LOOK BY THE AUTHORITIES BELOW. THUS, INSOFAR AS THE CLAIM OF D EDUCTION U/S 80IA FOR THE TURBINE DIVISION, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND REMIT IT TO THE FILE OF THE ASSESSING OFFICER FOR CONSIDERATION AFRESH IN ACCORDANCE WITH LAW. 7. CONSEQUENT TO THE DIRECTION OF THIS TRIBUNAL, TH E ASSESSING OFFICER EXAMINED THE ISSUE AND FOUND THAT THE ASSES SEE WAS MAINTAINING SEPARATE BOOKS OF ACCOUNT FOR TURBINE D IVISION AND IT WAS ALSO FOUND THAT THE ASSESSEE WAS CALCULATING BY ADOPTING ` 4.80 PER UNIT WHICH IS NORMAL MARKET RATE FIXED BY TNEB. IN FACT, THE ASSESSING OFFICER OBSERVED IN THE ASSESSMENT ORDER DATED 26.12.2016 AS FOLLOWS:- 4. IN RESPONSE TO THE HEARING NOTICE DATED 25/10/2016, SHRI A. DHANANJAYAN, AUTHORIZED REPRESENTATIVE OF THE ASSESSEE WAS PRESENT AND CASE DISCUSSED. THE ASSESSEE IS MAINTAINING SEPARATE BO OKS OF ACCOUNTS FOR THE TURBINE DIVISION. AUDIT REPORT IN FORM NO.10CCB FOR POWER GENERATING DIVISIONS LIKE TURBINE DIVISION AND WINDMILL DIVISIONS, SEPARATE P&L A/C A ND 5 I.T.A. NO.454/MDS/17 BALANCE SHEET WERE ALSO SUBMITTED. DETAILS OF ELEC TRICITY PRODUCED, RATE PER UNIT AND CALCULATION FOR ARRIVIN G AT THE VALUE OF THE ELECTRICITY PRODUCED WERE SUBMITTED AN D VERIFIED. THE ASSESSEE COMPANY HAS ADOPTED ` 4.80 PER UNIT WHICH IS THE NORMAL MARKET RATE FIXED BY TNEB. 8. IN VIEW OF THE ABOVE, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY AND ACCORDINGLY THE SAME IS CONFIRMED. 9. THE NEXT GROUND OF APPEAL IS WITH REGARD TO CLAI M OF DEPRECIATION ON WINDMILL. 10. WE HAVE HEARD SMT. ANN MARY BABY, THE LD. DEPAR TMENTAL REPRESENTATIVE AND SHRI A. DHANANJAYAN, THE LD. REP RESENTATIVE FOR THE ASSESSEE. THIS ISSUE WAS CONSIDERED BY THIS TR IBUNAL IN THE ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2011-12. T HIS TRIBUNAL AFTER REFERRING TO THE JUDGMENT OF MADRAS HIGH COUR T IN VELAYUDHASWAMY SPINNING MILLS (P) LTD. V. ACIT (231 CTR 368), ALLOWED THE CLAIM OF THE ASSESSEE. IN FACT, THE CI T(APPEALS) HAS PLACED HIS RELIANCE ON THE JUDGMENT OF MADRAS HIGH COURT IN VELAYUDHASWAMY SPINNING MILLS (P) LTD. (SUPRA). TH EREFORE, THIS TRIBUNAL DO NOT FIND ANY REASON TO INTERFERE WITH T HE ORDER OF THE LOWER AUTHORITY AND ACCORDINGLY THE SAME IS CONFIRM ED. 6 I.T.A. NO.454/MDS/17 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON 29 TH JUNE, 2017 AT CHENNAI. SD/- SD/- ( ! ) ( . . . ) (S. JAYARAMAN) (N.R.S. GANESAN) # / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 29 TH JUNE, 2017. KRI. . ,167 87(1 /COPY TO: 1. *+ /APPELLANT 2. ,-*+ /RESPONDENT 3. 0 91 () /CIT(A)-18, CHENNAI 4. PRINCIPAL CIT (CENTRAL) 2, CHENNAI 5. 7: ,1 /DR 6. ;' < /GF.