ACIT CENTRAL CIRCLE 2 (1), CHENNAI V. M/S MOHAN BREWERIES & DISTILLERIES LTD, CHENNAI

ITA 599/CHNY/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 3034 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 19-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R VIJAYARAGHAVAN
• Keywords: Depreciation
• Section: 148

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 NOS.598 & 599/CHNY/2018 ' (' / ASSESSMENT YEARS : 2005-06 & 2006-07 THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2(1), INVESTIGATION WING, CHENNAI - 600 034. V. M/S MOHAN BREWERIES & DISTILLERIES LTD., PHASE I, 3 RD FLOOR, 605 & 606, T.R. SUNDARAM AVENUE, CHENNAI - 600 006. PAN : AAACM 2415 L (*+/ APPELLANT) (,-*+/ RESPONDENT) *+ . / / APPELLANT BY : SHRI GURU BASHYAM, JCIT ,-*+ . / / RESPONDENT BY : SH. R. VIJAYARAGHAVAN, ADVOCATE 0 . 1# / DATE OF HEARING : 01.08.2018 23( . 1# / DATE OF PRONOUNCEMENT : 10.08.2018 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: BOTH THE APPEALS OF THE REVENUE ARE DIRECTED AGAI NST THE COMMON ORDER PASSED BY THE COMMISSIONER OF INCOME T AX (APPEALS)-18, CHENNAI, DATED 29.11.2017 AND PERTAIN TO ASSESSMENT YEARS 2005-06 AND 2006-07. THEREFORE, W E HEARD BOTH THE APPEALS TOGETHER AND DISPOSING OF THE SAME BY T HIS COMMON ORDER. 2 I.T.A. NOS.598 & 599/CHNY/18 2. SHRI GURU BASHYAM, THE LD. DEPARTMENTAL REPRESEN TATIVE, SUBMITTED THAT THE ASSESSING OFFICER REOPENED THE A SSESSMENT BY ISSUING NOTICE UNDER SECTION 148 OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') ON 29.03.2012 FOR BOTH THE ASSESSM ENT YEARS. ACCORDING TO THE LD. D.R., THE ASSESSEE CLAIMED DED UCTION UNDER SECTION 80-IA OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') IN RESPECT OF THREE WINDMILL UNITS. THE ASSESSING OFF ICER AFTER CONSIDERING THE FINANCE ACT, 1998, FOUND THAT WINDM ILL CANNOT BE EQUATED WITH POWER GENERATING UNIT AS CONTEMPLATED IN ANNEXURE 1A OF DEPRECIATION SCHEDULE, THEREFORE, THE ASSESSE E IS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80-IA OF THE ACT. ACCO RDINGLY, HE WITHDREW THE SAME. HOWEVER, ACCORDING TO THE LD. D .R., THE CIT(APPEALS) FOUND THAT THE ASSESSMENTS WERE REOPEN ED BEYOND THE PERIOD OF FOUR YEARS AND NO FRESH MATERIAL WAS AVAILABLE BEFORE THE ASSESSING OFFICER FOR REOPENING THE ASSESSMENTS . ACCORDINGLY, THE CIT(APPEALS) FOUND THAT THE REOPENING OF ASSESS MENTS WAS ILLEGAL. ACCORDING TO THE LD. D.R., SINCE THE ASSE SSING OFFICER HAS RIGHTLY REOPENED THE ASSESSMENTS, THE CIT(APPEALS) IS NOT JUSTIFIED IN ALLOWING THE CLAIM OF THE ASSESSEE. 3 I.T.A. NOS.598 & 599/CHNY/18 3. ON THE CONTRARY, SH. R. VIJAYARAGHAVAN, THE LD.C OUNSEL FOR THE ASSESSEE, SUBMITTED THAT THE ISSUE OF DEDUCTION UNDER SECTION 80-IA OF THE ACT IN RESPECT OF WINDMILL WAS DISALLO WED BY THE ASSESSING OFFICER IN THE ORIGINAL ASSESSMENTS. ACC ORDING TO THE LD. COUNSEL, THE ASSESSEE FILED APPEALS FOR BOTH THE AS SESSMENT YEARS BEFORE THE CIT(APPEALS) AND THE CIT(APPEALS), IN FA CT, ALLOWED DEPRECIATION ON THE WINDMILL AND FURTHER APPEALS WE RE FILED BEFORE THIS TRIBUNAL AND THIS TRIBUNAL FOUND THAT THE ASSE SSEE IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80-IA OF THE ACT. ACCORDIN G TO THE LD. COUNSEL, THE HIGH COURT ALSO CONFIRMED THE ORDER OF THIS TRIBUNAL. NOW, THE ASSESSING OFFICER CLAIMS IN THE ASSESSMENT ORDERS THAT AN SLP IS PENDING BEFORE THE SUPREME COURT. WHEN THE MATTER IS SAID TO BE PENDING BEFORE SUPREME COURT IN RESPECT OF DE DUCTION UNDER SECTION 80-IA OF THE ACT, ACCORDING TO THE LD. COUN SEL, THE ASSESSING OFFICER HAS NOW REOPENED THE ASSESSMENTS BY ISSUING NOTICE UNDER SECTION 148 OF THE ACT ON THE GROUND T HAT WINDMILL CANNOT BE EQUATED WITH POWER GENERATING UNIT. ACCO RDING TO THE LD. COUNSEL, WHEN THE ORDER OF THE ASSESSING OFFICER WA S MERGED WITH THE ORDER OF THIS TRIBUNAL AND THE JUDGMENT OF MADR AS HIGH COURT, HE HAS NO JURISDICTION TO OVERTURN THE ORDER OF THI S TRIBUNAL AND THE 4 I.T.A. NOS.598 & 599/CHNY/18 JUDGMENT OF MADRAS HIGH COURT. THEREFORE, ACCORDIN G TO THE LD. COUNSEL, REOPENING ITSELF IS INVALID. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. A PERUSAL OF THE ORDER OF REASSESSMENT CLEARLY SHOWS THAT THIS TRIBU NAL AND MADRAS HIGH COURT ALLOWED THE CLAIM OF THE ASSESSEE UNDER SECTION 80-IA OF THE ACT ON THE VERY SAME WINDMILL. THE ASSESSIN G OFFICER BY REFERRING THE AMENDMENT MADE BY FINANCE ACT, 1998, CLAIMS THAT WINDMILL CANNOT BE EQUATED WITH POWER GENERATING UN IT. THEREFORE, HE WITHDREW THE DEDUCTION GRANTED UNDER SECTION 80- IA OF THE ACT. 5. IT IS A COMMON KNOWLEDGE THAT WHEN THE TRIBUNAL AND HIGH COURT FOUND THAT THE ASSESSEE IS ELIGIBLE FOR DEDUC TION UNDER SECTION 80-IA OF THE ACT, THE ASSESSMENT ORDER ORIG INALLY PASSED BY THE ASSESSING OFFICER IS MERGED WITH THE JUDGMENT O F MADRAS HIGH COURT. THE QUESTION ARISES FOR CONSIDERATION IS WH EN THE ORIGINAL ORDER OF ASSESSMENT IS MERGED WITH THE JUDGMENT OF MADRAS HIGH COURT, CAN THE ASSESSING OFFICER REOPEN THE ASSESSM ENT AND WITHDRAW THE CLAIM OF DEDUCTION GRANTED UNDER SECTI ON 80-IA OF THE ACT? THIS TRIBUNAL IS OF THE CONSIDERED OPINION TH AT THE ASSESSING OFFICER HAS NO JURISDICTION TO OVERTURN THE JUDGMEN T OF MADRAS HIGH 5 I.T.A. NOS.598 & 599/CHNY/18 COURT. THE JUDGMENT OF MADRAS HIGH COURT IS BINDIN G ON ALL THE AUTHORITIES IN THE STATE. WHATEVER MAY BE THE REAS ON, THE ASSESSING OFFICER HAS TO FOLLOW THE JUDGMENT OF MAD RAS HIGH COURT. NOW THE REVENUE CLAIMS THAT AN SLP WAS FILED BEFORE THE APEX COURT. IT IS OPEN TO THE REVENUE TO PURSUE REMEDY BEFORE THE APEX COURT IN A MANNER KNOWN TO LAW. HOWEVER, THE ASSES SING OFFICER CANNOT REOPEN THE ASSESSMENT AND WITHDRAW THE CLAIM OF DEDUCTION UNDER SECTION 80-IA OF THE ACT WHICH WAS ALREADY AL LOWED BY THE MADRAS HIGH COURT. 6. THE POWER TO DECIDE AND ADJUDICATE A DISPUTE WAS TECHNICALLY CONFERRED ON THE ASSESSING OFFICER UNDE R THE INCOME-TAX ACT. HOWEVER, REAL POWER FLOWS FROM THE CONFIDENCE REPOSED BY THE PEOPLE ON THE JUDICIAL SYSTEM. ONCE THE ORDER OF A SSESSMENT IS MERGED WITH THE JUDGMENT OF MADRAS HIGH COURT, THE ASSESSING OFFICER CANNOT TOUCH THE ORDER. IF THE ASSESSING O FFICER IS ALLOWED TO OVERTURN THE JUDGMENT OF MADRAS HIGH COURT, THEN TH E TAXPAYERS / CITIZENS OF THIS COUNTRY MAY NOT HAVE CONFIDENCE ON THE JUDICIAL SYSTEM. SUCH A THING CANNOT BE ALLOWED TO HAPPEN I N THIS COUNTRY. THIS TRIBUNAL TIME AND AGAIN POINTS OUT THAT THE JU DGMENT OF JURISDICTIONAL HIGH COURT HAS TO BE SCRUPULOUSLY FO LLOWED BY ALL THE 6 I.T.A. NOS.598 & 599/CHNY/18 AUTHORITIES IN THIS STATE. IRRESPECTIVE OF THIS, T HIS KIND OF THINGS HAPPEN. WE HOPE AND CONFIDENT THAT HIGHER AUTHORIT IES IN THE INCOME-TAX DEPARTMENT WOULD TAKE STOCK OF THE SITUA TION AND GIVE NECESSARY INSTRUCTIONS TO SUBORDINATES TO FOLLOW TH E JUDGMENT OF JURISDICTIONAL HIGH COURT AND APEX COURT. THIS TRI BUNAL CANNOT PERMIT THE ASSESSING OFFICER TO OVERTURN THE JUDGME NT OF MADRAS HIGH COURT MERELY BECAUSE AN SLP IS PENDING BEFORE THE APEX COURT. AFTER THE JUDGMENT OF MADRAS HIGH COURT CON FIRMING THE ORDER OF THIS TRIBUNAL, THE ASSESSING OFFICER CANNO T REOPEN THE ASSESSMENT ON THE GROUND THAT WINDMILL CANNOT BE EQ UATED TO POWER GENERATING UNIT. THE ASSESSING OFFICER OUGHT TO HAVE RAISED THIS ISSUE BEFORE THIS TRIBUNAL OR HIGH COURT. HAV ING FAILED TO RAISE THE ISSUE BEFORE THE TRIBUNAL OR BEFORE THE HIGH CO URT, THE ASSESSING OFFICER CANNOT REOPEN THE ASSESSMENT. TH E HIGH COURT, BEING CONSTITUTIONAL HIGH COURT, ITS JUDGMENT HAS T O BE FOLLOWED BY ALL THE AUTHORITIES IN THIS STATE. THEREFORE, REOP ENING OF THE ISSUE OF DEDUCTION UNDER SECTION 80-IA OF THE ACT AFTER THE ORDER OF THIS TRIBUNAL AND THE JUDGMENT OF THE MADRAS HIGH COURT IS NOT JUSTIFIED. HENCE, THE CIT(APPEALS) HAS RIGHTLY ALLOWED THE APP EAL OF THE ASSESSEE. HENCE, THIS TRIBUNAL DO NOT FIND ANY REA SON TO INTERFERE 7 I.T.A. NOS.598 & 599/CHNY/18 WITH THE ORDER OF THE CIT(APPEALS) AND ACCORDINGLY THE SAME IS CONFIRMED. 7. WITH THE ABOVE OBSERVATION, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED ON 10 TH AUGUST, 2018 AT CHENNAI. SD/- SD/- ( ! ) ( . . . ) (S. JAYARAMAN) (N.R.S. GANESAN) # / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 10 TH AUGUST, 2018. KRI. . ,167 87(1 /COPY TO: 1. *+/ APPELLANT 2. ,-*+/ RESPONDENT 3. 0 91 () /CIT(A)-18, CHENNAI-34 4. PRINCIPAL CIT, CENTRAL-2, CHENNAI 5. 7: ,1 /DR 6. ;' < /GF.