ACIT, New Delhi V. M/s. Arushi Exports, Delhi

ITA 6014/DEL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 4470 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 10 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 05-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARUN KUMAR YADAV SENIOR
• Keywords: Depreciation; Rule of consistency; Unabsorbed depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH C : NEW DELHI) BEFORE SHRI B.P. JAIN, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.6014/DEL./2015 (ASSESSMENT YEAR : 2011-12) ACIT, CIRCLE 46 (1), VS. M/S. ARUSHI EXPORTS, NEW DELHI. 6658, GADODIA MARKET, KHARI BAOLI, DELHI - 110 006. (PAN : AABFA1107B) (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SHRI ARUN KUMAR YADAV, SENIOR DR DATE OF HEARING : 31.08.2017 DATE OF ORDER : 18.09.2017 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : APPELLANT, ASSISTANT COMMISSIONER OF INCOME-TAX, C IRCLE 46 (1), NEW DELHI (HEREINAFTER REFERRED TO AS THE REV ENUE), BY FILING THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 24.08.2015 PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS)- 16, NEW DELHI, FOR THE ASSESSMENT YEARS 2011-12 ON THE GROUNDS INTER ALIA THAT :- ITA NO6014/DEL./2015 2 ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE THE LD.CIT(A) HAS ERRED IN ALLOWING DEDUCTION U/S 80IA OF THE ACT AMOUNTING TO RS.36,15,103/- AS CLAIMED B Y THE ASSESSEE BECAUSE THE ASSESSEE WAS HAVING BROUGHT FORWARD BUSINESS LOSSES FROM THE FOUR WIND ELECTRICITY GENERATION UNITS WHICH SHOULD HAVE ALSO BEEN SET OFF AGAINST THE PROFIT DERIVED FROM THE SA ID UNITS. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : DURING THE SCRUTINY PROCE EDINGS, ASSESSING OFFICER NOTICED THAT ASSESSEE HAS CLAIMED DEDUCTION OF RS.36,15,103/- UNDER SECTION 80IA OF THE INCOME-TAX ACT, 1961 (FOR SHORT THE ACT) QUA FOUR WIND ELECTRICITY GEN ERATION UNITS LOCATED IN TAMIL NADU. ON QUERY RAISED BY THE AO, THE ASSESSEE PROVIDED DETAILS OF SPECIFIC AMOUNT CLAIMED AS DEDU CTION U/S 80IA QUA FOUR UNITS AS UNDER :- SR.NO. UNIT NO. PROFITS DERIVED IN RUPEES 1. 1512 2,46,737/- 2. 1513 39,186/- 3. 1733 27,22,109/- 4. 375 6,07,071/- TOTAL 36,15,103/- 3. AO CALLED UPON THE ASSESSEE COMPANY TO EXPLAIN A S TO WHY THE LOSSES OF UNIT IN RESPECT OF EARLIER YEARS BE N OT SET OFF BEFORE DERIVING THE PROFITS ELIGIBLE FOR DEDUCTION IN VIEW OF SECTION 80IA (5) OF THE ACT. AO BEING DISSATISFIED WITH THE REP LY FILED BY THE ASSESSEE COMPANY PROCEEDED TO HOLD THAT SINCE THERE ARE LOSSES IN ITA NO6014/DEL./2015 3 EACH OF THE UNIT AND THE SAME ARE BROUGHT FORWARD B Y THE ASSESSEE ITSELF AND ADJUSTED IN THE CURRENT YEARS PROFIT BU T THE SAME HAS NOT BEEN CONSIDERED BY THE ASSESSEE FOR 80IA AND COMPUT ED THE ELIGIBLE PROFIT U/S 80IA(5) AFTER ADJUSTING THE LOS SES AS NIL AND THEREBY DISALLOWED THE AMOUNT OF RS.36,15,103/- CLA IMED BY THE ASSESSEE U/S 80IA. 4. ASSESSEE CARRIED THE MATTER BY WAY OF FILING APP EAL BEFORE THE LD. CIT (A) WHO HAS DELETED THE DISALLOWANCE OF RS.36,15,103/- BY ALLOWING THE APPEAL. FEELING AGGRIEVED, THE REV ENUE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF CHALLENGING THE IM PUGNED ORDER PASSED BY LD. CIT (A). 5. ASSESSEE HAS NOT PREFERRED TO PUT IN APPEARANCE DESPITE ISSUANCE OF THE NOTICE AND CONSEQUENTLY, WE PROCEED ED TO DECIDE THE PRESENT APPEAL WITH THE ASSISTANCE OF THE LD. D R AS WELL AS ON THE BASIS OF DOCUMENTS AVAILABLE ON THE FILE. 6. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATIV E FOR THE REVENUE TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 7. THE LD. DR FOR THE REVENUE CHALLENGING THE IMPUG NED ORDER RELIED UPON THE ORDER PASSED BY THE AO IN DISALLOWI NG THE DEDUCTION CLAIMED BY THE ASSESSEE U/S 80IA OF THE A CT. ITA NO6014/DEL./2015 4 8. THE LD. CIT (A) DELETED THE ADDITION OF RS.36,15 ,103/- MADE BY THE AO AFTER DISALLOWING THE DEDUCTION CLAIMED B Y THE ASSESSEE WITH THE FOLLOWING FINDINGS :- 4. FINDINGS :- THE IDENTICAL ISSUE HAS ARISEN IN ASSESSMENT YEAR 2010-11 ON ACCOUNT OF SIMILAR DISALLOWANCE BY THE ASSESSING OFFICER. HOWEVER MY LD PREDECESSOR VIDE HIS ORDER DATED 09/05/2014 IN APPEAL NO.71/2013-14 HAD DELETED THE ADDITION WHILE OBSERVING AS UNDER:- 'FOLLOWING THE RATIO OF THE DECISIONS IN THE ABOVE CASES, THE INEVITABLE CONCLUSION IS THAT THE LD AO WAS NOT WARRANTED IN DENYING THE CLAIM OF SECTION 80IA OF THE ACT AS THE STATUTE DOES NOT CONTEMPLATE CARRY FORWARD OF NOTIONAL LOSSES INCURRED IN THE EARLIER YEAR FOR SET OFF OF LOSSES FOR THE PURPOSE OF COMPUTING PROFITS OF ELIGIBLE BUSINE SS FOR CLAIMING DEDUCTION U/S 80IA (4). IF THE LOSSES INCURRED IN THE ELIGIBLE UNIT ARE SET OFF AGAINST T HE NON = ELIGIBLE UNIT AFTER THE INITIAL ASSESSMENT YE AR THAN THE RATIO LAID DOWN BY THE TRIBUNAL AND THE HIGH COURT AS SOUGHT TO BE RELIED ON BY THE DEPARTMENT WOULD APPLY. SIMILARLY THE 'INITIAL ASSESSMENT YEAR I.E. ASSESSMENT YEAR 2010-11 OPTED BY THE APPELLANT WAS IN CONGRUENCE WITH THE AMENDED PROVISIONS OF SECTION 80IA(2) OF THE ACT. HENCE THE ACTION OF THE LD AO IN ASSAILING THE OPTION EXERCISE BY THE APPELLANT IN REGARD TO THE CLAIM OF DEDUCTION U/S 80IA(1) WAS UNJUSTIFIED AND UNCALLED FOR. IN THE AFORESAID PREMISES, THE ADDITION OF RS.34,50,412/- IS DELETED AND GROUNDS OF APPEAL 1, 2, 2.1 AND 2.2 ARE ALLOWED.' FULLY AGREEING AND RESPECTFULLY FOLLOWING THE ORDER OF MY PREDECESSOR IN THE ASSESSMENT YEAR ITA NO6014/DEL./2015 5 2010-11, AS MENTIONED ABOVE THE ADDITION OF RS.36,15,103/- IS DELETED. 9. WHEN UNDISPUTEDLY THE IDENTICAL ISSUE HAS BEEN D ECIDED BY THE REVENUE IN AY 2010-11 & 2011-12 BY DELETING THE ADDITION MADE BY THE AO BY DISALLOWING THE DEDUCTION U/S 80I A AND BOTH THE DECISION FOR AY 2010-11 AND 2011-12 ARE STATED TO BE NOT FURTHER CHALLENGED, NO ISSUE LEFT BEFORE THE BENCH TO BE DECIDED AFRESH PARTICULARLY WHEN THERE IS NO CHANGE IN THE FACTS AND ELIGIBILITY OF THE ASSESSEE TO CLAIM BENEFIT OF SEC TION 80IA. EVEN OTHERWISE, WHEN RULE OF CONSISTENCY IS BEING FOLLOW ED BY THE REVENUE ITSELF IN ASSESSEES OWN CASE FOR THE LAST TWO YEARS, THE PRESENT APPEAL APPEARS TO HAVE BEEN FILED FOR THE S AKE OF APPEAL ONLY. 10. NOT ONLY THIS IDENTICAL ISSUE HAS BEEN DECIDED BY THE HONBLE MADRAS HIGH COURT IN CASE CITED AS VELAYUDHASWAMY SPINNING MILLS (P) LTD. VS. ACIT 340 ITR 477 (MAD.) WHEREIN IT IS HELD AS UNDER :- HELD, ALLOWING THE APPEAL, THAT THERE WAS NO DISPU TE THAT LOSSES INCURRED BY THE ASSESSEE WERE ALREADY S ET OFF AND ADJUSTED AGAINST THE PROFITS OF THE EARLIER YEARS. DURING THE RELEVANT ASSESSMENT YEAR, THE ASSESSEE EXERCISED THE OPTION UNDER SECTION 80-IA(2 ). DURING THE RELEVANT PERIOD, THERE WAS NO UNABSORBED DEPRECIATION OR LOSS OF THE ELIGIBLE UNDERTAKING AN D THESE WERE ALREADY ABSORBED IN THE EARLIER YEARS. THERE WAS A POSITIVE PROFIT DURING THE YEAR. THE LO SS IN THE YEAR EARLIER TO THE INITIAL ASSESSMENT YEAR ITA NO6014/DEL./2015 6 ALREADY ABSORBED AGAINST THE PROFIT OF OTHER BUSINE SS COULD NOT BE NOTIONALLY BROUGHT FORWARD AND SET OFF AGAINST THE PROFITS OF THE ELIGIBLE BUSINESS AS NO SUCH MANDATE WAS PROVIDED IN SECTION 80-IA(S). THE ORDER OF THE TRIBUNAL WAS TO BE SET ASIDE. 11. SO, THE REVENUE ITSELF BY FOLLOWING THE LAW LAI D DOWN BY HONBLE MADRAS HIGH COURT IN CASE OF VELAYUDHASWAMY SPINNING MILLS (P) LTD. (SUPRA) DELETED THE SIMILAR ADDITION MADE BY THE AO ON THE GROUND THAT THE LOSS IN THE YEAR EARLIER TO INITIAL ASSESSMENT YEAR ALREADY ABSORBED CANNOT BE NOTIONALLY BROUGHT FORWARD AND SET OFF AGAINST THE PROFITS OF ELIGIBLE BUSINESS. SINC E THERE IS NO DISPUTE THAT THE ASSESSEE COMPANY IS OTHERWISE ELIGIBLE FOR DEDUCTION U/S 80IA, THE SAME CANNOT BE DISALLOWED ON THE GROUND T HAT THE ASSESSEE HAS NOT CONSIDERED THE LOSSES IN THE YEAR EARLIER TO THE INITIAL ASSESSMENT YEAR. SO, FINDING NO ILLEGALITY OR PERVERSITY IN THE IMPUGNED ORDER, WE HEREBY DISMISS THE APPEAL FILED BY THE REVENUE. ORDER PRONOUNCED IN OPEN COURT ON THIS 18 TH DAY OF SEPTEMBER, 2017. SD/- SD/- (B.P. JAIN) (KULDIP SING H) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 18 TH DAY OF SEPTEMBER, 2017 TS ITA NO6014/DEL./2015 7 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-3, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.