ITO, Tiruppur V. Anand Textiles, Tiruppur

ITA 688/CHNY/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9190 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 21-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVAS
• Assessee Lawyers: N VIJAYAKUMAR
• Keywords: Depreciation
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , B B ENCH, CHENNAI . . . , . , & BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.688/MDS/2016 ( / ASSESSMENT YEAR: 2013-14) THE INCOME TAX OFFICER, WARD-I(2), TIRUPUR. VS M/S. ANAND TEXTILES, 527, AVINASHI ROAD, TIRUPUR-641 603. ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. SHIVA SRINIVAS, JCIT /RESPONDENT BY : MR. N.VIJAYAKUMAR, C.A. /DATE OF HEARING : 30 TH MAY, 2016 /DATE OF PRONOUNCEMENT : 6 TH JUNE, 2016 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THIS APPEAL IS FILED BY THE REVENUE AGGRIEVED BY TH E ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS)- 3, COIMBATORE DATED 21.12.2015 IN ITA NO.228/15-16 PASSED UNDER SECTION 143(3) R.W.S.250(6) OF THE AC T . 2. THOUGH THE REVENUE HAS RAISED SEVERAL GROUNDS IN ITS APPEAL HOWEVER, THE CRUX OF THE ISSUE IS THAT, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN D ELETING THE ADDITION OF ` 2,84,80,314/- MADE BY THE LEARNED ASSESSING 2 ITA NO.688/MDS/2016 OFFICER BY ALLOWING THE CLAIM OF DEDUCTION BY THE A SSESSEE UNDER SECTION 80IA OF THE ACT. 3. BRIEF FACTS ARE THAT THE ASSESSEE IS A FIRM ENGA GED IN THE BUSINESS OF SPINNING MILL AND GENERATING ELECTR ICITY THROUGH WINDMILL FILED ITS RETURN OF INCOME ON 28.0 9.2013 FOR THE ASSESSMENT YEAR 2013-14 DECLARING NIL INCOME. IN THE SCRUTINY ASSESSMENT PROCEEDINGS, THE LEARNED ASSESS ING OFFICER DISALLOWED THE CLAIM OF DEDUCTION UNDER SEC TION 80IA OF THE ACT MADE BY THE ASSESSEE BECAUSE OF THE FOLL OWING REASONS:- I) WHILE WORKING OUT THE PROFIT ELIGIBLE FOR DEDUCT ION UNDER SECTION 80IA OF THE ACT, THE ASSESSEE HAS NOT TAKEN INTO CONSIDERATION OF THE DEPRECIATION THE ASSESSEE HAS SET OFF IN THE EARLIER YEARS AGAINST T HE INCOME OF THE OTHER UNITS OF THE ASSESSEE. IT WAS O PINED THAT SUCH DETERMINATION OF PROFIT IS AGAINST THE PROVISIONS OF SECTION 80IA OF THE ACT BECAUSE THE ELIGIBLE UNIT SHOULD BE TREATED AS THE ONLY SOURCE OF INCOME AND THE INCOME / LOSS HAS TO BE COMPUTED ACCORDINGLY. 3 ITA NO.688/MDS/2016 II) THE INITIAL YEAR FOR CLAIMING DEDUCTION UNDER SECTION 80IA OF THE ACT HAS TO BE THE YEAR IN WHICH THE ASSESSEE HAS COMMENCED ITS ELIGIBLE BUSINESS AND NO T THE SUBSEQUENT YEAR ADOPTED BY THE ASSESSEE. THE LEARNED ASSESSING OFFICER OPINED THAT THOUGH TH ESE ISSUES WERE HELD IN FAVOUR OF THE ASSESSEE BY THE H ONBLE JURISDICTIONAL HIGH COURT IN THE CASE SRI VELAYUTHA SAMY SPINNING MILLS PVT.LTD., REPORTED IN 231 CTR 368 (M AD), HE NEED NOT FOLLOW THE SAME BECAUSE THE MATTER IS PEND ING BEFORE THE APEX COURT BY WAY OF SLP. 4. HOWEVER, ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FOLLOWING THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF SRI VELAYU THASAMY SPINNING MILLS REPORTED IN 231 ITR 368 ALLOWED THE APPEAL OF THE ASSESSEE BY OBSERVING AS UNDER:- 6. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE APPELLANT AND THE MATERIALS AVAILABLE ON RECORD. A PERUSAL OF THE ASSESSMENT ORDER ITSELF INDICATES TH AT THE ISSUE IS COVERED BY THE JURISDICTIONAL HIGH COURT I N THE CASE OF CIT VS. SRI VELAYUTHASAMY SPINNING MILLS REPORTED IN 231 ITR 368. THE ASSESSING OFFICER HAS ADDED THIS AMOUNT SINCE THE DEPARTMENT HAS FILED SL P BEFORE THE SUPREME COURT CHALLENGING THE ABOVE DECISIONS. IN VIEW OF THE BINDING DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. SR I VELAYUTHASAMY SPINNING MILLS THE 80IA CLAIM OF TH E ASSESSEE TO THE EXTENT OF RS.2,84,80,314/- IS ALLOW ED. 4 ITA NO.688/MDS/2016 5. BOTH THE PARTIES HAVE NOT DISPUTED ON THE FACTS OF THE CASE AS PRESENTED HEREIN ABOVE. ON PERUSING THE MAT ERIALS BEFORE US IT IS EVIDENT THAT THE LEARNED ASSESSING OFFICER HAD DISALLOWED THE CLAIM OF THE ASSESSEE U/S. 80IA OF T HE ACT WITHOUT FOLLOWING THE RATIO LAID DOWN BY THE DECISI ON OF THE JURISDICTIONAL HIGH COURT IN THE CASE SRI VELAYUDHA SWAMY SPINNING MILLS PVT.LTD., CITED SUPRA BECAUSE THE DE PARTMENT HAD CARRIED THE MATTER BEFORE THE HONBLE SUPREME C OURT AND THE SLP WAS PENDING FOR DISPOSAL AND ACCORDINGLY TH E ISSUE HAS NOT BECOME FINAL. HOWEVER, THE LEARNED COMMISSI ONER OF INCOME TAX (APPEALS) BY FOLLOWING THE DECISION OF T HE JURISDICTIONAL HIGH COURT IN THE CASE OF SRI VELAYU DHASWAMY SPINNING MILLS PVT.LTD., CITED SUPRA HAS ALLOWED TH E CLAIM OF THE ASSESSEE UNDER SECTION 80IA OF THE ACT. FURTHER , IT IS NOT THE CASE OF THE REVENUE THAT THE JUDGMENT OF THE HO NBLE MADRAS HIGH COURT IN THE CASE VELAYUDHASWAMY SPINNI NG MILLS P. LTD (SURPA) IS STAYED BY THE HONBLE APEX COURT. THEREFORE IT IS PERTINENT TO MENTION THAT IN THE AB SENCE OF ANY STAY GRANTED BY THE HONBLE APEX COURT AGAINST THE OPERATION OF THE JUDGMENT OF THE HONBLE MADRAS HIGH COURT, A LL THE 5 ITA NO.688/MDS/2016 LOWER JUDICIARIES AS WELL AS QUASI JUDICIAL AUTHORI TIES ARE BOUND TO FOLLOW THE DECISION OF THE HONBLE JURISDI CTIONAL HIGH COURT. SINCE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS RIGHTLY FOLLOWED THE DECISION OF THE HONBLE JURISDICTIONAL MADRAS HIGH COURT (SUPRA) AND HELD T HE ISSUE IN FAVOUR OF THE ASSESSEE, WE DO NOT FIND IT NECESS ARY TO INTERFERE WITH THE ORDERS OF THE LEARNED COMMISSION ER OF INCOME TAX (APPEALS). ACCORDINGLY WE HEREBY CONFIR M THE ORDERS OF THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS) ON THIS ISSUE. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON THE 6 TH JUNE, 2016 SD/- SD/- ( . . . ) ( . ) (N.R.S.GANESAN) ( A.M OHAN ALANKAMONY ) # % / JUDICIAL MEMBER % / ACCOUNTANT MEMBER # /CHENNAI, ( /DATED 6 TH JUNE, 2016 SOMU *+ ,+ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. - () /CIT(A) 4. - /CIT 5. + 1 /DR 6. /GF