ACIT CIR 27(1), NAVI MUMBAI V. DEEPALI ATUL GANATRA, MUMBAI

ITA 7251/MUM/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5635 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2011-2012
• Appeal Filed On: 09-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAM TIWARISR ARCIT
• Keywords: Depreciation; Additional depreciation
• Section: 80HHC; 32

Judgement Text

, INCOME-TAX APPELLATE TRIBUNAL -DBENCH MUMBAI , . . , BEFORE S/SH.RAJENDRA,ACCOUNTANT MEMBER AND C. N. PRASAD,JUDICIAL MEMBER ./I.T.A./7251/MUM/2016, /ASSESSMENT YEAR: 2011-12 ACIT CIRCLE-27(1) ROOM NO.415, 4 TH FLOOR TOWER NO.6, VASHI STATION COMPLEX, MUMBAI 400 703. VS. SMT. DEEPALI ATUL GANATRA 104, KAVERI NEELKANTH VALLEY 7, RAJAWADI ROAD, GHATKOPAR (E) MUMBAI 400 077. PAN : AAFPG 3094 F ( /APPELLANT ) ( / RESPONDENT ) / REVENUE BY: SHRI RAM TIWARI-SR.AR-CIT /ASSESSEE BY: SHRI ADITYA AJGAONKAR -AR / DATE OF HEARING: 13/06/2018 / DATE OF PRONOUNCEMENT: 04/07/2018 , / PER RAJENDRA A.M. - CHALLENGING THE ORDER DATED, 23/09/2016 OF CIT(A)- 25, MUMBAI, THE ASSESSING OFFICER(AO) HAS FILED THE PRESENT APPEAL.ASSESSEE,AN INDIVIDUAL ,ENGAGED IN THE BUSINESS OF TRADING IN COTTON BALES AND GENERATION OF POWER, FILED RETURN OF INCOME ON 28/09/2011, DECLARING INCOME AT RS.7.85 CRORES.THE ASSESSMENT WAS COMPLETED, U/S .143(3) OF THE ACT,VIDE ORDER DATED 19/03/2013,DETERMINING HER INCOME AT RS.9.18 CRORE S. 2. SOLITARY GROUND OF APPEAL IS ABOUT ALLOWING ADDITIO NAL DEPRECIATION FOR WIND MILLS U/S. 32 (1)(II) OF THE ACT.DURING THE ASSESSMENT PROCEEDING S,THE AO FOUND THAT THE ASSESSEE HAD CLAIMED DEDUCTION ON ADDITIONAL DEPRECIATION OF RS. 1.30 CRORES @10% ON THE WIND MILL WHICH WAS INSTALLED AND COMMISSIONED DURING THE ASS ESSMENT YEAR UNDER CONSIDERATION.HE HELD THAT THE ASSESSEE WAS NOT ELIGIBLE FOR ADDITIO NAL DEPRECIATION AS PER THE PROVISIONS OF SECTION 32(1)(IIA),AS THE WINDMILL WAS INSTALLED AN D COMMISSIONED BEFORE AY.2013-14.HE ISSUED A NOTICE TO THE ASSESSEE IN THAT REGARD.AFTE R CONSIDERING THE EXPLANATION OF THE ASSESSEE THE AO HELD THAT SHE WAS NOT ENGAGED IN THE BUSINES S OF GENERATION OF POWER, THAT SHE WAS NOT ELIGIBLE TO CLAIM ADDITIONAL DEPRECIATION FOR ASSES SMENT YEAR UNDER CONSIDERATION, THAT THE AMENDED PROVISIONS OF SECTION 32(1)(IIA)WERE PROSPE CTIVE, THAT THE ADDITIONAL DEPRECIATION WAS NOT AVAILABLE FOR THE YEAR UNDER CONSIDERATION. REJECTING THE CLAIM OF THE ASSESSEE, THE AO ADDED BACK AN AMOUNT OF RS.1.30 CRORES TO THE TOTAL INCOME OF THE ASSESSEE. 3. AGGRIEVED BY THE ORDER OF THE AO THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY(FAA) AND MADE DETAILED SUBMISSI ONS. AFTER CONSIDERING THE AVAILABLE 7251/M/16 SMT. DEEPALI ATUL GANATRA 2 MATERIAL,HE REFERRED TO THE CASE OF ATUL S. GANATRA (ITA/4899/MUM/2014, AY 10-11, DTD.26/ 08/2016) WHEREIN IDENTICAL ISSUE WAS DECIDED IN FAV OUR OF THE ASSESSEE.HE REFERRED TO THE FOLLOWING CASES:- I) ATLAS EXPORT ENTERPRISE (373ITR414); II) ANKIT METAL & POWER LTD.(372ITR660); III) HI TECH ARAI LTD. (321ITR477); IV) TEXMO PRECISION CASTING (321ITR481) AND V) CERA SANITARYWARE LTD. (42ITR(TRIB.)334) AND ALLOWED THE ADDITIONAL DEPRECIATION CLAIMED BY THE ASSESSEE ON THE WIND MILLS. 4. DURING THE COURSE OF HEARING BEFORE US,THE DEPARTME NTAL REPRESENTATIVE (DR) STATED THAT MATTER COULD BE DECIDED ON MERITS. THE AUTHORISED R EPRESENTATIVE (AR) STATED THAT IN THE CASE OF GIRIRAJ ENTERPRISES,(186TTJ146) THE TRIBUNA L HAD HELD THAT GENERATION OF ELECTRICITY BY WIND MILLS AMOUNTED TO PRODUCTION OF AN ARTICLE OR THING, THAT CLAIM MADE BY THE ASSESSEE FOR ADDITIONAL DEPRECIATION ON PURCHASE OF WIND MIL LS U/S.32(1)(IIA) WAS TO BE ALLOWED. HE ALSO REFERRED TO CASE OF ATUL S. GANATRA(SUPRA), HU SBAND OF THE ASSESSEE. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE AVAILABLE MATERIAL. WE FIND THAT IN THE CASE OF ATUL S. GANATRA THE TRIBUNAL HAS DECIDED TH E ISSUE AS UNDER :- 2.1 NEXT ISSUE IS WITH REGARD TO ADDITIONAL DEPRE CIATION OF RS.2,19,29,891/- ON TWO WINDMILLS ACQUIRED AND INSTALLED BY ASSESSEE DURING THE YEAR, WHICH WAS CONFIRMED BY CIT(A). AS STATED ABOVE, ASSESSEE IS ENGAGED IN THE BUSINESS OF GENERATION OF POWER. DURING THE YEAR TWO WINDMILLS WERE ACQUIRED AND INS TALLED. ASSESSEE CLAIMED ADDITIONAL DEPRECIATION OF RS.2,19,29,891/- U/S.32(1)(IIA). AS SESSING OFFICER DISALLOWED SAME BY RELYING OF THE DECISION OF TAMILNADU CHLORATES [200 6] 98 ITD 1 (CHENNAI) (TRIB.). CIT(A) UPHELD THE DISALLOWANCE BY RELYING UPON THE EXPLANATORY NOTES (MEMORANDUM) TO AMENDMENTS AS INSERTED BY FINANCE ACT, 2012. THE ST AND OF ASSESSEE HAS BEEN THAT ITAT CHENNAI BENCH IN TAMILNADU CHLORATES (SUPRA) HAS BE EN RELIED UPON BY ASSESSING OFFICER WAS NOT RELEVANT TO CURRENT SCENARIO AS DEA LT WITH THE PROVISIONS OF SECTION 80HHC OF THE ACT AND NOT WITH THE PROVISIONS OF SEC TION 32(1)(IIA) OF THE ACT. LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT ITAT, DELH I BENCH IN CASE OF N.T.P.C. VS. DCIT [2012] 54 SOT 177 (URO) (DELHI) (TRIB.), CONSI DERED THIS DECISION WHILE DEALING WITH THE ACTIVITY OF GENERATION OF ELECTRICITY WITH RESPECT OF ADDITIONAL DEPRECIATION U/S.32(1)(IIA) AND RULED IN FAVOUR OF ASSESSEE. HON BLE MADRAS HIGH COURT IN CASE OF CIT VS. VTM LTD. [2009] 319 ITR 336 (MAD.) (HC) EXAMINE D THE SAME ISSUE AND DISMISSED THE REVENUE APPEAL SEEKING TO DISALLOW ADDITIONAL D EPRECIATION U/S.32(1)(IIA) OF THE ACT WITH RESPECT OF SETTING UP A WINDMILL BY A MANUFACT URER OF TEXTILE GOODS. THUS, FOLLOWING THE RATIO OF VMT LTD.(SUPRA) ISSUE HAS BEEN DECIDED IN FAVOUR OF ASSESSEE WITH REGARD TO ADDITION DEPRECIATION U/S.32(1)(IIA) OF THE ACT. HO NBLE SUPREME COURT IN CASE OF CST VS. M.P. ELECTRICITY BOARD (AIR 1970 SC 732), HELD THAT THE ELECTRICITY GENERATED BY AN ASSESSEE IS AN ARTICLE OR GOODS. THE EXPLANATION TO AMENDMENTS (MEMORANDUM) AS INSERTED BY FINANCE ACT, 2012 AS RELIED UPON BY CIT (A) CANNOT BE SAID TO OVERRULE AND EARLIER DECISION OF HONBLE HIGH COURT. AN AMENDMEN T THAT HAS PROSPECTIVE APPLICATION CANNOT BE SAID TO RETROSPECTIVELY TAKE AWAY THE RIG HTS OF AN ASSESSEE QUA ITS EXPLANATORY NOTES. WHERE THERE IS NO AMBIGUITY IN THE SECTION, THERE IS NO WARRANT FOR RESORT TO EXTERNAL AIDS OF INTERPRETATION NAMELY THE NOTES ON CLAUSES AND THE MEMORANDUM 7251/M/16 SMT. DEEPALI ATUL GANATRA 3 EXPLAINING ITS PROVISIONS. IN THE LIGHT OF DECISION OF VTM LTD.(SUPRA) WITH REGARD TO CLAIM OF ADDITIONAL DEPRECIATION U/S.32(1)(IIA) FOR SETTI NG UP A WINDMILL, WHEREIN MATERIAL BEING SOLE DECISION BY HONBLE HIGH COURT ON THE MA TTER, WE HOLD THAT ADDITIONAL DEPRECIATION SHOULD BE ALLOWED. RESPECTFULLY FOLLOWING THE ABOVE ORDER OF THE TRIBU NAL AND THE ORDER OF GIRIRAJ ENTERPRISES (SUPRA),WE DECIDE THE EFFECTIVE GROUND OF APPEAL AG AINST THE AO. AS A RESULT, APPEAL FILED BY THE AO S TANDS DISMISSED. ! '#$% &'() . ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH JULY, 2018. *& 4 , 2018 SD/- SD/- ( . . / C.N.PRASAD ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; *& /DATED : 04 .07.2018. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR D BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.