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

ITA 7252/MUM/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1109 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 09-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Additional depreciation
• Section: 32(1)(iia)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A, MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER ITA NO. A.Y. APPELLANT RESPONDENT 7250/MUM/16 2011-12 ACIT, CIR-27(1), MUMBAI SHRI ATUL SHIVDAS GANATRA (HUF), 104, KAVERI NEELKANTH VALLEY, 7, RAJAWADI ROAD, GHATKOPAR(E), MUMBAI [PAN: AAAHA 1614 C] 7252/MUM/16 2011-12 SHRI ATUL SHIVDAS GANATRA, 103/104, KAVERI NEELKANTH VALLEY, 7, RAJAWADI ROAD, GHATKOPAR(E), MUMBAI [PAN: AABPG 2055 L] APPELLANT BY : SHRI ASHISH KUMAR , DR RESPONDENT BY : SHRI SASHANK DUNDU , A R DATE OF HEARING : 28 - 1 1 - 201 8 DATE OF PRONOUNCEMENT : 30 - 11 - 201 8 O R D E R PER MAHAVIR SINGH, JUDICIAL MEMBER: THESE TWO APPEALS FILED BY THE REVENUE ARE DIRECTED AGAINST THE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEA LS)-25, MUMBAI, DATED 23-09-2016 & 27-09-2016 RESPECTIVELY. ITA NOS. 7250 & 7252/MUM/2016 2 2. THE ONLY COMMON ISSUE IN THESE TWO APPEALS OF RE VENUE AGAINST THE ORDER OF CIT(A), ALLOWING ADDITIONAL DE PRECIATION FOR WIND MILLS U/S. 32(1)(IIA) OF THE INCOME TAX ACT, 1 961 [HEREIN AFTER REFERRED TO AS ACT]. FOR THIS, REVENUE HAS RAISED IDENTICALLY WORDED GROUNDS IN BOTH THE CASES OF ASSESSEE. THE F ACTS AND CIRCUMSTANCES ARE ALSO EXACTLY IDENTICAL AND HENCE, WE WILL TAKE THE GROUNDS FROM ITA NO. 7252/MUM/2016. THE GROUND S RAISED BY REVENUE ARE AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD.CIT(A) HAS ERRED BY ALLOWING THE ADDITIONAL DEPR ECIATION FOR WIND MILLS U/S. 32(1)(IIA) FOR AY. 2011-12, WHEN THE SAM E IS ALLOWED AS PER THE PROVISION OF THE ACT AND MEMORANDUM TO THE FINA NCE ACT, 2012 IN RELATION TO AY. 2013-14 AND SUBSEQUENT ASSESSMENT Y EARS ONLY. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD.CIT(A) HAS ERRED BY RELYING ON THE DECISION OF C IT VS. VTM LTD. (319 ITR 336), WHEREIN THE FACTS OF THE CASE WERE DIFFER ENT BEING THE CASE OF TEXTILE MANUFACTURER WHEREAS THE ASSESSEE IS A TRAD ER AND HENCE THE DECISION RELIED UPON IS NOT APPLICABLE BEING DISTIN GUISHABLE ON FACTS. 3. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. BRIEFLY STATED FACTS ARE THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING IN C OTTON BALES AND GENERATION OF POWER. DURING THE COURSE OF ASSES SMENT PROCEEDINGS, AO NOTED THAT THE ASSESSEE HAS CLAIMED DEDUCTION U/S. 32(1)(IIA) OF THE ACT BEING ADDITIONAL DEPRECI ATION ON THE ITA NOS. 7250 & 7252/MUM/2016 3 WIND MILLS, WHICH WERE INSTALLED AND COMMISSIONED D URING THE YEAR UNDER CONSIDERATION. ACCORDING TO AO, ASSESSEE IS NOT ELIGIBLE FOR ADDITIONAL DEPRECIATION FOR THE REASON THAT THE ASSESSEE IS NOT ENGAGED IN MANUFACTURING/PRODUCTION OF ANY ARTICLE AND MOREOVER HE IS ENGAGED IN GENERATION OF POWER THROUGH WIND MILL AND AS PER AMENDMENT BROUGHT INTO BY THE FINANCE ACT, 2012 WITH EFFECT FROM 01-04-2013 FOR T HE RELEVANT AY 2013-14 WHICH IS RETROSPECTIVE. AGGRIEVED, ASSES SEE PREFERRED AN APPEAL BEFORE THE CIT(A). 4. THE CIT(A) ALLOWED THE CLAIM OF ASSESSEE BY STAT ING THAT THIS PLANT & MACHINERY WAS INSTALLED IN AY. 2010-11 I.E., WIND MILL HAVING CAPACITY OF 1,800 KV AND THIS WAS COMMI SSIONED AND PUT TO USE ON OR BEFORE 31-03-2011 AT S.F. NO. 348/ P1, VANDHIYA, BHACHAU, KUTCH, GUJARAT. ASSESSEE CLAIMED THE ADDITIONAL DEPRECIATION @ 10% IN CLAIMED DEPRECIATI ON IN AY. 2011-12. THE ADDITIONAL DEPRECIATION WAS CLAIMED U /S. 32(1)(IIA) OF THE ACT FOR THE REASON THAT THE ASSESSEE IS ENGA GED IN MANUFACTURING/PRODUCTION OF ANY ARTICLE OR THING AN D THIS NEW PLANT & MACHINERY WAS ACQUIRED BEFORE AND INSTALLED BEFORE 31-03-2010. THE CIT(A) FOLLOWED THE ORDER OF THE I TAT IN AY. ITA NOS. 7250 & 7252/MUM/2016 4 2010-11 IN ITA NO. 4899/MUM/2014, ORDER DATED 26-08 -2016 IN ASSESSEES OWN CASE. 5. WE FIND THAT THIS ISSUE IS SQUARELY COVERED BY T HE DECISION OF CO-ORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE, WHEREIN IT WAS HELD AS UNDER: 2.1 NEXT ISSUE IS WITH REGARD TO ADDITIONAL DEPREC IATION OF RS.2,19,29,891/- ON TWO WINDMILLS ACQUIRED AND INST ALLED BY ASSESSEE DURING THE YEAR, WHICH WAS CONFIRMED BY CIT(A). AS STATED ABOVE, ASSESSEE IS ENGAGED IN THE BUSINESS OF GENERATION O F POWER. DURING THE YEAR TWO WINDMILLS WERE ACQUIRED AND INSTALLED. ASS ESSEE CLAIMED ADDITIONAL DEPRECIATION OF RS.2,19,29,891/- U/S.32( 1)(IIA). ASSESSING OFFICER DISALLOWED SAME BY RELYING OF THE DECISION OF TAMILNADU CHLORATES [2006] 98 ITD 1 (CHENNAI) (TRIB.). CIT(A) UPHELD THE DISALLOWANCE BY RELYING UPON THE EXPLANATORY NOTES (MEMORANDUM) TO AMENDMENTS AS INSERTED BY FIANCE ACT, 2012. THE STA ND OF ASSESSEE HAS BEEN THAT ITAT CHENNAI BENCH IN TAMILNADU CHLOR ATES (SUUPRA) HAS BEEN RELIED UPON BY ASSESSING OFFICER WAS NOT RELEV ANT TO CURRENT SCENARIO AS DEALT WITH THE PROVISIONS OF SECTION 80 HHC OF THE ACT AND NOT WITH THE PROVISIONS OF SECTION 32(1)(IIA) OF TH E ACT. LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT ITAT, DELHI 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 EL ECTRICITY WITH RESPECT OF ADDITIONAL DEPRECIATION U/S.32(1)(IIA) AND RULED IN FAVOUR OF ASSESSEE. HONBLE MADRAS HIGH COURT IN CASE OF CIT VS. VTM LT D. [2009] 319 ITR 336 (MAD.) (HC) EXAMINED THE SAME ISSUE AND DISMISS ED THE REVENUE APPEAL SEEKING TO DISALLOW ADDITIONAL DEPRECIATION U/S.32(1)(IIA) OF THE ACT WITH RESPECT OF SETTING UP A WINDMILL BY A MANU FACTURER OF TEXTILE GOODS. THUS, FOLLOWING THE RATIO OF VMT LTD.(SUPRA) ISSUE HAS BEEN DECIDED IN FAVOUR OF ASSESSEE WITH REGARD TO ADDITI ON DEPRECIATION U/S.32(1)(IIA) OF THE ACT. HONBLE 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 EXPLANAT ION TO AMENDMENTS (MEMORANDUM) AS INSERTED BY FINANCE ACT, 2012 AS RE LIED UPON BY ITA NOS. 7250 & 7252/MUM/2016 5 CIT(A) CANNOT BE SAID TO OVERRULE AND EARLIER DECIS ION OF HONBLE HIGH COURT. AN AMENDMENT THAT HAS PROSPECTIVE APPLICATIO N CANNOT BE SAID TO RETROSPECTIVELY TAKE AWAY THE RIGHTS 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 NAMEL Y THE NOTES ON CLAUSES AND THE MEMORANDUM EXPLAINING ITS PROVISIONS. IN TH E LIGHT OF DECISION OF VTM LTD.(SUPRA) WITH REGARD TO CLAIM OF ADDITION AL DEPRECIATION U/S.32(1)(IIA) FOR SETTING UP A WINDMILL, WHEREIN M ATERIAL BEING SOLE DECISION BY HONBLE HIGH COURT ON THE MATTER, WE HO LD THAT ADDITIONAL DEPRECIATION SHOULD BE ALLOWED. 5.1. AS THE ISSUE IS SQUARELY COVERED BY THE TRIBUN ALS DECISION IN ASSESSEES OWN CASE FOR IMMEDIATELY PRECEDING AS SESSMENT YEAR, ADDITIONAL DEPRECIATION HAS RIGHTLY BEEN ALLO WED BY THE CIT(A). SIMILAR ARE THE FACTS IN THE CASE OF SHRI ATUL SHIVDAS GANATRA (HUF) IN ITA NO. 7250/MUM/2016. ACCORDINGL Y, WE DISMISS BOTH THE APPEALS OF REVENUE. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH DAY OF NOVEMBER, 2018 SD/- SD/- (MANOJ KUMAR AGGARWAL) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDIC IAL MEMBER MUMBAI; DATED: 30 TH NOVEMBER, 2018 TNMM ITA NOS. 7250 & 7252/MUM/2016 6 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A),MUMBAI 4. THE CIT 5. DR, A BENCH, ITAT, MUMBAI BY ORDER, #TRUE COPY # ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI