DCIT, Circle-2(2), Hyderabad, Hyderabad V. Hyderabad Chemical Products Limited, Hyd, Hyderabad

ITA 728/HYD/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2620 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 28-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V SREEKAR
• Assessee Lawyers: NEELIMA
• Section: 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ITA.NO. 728 AND 729/HYD/2017 ASSESSMENT YEAR S 2011 - 12 AND 2012 - 2013 THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE - 2(2), HYDERABAD. VS. M/S. HYDERABAD CHEMICAL PRODUCTS LIMITED, A - 24/25, APIE, BALANAGAR, HYDERABAD. PAN: AAACH 5507 Q (APPELLANT) (RESPONDENT) FOR ASSESSEE: MS. NEELIMA FOR REVENUE : SHRI V . SREEKAR, DR DATE OF HEARING : 04.09.2017 DATE OF PRONOUNCEMENT : 04.09 .2017 ORDER PER D. MANMOHAN, VP. THESE APPEALS BY THE REVENUE ARE DIRECTED AGAINST THE ORDERS PASSED BY THE LD. CIT(A) - 2, HYDERABAD AND THEY PERTAIN TO THE ASSESSMENT YEARS 2011 - 12 AND 2012 - 13. COMMON GROUND IS URGED IN BOTH THE APPEALS; WE THEREFORE, REPRODUCE THE GROUND URGED FOR THE A SSESSMENT YEAR 2011 - 12. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WHETHER THE CIT (A) IS CORRECT IN LAW IN DELETING THE DISALLOWANCE OF THE DEDUCTION U/S 80IA MADE BY THE A.O. ON THE BASIS OF SECTION 80 - IA( 5) BY SETTING OFF THE NOTIONALLY BROUGHT FORWARD UNABSORBED LOSSES AGAINST THE INCOME WHILE ARRIVING AT THE PROFITS TO BE ALLOWED U/S 80IA. 2. FACTS NECESSARY FOR DISPOSAL OF THE APPEAL ARE STATED IN BRIEF. ASSESSEE IS A PUBLIC LIMITED COMPANY WHICH IS E NGAGED IN THE BUSINE SS OF MANUFACTURING AND SALE OF PESTICIDES. IT ALSO DERIVES INCOME FROM WIND POWER GENERATION. ASSESSEE CLAIMED 2 DEDUCTION U/S 80 - IA OF THE ACT IN PHASE - II AND PHASE - III IN RESPECT OF ITS WINDMILL PROJECTS WHICH WAS REJ ECTED BY THE ASSE SSING OFFICER. LD. CIT(A) , HOWEVER FOLLOWED THE DECISION OF THE ITAT IN THE ASSESSEES OWN CASE FOR THE EARLIER YEARS AND OBSERVED AS UNDER: - 6. I HAVE GONE THROUGH THE A.O.S OBSERVATIONS AND AR'S CONTENTIONS. IT IS SEEN FROM THE FACTS THAT THE A.O. HA S DISALLOWED THE DEDUCTIONS OF RS. 28,38,344/ - FOR PHASE - II AND RS. 78,00,162/ - FOR PHAS E - III CLAIMED BY THE ASSESSEE U / S 80 - IA OF THE ACT, BY OBSERVING THAT THE BROUGHT FORWARD UNABSORBED LOSSES IN RESPECT OF THE WINDMILL UNIT PHASE - II NEED TO BE SET OFF AGAINST THE INCOME EARNED BY THE RESPECTIVE UNIT FOR A.Y. 2010 - 11 IN ACCORDANCE WITH THE PROVISIONS OF SECTION 80 - IA(5) O F THE ACT AND BY DOING SO, THERE BEING NO POSITIVE INCOME FROM THE SAID UNIT, THE QUESTION OF DEDUCTION U/S 80IA DOES NOT ARISE. THE AR CONTENDS THAT INITIAL ASSESSMENT YEAR IS THE YEAR IN WHICH THE ASSESSEE CLAIMS THE DEDUCTION AND NOT THE YEAR IN WHIC H THE WINDMILLS WERE PUT INTO USE AND AS PER THE PROVISIONS OF ACT, THE ASSESSEE CAN CLAIM DEDUCTION FOR A PERIOD OF 10 CONSECUTIVE ASSESSMENT YEARS OUT OF 15 ASSESSMENT YEARS AS PER THE ASSESSEES CHOICE. THE HONBLE ITAT, BENCH B, HYDERABAD IN ITA NO. 1033/HYD/2015, DT: 10.06.2016 FOR THE A.Y. 2008 - 09 HELD AS UNDER: THUS IT IS CLEAR THAT THE INITIAL ASSESSMENT YEAR IS NOT THE YEAR OF OPERATION OR COMMENCEMENT OF BUSINESS, AS INTERPRETED BY THE ASSESSING OFFICER, BUT IS THE FIRST YEAR IN WHICH THE APPEL LANT HAS OPTED TO CLAIM THE DEDUCTION U/S 80IA. IN VIEW OF THIS CLARIFICATION OF THE BOARD, WHICH CLINCHES THE ISSUE IN FAVOUR OF THE APPELLANT, AND IS BINDING ON THE REVENUE AUTHORITIES, WE ACCEPT THE CONTENTIONS OF THE APPELLANT IN THIS BEHALF, AND DIRE CT THE ASSESSING OFFICER TO ALLOW THE CLAIM OF THE APPELLANT, AFTER VERIFYING THE RECORDS AS TO THE INITIAL ASSESSMENT YEAR IN WHICH THE APPELLANT FOR THE FIRST TIME HAS CLAIMED THE DEDUCTION U/S 80 - IA OF THE ACT, AND CONSIDER THE INCOME OF THE APPELLANT F ROM THE ELIGIBLE UNIT FROM THAT YEAR ALONE ON A STANDALONE BASIS. APPELLANTS GROUNDS ON THIS ISSUE ARE ACCORDINGLY ALLOWED. 6.1. SINCE, THE ISSUE INVOLVED IS SIMILAR FOR THE YEAR UNDER APPEAL ALSO, RESPECTFULLY FOLLOWING THE DECISION OF HONBLE ITAT CIT ED SUPRA, I DIRECT THE A.O. TO ALLOW DEDUCTIONS OF RS. 28,38,344/ - FOR PHASE - II AND RS. 78,00,162/ - FOR PHASE - III CLAIMED BY THE ASSESSEE U/S 80 - IA OF THE ACT. AS A RESULT, THE GROUNDS RAISED ARE ALLOWED. 3. AGGRIEVED, REVENUE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD THE LD DR AND LD COUNSEL FOR THE ASSESSEE AND CAREFULLY PERUSED THE RECORD. THERE IS NO DISPUTE ON THE FACT THAT THE ISSUE IS IDENTICAL IN RESPECT OF THE A.Y. 2008 - 09, WHEREIN THE ITAT B BENCH, HYDERABAD HAS DECIDED THE ISSUE IN FAV OUR OF THE ASSESSEE. SINCE THE LD. CIT(A) FOLLOWED THE DECISION OF THE ITAT IN THE ASSESSEES OWN CASE FOR THE EARLIER YEARS, WE DO NOT FIND ANY INFIRMITY IN THE ORDERS PASSED BY THE LD. CIT(A). WE, THEREFORE, DISMISS THE APPEALS OF THE REVENUE. 3 5. ORDER PRONOUNCED IN THE OPEN COURT ON 04 TH SEPTEMBER, 2017. S D / - S D / - ( INTURI RAMA RAO ) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDEN T HYDERABAD, DATED: 04.09 . 2017 OKK, SR.PS COPY TO 1. M/S. HYDERABAD CHEMICAL PRODUCTS LIMITED, A - 24/25, APIE, BALANAGAR, HYDERABAD. 2. DCIT, CIRCLE 2(2), R.NO.513, 5 TH FLOOR, SIGNATURE TOWERS, KONDAPUR, HYDERABAD. 3. CIT (A) - 2, HYDERABAD. 4 PR. CIT - 2, HYDERABAD. 5. D.R. ITAT A BENCH, HYDERABAD. 6. GUARD FILE