Appeal Details
Counselvise Citation
[2016] 131 COUNSELVISE.COM (IT) 0984 (ITAT-PUNE)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
3 month(s) 29 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
31-08-2016
Appeal Filed By
Assessee
Order Result
Dismissed
Bench Allotted
A
Next Hearing Date
25-08-2016
Assessment Year
2006-2007
Appeal Filed On
02-05-2016
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , . . , BEFORE MS. SUSHMA CHOWLA , JM AND SHRI R.K. PANDA , AM IT A NO S . 874 TO 879 /PN/201 6 A . YRS . : 200 4 - 0 5 TO 2008 - 09 & 2012 - 13 M/S G. B. RUBBER PRODUCTS, S - 157, MIDC BHOSARI, PUNE 411 026. PAN : AACFG5404A . APPELLANT VS. THE DY. COMMISSIONER OF INCOME TAX, CIRCLE 8, PUNE. . RESPONDENT / APPELLANT BY : SHRI M. K. KULKARNI / DEPARTMENT BY : SHRI S. K. KULKARNI / DATE OF HEARING : 29 .0 8 .201 6 / DATE OF PRONOUNCEMENT: 31 . 0 8 .201 6 / ORDER PER SUSHMA CHOWLA, JM : THIS BUNCH OF SIX APPEALS FILED BY THE SAME ASSESSEE AGAINST SEPARATE ORDERS OF CIT(A) , ALL DATED 02.02.2016 RELATING TO ASSESSMENT YEAR S 2004 - 05 TO 2008 - 09 AND 2012 - 13 AGAINST RESPECTIVE ORDER S OF THE ASSESSING OFFICER . 2. ALL THE CAPTIONED APPEALS RELA T ING TO THE SAME ASSESSEE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2 ITA NO S . 874 TO 879 /PN/201 6 ITA NO.874/PN/2016 (A SSESSMENT YEAR: 2004 - 05) : ITA NO.875/PN/2016 (A SSESSMENT YEAR: 2005 - 06) : 3. THE AFORESAID TWO APPEALS FILED BY THE ASSESSEE ARE AGAINST THE CONSOLIDATED ORDER OF CIT (A) - 6 , PUNE, DATED 02.02.2016 RELATING TO ASSESSMENT YEAR S 2004 - 0 5 AND 2005 - 06 AGAINST ORDER PASSED UNDER SECTION 143(3) R.W.S. 254 OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT). 4 . IN BOTH THE AFORESAID CAPTIONED APPEALS, T HE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAS FILED A LETTER DATED 29.08.2016 ON BEHALF OF THE ASSESSEE SEEKING PERMISSION TO WITHDRAW THE CAPTIONED APPEAL S , FOR WHICH LEARNED DEPARTMENTAL REPRESENTATIVE FOR T HE REVENUE HAS NOT OBJECTED. THUS, BOTH THE APPEAL S RELATING TO ASSESSMENT YEARS 2004 - 05 AND 2005 - 06 ARE DISMISSED AS WITHDRAWN. 5 . IN THE RESULT, BOTH THE CAPTIONED APPEALS OF THE ASSESSEE IN ITA NOS.874 & 875/PN/2016 RELATING TO ASSESSMENT YEARS 200 4 - 05 AND 2005 - 06 ARE DISMISSED. ITA NO.87 6 /PN/2016 (A SSESSMENT YEAR: 200 6 - 0 7 ) : 6. NOW, COMING TO THE APPEAL OF THE ASSESSEE IN ITA NO. 876/PN/2016, WHICH IS DIRECTED AGAINST THE ORDER OF CIT (A) - 6 , PUNE, DATED 02.02.2016 RELATING TO ASSESSMENT YEAR 2006 - 07 AGAINST ORDER PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE ACT . 7 . IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT (A) - 6, AKURDI WAS NOT JUSTIFIED IN DI RECTING THE A. O. IN HIS APPEAL ORDER THAT THE LOSSES SUFFERED IN EARLIER YEARS NEED TO BE NOTIONALLY CARRIED FORWARD AND SET OFF AGAINST THE 3 ITA NO S . 874 TO 879 /PN/201 6 ELIGIBLE INCOME OF SUBSEQUENT YEAR BEFORE ALLOWING ANY DEDUCTION. THE DIRECTIONS ISSUE ARE CONTRARY TO SETTLED LAW IN THIS RESPECT. THE DEDUCTION U/S 80IA(4) BE ALLOWED OF THE ELIGIBLE INCOME WITHOUT CONSIDERING THE EFFECT OF SUCH CAR RY FORWARD OF NOTIONAL LOSSES. 2) THE APPELLANT CRAVES TO LEAVE, ADD/AMEND OR ALTER ANY OF THE ABOVE GROUNDS OF APPEAL. 8 . THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE ISSUE RAISED IN THE APPEAL IS AGAINST DENIAL OF DEDUCTION UNDER SECTION 80IA(4) OF THE ACT. 9 . THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE COULD NOT CONTROVERT THE SAID SUBMISSIO NS OF THE ASSESSEE. 10 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD AND ORDER OF CIT(A) . THE GROUND OF APPEAL NO.1 RAISED BY THE ASSESSEE BEFORE THE CIT(A) WAS AGAINST THE ACTION INITIATED UNDER SECTION 147 OF THE ACT BY ISSUANCE OF NOTICE UNDER SECTION 148 OF THE ACT. THE CIT(A) WHILE DECIDING THE SAID ISSUE NOTED VARIOUS FACETS OF THE CASE WHEREIN THE ASSESSEE HAD FURNISHED THE RETURN OF INCOME ON 30.12.2006 WHICH WAS PROCESSED UNDER SECTION 143(1) OF THE ACT. THE ASSESSING OFFICER REOP ENED THE ASSESSMENT BY ISSUING NOTICE UNDER SECTION 148 OF THE ACT DATED 14.01.2009 AFTER RECORDING THE REASONS THAT THE ASSESSEE WAS NOT ENTITLED TO DEDUCTION UNDER SECTION 80IA OF THE ACT. THE ASSESSEE FILED A LETTER INTIMATING THE ASSESSING OFFICER THA T THE RETURN OF INCOME ALREADY FILED BE TREATED AS A RETURN FILED IN RESPONSE TO NOTICE UNDER SECTION 148 OF THE ACT. THE ASSESSEE FAILED TO APPEAR BEFORE THE ASSESSING OFFICER AND THE ASSESSMENT WAS COMPLETED UNDER SECTION 144 OF THE ACT. THE CIT(A) NOT ED THE REASONS FOR REOPENING THE ASSESSMENT AND THE PROVISIONS OF SECTION 80IA OF THE ACT AND OBSERVED AS UNDER : - AS SEEN FROM THE WORDING OF SEC. 80 I A(4)(IV)(A) DOES NOT INDICATE THAT THE UNDERTAKING NEEDS TO BE A COMPANY AND HAS TO ENTER 4 ITA NO S . 874 TO 879 /PN/201 6 INTO AN AGRE EMENT WITH THE STATE GOVT. FOR GENERATION OF POWER. THE AO HAS ALLOWED HIMSELF TO BE MISLEAD BY SEC. 80 IA (4)(I) WHICH IS APPLICABLE ONLY TO ENTERPRISES WHICH ARE CARRYING ON THE BUSINESS OF DEVELOPING OR/AND OPERATING OR/ AND MAINTAINING OF ANY INFRASTR UCTURE FACILITY. ONLY SUCH ENTERPRISES NEED TO BE OWNED BY COMPANY AND THEY NEED TO ENTER INTO AN AGREEMENT WITH THE GOVT. OR OTHER STATUTORY AUTHORITIES. AN EXPLANATION HAS ALSO BEEN INSERTED IN THAT CLAUSE AS TO THE MEANING OF THE INFRASTRUCTURE FACIL ITY AS DEFINED IN THAT CLAUSE. THE POWER GENERATION IS NOT AN INFRASTRUCTURE FACILITY SO DEFINED UNDER THAT EXPLANATION OF CLAUSE OF SEC. 80IA(4)(I). SO THE PLAIN READING CLEARLY INDICATE THAT THE APPELLANT POWER GENERATION UNITS DO NOT FALL UNDER SEC. 80 IA(4)(I) BUT INSTEAD TO BE DEALT UNDER SEC. 80IA(4)(IV)(A). AS THE CONDITIONS SPECIFIED IN THAT CLAUSE ARE MET BY THE APPELLANT'S WIND MILL UNDERTAKINGS, THE REOPENING UNDERTAKEN BY THE AO IS BASED ON A REASONING WHICH IS BASED ON INVOKING OF A WRONG CLAU SE IN A SECTION 80 I A. HE FURTHER FAILED TO NOTICE THAT THE COL. N O .17 OF THE FORM N O . 10CCB DEALING WITH GENERATION TRANSMISSION AND DISTRIBUTION OF POWER DOES NOT SPECIFY ANY MENTION OF AN AGREEMENT WITH THE GOVT./ S TATUTORY AUTHORITIES. THE REASON TO BELI EF TO REOPEN THE ASSESSMENT CANNOT BE BASED ON WRONG ASSUMPTION OF APPLICABLE LAW TO THE FACTS ON RECORD. THE ASSESSING OFFICER BEING A QUASI JUDICIAL AUTHORITY AND HAVING BEING TRAINED IN THIS LINE SHOULD HAVE READ THE SECTIONS PROPERLY BEFORE INVOKING TH EM TO THE FACTS OF THE CASE. THERE APPEARS TO BE LACK OF APPLICATION OF MIND TO THE FACTS OF THE CASE AND THE LAW APPLICABLE. THEREFORE, I HAVE NO HESITATION TO HOLD THAT THE REOPENING HAS BEEN ON A WRONG ASSUMPTION OF LAW AND THEREFORE THE NOTICE U/S 1 48 IS BAD IN LAW. THEREFORE THE GROUND NO .1 IS ALLOWE D. 11 . THE CIT(A) HAS GIVEN A FINDING THAT THE REOPENING UNDERTAKEN BY THE ASSESSING OFFICER WAS ON REASONING, WHICH WAS BASED ON INVOKING OF WRONG CLAUSE OF SECTION 80IA OF THE ACT. THUS, THE REASON S TO BELIEVE TO REOPEN THE ASSESSMENT OF SECTION 80IA OF THE ACT. THUS, THE REASON S TO BELIEVE TO REOPEN THE ASSESSMENT COULD NOT BE BASED ON WRONG ASSUMPTION OF APPLICABLE LAW TO THE FACTS ON RECORD. THUS, THE REOPENING WAS HELD TO BE BAD AS THE REASON TO BELIEVE THE REOPEN COULD NOT BE BASED ON WRONG ASSUMPTION OF APPLICABLE IN LAW. IN VIEW THEREOF, THE REOPENING WAS HELD TO BE BAD IN LAW. THE REVENUE IS NOT IN APPEAL AGAINST THE SAID FINDING OF CIT(A). ONCE, THE ADDITION IN THE PRESENT CASE HAS BEEN MADE BY REOPENING THE ASSESSMENT UNDER SECTION 147/148 OF THE ACT WHICH HAS BEEN H ELD TO BE BAD IN LAW BY THE CIT(A), AGAINST WHICH THE REVENUE IS NOT IN APPEAL , NO FURTHER ADDITION IS MERITED IN THE HANDS OF THE ASSESSEE. THE ASSESSEE, THUS, HAS WRONGLY RAISED GROUND OF APPEAL IN THE PRESENT APPEAL AND THE SAME IS DISMISSED. 12 . IN T HE RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO. 876 /PN/2016 RELATING TO ASSESSMENT YEARS 200 6 - 0 7 IS DISMISSED. 5 ITA NO S . 874 TO 879 /PN/201 6 ITA NO.87 7 /PN/2016 (A SSESSMENT YEAR: 200 7 - 0 8 ) : ITA NO.87 8 /PN/2016 (A SSESSMENT YEAR: 200 8 - 0 9 ) : ITA NO.87 9 /PN/2016 (A SSESSMENT YEAR: 20 12 - 13 ) : 13 . THE AFORESAID THREE APPEALS FILED BY THE ASSESSEE ARE AGAINST SEPARATE ORDER S OF CIT (A) - 6 , PUNE, DATED 02.02.2016 RELATING TO ASSESSMENT YEAR S 2007 - 08, 2008 - 09 AND 2012 - 13 AGAINST ORDER PASSED UNDER SECTION 143(3) OF THE ACT . 1 4 . HOWEVER, REFERENCE IS BEING MADE TO THE FACTS AND ISSUES IN ITA NO. 877 /PN/201 6 RELATING TO ASSESSMENT YEAR 200 7 - 0 8 TO ADJUDICATE THE ISSUE. 1 5 . THE ASSESSEE IN ITA NO. 877 /PN/201 6 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT (A) - 6, AKURDI WAS NOT JUSTIFIED IN DIRECTING THE A. O. LD. CIT (A) - 6, AKURDI WAS NOT JUSTIFIED IN DIRECTING THE A. O. IN HIS APPEAL ORDER THAT THE LOSSES SUFFERED IN EARLIER YEARS NEED TO BE NOTIONALLY CARRIED FORWARD AND SET OFF AGAINST THE ELIGIBLE INCOME OF SUBSEQUENT YEAR BEFORE ALLOWING A NY DEDUCTION. THE DIRECTIONS ISSUE ARE CONTRARY TO SETTLED LAW IN THIS RESPECT. THE DEDUCTION U/S 80IA(4) BE ALLOWED OF THE ELIGIBLE INCOME WITHOUT CONSIDERING THE EFFECT OF SUCH CARRY FORWARD OF NOTIONAL LOSSES. 2) THE APPELLANT CRAVES TO LEAVE, ADD/A MEND OR ALTER ANY OF THE ABOVE GROUNDS OF APPEAL. 1 6 . THE ONLY ISSUE RAISED IN THE PRESENT APPEAL IS WITH REGARD TO THE CLAIM OF DEDUCTION UNDER SECTION 80IA(4) OF THE ACT AND WHETHER THE SAME IS TO BE ALLOWED AFTER SETTING OFF OF THE LOSSES SUFFERED BY THE ASSESSEE IN THE EARLIER YEARS. 17 . THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE AT THE OUTSET POINTED OUT THAT THE TRIBUNAL IN ASSESSEE OWN CASE IN ITA NO.649/PN/2008 RELATING TO ASSESSMENT YEAR 2003 - 04 VIDE ORDER DATED 26 TH JULY, 2010 HAD HEL D THAT ASSESSMENT YEAR 2003 - 04 WAS THE FIRST YEAR OF CLAIM OF DEDUCTION UNDER SECTION 6 ITA NO S . 874 TO 879 /PN/201 6 80IA OF THE ACT. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FURTHER POINTED OUT THAT THE ISSUE OF ALLOWABILITY OF THE CLAIM OF DEDUCTION UNDER SECTION 80IA OF TH E ACT ON INCOME FROM POWER GENERATION I.E. WINDMILL, WITHOUT ADJUSTMENT OF BROUGHT FORWARD LOSSES OF THE EARLIER YEARS IS SQUARELY COVERED BY THE UNDER - MENTIONED DECISIONS : - (I) CIT VS. P. V. CHANDRAN, (2016) 385 ITR 479 (MAD.) , (II) VELAYUDHASWAMY SPIN NING MILLS (P) LTD. VS. ACIT, (2010) 38 DTR 57 (MAD.) , (III) ACIT VS. JAYSHREE POLYMERS PVT. LTD., ITA NO.2282/PN/2014, ORDER DATED 10.02.2016. 18 . THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE PLACED RELIANCE ON THE ORDERS OF THE AUTHORITIES BELOW. 19 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE 19 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING IN THE PRESENT APPEAL IS AGAINST THE CLAIM OF DEDUCTION UNDER SECTION 80IA OF THE ACT IN RESPECT OF POWER GENERATION THROUGH WINDMILLS ESTABLISHED BY THE ASSESSEE. THE FI RST YEAR OF CLAIM OF DEDUCTION BY THE ELIGIBLE UNIT WAS ASSESSMENT YEAR 2003 - 04, WHICH IS THE INITIAL YEAR AND THE ASSESSEE HAS CLAIMED THE SAID DEDUCTION THEREAFTER. IN THE EARLIER YEARS, THE LOSSES ARISING ON ACCOUNT OF THE WINDMILL UNIT HAVE ALREADY BE EN SET - OFF AGAINST OTHER INCOME AND THE ASSESSEE CLAIMS THAT THE SAME COULD NOT BE NOTIONALLY CARRIED FORWARD TO THE LATER YEARS I.E. THE YEAR IN WHICH THE ASSESSEE HAD CLAIMED THE DEDUCTION UNDER SECTION 80IA OF THE ACT. WE FIND THAT THE SAID ISSUE OF AL LOWABILITY OF DEDUCTION UNDER SECTION 80IA OF THE ACT AND NON SETTING - OFF OF BROUGHT FORWARD LOSSES FROM THE EARLIER YEARS IS NOW SETTLED BY THE LATEST DECISION OF THE HONBLE MADRAS HIGH COURT IN CIT VS. P. V. CHANDRAN (SUPRA ) WHEREIN IT HAS BEEN HELD THA T : - 7 ITA NO S . 874 TO 879 /PN/201 6 FROM A READING OF THE ABOVE, IT IS CLEAR THAT THE ELIGIBLE BUSINESS WERE THE ONLY SOURCE OF INCOME, DURING THE PREVIOUS YEAR RELEVANT TO THE INITIAL ASSESSMENT YEAR AND EVERY SUBSEQUENT ASSESSMENT YEARS. WHEN THE ASSESSEE EXERCISES THE OPTION, TH E ONLY LOSSES OF THE YEARS BEGINNING FROM INITIAL ASSESSMENT YEAR ALONE ARE TO BE BROUGHT FOR - WARD AND NO LOSSES OF EARLIER YEARS WHICH WERE ALREADY SET OFF AGAINST THE INCOME OF THE ASSESSEE. LOOKING FORWARD TO A PERIOD OF TEN YEARS FROM THE INITIAL ASSESSMENT IS CONTEMPLATED. IT DOES NOT ALLOW THE REVENUE TO LOOK BACKWARD AND FIND OUT IF THERE IS ANY LOSS OF EARLIER YEARS AND BRING FORWARD NOTIONALLY EVEN THOUGH THE SAME WERE SET OFF AGAINST OTHER INCOME OF THE ASSESSEE AND THE SET OFF AGAINST THE CUR - RENT INCOME OF THE ELIGIBLE BUSINESS. ONCE THE SET OFF IS TAKEN PLACE IN EARLIER YEAR AGAINST THE OTHER INCOME OF THE ASSESSEE, THE REVENUE CANNOT REWORK THE SET OFF AMOUNT AND BRING IT NOTIONALLY. A FICTION CREATED IN SUB - SECTION DOES NOT CONTEM PLATES TO BRING SET OFF AMOUNT NOTIONALLY. THE FICTION IS CREATED ONLY FOR THE LIMITED PURPOSE AND THE SAME CANNOT BE EXTENDED BEYOND THE PURPOSE FOR WHICH IT IS CREATED. 20 . SIMILAR RATIO LAID DOWN BY THE HONBLE MADRAS HIGH COURT IN VELAYUDHASWAMY SPI NNING MILLS (P) LTD. VS. ACIT (SUPRA) WHICH HAS BEEN FOLLOWED BY THE PUNE BENCH OF THE TRIBUNAL IN SERUM INTERNATIONAL LTD. VIDE ITA NOS.290 TO 292/PN/2010, ORDER DATED 28.09.2011, WHICH HAS BEEN APPLIED IN ACIT VS. JAYSHREE POLYMERS PVT. LTD. (SUPRA). 21 . FOLLOWING THE SAID LEGAL PRECEDENTS, WE HOLD THE ASSESSEE IS ENTITLED TO CLAIM THE DEDUCTION ON ACCOUNT OF ITS INCOME ARISING FROM WINDMILL POWER GENERATION WITHOUT ADJUSTING THE NOTIONALLY BROUGHT FORWARD LOSSES OF EARLIER YEARS , WHICH HA D ALREADY BEEN ADJUSTED AGAINST THE OTHER INCOME OF THE ASSESSEE. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO ALLOW THE CLAIM OF THE ASSESSEE WITH REGARD TO CLAIM OF DEDUCTION UNDER SECTION 80IA OF THE ACT. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, ALL OWED. 22 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO.877/PN/2016 RELATING TO ASSESSMENT YEARS 2007 - 08 IS ALLOWED. 23 . FURTHER, THE ISSUE RAISED IN ASSESSMENT YEARS 2008 - 09 AND 2012 - 13 ON MERITS IS IDENTICAL TO THE ISSUE IN ASSESSMENT YEAR 2007 - 0 8 . THE ASSESSEE HAS ALSO 8 ITA NO S . 874 TO 879 /PN/201 6 RAISED IDENTICAL GROUNDS OF APPEAL AND OUR RATIO IN ITA NO.877/PN/2016 SHALL APPLY MUTATIS - MUTANDIS IN ITA NOS.878 & 879/PN/2016 RELATING TO ASSESSMENT YEARS 2008 - 09 & 2012 - 13 RESPECTIVELY. 24. IN THE RESULT, THE APPEALS OF THE A SSESSEE IN ITA NOS.878 & 879/PN/2016 RELATING TO ASSESSMENT YEARS 2008 - 09 AND 2012 - 13 ARE ALLOWED. 2 5 . RESULTANTLY, ALL THE CAPTIONED APPEALS OF THE ASSESSEE ARE DISPOSED OFF AS INDICATED ABOVE . ORDER PRONOUNCED ON THIS 31 ST DAY OF AUGUST , 201 6 . SD/ - SD/ - ( R.K. PANDA ) ( SUSHMA CHOWLA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER PUNE ; DATED : 31 ST AUGUST , 201 6 . / COPY OF THE O RDER IS FORWARDED TO : 1 ) THE ASSESSEE; 2 ) THE DEPARTMENT; 3 ) THE CIT(A) - 6 , PUNE ; 4 ) THE ADDL. CIT , RANGE - 8 , PUNE ; 5 ) THE DR A BENCH, I.T.A.T., PUNE; 6 ) GUARD FILE. / BY ORDER , //TRUE COPY// / SR. PRIVATE SECRETARY , / ITAT, PUNE
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