Selwind Industries Pvt Ltd., CHENNAI V. DCIT, Coimbatore

ITA 915/CHNY/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8327 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 29-12-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 24-04-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A B KOLI IRS
• Assessee Lawyers: R VIJAYARAGHAVAN
• Keywords: Depreciation
• Section: 32; 139

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI , . , ! ' BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A.NOS.915 & 916/MDS/2015 ! # $# / ASSESSMENT YEARS : 2010-2011 & 2011-2012. M/S. SELWIND INDUSTRIES P. LTD 6, SUNDARAM APARTMENTS, 81,RACE COURSE ROAD, COIMBATORE 641 018. VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE -1, COIMBATORE. [PAN AANCS 4036Q ] ( / APPELLANT) ( /RESPONDENT) %& ' ( / APPELLANT BY : SHRI. R. VIJAYARAGHAVAN, ADVOCATE )*%& ' ( /RESPONDENT BY : SHRI. A.B. KOLI, IRS, JCIT. ' + / DATE OF HEARING : 29.12.2015 ,-$ ' + / DATE OF PRONOUNCEMENT : 08.01.2016 / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER : THESE APPEALS ARE FILED BY THE ASSESSEE ARE DIR ECTED AGAINST DIFFERENTS ORDER OF COMMISSIONER OF INCOM E-TAX (APPEALS)-1, COIMBATORE, DATED 05.03.2015 FOR THE ASSESSMENT YEA RS 2010-2011 ITA NOS.915 &916/MDS/2015 :- 2 -: AND 2011-2012 PASSED U/S.143(3) R.W.S.147 AND 250 O F THE INCOME TAX ACT, 1961 . 2. THE ASSESSEE HAS RAISED ONLY ONE SUBSTANTIVE GROU ND IN RESPECT OF DISALLOWANCE OF DEPRECATION ON WINDMILLS ON WDV METHOD FOR BOTH ASSESSMENT YEARS. SINCE THE ISSUE IN THESE APPEALS ARE COMMON IN NATURE, THESE APPEALS ARE CLUBBED, HEARD TOGETHER, AND DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CO NVENIENCE. WE CONSIDER THE FACTS AS NARRATED IN ITA NO.915/MDS/2 015 FOR ADJUDICATION. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY IS IN THE BUSINESS OF MANUFACTURE OF WINDMILL ENERGY A ND FILED RETURN OF INCOME ON 24.09.2010 WITH NIL INCOME WITH CARRIED F ORWARD UNABSORBED DEPRECATION OF =19,59,919/- AND RETURN O F INCOME WAS PROCESSED U/S.143(1) OF THE ACT. THE ASSESSING OFF ICER FOUND THAT THE ASSESSEE HAS CLAIMED DEPRECIATION ON WINDMILL AT 80 % ON WDV METHOD IN THE RETURN OF INCOME AS AGAINST @7.69% ON STRAIGHT LINE METHOD AND ISSUED NOTICES U/S.148 AND ALSO 143 (2) OF THE ACT AND POSTED THE CASE FOR HEARING. IN THE RE-ASSESSMENT PROCEEDING, THE LD. AUTHORISED REPRESENTATIVE FOR ASSESSEE APPEARED FRO M TIME TO TIME AND FILED DETAILS OF DEPRECATION CLAIMED AT 80% ON WINDMILLS U/S. PROVISIONS OF SEC. 32 OF THE ACT INSTEAD OF SLM RAT E AT 7.69% AS PER ITA NOS.915 &916/MDS/2015 :- 3 -: ACT AND SUBMITTED THAT THE COMPANY HAS ERECTED WIND MILLS DURING THE YEAR 2008-09 AND CLAIMED DEPRECATION AS PER THE APP LICABLE RATES. THE RETURN OF INCOME WAS FILED BEFORE DUE DATE ON 24.09 .2010 AND THE RETURN OF INCOME CONTAINED DETAILS OF DEPRECATION C LAIMED AS PER BOOKS MAINTAINED BY THE ASSESSEE AND DEPRECATION CL AIMED FOR THE PURPOSE OF INCOME TAX AND THERE IS NO OPTION FOR SE PARATE CLAIM AND RELIED ON THE DECISION OF KKSK LEATHER PROCESSORS IN ITA NOS.826 & 827 OF 2009 DATED 20.11.2009. THE ASSESSEE COMPANY HAS NOT FILED RETURN OF INCOME WITHIN THE DUE DATE U/S.139(1) OF THE ACT FOR THE ASSESSMENT YEAR 2009-10 BEING THE FIRST YEAR OF CLA IMING DEPRECATION ON WINDMILLS INSTALLED IN THE PREVIOUS YEAR 2008-20 09. THE ASSESSEE HAS FILED BELATED RETURN FOR THE ASSESSMENT YEAR 20 09-2010 ON 23.12.2009 AND NOT FILED OPTION OF CLAIM FOR DEPREC ATION BEFORE DUE DATE OF FILING OF RETURN U/S.139(1) OF THE INCOME T AX ACT TO COMPLY THE PROVISIONS AND EXPLANATION (II) OF SEC.32(1) OF I.T ACT READ WITH RULE 5(1A) OF INCOME TAX RULES, 1962. APPLING THE LEGAL POSITION THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009-2010 WAS NOT FILED BY THE ASSESSEE BEFORE THE DUE DATE, BEING THE FIRST YEAR 2009-2010 AND ALLOWED DEPRECATION @7.69% ON STRAIGHT LINE METHOD. THE ASSESSING OFFICER COMPLETED ASSESSMENT BY DISALLOWING CLAIM O F DEPRECATION ON WDV METHOD AND ALLOWED DEPRECATION ADMISSIBLE AT 7 .69%. SIMILARLY, FOR THE ASSESSMENT YEAR 2011-12, ASSESSING OFFICER DISALLOWED ITA NOS.915 &916/MDS/2015 :- 4 -: DEPRECATION BEING THIRD YEAR AND ALLOWED DEPRECIAT ION ON SLM BASIS. AGGRIEVED BY THE ORDERS FOR ASSESSMENT YEARS 2010-2 011 AND 2011-12 PASSED BY THE ASSESSING OFFICER, THE ASSESSEE FILED APPEALS BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). 4. IN THE APPELLATE PROCEEDINGS, THE ASSESSEE HAS RAIS ED GROUNDS AND ALSO CHALLENGED VALIDITY OF REOPENING O F ASSESSMENT U/S.147 OF THE ACT. THE LD. AUTHORISED REPRESENTAT IVE HAS REITERATED HIS SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER A ND ALSO RELIED ON THE DECISION OF CO-ORDINATE BENCH OF THE TRIBUNAL I N THE CASE OF M/S. KKSK LEATHER PROCESSORS PVT. LTD WHERE IT WAS CONS IDERED THAT WHEN THE RETURN OF INCOME WAS FILED WITHIN THE DUE DATE . THE INCOME TAX RETURN ITSELF IS A SUFFICIENT DECLARATION FOR EXERC ISING THE OPTION TO CLAIM DEPRECIATION UNDER WRITTEN DOWN VALUE METHOD. FURTH ER, IT WAS PLEADED THAT DEPRECIATION ON WINDMILLS WAS ALLOWED BY ASSES SING OFFICER AT 7.69% ON STRAIGHT LINE METHOD INSTEAD OF 80% ON WDV BASIS CLAIMED BY THE ASSESSEE. THE LD.CIT(A) RELIED ON THE FINDI NGS OF THE ASSESSING OFFICER AND PERUSED THE ORDER OF THE TRIBUNAL AND C ONCLUDED THAT SINCE THE WINDMILLS WERE INSTALLED FOR THE FIRST TIME IN THE FINANCIAL YEAR 2008-2009 BEING THE FIRST YEAR AND THE ASSESSEE HA S NOT FILED RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009-2010 WITHIN THE DUE DATE. THEREFORE, DEPRECIATION FOR SUBSEQUENT YEARS SHALL BE ALLOWED ONLY ON ITA NOS.915 &916/MDS/2015 :- 5 -: SLM BASIS AND CONFIRMED THE ORDER OF THE ASSESSING OFFICER. AGGRIEVED BY THE ORDERS OF THE COMMISSIONER OF INCOME TAX (AP PEALS), THE ASSESSEE FILED APPEALS BEFORE THE TRIBUNAL. 5. BEFORE THE TRIBUNAL, THE LD. AUTHORISED REPRESENTAT IVE SUBMITTED THAT THE RETURN OF INCOME FOR THE ASSESSM ENT YEAR 2010- 2011 AND 2011-12 WERE FILED WITHIN THE DUE DATE U/S .139(1) OF THE ACT. THEREFORE, DEPRECATION ON WINDMILLS SHOULD BE ALLOW ED UNDER WRITTEN DOWN VALUE METHOD AND FURTHER ARGUED THAT THERE IS NO STATUTORY REQUIREMENT OF FILING PRIOR INTIMATION TO THE ASSES SING OFFICER AS CLAIM OF DEPRECATION WAS CONSIDERED FOR COMPUTING TOTAL I NCOME AND ASSESSEE COMPANY HAS COMPLIED THE PROVISIONS OF SEC .32 (1) OF THE ACT R.W.R 5(1A)OF INCOME TAX RULES, 1962 FOR CLAIM OF DEPRECIATION AND PRAYED FOR ALLOWING THE APPEALS. 6. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTAT IVE HAS RELIED ON THE ORDERS OF LOWER AUTHORITIES AND ARGUE D THAT CASE LAWS REFERRED BY THE AUTHORISED REPRESENTATIVE ARE NOT A PPLICABLE IN THE PRESENT CONTEXT AND PRAYED FOR DISMISSAL OF THE APP EALS. 7. WE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES, PERUSED THE MATERIAL ON RECORD AND ALSO JUDICIAL DECISIONS CITED. THE LD. AUTHORISED REPRESENTATIVE ARGUED ON METHODOLOGY OF CLAIM OF ITA NOS.915 &916/MDS/2015 :- 6 -: DEPRECATION AS PER THE PROVISIONS OF THE ACT. THE O NLY ISSUE FOR CONSIDERATION BEFORE THE LOWER AUTHORITIES WAS IN R ESPECT OF ALLOWING THE DEPRECIATION ON WINDMILLS @80% ON WRITTEN DOWN VALUE METHOD INSTEAD OF STRAIGHT LINE METHOD. WE HAVE PERUSED TH E LAW ON PROVISIONS OF SEC.32(1)(I) OF INCOME TAX ACT READ WITH RULE 5( 1A) OF INCOME TAX RULES, 1962 READ AS UNDER:- THE ALLOWANCE UNDER CLAUSE (I) OF SUB-SECTION (1 ) OF SECTION 32 OF THE ACT IN RESPECT OF DEPRECATION OF ASSETS A CQUIRED ON OR AFTER 1 ST DAY OF APRIL,1997 SHALL BE CALCULATED AT THE PERCE NTAGE SPECIFIED IN THE SECOND COLUMN OF THE TABLE IN APPE NDIX IA OF THESE RULES ON THE ACTUAL COST THEREOF TO THE ASSES SEE AS ARE USED FOR THE PURPOSE OF THE BUSINESS OF THE ASSESSE E AT ANY TIME DURING THE PREVIOUS YEAR. PROVIDED THAT THE AG GREGATE DEPRECATION ALLOWED IN RESPECT OF ANY ASSET FOR DIF FERENT ASSESSMENT YEARS SHALL NOT EXCEED THE ACTUAL COST O F THE SAID ASSET. PROVIDED FURTHER THAT THE UNDERTAKING SPECI FIED IN CLAUSE (I) OF SUB-SECTION (1) OF SECTION 32 OF THE ACT MAY , INSTEAD OF THE DEPRECIATION SPECIFIED IN APPENDIX IA, AT ITS O PTION, BE ALLOWED DEPRECATION UNDER SUB-RULE (1) READ WITH AP PENDIX I, IF SUCH OPTION IS EXERCISED BEFORE THE DUE DATE FOR FU RNISHING THE RETURN OF INCOME UNDER SUB-SECTION (1) OF SECTION 1 39 OF THE ACT. (A) FOR THE ASSESSMENT YEAR 1998-99, IN THE CASE OF AN UNDERTAKING WHICH BEGAN TO GENERATE POWER PRIOR TO 1 ST DAY OF APRIL 1997; AND (B) FOR THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YE AR IN WHICH IT BEGINS TO GENERATE POWER, IN CASE OF AN Y OTHER UNDERTAKING: PROVIDED ALSO THAT ANY SUCH OPTION ONCE EXERCISED S HALL BE FINAL AND SHALL APPLY TO ALL THE SUBSEQUENT ASSESSMENT YE ARS. IN THE PRESENT CASE, THE ASSESSEE HAS FILED RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009-2010 BELATEDLY ON 23.12.2009 BEING THE FIRST YEAR OF INSTALLATION OF WINDMILL AND DEPRECATION WA S CLAIMED, FURTHER NO ITA NOS.915 &916/MDS/2015 :- 7 -: OPTION EXERCISED BY THE COMPANY FOR CLAIMING DEPREC ATION ON WRITTEN DOWN METHOD AS PER RULE 5(1A) OF THE INCOME TAX RU LES BEFORE THE DUE DATE U/S.139(1) OF THE ACT WHEREAS FOR THE ASSE SSMENT YEAR 2010- 2011 AND 2011-2012, THE ASSESSEE CLAIMED DEPRECATIO N AT 80% ON WRITTEN DOWN VALUE METHOD INSTEAD OF STRAIGHT LINE METHOD AT 7.69%. AS PER THE PROVISION OF THE ACT, WHERE ANY OPTION E XERCISED SHALL BE FINAL AND SHALL APPLY TO SUBSEQUENT/ASSESSMENT YEAR S. SINCE THE ASSESSEE COMPANY CLAIMED DEPRECIATION ON STRAIGHT L INE METHOD FOR THE ASSESSMENT YEAR 2009-2010 AND CANNOT HAVE DIFFERENT METHODOLOGY OF DEPRECATION FOR THE SUBSEQUENT YEARS. WE RELY ON T HE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF CIT VS. KIKANI EXPORTS P. LTD 369 ITR 0500 WHERE IT WAS HELD THAT ALL THE SECOND PROVISO TO RULE 5(1A) STATES IS THAT THE ASSESSEE HAS TO EXERCISE OPTION BEFORE THE DUE DATE FOR FURNISHING RETURN OF INCOME. IF OPTION IS EXERC ISED AFTER FURNISHING OF RETURN OF INCOME UNDER SUB-SECTION (1) OF SECTIO N 139, IT IS OF NO AVAIL. FORM ITR-6 GIVES METHODOLOGY ON WHICH DEPREC ATION CAN BE CLAIMED. STATUE DID NOT PROVIDE FOR ANY OTHER METHO D TO EXERCISE OPTION EXCEPT THROUGH FILING OF RETURN. TO READ SOM ETHING MORE INTO SECOND PROVISO TO RULE 5(1A), THAT AN OPTION SHOULD BE EXERCISED SEPARATELY WOULD MAKE RETURNS FILED MEANINGLESS. TH US IF ASSESSEE EXERCISED OPTION IN TERMS OF SECOND PROVISO TO RULE 5(1A) AT TIME OF FURNISHING OF RETURN OF INCOME, IT WILL SUFFICE AND NO SEPARATE LETTER OR ITA NOS.915 &916/MDS/2015 :- 8 -: REQUEST OR INTIMATION WITH REGARD TO OF EXERCISE OF OPTION IS REQUIRED. FURTHER OPTION ONCE EXERCISED WILL CONTINUE TO ALL SUBSEQUENT YEARS, ASSESSEE IS NOT REQUIRED TO EXERCISE SUCH OPTION EA CH AND EVERY YEAR SEPARATELY. REVENUES APPEAL DISMISSED. WE FIND T HE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE ARE SIMILAR TO TH E CASE DECIDED BY THE JURISDICTIONAL HIGH COURT AND ACCORDINGLY, WE DISMISS THE APPEALS OF THE ASSESSEE. 8. IN THE RESULT, THE APPEALS OF THE ASSESSEE IN ITA N O.915 & 916/MDS/2015 ARE DISMISSED. ORDER PRONOUNCED ON FRIDAY, THE 8TH DAY OF JANUARY, 2016, AT CHENNAI. SD/- SD/- ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER ( . ) (G. PAVAN KUMAR) /JUDICIAL MEMBER / CHENNAI . / DATED: 08.01.2016 KV / ' )!+12 32$+ / COPY TO: 1 . %& / APPELLANT 3. 4+ () / CIT(A) 5. 278 )!+! / DR 2. )*%& / RESPONDENT 4. 4+ / CIT 6. 89# : / GF