Torrent Power Ltd., Ahmedabad V. The ACIT.,Circle-8, Ahmedabad

MA 33/AHD/2022

AI Insights

The case involves Torrent Power Limited, which filed miscellaneous applications seeking rectification of apparent mistakes in the orders of the Income Tax Appellate Tribunal regarding the treatment of income from the sale of scrap and the deductions under section 80IA for the assessment years 2009-10 to 2011-12. The Tribunal had previously relied on its decision from the assessment year 2008-09, which led to discrepancies in the application of the law for the subsequent years. The Tribunal acknowledged the mistakes and corrected the treatment of the income from the sale of scrap of capital items and adjusted the depreciation calculations accordingly. The Tribunal's decision also harmonized the treatment of similar cases across the specified assessment years.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 135816 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 2 month(s) 25 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 14-09-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: B
• Next Hearing Date: 29-06-2023
• Assessment Year: 2009-2010
• Appeal Filed On: 20-06-2022
• Other Referred Cases: ITANo.776/AHD/2012, ITANo.738/AHD/2012, ITANo.1669/AHD/2012, ITANo.2025/AHD/2013, ITANo.3178/AHD/2013
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: FORTHEASSESSEEATTHETIMEOFHEARINGBEFOREUSALSOFILED; FORTHEASSESSEEFURTHERSUBMITTED; FORTHEASSESSEEFAIRLYSUBMITTEDTHATTHE; SHRIURJITSHAH
• Assessee Lawyers: SHRIS.N.SOPARKAR; WAYOFTHESEMISCELLANEOUSAPPLICATIONSHASSOUGHT
• Keywords: Depreciation

Judgement Text

आयकरअपीलीयअधिकरण , अहमदाबादनयायपीी INTHEINCOMETAXAPPELLATETRIBUNAL, ‘’B”BENCH,AHMEDABAD BEFOREMs.SUCHITRAKAMBLE,JUDICIALMEMBER, And SHRIWASEEMAHMED,ACCOUNTANTMEMBER (Applicant)(Respondent) Assesseeby:ShriS.N.Soparkar,Sr.Advocate withShriParinShah& ShriDhrunalBhatt,A.Rs Revenueby:ShriUrjitShah,Sr.D.R सुनवाईकीतारीख/DateofHearing:30/06/2023 घोषणाकीतारीख /DateofPronouncement:15/09/2023 No(s) MA/CO/ITAAsset. Year(s) Appeal(s)by Appellantvs.Respondent AppellantRespondent 1.MANo.33/Ahd/2022 In ITANo. 1581/Ahd/2012 2009-10TorrentPowerLimited, TorrentHouse,Nr. DineshHall,OffAshram Road, Ahmedabad-380009. PAN:AACCT0294J A.C.I.T, Range-8, Ahmedabad. 2.M.ANo.34/Ahd/2022 inITA No.1977/Ahd/2013 2010-11TorrentPowerLimited, Ahmedabad. PAN:AACCT0294J D.C.I.T,(OSD) Range-8, Ahmedabad. 3.M.ANo.35/Ahd/2022 In C.ONo.25/Ahd/2022 (arisingoutofITA No.3178/Ahd/2016) 2011-12TorrentPowerLimited, Ahmedabad. PAN:AACCT0294J D.C.I.T, Circle-4(1)(2) Ahmedabad M.ANo.33/Ahd/2023in ITAno.1581/AHD/2012 A.Y.2009-10with2others 2 आदेश/ORDER PERWASEEMAHMED,ACCOUNTANTMEMBER: Theassesseebywayofthesemiscellaneousapplicationshassought rectificationofthemistakesapparentfromtherecordintheorderoftheITAT withinthemeaningoftheprovisionsofsection254(2)oftheAct. 2.Oneoftheissuesraisedbytheassesseeiscommoninallthemiscellaneous applicationfiledbyit.Accordingly,wehaveclubbedalltheMA’sfiledbythe assesseetogetherforthesakeofbrevityandconvenience.Forthepurposeofthe adjudication,thefactsinthemiscellaneousapplicationbearingNo.33/AHD/2022 pertainingtotheassessmentyear2009-10havebeenadoptedforreadyreference. 3.Theassesseeinthemiscellaneousapplicationhaspointedoutasunder: 2.Disallowanceofdeductionu/s.80IAoftheActinrespectofsaleofscrap ofRs.6,40,66,794/- 2.1WhilepassingtheAppellateorderforA.Y.2009-10,yourgoodhonourhave disposedoffthegroundrelatingtothe“Disallowanceofdeductionu/s80IAoftheActin respectofsaleofscrap"byrelyinguponthedecisiongivenbyyourgoodhonourinA.Y. 2008-09forthesaidissue.' 2.2InA.Y.2008-09,outofthetotalamountofsaleofscrapofRs.11,57,69,6187-,an amountofsaleofscrapofRs.10,04,30,0797-representedthesaleofscrapoftheitems (likecables,transformers,meters,metal,etc.)whichhavebeenclassifiedasfixedassets inthebooksofaccountsandcapitalizedasapartofblockoffixedassetsunderthe IncomeTaxAct,onwhichtheAppellantisentitledtoclaimdepreciation.Consideringthe saidfacts,inA.Y.2008-09,theHon'bleCIT(A)heldthatastheincomeof Rs.10,04,30,0797-isonaccountofsaleoffixedassets(scrap),thereceiptsshould thereforebeadjustedagainstthevalueofblockofassetsanddepreciationunderthe IncomeTaxActshouldbeallowedontheWDVafteradjustingthesaidamount. Consequentially,thesaidamountofsaleofscrapisnottreatedasincomeoftheAppellant company.WhilepassingtheAppellateorder,yourgoodhonourhaveconfirmedthe decisiongivenbytheHon'bleCIT(A)inA.Y.2008-09. 2.3InA.Y.2009-10,whiledealingwiththeissuerelatedtothesaleofscrap,yourgood honourhavestatedthatasthefactsofthecaseareidenticaltothefactsofthecaseinA.Y. 2008-09,thedecisiongivenforA.Y.2008-09shallbeapplicableforA.Y.2009-10also. M.ANo.33/Ahd/2023in ITAno.1581/AHD/2012 A.Y.2009-10with2others 3 2.4Inthisconnection,itissubmittedthatinA.Y.2009-10,theHon'bleCIT(A)heldthat theAppellantcompanyhasnotbeenabletoestablishthatcablescrap,metalscrapand otherscraprelatestotheexpendituredebitedasrevenueexpenditureinthebooksof accountandnotoncapitalaccount.Accordingly,theAppellantcompanywasnotallowed thedeductionu/s.801AoftheActinrespectoftheincomearisingonthesaidsaleofscrap. TheCIT(A)furtherheldthatwasteoilisrecoveryoftheoilutilizedfortheappellant's businessundertakingandhence,theAppellantcompanywasalloweddeductionu/s.80IA oftheActinrespectofsaleofscrapofwasteoil.Therelevantexceptoftheorderof Hon’bleCIT(A)(Pageno.40)isreproduced,asunder: Limited[SOSITR263],Iappreciatethesubmission.However,itisnoticedthatthe appellanthasnotbeenabletoestablishthatthecablescrapmetalscrapand otherjcrgprelatestotheexpendituredebitedasrevenueexpenditureinthebooks andnotoncapitalaccount.Inthecircumstances,Iamintofafagreementwiththe findingsgivenbytheA.O.inrejectingtheclaimoftheappellantinrespectofth© suchitems.However,wasteoilisrecoveryoftheoilutilizedfortheappellant's businessundertakingandhence,theA.O.isdirectedtoallowdeductioninrespect ofsaleofwasteoil. Onperusaloftheabove,itisclearthatinA.Y.2009-10,theCIT(A)heldthatthesaleof scrapofwasteoilisonaccountofthewasteoil,theexpenditureofwhichhasbeendebited toprofitandlossaccount,asrevenueexpenditureandhence,thesaidamountiseligible fordeductionu/s.80IAoftheAct.Thesaleofscrapofotheritems(i.ecables,metals, meters,etc.)isonaccountoftheassets,whichiscapitalizedinthebooksofaccountand hence,thedeductionofthesaidamountwasnotallowedwhilecomputingtheprofiteligible fordeductionu/s.80IAoftheAct. 2.5Inviewoftheabove,itisclearthatthefactsofthecaseinA.Y.2008-09andA.Y. 2009-10aresimilartotheextentthatoutoftotalsaleofscrap,thesaleofscrapofcertain itemsrelatestotheassets,whichhasbeentreatedascapitalexpenditure(i.e.capitalized asapartofblockofassets)bytheAppellantcompany.InA.Y.2008-09,theCIT(A)has categoricallystatedthattheincomearisingonsaleofscrap,whichisonaccountofsaleof fixedassets,shouldbeadjustedagainsttheblockofassetsandaccordingly,the depreciationundertheAct,shouldbeallowedtotheAppellantcompanyonthesaid adjustedvalueandthatthesaidamountofsaleofscrapshallnotbetreatedasincomeof theAppellantcompanyWhereas,inA.Y.2009-10,theHon'bleCIT(A)merelyheldthatthe incomearisingfromthesaleofscrap(exceptsaleofwasteoil)isinrespectofsaleof assets(i.e.treatedascapitalexpenditure)andhence,theAppellantisnoteligibletoclaim u/s.80IAoftheAct. 2.6WhilepassingtheAppellateorderofA.Y.2008-09,yourgoodhonourconsidered thefindings/conclusiongivenbytheHon'bleCIT(A)inA.Y.2008-Crandthereby confirmedtheorderpassedbytheCIT(A).Further,asthefactsofthecaseofA.Y.2009-10 wereidenticaltothefactsofthecaseofA.Y.2008-09,you-goodhonourhavereliedupon thedecisiongivenforA.Y.2008-09,withoutappreciatingthefactthatthefindings/ conclusiongivenbytheHon'bleCIT(A)inA.Y.2009-10aredifferentfromA.Y.2008-09, throughthefactsofboththeyearsareidentical. 2.7Inlightoftheabove,theappellantcompanysubmitsthatthoughthefactsofthe caseforboththeyearsaresimilar,thedecision/findingsgivenbytheHon'bleCIT(A)for boththeyears,whichhavebeenconfirmedbyyourgoodhonour,intheAppellateorder, aredifferent.Thisbeingthemistakeapparentfromtherecords,theappellantcompany requestsyourgoodhonourtoappreciatetheabovereferredfactsandtherebymodifythe M.ANo.33/Ahd/2023in ITAno.1581/AHD/2012 A.Y.2009-10with2others 4 Appellateorder,tothatextent,bygivingfindingontheissueoftreatmentofsaleofscrapof capitalitems,whichisapartofMiscellaneousincome. 3.1ThelearnedARfortheassesseeatthetimeofhearingbeforeusalsofiled writtensubmissionpointingoutcertainmistakesapparentfromtherecordcreptin theimpugnedorder.ThelearnedARpointedoutthattherevenueinitsappealin ITANo.1669/Ahd/2012forAY2009-10videgroundNos.1(a)to1(d)raisedthe issueofallowingthedeductionundersection80IAoftheActwithrespecttothe proceedsfromofsaleofscrapbeingwasteoilalongwithcertainotherissuesas well.TheBenchdealingwiththeimpugnedissuevideparagraphNo.157ofthe orderheldthattheproceedsfromsaleofwasteiseligiblefordeductionunder section80IAoftheActonthesamereasoningasgivenforinsuranceclaimreceipt andbaddebtrecovery.However,thebenchwhileholdingsoreferredtheprevious paragraphNo.86ofthesaidorderbutsuchparagraphNo.86dealswiththe assessee’sgroundofappealforAY2008-09aboutthesaleofscrapoffixedassets only.Thus,anapparentmistakeontherecordinpara157oftheimpugnedorder isrequiredtobecorrected.ThelearnedARfortheassesseefurthersubmitted thattheidenticalorsamemistakealsocreptinparagraphNos.189and214ofthe saidorderwhererevenue’sgroundsofappealforassessmentyear2010-11and 2011-12havebeendealt. 4.Inviewoftheabove,thelearnedARbeforeussubmittedthatthe paragraphbearingnumber132oftheorderdated9-12-2021whereincertain paragraphbeingparanos.38,45,52,86hasbeenreferredshouldbemodifiedby makingareferencetotheparagraphNos.38,45,52,73and86to88relatingto theassessmentyear2008-09inITANo.776/AHD/2012soastoproper adjudicationoftheissues.Likewise,paragraphNo.157oftheorderdated9-12- 2021fortheAY2009-10oftheRevenue’sappealalsoneedstoberectifiedby removingthereferencetopara86ofsaidorderrelatingtoassessmentyear2008- 09inITANo.776/AHD/2012.ThelearnedARfurtherpointedthatthefindings givenbytheITATinparagraphNo.87,88and73fortheassessmentyear2008- M.ANo.33/Ahd/2023in ITAno.1581/AHD/2012 A.Y.2009-10with2others 5 09shouldalsobemadeapplicableinassesseeappealandcrossobjectionforthe assessmentyears2009-10to2011-12asthefactsareidenticalwhereas,the referencetoparagraphNo.86shouldberemovedfromParaNos.157,189and 214oftheorderrelatingtotheRevenue’sappealfortheAYs2009-10to2011-12. Assuch,theapparentmistakehascreptinthefindingoftheITATrelatingtothe assessmentyears2009-10to2011-12onaccountofnon-makingoftheproper referencetothefindingoftheassessmentyear2008-09inadvertentlywhich needstoberectifiedwithinthemeaningoftheprovisionsofsection254(2)ofthe Act. 4.1.Onthecontrary,thelearnedDRcouldnotcontrovertthearguments advancedbythelearnedcounselfortheassessee. 5.Heardtherivalcontentionsofboththepartiesandperusedthematerials availableonrecord.AsfarasthedirectiongivenbytheITATinparagraphNos.86 to88and118fortheassessmentyear2008-09,thereisnoambiguitytheextent thatthesameisalsoapplicablefortheassessmentyears2009-10to2011-12.But theITATwhileadjudicatingtheissueforthedifferentassessmentyears2009-10 to2011-12hasnotmadereferencetotherelevantparagraphsi.e.87to88and 73despitethefactitwasclearlyspecifiedbytheITATinitsorderthatthefactsin thedifferentassessmentyears2009-10to2011-12areidenticaltothefactsofthe AY2008-09.Accordingly,thefindingsgivenbytheITATinparagraphnumbers87, 88and73relatingtotheassessmentyear2008-09shallalsobeapplicableforthe assessmentyears2009-10to2011-12.Thus,itappearsthatthereisamistake apparentfromtherecordwithinthemeaningoftheprovisionsofsection254(2)of theActwhichrequirestoberectified.Accordingly,thedifferentparagraph numberspertainingtodifferentassessmentyearsaremodifiedasunder: 5.1ParagraphNo.132fortheassessmentyear2009-10inITANo. 1581/AHD/2012,anappealbytheassessee,isamendedasunder: M.ANo.33/Ahd/2023in ITAno.1581/AHD/2012 A.Y.2009-10with2others 6 132.Attheoutset,wenotethattheissuesraisedbytheassesseeinitsgroundof appealfortheAY2009-10areidenticaltotheissuesraisedbytheassesseevideground Nos.3to4inITANo.776/AHD/2012fortheassessmentyear2008-09exceptthereis meagredifferenceinthefactsrelatingtothetreatmentofscrapsale.Assuchthelearned CIT(A)whiledealingwiththeissueofscrapsalefor2008-09hasheldthatsaleproceeds fromscrapsaleisofcapitalitemandthereforethesameshouldnotbeincludedinthe eligibleunitbutthesamewillreducetheWDVofblockassets.Accordingly,the depreciationwillbere-calculated.ThefindingofthelearnedCIT(A)wasconfirmedbyus videparagraphnumber86to88andhavedismissedthegroundofappealoftheassessee. However,thelearnedCIT(A)whiledecidingtheissueofsaleproceedfromscrapsalefor theyearunderconsiderationi.e.AY2009-10hasnotprovidedtheadjustmentforblockof assetsonaccountofscrapsaleofcapitalitems.Therefore,thefindingsgiveninITANo. 776/AHD/2012shallalsobeapplicablefortheyearunderconsiderationi.e.AY2009-10 butthefindingwithregardtogroundofappealrelatingtoscrapsalewillbereadaspartly allowedinsteadofdismissedasheldintheAY2008-09.Theappealoftheassesseeforthe assessment2008-09hasbeendecidedbyusvideparagraphNos.38,45,52,59,73and 86to88ofthisorderinfavouroftheassesseeinpart.ThelearnedARandtheDRalso agreedthatwhateverwillbethefindingsfortheassessmentyear2008-09shallalsobe appliedfortheyearunderconsiderationi.e.AY2009-10. 132.1Beforeparting,wenotethat,thereversaloftheprovisionshownbytheassessee creditingtheprofitandlossaccount,isallowableforeligiblefordeductionundersection 80-IAoftheActonthesamereasoningasprovidedbyuswithrespecttoinsurancereceipt andbaddebtswrittenbackinITANo.776/AHD/2012fortheAY2008-09inParagraphNo. 32and45ofthisorder.Hence,thegroundsofappealfiledbytheAssesseeispartly allowed. 5.2ParagraphNo.157fortheassessmentyear2009-10inITANo. 1669/AHD/2012,anappealbytherevenue,isamendedasunder: 157.AttheoutsetwenotethattheissuesraisedbytheRevenueinitsgroundsofappeal fortheAY2009-10areidenticaltotheissuesraisedbytheRevenueinITANo. 738/AHD/2012fortheassessmentyear2008-09exceptthereceiptonsaleofwasteoil. Butitissufficienttoholdthattheincomefromthesaleofwasteoilisalsoeligibleforthe M.ANo.33/Ahd/2023in ITAno.1581/AHD/2012 A.Y.2009-10with2others 7 deductionundersection80-IAoftheActbeingtheincomehavingdirectproximitywiththe businessactivitiesoftheassessee.Furthermore,thecorrespondingexpensestothesaleof thewasteoilhasbeentreatedasarisinginthecourseoftheeligiblebusiness.Inother wordsthecorrespondingexpenseshavenotbeendisturbedbytheAOduringthe assessmentproceedings.Additionally,thereasoninggivenbyusintheappealofthe assesseeinITANo.776/AHD/2012fortheAY2008-09withrespecttoinsurancereceipts, baddebtsrecoveryshallalsobeapplicableontheissueofsaleofreceiptasdiscussed above.TheappealoftheassesseeandtheRevenuefortheassessmentyear2008-09has alreadybeendecidedbyusvideparagraphNos.59,65,80ofthisorder.ThelearnedAR andtheDRbeforeusalsoagreedthatwhateverwillbethefindingsfortheassessment year2008-09shallalsobeappliedfortheyearunderconsiderationi.e.AY2009-10.Hence, thegroundsofappealfiledbytheRevenueisdismissed. 5.3ParagraphNo.171fortheassessmentyear2010-11inITANo. 1977/AHD/2013,anappealbytheassessee,isamendedasunder: 171.Attheoutset,wenotethattheissuesraisedbytheassesseeinitsgroundof appealfortheAY2010-11areidenticaltotheissuesraisedbytheassesseevideground No.4inITANo.1581/AHD/2012fortheassessmentyear2009-10.Therefore,thefindings giveninITANo.1581/AHD/2012shallalsobeapplicablefortheyearunderconsideration i.e.AY2010-11.Theappealoftheassesseefortheassessmentyear2009-10hasbeen decidedbyusvideparagraphNo.132ofthisorderinfavouroftheassesseeinpart.The learnedARandtheDRalsoagreedthatwhateverwillbethefindingsfortheassessment year2009-10shallalsobeappliedfortheyearunderconsiderationi.e.AY2010-11.Hence thegroundofappealoftheassesseeispartlyallowed. 5.4ParagraphNo.189fortheassessmentyear2010-11inITANo. 2025/AHD/2013,anappealbytheassessee,isamendedasunder: 189.Attheoutset,wenotethattheissuesraisedbytherevenueinitsgroundof appealfortheAY2010-11areidenticaltotheissuesraisedbytheRevenuevideground No.1to1(d)inITANo.1669/AHD/2012fortheassessmentyear2009-10.Therefore,the findingsgiveninITANo.1669/AHD/2012shallalsobeapplicablefortheyearunder considerationi.e.AY2010-11.Theappealoftherevenuefortheassessmentyear2009-10 M.ANo.33/Ahd/2023in ITAno.1581/AHD/2012 A.Y.2009-10with2others 8 hasbeendecidedbyusvideparagraphNo.157ofthisorderagainsttherevenue.The learnedARandtheDRalsoagreedthatwhateverwillbethefindingsfortheassessment year2009-10shallalsobeappliedfortheyearunderconsiderationi.e.AY2010-11.Hence thegroundofappealoftherevenueisdismissed. 5.5ParagraphNo.214fortheassessmentyear2011-12inITANo. 3178/AHD/2013,anappealbytheassessee,isamendedasunder: 214.Attheoutset,wenotethattheissuesraisedbytherevenueinitsgroundof appealfortheAY2011-12areidenticaltotheissuesraisedbytheRevenuevideground No.1to1(d)inITANo.1669/AHD/2012fortheassessmentyear2009-10.Therefore,the findingsgiveninITANo.1669/AHD/2012shallalsobeapplicablefortheyearunder considerationi.e.AY2011-12.Theappealoftherevenuefortheassessmentyear2009-10 hasbeendecidedbyusvideparagraphNo.157ofthisorderagainsttherevenue.The learnedARandtheDRalsoagreedthatwhateverwillbethefindingsfortheassessment year2009-10shallalsobeappliedfortheyearunderconsiderationi.e.AY2011-12.Hence thegroundofappealoftherevenueisdismissed. 5.6ParagraphNo.222fortheassessmentyear2011-12inCONo. 25/AHD/2017,aCObytheassesseeisamendedasunder: 222.Attheoutset,wenotethattheissuesraisedbytheassesseeinitsgroundof appealfortheAY2011-12areidenticaltotheissuesraisedbytheassesseevideground Nos.4inITANo.1581/AHD/2012fortheassessmentyear2009-10.Therefore,the findingsgiveninITANo.1581/AHD/2012shallalsobeapplicablefortheyearunder considerationi.e.AY2011-12.Theappealoftheassesseefortheassessment2009-10has beendecidedbyusvideparagraphNo.132ofthisorderinfavouroftheassesseeinpart. ThelearnedARandtheDRalsoagreedthatwhateverwillbethefindingsforthe assessmentyear2009-10shallalsobeappliedfortheyearunderconsiderationi.e.AY 2011-12.Hencethegroundofobjectionraisedbytheassesseeispartlyallowed. M.ANo.33/Ahd/2023in ITAno.1581/AHD/2012 A.Y.2009-10with2others 9 6.Thus,the1 st mistakeapparentfromrecordrelatingtotheissueofscrap saleandsaleofwasteoilraisedintheMAbearingNo.33to35/AHD/2022forA.Y. 2009-10to2011-12filedbytheassesseeareherebyallowed. 7.Comingtosecondmistakeapparentfromrecordrelatingtomiscellaneous receiptraisedbytheassesseeinMAbearingno.33to35/AHD/2022forA.Y2009- 10to2011-12,inthisregard,wenotethatatthetimeofhearing,thelearned counselfortheassesseefairlysubmittedthatthe2 nd issueraisedintheMA relatingtothemiscellaneousreceiptisnotrequiredtobepressedasperthe directionsoftheassessee.Thus,theimpugnedissueraisedbytheassesseeinthe MA’sisherebydismissed. 8.Intheresult,theMAsbearingNos.33to35/Ahd/2022forAYs2009-10to 2011-12filedbytheassesseeareherebypartlyallowed. OrderpronouncedintheCourton15/09/2023atAhmedabad. ] Sd/-Sd/- (SUCHITRAKAMBLE)(WASEEMAHMED) JUDICIALMEMBERACCOUNTANTMEMBER (TrueCopy) Ahmedabad;Dated15/09/2023 Manish