Income Tax Appellate Tribunal - Chennai
Everady Spinning Mills Ltd., Tiruppur vs Department Of Income Tax on 5 January, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
'B' BENCH, CHENNAI
BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND
SHRI N.S. SAINI, ACCOUNTANT MEMBER
I.T.A. Nos. 1774 & 1775/Mds/2011
A.Ys. 2007-08 to 2008-09
The Asstt Commissioner of M/s Eveready Spinning Mills Ltd
Income Tax, Vs. No. 16/23, Jyothi Theatre Road
Company Circle Tirupur
Tirupur.
PAN : AAACE 4788 J
(Appellant) (Respondent)
Appellant by : Shri R.B. Naik, CIT, DR
Respondent by : Shri T. Banusekar, C.A
Date of Hearing : 05.01.2012
Date of Pronouncement : 05 .01.2012
O R D E R
PER N.S. SAINI, A.M :-
These two appeals filed by the Revenue are directed against the separate orders dated 21.07.2011 and 10.07.2011 of Commissioner of Income Tax (Appeals)-II, Coimbatore, for the Assessment Years 2007-08 and 2008-09.
2 ITA Nos. 1774 & 1775/Mds/2011
2. The appeals filed by the department are barred by limitation by 10 days in the Assessment Year 2007-08 and by 19 days in the Assessment Year 2008-09. The Revenue has filed condonation petitions and the ld. A.R. did not have any objection to the condonation of delay in filing the appeals by the Revenue and the hearing of the appeals on merits. We are satisfied that there was reasonable cause for not filing the appeals in time by the department. Hence we condone the delay and admit the appeals for hearing.
3. At the very outset of the hearing of the appeals, the ld. D.R. submitted that the facts and issue involved in both the appeals are identical. Both the cases were argued together before us. Therefore, for the sake of convenience, both the appeals are disposed of by this common order.
4. In both the appeals, the Revenue has raised the following common grounds of appeal:
3 ITA Nos. 1774 & 1775/Mds/2011
"1. The order of the learned Commissioner of Income Tax (Appeals) is against facts and circumstances of the case.
2. The learned CIT(A) has erred in holding that the assessee is entitled to deduction u/s 80IA of the Act on windmills.
3. The learned CIT(A) ought to have observed that the initial year should be taken as the year of commencement of business and not the year of claim of deduction.
4 The learned CIT(A) ought to have observed that the plain meaning of th word 'initial year' means the year in which the manufacture or production or other activity begins.
5. The learned CIT(A) has erred in holding that the unabsorbed depreciation of the earlier years which had already been absorbed cannot be notionally carried forward and taken into consideration for computing deduction u/s 80IA of the Act.
6. The learned CIT(A) ought to have appreciated that as per provisions of section 80IA(5) the undertaking eligible for deduction u/s 80IA of the Act should be 4 ITA Nos. 1774 & 1775/Mds/2011 treated as only source of income for computing the quantum of deduction.
7. The learned CIT(A) should have observed that since sub section 5 of section 80IA of the Act starts with an non obstante clause, the restriction put in sub- section 5 will prevail and deduction u/s 80IA of the Act has to be restricted accordingly.
8. It is submitted that SLP has been filed against the judgment of the Hon'ble Jurisdictional High Court in the case of M/s Sri Velayudhasamy Spinning Mills [P] Ltd and others and is yet to be disposed off by the Hon'ble Supreme Court."
5. The only issue involved in both the appeals is that the ld. CIT(A) was not justified in holding that the assessee is entitled to deduction u/s 80IA of the Act on wind mill.
6. The ld. D.R. Shri R.B. Naik relied on the grounds of appeal taken by the Revenue in the appeals.
5 ITA Nos. 1774 & 1775/Mds/2011
7. On the other hand, the ld. A.R. for the assessee Shri T. Banusekar filed before us copy of the Hon'ble Jurisdictional High Court order in the case of M/s Sri Velayudhasamy Spinning Mills [P] Ltd Vs. ACIT reported in [2010] 231 CTR [Mad] 368 and submitted that the issue at hand was squarely covered by the decision of the High Court in favour of the assessee. Further, the same is also evident from the grounds of appeal of the Revenue wherein the Revenue has taken a ground that the SLP which has been filed against the judgment of the Hon'ble Jurisdictional High Court in the case of M/s Sri Velayudhasamy Spinning Mills [P] Ltd and others [supra] is yet to be disposed off by the Hon'ble Supreme Court.
8. We have heard the rival submissions and perused the orders of the lower authorities and the material available on record. The undisputed facts of the case are that the assessee is running spinning mill and also installed three wind mills, first in Assessment Year 2003-04, second in Assessment Year 2005-06 and the third in Assessment Year 2006-07. Although the year of commencement was 6 ITA Nos. 1774 & 1775/Mds/2011 Assessment Year 2003-04, the assessee opted Assessment Year 2007- 08 as initial Assessment Year for the purpose of claiming deduction u/s 80IA of the Act in respect of windmills. Initial loss from windmills was set off against profit of spinning mills division. The assessee did not claim deduction u/s 80IA of the Act during the years where the assessee suffered loss. The Assessing Officer held that the initial year should be taken as the year of commencement of business and not the year of claim of deduction and that unabsorbed depreciation of the earlier years which had already been absorbed cannot be notionally carried forward and taken into consideration for computing deduction u/s 80IA of the Act.
9. In appeal, the ld. CIT(A) held as under:
"I have gone through the submissions made by the assessee as well as the material available on record. The assessee runs a spinning mill and has also installed three wind mills viz. first in Assessment Year 2003-04, second in Assessment Year 2005- 06 and the third in Assessment Year 2006-07. Though the 7 ITA Nos. 1774 & 1775/Mds/2011 year of commencement was the Assessment Year 2003-04, the assessee has opted Assessment Year 2007-08 as initial Assessment Year for the purpose of claiming deduction u/s 80IA of the Act in respect of windmills I and II. Initially the loss from windmills was set off against profit of spinning mill division. The assessee had not claimed deduction u/s 80IA of the Act during those years when it resulted in loss. The assessee has opted Assessment Year 2007-08 as initial Assessment Year for the purpose of claiming deduction u/s 80IA. Respectfully, following the decision of the Hon'ble Jurisdictional High Court in the case of M/s Sri Velayudhasamy Spinning Mills [P] Ltd and others [supra], the Assessing Officer is directed to compute the profits u/s 80IA(5) of the Act as if such eligible business is the only sources of income of the assessee and only the losses of the years beginning from the initial Assessment Year are to be brought forward and not losses of earlier years which have been already set off against the income of the assessee. This ground of appeal is allowed."
10. No specific error in the order of the ld. CIT(A) could be pointed out by the departmental representative. The ld. D.R. also could not file any material before us to show that the order of the Hon'ble High Court relying on which the ld. CIT(A) granted relief to 8 ITA Nos. 1774 & 1775/Mds/2011 the assessee was varied in appeal by the Hon'ble Supreme Court. We, therefore, do not find any good reasons to interfere with the order of the ld. CIT(A), which stands confirmed and the grounds of appeal taken by the Revenue are dismissed.
11. In the result, both the appeals of the Revenue are dismissed.
The order was pronounced in the Court on 5th January, 2012.
Sd/- Sd/-
(Hari Om Maratha) (N.S. Saini)
Judicial Member Accountant Member
Chennai,
Dated the 5th January, 2012.
VL Copy to: (1) Appellant
(2) Respondent
(3) CIT(A)
(4) CIT, Chennai
(5) D.R.
(6) Guard file