ACIT, Bangalore v. M/s Khivraj Motors, Bangalore

ITA 1051/BANG/2015 | 2010-2011
Pronouncement Date: 19-10-2016

Appeal Details

RSA Number 105121114 RSA 2015
Assessee PAN AAAFK6627K
Bench Bangalore
Appeal Number ITA 1051/BANG/2015
Duration Of Justice 1 year(s) 3 month(s) 9 day(s)
Appellant ACIT, Bangalore
Respondent M/s Khivraj Motors, Bangalore
Appeal Type Income Tax Appeal
Pronouncement Date 19-10-2016
Appeal Filed By Department
Bench Allotted B
Tribunal Order Date 19-10-2016
Date Of Final Hearing 27-07-2016
Next Hearing Date 27-07-2016
Assessment Year 2010-2011
Appeal Filed On 10-07-2015
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI A. K. GARODIA ACCOUNTANT MEMBER AND SMT ASHA VIJAYARAGHAVAN JUDICIAL MEMBER ITA NO.1051 & 1052/BANG/2015 ASSESSMENT YEARS : 2010-11 & 2011-12 ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-1(2)(1) BANGALORE. VS. M/S. KHIVRAJ MOTORS NO. 10/2 4 TH FLOOR KASTURBA ROAD BANGALORE 560001. PAN:AAAFK6627K APPELLANT RESPONDENT REVENUE BY : NONE ASSESSEE BY : SHRI H. N. KINCHA CA DATE OF HEARING : 10.10.2016 DATE OF PRONOUNCEMENT : 19 .10.2016 O R D E R PER ASHA VIJAYARAGHAVAN JUDICIAL MEMBER THIS IS A DEPARTMENTAL APPEAL. M/S. KHIVRAJ MOTORS FILED ITS RETURN OF INCOME DECLARING INCOME AT RS. 1 92 92 870/-. THE ASSESSING OFFICER PASSED THE ASSESSMENT ORDER BY DETERMINING THE TOTA L TAXABLE INCOME AT RS.3 09 83 810/- BY DISALLOWING THE DEDUCTION UNDER SECTION 80IA AMOUNTING TO RS.1 16 90 948/- AND DISALLOWING 20% O F PETROL MARKETING SALES PROMOTION AND TELEPHONE EXPENDITURE. 2. AGGRIEVED THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A). THE LEARNED COUNSEL FOR THE ASSESSEE POINTED OUT BEFORE THE AO THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF M/S. V ELAYUDHASWAMY SPINNING MILLS (P) LTD. VS. ACIT 231 CTR 368 IN S UPPORT OF THE CLAIM OF ITA NO.1051 & 1052/BANG/2015 PAGE 2 OF 5 DEDUCTION UNDER SECTION 80IA. BUT THE AO DISMISSED THE ASSESSEES CONTENTION. 3. ON FURTHER APPEAL BEFORE CIT(A) IT WAS SUBMITTED THAT THERE IS NO DISPUTE THAT THE WINDMILLS FULFILLED THE REQUISITE CONDITIONS PRESCRIBED IN THE ACT AND THE PROFITS OF THE WINDMILLS WERE ELIGIBLE FOR DEDUCTION U/S 80IA AND THAT THERE IS ALSO NO DISPUTE THAT THE LOSSES I N THE WIND MILL DIVISION INCURRED DURING A. YRS. 2005-06 TO 2009-10 WERE ADJ USTED AND SET OFF AGAINST OTHER BUSINESS INCOME OF THE APPELLANT IN S UCH ASSESSMENT YEARS. THE DETAILS WERE FILED BY THE APPELLANT AS UNDER: ASSESSMENT YEAR LOSSES (RS.) 2005-2006 1 48 60 154.20 2006-2007 2 89 29 020.00 2007-2008 1 28 14 240.20 2008-2009 2 15 76 365.20 2009-2010 1 67 50 540.60 TOTAL 9 49 30 319.00 4. THE CIT (A) HELD THAT THE DECISION IN THE CASE O F M/S. VELAYUDHASWAMY SPINNING MILLS (P) LTD. (SUPRA ) 340 ITR 477 WHICH HAS BEEN UPHELD BY THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. SHRI. ANIL H. LAD 102 DTR KARNATAKA 241 WOULD A PPLY TO THE PRESENT CASE. THE CIT (A) HELD THAT WHEN THE ASSESSEE EXER CISES THE OPTION THE ONLY LOSSES OF THE YEARS BEGINNING FROM INITIAL ASSESSME NT YEAR ALONE ARE TO BE BROUGHT FORWARD AND NO LOSSES OF EARLIER YEARS WHIC H WERE ALREADY SET OFF AGAINST THE INCOME OF THE ASSESSEE. FURTHER LOOKIN G FORWARD TO A PERIOD OF TEN YEARS FROM THE INITIAL ASSESSMENT IS CONTEMPLAT ED AND DOES NOT ALLOW THE REVENUE TO LOOK BACKWARD AND FIND OUT IF THERE IS A NY LOSS OF EARLIER YEARS AND BRING FORWARD NOTIONALLY EVEN THOUGH THE SAME W ERE SET OFF AGAINST OTHER INCOME OF THE ASSESSEE AND THE SET OFF AGAINST THE CURRENT INCOME OF THE ITA NO.1051 & 1052/BANG/2015 PAGE 3 OF 5 ELIGIBLE BUSINESS. THE CIT(A) HELD THAT ONCE THE S ET OFF IS TAKEN PLACE IN EARLIER YEAR AGAINST THE OTHER INCOME OF THE ASSESS EE THE REVENUE CANNOT REWORK THE SET OFF AMOUNT AND BRING IT NOTIONALLY. AGGRIEVED WITH THE ORDERS OF THE CIT (A) THE DEPARTMENT IS IN APPEAL BEFORE U S AND HAS FILED THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE CIT(A) IS OPPOSED TO LAW AND THE F ACTS AND CIRCUMSTANCES OF THE CASE. 2. THE CIT(A) ERRED IN DIRECTING TO ALLOW THE ASSESSEE S CLAIM OF DEDUCTION OF RS. 1 16 90 948/- U/S 80IA IN A.Y. 201 0-11 BEING THE INITIAL ASSESSMENT YEAR BY RELYING ON THE ORDER OF THE MADRAS HIGH COURT IN THE CASE OF M/S. VELAYUDHASWAMY SPINNING M ILLS (P) LTD. AND THE DECISION OF JURISDICTIONAL HIGH COURT IN TH E CASE OF SHRI. ANIL H. LAD AND THE DECISION ITAT MUMBAI IN THE CASE OF EXCEL CROPCARE LTD WITHOUT APPRECIATING THAT THE RELIED UPON ORDER S OF THE HIGH COURTS HAS NOT BEEN ACCEPTED AND THE SLP HAS BEEN P REFERRED AGAINST THE SAID ORDER. 3. THE CIT(A) WAS NOT JUSTIFIED IN ALLOWING THE ASSESS EES APPEAL WITHOUT APPRECIATING THAT THE DEDUCTION U/S 80IA IS ON THE PROFITS OF ELIGIBLE BUSINESS AND THAT THE PROVISIONS OF SECT ION 81IA HAVE TO BE UNDERSTOOD ALONG WITH THE PROVISIONS OF SECTIONS 80 B(5) AND 80AB OF THE IT ACT 1961. 4. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING IT IS HUMBLY PRAYED THAT THE ORDER OF THE CIT(A) BE REVERSED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 5. THE APPELLANT CRAVES LEAVE TO ADD TO ALTER TO AME ND OR DELETE ANY OF THE GROUNDS THAT MAY BE URGED AT THE TIME OF HEARIN G OF THE APPEAL. ITA NO.1051 & 1052/BANG/2015 PAGE 4 OF 5 5. WE FIND THAT ASSESSMENT YEAR 2010-11 IS THE INI TIAL ASSESSMENT YEAR OF THE CLAIM OF DEDUCTION UNDER SECTION 80IA FOR TH E WINDMILL DIVISION OR UNDERTAKING OF THE ASSESSEE CONSISTING OF FOUR WIN DMILLS AS PER THE OPTION EXERCISED BY THE ASSESSEE. THE PROFITS OF THE UNDE RTAKING SHALL BE ACCORDINGLY ELIGIBLE FOR THE SAID DEDUCTION FOR 9 M ORE SUCCEEDING ASSESSMENT YEARS. IT IS ONLY IN CASE OF LOSS IN BUSINESS OF T HE ELIGIBLE UNDERTAKING DURING THE TAX HOLIDAY PERIOD OF 10 YEARS BEGINNING AY 201 0-11 THAT THE SAME CAN BE CARRIED FORWARD AND SET OFF AGAINST THE PROFITS OF THE UNDERTAKING. 6. WE RESPECTFULLY FOLLOW THE DECISION OF THE JURI SDICTIONAL HIGH COURT OF KARNATAKA IN THE CASE OF CIT VS. SHRI. ANIL H. L AD 102 DTR 241 AND DISMISS THE DEPARTMENTAL APPEAL. IN THE RESULT TH E DEPARTMENTAL APPEAL IS DISMISSED. ITR NO. 1052/BANG/2015 FOR THE ASSESSMENT YEAR 2011 -12. 7. THE CLAIM REQUESTED BY THE ASSESSEE FOR DEDUCTI ON UNDER SECTION 80IA IS TO BE ALLOWED AS THE CLAIM IS FOR THE SECO ND YEAR UNDER THE PROVISIONS OF SECTION 80IA. THEREFORE THE DEPARTM ENTAL APPEAL IS DISMISSED. 8. IN THE RESULT THE DEPARTMENTAL APPEAL FOR BOTH YEARS ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS 19 TH DAY OF OCTOBER 2016. SD/- SD/- (A. K. GARODIA) (ASHA VIJAYARAGHAV AN) ACCOUNTANT MEMBER JUDI CIAL MEMBER BANGALORE. DATED: 19 TH OCTOBER 2016. /NS/ ITA NO.1051 & 1052/BANG/2015 PAGE 5 OF 5 COPY TO: 1. APPELLANTS 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR ITAT BANGALORE.