ACIT, Coimbatore v. M/s. G.V.G.Paper Mills (P) Ltd., Udamalpet

ITA 1351/CHNY/2010 | 2005-2006
Pronouncement Date: 11-01-2011 | Result: Dismissed

Appeal Details

RSA Number 135121714 RSA 2010
Assessee PAN AABCG1438N
Bench Chennai
Appeal Number ITA 1351/CHNY/2010
Duration Of Justice 4 month(s) 26 day(s)
Appellant ACIT, Coimbatore
Respondent M/s. G.V.G.Paper Mills (P) Ltd., Udamalpet
Appeal Type Income Tax Appeal
Pronouncement Date 11-01-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 11-01-2011
Date Of Final Hearing 11-01-2011
Next Hearing Date 11-01-2011
Assessment Year 2005-2006
Appeal Filed On 16-08-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BENCH A CHENNAI BEFORE SHRI U.B.S. BEDI J.M. & SHRI ABRAHAM P. GEO RGE A.M. I.TA. NOS.1350 AND 1351/MDS/2010 ASSESSMENT YEARS: 2004-05 AND 05-06 THE ASSISTANT COMMISSIONER OF INCOME TAX SALARY CIRCLE COIMBATORE. VS . M/S. G.V.G. PAPER MILLS (P) LTD. NO. 168/2 SIKKANDHAR BATCHA STREET GANDHINAGAR UDUMALPET 54. [PAN: AABCG1438N] (APPELLANT) (RESPONDENT) REVENUE BY : SHRI SHAJI P. JACOB ASSESSEE BY : NONE O R D E R PER U.B.S. BEDI J.M. THESE TWO APPEALS OF THE DEPARTMENT ARE DIRECTED A GAINST THE SEPARATE ORDERS PASSED BY THE LD. CIT(A) II COIMBATORE BOTH DATED 21.05.2010 RELEVANT TO THE ASSESSMENT YEARS 2004-05 AND 05-06 WHEREBY THE DEPARTMENT HAS CHALLENGED THE ACTION OF THE LD. CIT(A) IN RESTORIN G THE DEDUCTION UNDER SECTION 80IA AS CLAIMED BY THE ASSESSEE. 2. SINCE BOTH THE APPEALS INVOLVE IDENTICAL FACTS AND SIMILAR ISSUE THEREFORE BEING DISPOSED OF BY THIS SINGLE ORDER FOR THE SAKE OF CONVENIENCE. 3. THE ASSESSEE CLAIMED DEDUCTION OF ` .27 88 859/- FROM WINDMILL DIVISION AND ` .12 85 175/- FROM TURBINE DIVISION RESPECTIVELY UND ER SECTION 80IA OF THE ACT FOR THE ASSESSMENT YEAR 2004-05 AND THE ASSESSING OFFIC ER COMPLETED REOPENED ASSESSMENT WHILE WITHDRAWING DEDUCTION UNDER SECTIO N 80IA OF THE ENTIRE AMOUNT OF ` .40 74 374/- AS CLAIMED BY THE ASSESSEE AND FOR THE ASSESSMENT YEAR 2005- IT ITIT ITA NO A NO A NO A NOS SS S. .. .1350 & 1351/MDS/10 1350 & 1351/MDS/10 1350 & 1351/MDS/10 1350 & 1351/MDS/10 2 06 THE ASSESSEE CLAIMED DEDUCTION OF ` .22 10 638/- AND ` .1 13 55 009/- FROM WIND MILL DIVISION AND TURBINE DIVISION RESPECTIVEL Y WHICH CAME TO BE RESTRICTED BY THE ASSESSING OFFICER IN REOPENED ASSESSMENT TO THE EXTEND OF ` .41 92 760/- WHILE WITHDRAWING SUCH DEDUCTION TO THE TUNE OF ` .93 72 887/-. 4. THE ASSESSEE FILED APPEALS AGAINST SUCH ORDERS OF THE ASSESSING OFFICER BEFORE THE FIRST APPELLATE AUTHORITY AND IT WAS CON TENDED BEFORE HIM THAT THE ASSESSING OFFICER OUGHT TO HAVE VERIFIED AND FOUND THAT THERE IS NO DEFINITION FOR THE TERM INITIAL YEAR FOR THE CLAIM UNDER SECTION 80IA. HE OUGHT TO HAVE VERIFIED AND FOUND FROM THE DETAILS THAT INITIAL YEAR OF TUR BINE DIVISION IS 2004-05 AND INITIAL YEAR OF WINDMILL DIVISION IS 2001-02. ON THIS BASIS FOR THE ASSESSMENT YEAR 2004- 05 THE ASSESSING OFFICER OUGHT TO HAVE OBSERVED TH AT THE ASSESSEE COMPANY IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80IA FOR TURBI NE DIVISION AT ` .12 85 515/- BEING THE FIRST YEAR OF THE CLAIM AND ` .27 88 859/- FOR THE WIND MILL DIVISION BEING 4 TH SUCCESSIVE YEAR OF THE CLAIM AND THE LD. CIT(A) WH ILE CONSIDERING AND ACCEPTING THE PLEA OF THE ASSESSEE AND FOLLOWING DIFFERENT DE CISIONS OF HONBLE MADRAS HIGH COURT HAS CONCLUDED TO DELETE THE ADDITION OF ` .40 74 374/- MADE BY THE ASSESSING OFFICER FOR THE ASSESSMENT YEAR 2004-05 AS PER PARA 5.5 6 AND 7 OF HIS ORDER WHICH READS AS UNDER: 5.5 HONBLE ITAT B BENCH CHENNAI IN ITS ORDER D ATED 04/09/2009 IN THE CASE OF ACIT VS. M/S. SRI VELAYUT HASAMY SPINNING MILLS (P) LTD. (I.T.A. NO. 1961/MDS/2008) HELD THE FOLLOWING ON THIS ISSUE: FROM THE RELEVANT PROVISIONS OF SECTION 80IA OF TH E INCOME TAX ACT 1961 IT IS CLEAR THAT THE ASSESSEE CAN CHOOSE TEN C ONSECUTIVE YEARS OUT IT ITIT ITA NO A NO A NO A NOS SS S. .. .1350 & 1351/MDS/10 1350 & 1351/MDS/10 1350 & 1351/MDS/10 1350 & 1351/MDS/10 3 OF FIFTEEN YEARS BEGINNING FROM THE YEAR IN WHICH T HE ASSESSEE UNDERTAKING OR ENTERPRISE DEVELOPS AND BEGINS TO OP ERATE. THE SELECTION OF TEN CONSECUTIVE YEARS BLOCK PERIOD IS WITHIN THE SPAN OF FIFTEEN YEARS FROM THE YEAR IN WHICH THE ASSESSEE B EGINS THE OPERATION OF ENTERPRISE DEVELOPS. THEREFORE SUB-SECTION (2) PROVIDES A LIBERTY TO THE ASSESSEE TO CHOOSE THE BLOCK OF TEN CONSECUTIVE YEARS AS TAX HOLIDAY OUT OF THE SPAN OF FIFTEEN YEARS. THE SUB-S ECTION (5) OF SECTION 80IA OF THE INCOME TAX ACT 1961 STARTS WITH NON-OB STANTE CLAUSE HAVING AN OVER-RIDING EFFECT OVER THE OTHER PROVISI ONS OF THE INCOME TAX ACT 1961. THEREFORE THE SUB-SECTION (5) PRESC RIBES THE DEEMING FICTION AND LAID DOWN A SPECIAL MANNER OF COMPUTATI ON OF PROFIT AND GAIN FOR THE PURPOSE OF DETERMINING THE QUANTUM OF DEDUCTION UNDER SUB-SECTION (1) OF SECTION 80IA OF THE INCOME TAX A CT 1961. AS PER THE DEEMING PROVISION OF SUB-SECTION (5) THE PROFIT AN D GAIN ELIGIBLE BUSINESS IS COMPUTED AS IF SUCH ELIGIBLE BUSINESS W ERE THE ONLY SOURCE OF INCOME OF THE ASSESSEE DURING THE PREVIOUS YEAR RELEVANT TO THE INITIAL ASSESSMENT YEAR. SINCE THE ASSESSEE IS ENT ITLED FOR THE DEDUCTION U/S.80IA OF THE INCOME TAX ACT 1961 ONLY FOR THE B LOCK PERIOD OF TEN CONSECUTIVE ASSESSMENT YEARS THE INITIAL ASSESSMEN T YEAR REFERRED IN SUB-SECTION (5) WOULD HAVE NO OTHER MEANING THAT TH E FIRST YEAR OF THE TEN CONSECUTIVE ASSESSMENT YEARS CHOSEN BY THE ASSE SSEE. THUS IT IS CLEAR THAT FOR THE TAX HOLIDAY PERIOD OF TEN CONSEC UTIVE YEARS CHOSEN BY THE ASSESSEE THE ELIGIBLE BUSINESS IS TREATED AS T HE SOLE AND SEPARATE SOURCE OF INCOME AND ANY UNABSORBED DEPRECIATION PR IOR TO THE BLOCK PERIOD OF TEN YEARS CHOSEN AS TAX HOLIDAYS ANY THE ASSESSEE CANNOT BE NOTIONALLY CARRIED FORWARD AND SET OFF AGAINST THE INCOME FROM THE ASSESSMENT YEARS FALLING IN THE BLOCK PERIOD OF TEN YEARS TAX HOLIDAY. 5.5 HONBLE MADRAS HIGH COURT ALSO HELD THE SAME VI EW IN ITS ORDER DATED 11.03.2010 ON THIS ISSUE IN TAX CASE (A PPEAL) NOS. 909 & 940 OF 2009 & 918 OF 2008. M/S. VELAYUDHASAMY SPINNING MILLS (P) LTD. VS ACIT M/S. SUDAN SPINNING MILLS (P) LTD. VS. ACIT AND CIT VS M/S. MOHAN BREWERIES & DISTILLERIES LTD. 6. THE FACTS OF THE ASSESSEES CASE ARE SIMILAR TO THAT OF M/S. SRI VELAYUDHASAMY SPINNING MILLS (P) LTD. RESPECTFULLY FOLLOWING THE DECISION OF HONBLE MADRAS HIGH COURT AND ITAT MENT IONED SUPRA I HOLD THAT FOR THE TAX HOLIDAY PERIOD OF TEN CONSECU TIVE YEARS CHOSEN BY IT ITIT ITA NO A NO A NO A NOS SS S. .. .1350 & 1351/MDS/10 1350 & 1351/MDS/10 1350 & 1351/MDS/10 1350 & 1351/MDS/10 4 THE ASSESSEE THE ELIGIBLE BUSINESS IS TREATED AS T HE SOLE AND SEPARATE SOURCE OF INCOME AND UNABSORBED DEPRECIATION PRIOR TO THE BLOCK PERIOD OF TEN YEARS CHOSEN AS TAX HOLIDAY CANNOT BE NOTIONALLY CARRIED FORWARD AND SET OFF AGAINST THE INCOME FROM THE ASS ESSMENT YEARS FALLING IN THE BLOCK PERIOD OF TEN YEARS TAX HOLIDA Y. 7. IN RESPECT OF BOTH WINDMILL DIVISION AND TURBIN E DIVISION ASSESSEE IS ENTITLED FOR DEDUCTION U/S 80IA OF THE ACT DURING A.Y. 2004- 05. HENCE I DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION OF ` .40 74 374/-. 4.1 SIMILAR ACTION HAS BEEN TAKEN BY THE LD. CIT(A) FOR THE ASSESSMENT YEAR 2005-06 TO DELETE THE ADDITION OF ` . 22 10 638/- FOR THE WINDMILL DIVISION AND ` .71 62 249/- FOR THE TURBINE DIVISION BEING FIFTH A ND SECOND YEAR OF THE CLAIM RESPECTIVELY UNDER SECTION 80IA. 5. AGAINST SUCH ACTION OF THE LD. CIT(A) THE DEPA RTMENT HAS CAME UP IN APPEALS WHILE RELYING UPON THE GROUNDS OF APPEAL THE LD. DR CONTENDED FOR SETTING ASIDE THE ORDER OF THE LD. CIT(A) AND RESTO RING THAT OF THE ASSESSING OFFICER AND WHEN IT WAS POINTED OUT THAT THE ISSUE IN BOTH THESE APPEALS IS SQUARELY COVERED BY THE HONBLE JURISDICTIONAL HIGH COURTS DECISION WHICH HAS BEEN FOLLOWED BY THE LD. CIT(A) TO DECIDE THE ISSUE IN F AVOUR OF THE ASSESSEE THE LD. DR HAD NO ANSWER TO THE SAME BUT HE RELIED UPON THE O RDER OF THE ASSESSING OFFICER. 6. THE ASSESSEE DID NOT APPEAR AT THE TIME OF HEAR ING. HOWEVER AN APPLICATION HAS BEEN RECEIVED FROM THE ASSESSEES C OUNSEL AND THE GROUND TAKEN IN THE SAID APPLICATION WAS NOT FOUND TO BE ADEQUAT E TO ADJOURN THE HEARING. AS SUCH WE REJECT THE REQUEST OF ADJOURNMENT AND PROC EEDED TO DECIDE THESE IT ITIT ITA NO A NO A NO A NOS SS S. .. .1350 & 1351/MDS/10 1350 & 1351/MDS/10 1350 & 1351/MDS/10 1350 & 1351/MDS/10 5 APPEALS EX-PARTE QUA THE ASSESSEE AFTER CONSIDERING THE ARGUMENTS OF THE LD. DR AND MATERIAL ON RECORD. 7. WE HAVE HEARD THE LD. DR CONSIDERED THE MATERI AL ON RECORD AND FIND THAT THE ISSUE IN BOTH THE APPEALS IS SQUARELY COVERED B Y VARIOUS DECISIONS OF THE HONBLE JURISDICTIONAL HIGH COURT WHICH HAS DULY B EEN RELIED UPON BY THE LD. CIT(A) TO DELETE THE DISALLOWANCE MADE WITH RESPECT TO SECTION 80IA DEDUCTION AND THE DEPARTMENT HAS NOT BEEN ABLE TO PLACE ANY CONTR ARY MATERIAL ON RECORD NOR ANY HIGHER COURTS ORDER HAS BEEN CITED. THEREFORE WE DO NOT FIND ANY JUSTIFIABLE REASON TO INTERFERE WITH THE ORDERS PASSED BY THE L D. CIT(A) WHICH ARE CONFIRMED AND BOTH THE APPEALS OF THE DEPARTMENT ARE DISMISSE D. 8. IN THE RESULT BOTH THE APPEALS OF THE DEPARTMEN T ARE DISMISSED. ORDER PRONOUNCED SOON AFTER THE CONCLUSION OF HEAR ING ON 11.01.2011. SD/- SD/- (ABRAHAM P. GEORGE) ACCOUNTANT MEMBER (U.B.S. BEDI) JUDICIAL MEMBER CHENNAI DATED THE. 11.01.2011 VM/- COPY TO : APPELLANT/RESPONDENT/CIT(A)- /CIT /DR