ACIT, CHENNAI v. M/s. Soundararaja Mills Ltd., Dindigul

ITA 1907/CHNY/2011 | 2004-2005
Pronouncement Date: 16-02-2012 | Result: Dismissed

Appeal Details

RSA Number 190721714 RSA 2011
Assessee PAN AAACS8799R
Bench Chennai
Appeal Number ITA 1907/CHNY/2011
Duration Of Justice 2 month(s) 18 day(s)
Appellant ACIT, CHENNAI
Respondent M/s. Soundararaja Mills Ltd., Dindigul
Appeal Type Income Tax Appeal
Pronouncement Date 16-02-2012
Appeal Filed By Department
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 16-02-2012
Assessment Year 2004-2005
Appeal Filed On 28-11-2011
Judgment Text
IN THE INCOME-TAX APPELLATE TRIBUNAL CHENNAI C BENCH CHENNAI. BEFORE SHRI N.S. SAINI ACCOUNTANT MEMBER & SHRI GEORGE MATHAN JUDICIAL MEMBER I.T.A. NOS. 1906 1907 1908 1909 AND 1910/MDS./20 11 ASSESSMENT YEARS: 2003-04 04-05 06-07 AND 07-08 THE ASSISTANT COMMISSIONER OF INCOME TAX COMPANY CIRCLE VI(3) AAYAKAR BHAVAN NEW BLOCK 7 TH FLOOR 121 M.G. ROAD CHENNAI 600034. VS. M/S. SOUNDARARAJA MILLS LTD. SOUNDARAJA BUILDINGS GTN SALAI DINDIGUL 624 005. [PAN: AAACS8799R] (APPELLANT) (RESPONDENT) C.O. NOS. 04 05 06 07 AND 08/MDS/2012 I.T.A. NOS. 1906 1907 1908 1909 AND 1910/MDS./20 11 ASSESSMENT YEARS: 2003-04 04-05 06-07 AND 07-08 M/S. SOUNDARARAJA MILLS LTD. SOUNDARAJA BUILDINGS GTN SALAI DINDIGUL 624 005. VS. THE ASSISTANT COMMISSIONER OF INCOME TAX COMPANY CIRCLE VI(3) AAYAKAR BHAVAN NEW BLOCK 7 TH FLOOR 121 M.G. ROAD CHENNAI 600034. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI OMKARESHWAR CHIDRA CIT ASSESSEE BY : SHRI S. SATHYANARAYANAN ADVOCATE DATE OF HEARING : 16.02.2012 DATE OF PRONOUNCEMENT : 16.02.2012 ORDER PER N.S. SAINI ACCOUNTANT MEMBER THESE FIVE APPEALS FILED BY THE REVENUE AND COS FI LED BY THE ASSESSEE ARE DIRECTED AGAINST SEPARATE ORDERS OF TH E LD. CIT(A) VI CHENNAI ALL DATED 12.09.2011 IN ITA NO. 186/10-11 183/10-1 1 185/10-11 188/10-11 I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .1906 1906 1906 1906- -- -10 1010 10/ // /M/ M/M/ M/11 1111 11 & & & & C.O. C.O. C.O. C.O. NO NONO NOS SS S. . . . 04 0404 04- -- -08 0808 08/M/1 /M/1 /M/1 /M/12 22 2 2 AND 187/10-11 IN ASSESSMENT YEARS 2003-04 04-05 0 6-07 AND 07-08 RESPECTIVELY. SHRI OMKARESHWAR CHIDRA CIT REPRESEN TED ON BEHALF OF THE REVENUE AND SHRI S. SATHYANARAYANAN ADVOCATE REPRE SENTED ON BEHALF OF THE ASSESSEE. 2. ALL THE APPEALS ARE PERTAINING TO SAME ASSESSEE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS SINGLE ORDER FOR THE SAKE OF CONVENIENCE. 3. AT THE OUTSET THE LD. DR SUBMITTED THAT THE SO LE ISSUE INVOLVED IN ALL THE APPEALS OF THE REVENUE IS THAT THE LD. CIT(A) E RRED IN DELETING THE DISALLOWANCE ON ACCOUNT OF RESTRICTING THE DEPRECIA TION TO 7.6% AS AGAINST 80% ON WINDMILLS. HE SUBMITTED THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN RELYING ON THE DECISION OF THE TRIBUNAL IN THE CASE OF M/S. K.K.S.K. LEATHER PROCESSORS P. LTD. IN I.T.A. NOS. 826 & 827/MDS/200 9 DATED 20.11.2009 AND ALLOWING THE APPEALS OF THE ASSESSEE AS THE ORDERS OF THE TRIBUNAL HAVE NOT BECOME FINAL AS THE DEPARTMENT HAS FILED APPEAL TO THE HONBLE HIGH COURT AGAINST THE SAID ORDERS OF THE TRIBUNAL. 4. ON THE OTHER HAND THE LD. AR FOR THE ASSESSEE RELIED ON THE ORDERS OF THE LD. CIT(A). 5. WE HAVE HEARD THE RIVAL SUBMISSIONS PERUSED TH E ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. IN T HE INSTANT CASE THE ASSESSEE CLAIMED DEPRECIATION ON WINDMILL OF ` .2 07 69 204/- IN ASSESSMENT YEAR 2003-04 AND THE ASSESSING OFFICER RESTRICTED T HE ALLOWANCE OF DEPRECIATION TO 7.69% ON THE GROUND THAT ACCORDING TO RULE 5(1A) OF THE I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .1906 1906 1906 1906- -- -10 1010 10/ // /M/ M/M/ M/11 1111 11 & & & & C.O. C.O. C.O. C.O. NO NONO NOS SS S. . . . 04 0404 04- -- -08 0808 08/M/1 /M/1 /M/1 /M/12 22 2 3 INCOME TAX RULES 1962 DEPRECIATION ON ASSETS OF A N UNDERTAKING ENGAGED IN THE GENERATION OR GENERATION AND DISTRIBUTION OF POWER WAS TO BE COMPUTED AT THE PERCENTAGE SPECIFIED IN SECOND COLU MN OF THE TABLE IN APPENDIX IA OF THE RULES. BUT THE PROVISO UNDER RU LE 5(1A) PERMITS THE ASSESSEE TO CLAIM HIGHER RATE OF DEPRECIATION AS PR OVIDED IN APPENDIX I PROVIDED THE ASSESSEE EXERCISE AN OPTION BEFORE THE DUE DATE OF FURNISHING OF RETURN OF INCOME UNDER SUB-SECTION (1) OF SECTIO N 139 OF THE ACT. RULE 5(1A) SPECIFICALLY PROVIDES STRAIGHT LINE METHOD OF COMPUTATION OF DEPRECIATION AND IN THE CASE OF WINDMILL THE ADMIS SIBLE RATE OF DEPRECIATION IS 7.69%. THE ASSESSING OFFICER FURTHER OBSERVED TH AT THE ASSESSEE HAS NOT EXERCISED ANY OPTION IN THIS REGARD AND REGISTERED AS SUCH IN THE RECORDS OF THE ASSESSING OFFICER. THE OPTION WAS REQUIRED TO B E FILED SEPARATELY AND NOT ALONG WITH THE RETURN. THE ASSESSEE CANNOT ALSO REI TERATE THE CLAIM OF THE DEPRECIATION AT THE ENHANCED RATE IN THE RETURN FIL ED AS A DEEMED OPTION. THEREFORE THE ASSESSING OFFICER DISALLOWED THE EXC ESSIVE CLAIM OF DEPRECIATION OF ` .1 90 87 992/-. 6. ON APPEAL THE LD. CIT(A) ALLOWED THE CLAIM OF DEPRECIATION TO THE ASSESSEE ON THE GROUND THAT THE CHENNAI D BENCH O F THE TRIBUNAL IN THE CASE OF M/S. K.K.S.K. LEATHER PROCESSORS P. LTD. VS . ITO IN I.T.A. NOS. 826 & 827/MDS/2009 DATED 20.11.2009 FOR THE ASSESSMENT YEARS 2003-04 AND 2005-06 AND IN THE CASE OF M/S. RANGAMMA STEELS & M ALLEABLES VS. ACIT IN ITA NO. 1171/MDS/2008 FOR THE ASSESSMENT YEAR 2005- 06 HAS HELD THAT NO I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .1906 1906 1906 1906- -- -10 1010 10/ // /M/ M/M/ M/11 1111 11 & & & & C.O. C.O. C.O. C.O. NO NONO NOS SS S. . . . 04 0404 04- -- -08 0808 08/M/1 /M/1 /M/1 /M/12 22 2 4 PARTICULAR FORMAT HAS BEEN PRESCRIBED UNDER THE RUL ES FOR EXERCISING OPTION AND THEREFORE THE ONLY WAY WAS THAT THE CLAIM HAS B EEN MADE IN TERMS OF RULE 5(1A) OF THE RULES WHICH SHOULD BE CONSTRUED AS EXERCISING OPTION AND HIGHER DEPRECIATION CLAIMED WAS ADMISSIBLE IF THE R ETURN OF INCOME WAS FILED WITHIN THE DUE DATE. 7. BEFORE US THE LD. DR MERELY SUBMITTED THAT AS THE DEPARTMENT HAS PREFERRED APPEAL BEFORE THE HONBLE HIGH COURT AGA INST THE ORDERS OF THE TRIBUNAL IN THE CASE OF M/S. K.K.S.K. LEATHER PROCE SSORS P. LTD. AND IN THE CASE OF M/S. RANGAMMA STEELS & MALLEABLES THE LD. CIT(A) WAS NOT JUSTIFIED IN RELYING ON THE SAME AND ALLOWING THE CLAIM OF DE PRECIATION TO THE ASSESSEE. ON QUERY FROM THE BENCH THE LD. DR COULD NOT SHOW ANY ORDER OF THE HONBLE HIGH COURT WHEREIN THE TRIBUNAL ORDERS WERE EITHER REVERSED OR THE OPERATION WERE STAYED. WE THEREFORE DO NOT FI ND ANY GOOD REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A). IT IS C ONFIRMED AND THE GROUNDS OF APPEAL OF THE REVENUE ARE DISMISSED. 8. IN OTHER YEARS OF APPEAL OF THE REVENUE IN I.T. A. NOS.1908 1909 AND 1910/MDS/2011 FOR THE ASSESSMENT YEARS 2004-05 06- 07 AND 07-08 RESPECTIVELY ALSO THE REVENUE HAS TAKEN SIMILAR GR OUNDS OF APPEAL EXCEPT FOR THE CHANGE IN FIGURE. THE FINDINGS OF THE LD. C IT(A) ARE ALSO SAME. THE LD. DR AND THE LD. AR OF THE ASSESSEE MADE SIMILAR ARGU MENTS. THEREFORE FOLLOWING OUR DECISION FOR THE ASSESSMENT YEAR 2003 -04 THE APPEALS OF THE REVENUE ARE DISMISSED. I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .1906 1906 1906 1906- -- -10 1010 10/ // /M/ M/M/ M/11 1111 11 & & & & C.O. C.O. C.O. C.O. NO NONO NOS SS S. . . . 04 0404 04- -- -08 0808 08/M/1 /M/1 /M/1 /M/12 22 2 5 9. IN I.T.A. NO. 1907/MDS/2011 FOR THE ASSESSMENT YEAR 2004-05 THE GRIEVANCE OF THE REVENUE IS THAT THE LD. CIT(A) ERR ED IN ALLOWING THE CLAIM OF THE ASSESSEE OF DEDUCTION UNDER SECTION 80HHC WHILE COMPUTING INCOME UNDER SECTION 115JB BUT RESTRICTED TO 30% ELIGIBLE PROFIT AS PER SECTION 80HHC (1B)(IV) FOLLOWING THE DECISION OF THE HONBL E MADRAS HIGH COURT IN THE CASE OF M/S. FUTURA POLYESTER LTD. IN T.C.A. NO S. 217 TO 219 OF 2009 DATED 16.04.2009 WHEN THIS ORDER OF THE HONBLE MAD RAS HIGH COURT HAS NOT BECOME FINAL AND FURTHER APPEAL BY WAY OF SLP HAVE BEEN FILED. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS PERUSED T HE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. IN T HE INSTANT CASE THE ISSUE BEFORE US IS WHETHER IN COMPUTING BOOK PROFIT UNDER SECTION 115 JB DEDUCTION IN RESPECT OF SECTION 80HHC WHICH IS TO BE ALLOWED UNDER CLAUSE (IV) OF EXPLANATION TO SECTION 115JB (2) IS TO BE C OMPUTED WITH REFERENCE TO THE BOOK PROFIT OR THE SAME IS TO BE COMPUTED WITH REFERENCE TO BUSINESS PROFIT COMPUTED IN THE NORMAL COMPUTATION. 11. WE FIND THAT ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISIONS OF THE HONBLE MADRAS HIGH COURT IN THE C ASE OF CIT V. RAJINIKANT SCHNELDER & ASSOCIATES (P) LTD. [2008] 302 ITR 22 ( MAD) AND ALSO IN THE CASE OF CIT VS. BHARI INFORMATION TECHNOLOGY SYSTEM S P. LTD. [2010] 328 ITR 380 (MAD) WHERE IT WAS HELD THAT COMPUTATION O F DEDUCTION UNDER SECTION 80HHC WAS TO BE WORKED OUT ON THE BASIS OF BOOK PROFIT UNDER SECTION 115JA ONLY AND NOT ON THE PROFIT ARRIVED AT ON REGULAR BASIS. FURTHER I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .1906 1906 1906 1906- -- -10 1010 10/ // /M/ M/M/ M/11 1111 11 & & & & C.O. C.O. C.O. C.O. NO NONO NOS SS S. . . . 04 0404 04- -- -08 0808 08/M/1 /M/1 /M/1 /M/12 22 2 6 THE HONBLE SUPREME COURT IN THE CASE OF BHARI INFO RMATION TECHNOLOGY SYSTEMS P. LTD. [2012] 17 TAXMANN.COM 62 (SC) HAS H ELD AS UNDER: 1. ASSESSEE FILED ITS RETURN OF INCOME FOR ASST. YR. 2000-01. ASSESSEE CLAIMED DEDUCTION UNDER S. 80HHE TO THE EXTENT OF ` . 1 56 33 719 AGAINST NET PROFIT AS PER P&L A/C AMOUNTING TO ` . 3 07 84 105 TO ARRIVE AT THE BOOK PROFIT OF ` . 1 51 50 386 UNDER S. 115JA OF THE IT ACT 1961 (SEE : VOL. R/1 OF I.A. PAPER BOOKP. 6). 2. THIS CLAIM FOR DEDUCTION MADE BY THE ASSESSEE WAS REJECTED BY THE AO SAYING THAT SINCE IN NORMAL COMPUTATION THERE IS NO PROFIT AFTER CARRY FORWARD LOSS/DEDUCTION UNDER S. 80HHE TO THE EXTENT OF RS. 1 56 33 719 FOR COMPUTING BOOK PROFIT UNDER S. 115J A WAS NOT ADMISSIBLE. ACCORDING TO THE AO SINCE IN THE PRESENT CASE IN NO RMAL COMPUTATION NO NET PROFIT WAS LEFT AFTER THE BROUGHT FORWARD LO SSES OF THE EARLIER YEARS GOT ADJUSTED AGAINST THE CURRENT YEAR'S PROFI T THE ASSESSEE WAS NOT ENTITLED TO DEDUCTION UNDER S. 80HHE TO THE EXT ENT OF RS. 1 56 33 719. 3. IN APPEAL THE CIT(A) UPHELD THE ORDER OF THE AO. THE ASSESSEE WENT IN APPEAL AGAINST THE ORDER OF THE CIT(A) BEFORE THE TRIBUNAL WHICH FOLLOWING THE JUDGMENT OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF DY. CIT V. SYNCOME FORMULATIONS (I) LTD. [2007] 106 ITD 193/ 13 SOT 414 (MUM.) TOOK THE VIEW THAT THE MAT SCHEME WH ICH INCLUDES S. 115JA DID NOT TAKE AWAY THE BENEFITS GIVEN UNDER S. 80HHE. THE SAID JUDGMENT OF THE SPECIAL BENCH WAS WITH REG ARD TO COMPUTATION OF DEDUCTION UNDER S. 80HHC WHICH LIKE S. 80HHE FALLS UNDER CHAPTER VI-A OF THE IT ACT 1961. IN THE SAID JUDGMENT OF SPECIAL BENCH WHICH SQUARELY APPLIES TO THE FACTS OF THE P RESENT CASE THE TRIBUNAL HELD THAT THE DEDUCTION UNDER S. 80HHC (S. 80HHE ALSO FALLS IN CHAPTER VI-A) IS TO BE WORKED OUT NOT ON THE BAS IS OF REGULAR INCOME-TAX PROFITS BUT IT HAS TO BE WORKED OUT ON T HE BASIS OF THE ADJUSTED BOOK PROFITS IN A CASE WHERE S. 115JA IS A PPLICABLE. IN THE SAID JUDGMENT THE DICHOTOMY BETWEEN REGULAR INCOME-TAX P ROFITS AND ADJUSTED BOOK PROFITS UNDER S. 115JA IS CLEARLY BRO UGHT OUT. THE I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .1906 1906 1906 1906- -- -10 1010 10/ // /M/ M/M/ M/11 1111 11 & & & & C.O. C.O. C.O. C.O. NO NONO NOS SS S. . . . 04 0404 04- -- -08 0808 08/M/1 /M/1 /M/1 /M/12 22 2 7 TRIBUNAL IN THE SAID JUDGMENT RIGHTLY HELD THAT IN S. 115JA RELIEF HAS TO BE COMPUTED UNDER S. 80HHC(3)/(3A). ACCORDING TO THE TRIBUNAL ONCE THE LAW ITSELF DECL ARES THAT THE ADJUSTED BOOK PROFIT IS AMENABLE FOR FURTHER DEDUCTIONS ON S PECIFIED GROUNDS IN A CASE WHERE S. 80HHC (80HHE IN THE PRESENT CASE) I S OPERATIONAL IT BECOMES CLEAR THAT COMPUTATION FOR THE DEDUCTION UN DER THOSE SECTIONS NEEDS TO BE WORKED OUT ON THE BASIS OF THE ADJUSTED BOOK PROFIT. [SEE : PARA 61 OF THE JUDGMENT OF THE TRIBUNAL IN SYNCOME FORMULATIONS (SUPRA)]. 4. IN THE PRESENT CASE WE ARE CONCERNED WITH S. 80HHE WHICH IS REFERRED TO IN THE EXPLANATION TO S. 115JA CL. (IX ). IN OUR VIEW THE JUDGMENT OF THE SPECIAL BENCH OF THE TRIBUNAL IN SY NCOME FORMULATIONS (I) LTD. (SUPRA) SQUARELY APPLIES TO T HE PRESENT CASE. FOLLOWING THE VIEW TAKEN BY THE SPECIAL BENCH IN SY NCOME FORMULATIONS (I) LTD. (SUPRA) THE TRIBUNAL IN THE PRESENT CASE CAME TO THE CONCLUSION THAT REDUCTION CLAIMED BY THE ASSESS EE UNDER S. 80HHE HAS TO BE WORKED OUT ON THE BASIS OF ADJUSTED BOOK PROFIT UNDER S. 115JA AND NOT ON THE BASIS OF THE PROFITS COMPUTED UNDER REGULAR PROVISIONS OF LAW APPLICABLE TO COMPUTATION OF PROF ITS AND GAINS OF BUSINESS. THE JUDGMENT OF THE TRIBUNAL HAS BEEN UPH ELD BY THE HIGH COURT. 5. WE SEE NO REASON TO INTERFERE WITH .THE IMPUGNED J UDGMENT. WE AGREE WITH THE VIEW TAKEN BY THE SPECIAL BENCH OF T HE TRIBUNAL IN THE CASE OF SYNCOME FORMULATIONS (I) LTD. (SUPRA) VIDE PARA 61 OF THE JUDGMENT. ACCORDINGLY THE SPECIAL LEAVE PETITION F ILED BY THE DEPARTMENT STANDS DISMISSED WITH NO ORDER AS TO COS TS. 12. STILL FURTHER THE HONBLE SUPREME COURT IN TH E CASE OF AL-KABEER EXPORTS LIMITED VS. CIT IN SLP(C) NOS. 33932-33933/ 2010 ORDER DATED 03.02.2012 FOLLOWING THE ORDER IN THE CASE OF BHARI INFORMATION TECHNOLOGY SYSTEMS P. LTD.(SUPRA) HAS HELD AS UNDER: IN VIEW OF THIS COURT'S ORDER IN THE CASE OF COMMI SSIONER OF INCOME- TAX VS. BHARI INFORMATION TECHNOLOGY SYSTEMS (P) LT D. [S.L.P. (C) NO.33750 OF 2009] UPHOLDING THE JUDGMENT OF THE SP ECIAL BENCH OF I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .1906 1906 1906 1906- -- -10 1010 10/ // /M/ M/M/ M/11 1111 11 & & & & C.O. C.O. C.O. C.O. NO NONO NOS SS S. . . . 04 0404 04- -- -08 0808 08/M/1 /M/1 /M/1 /M/12 22 2 8 INCOME TAX APPELLATE TRIBUNAL IN THE CASE OF DEPUTY COMMISSIONER OF INCOME TAX VS. SYNCOME FORMULATIONS (I) LTD. REPOR TED IN (2007) 106 ITD 193 THE IMPUGNED JUDGMENT OF THE HIGH COURT IS SET ASIDE AND THE JUDGMENTS OF THE ITAT IN THESE CASES STAND AFFIRMED . THE CIVIL APPEALS FILED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED WIT H NO ORDER AS TO COSTS. 13. WE THEREFORE DO NOT FIND FORCE IN THE GROUND S OF APPEAL OF THE REVENUE. HENCE THE SAME IS DISMISSED. 14. THE CROSS OBJECTION FILED BY THE ASSESSEE IS I N SUPPORT OF THE ORDER OF THE LD. CIT(A) AND AS NO GROUND HAS BEEN RAISED IN THE CROSS OBJECTION CHALLENGING THE ORDER OF THE LD. CIT(A) THE CO FIL ED BY THE ASSESSEE IS INFRUCTUOUS AND HENCE DISMISSED. 15. NO OTHER POINT HAS BEEN URGED BY THE REVENUE E XCEPT THE ABOVE POINT. 16. IN THE RESULT ALL THE APPEALS OF THE REVENUE AND THE CROSS OBJECTIONS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED AT THE CLOSE OF THE HEARING IN THE PRESENCE OF THE PARTIES ON 16.02.2012. SD/ - SD/ - (GEORGE MATHAN) JUDICIAL MEMBER (N.S.SAINI) ACCOUNTANT MEMBER CHENNAI DATED THE 16.02.2012 VM/- TO: THE ASSESSEE//A.O./CIT(A)/CIT/D.R.