PRASHANT CATERERS, MUMBAI v. ITO 12(3)(3), MUMBAI

ITA 4093/MUM/2012 | 2007-2008
Pronouncement Date: 09-07-2013 | Result: Allowed

Appeal Details

RSA Number 409319914 RSA 2012
Assessee PAN AAJFP7855K
Bench Mumbai
Appeal Number ITA 4093/MUM/2012
Duration Of Justice 1 year(s) 28 day(s)
Appellant PRASHANT CATERERS, MUMBAI
Respondent ITO 12(3)(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 09-07-2013
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 09-07-2013
Assessment Year 2007-2008
Appeal Filed On 11-06-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH MUMBAI . . BEFORE SHRI B.R. MITTAL JM AND SHRI RAJENDRA AM ./I.T.A. NO. 4093/MUM/2012 ( / ASSESSMENT YEAR: 2007-08) M/S PRASHANT CATERERS C/O SAMRAT RESTAURANT PREM COURT J.TATA ROAD CHURCHGATE MUMBAI-400020 / VS. INCOME TAX OFFICER 12(3)(3) AAYAKAR BHAVAN CHURCHGATE MUMBAI400020. ./ ./PAN/GIR NO. :AAJFP7855K ( ! /APPELLANT ) .. ( ' ! / RESPONDENT ) ! / APPELLANT BY : MS. TORAL JITESH SHAH ' ! $ /RESPONDENT BY : MS.C TRIPURA SUNDARI $ ( / DATE OF HEARING : 09.07.2013 $ ( /DATE OF PRONOUNCEMENT : 09.07.2013 / O R D E R PER B.R.MITTAL JM: THE ASSESSEE HAS FILED THIS APPEAL FOR THE ASSESS MENT YEAR 2007-08 AGAINST THE ORDER OF LD. CIT(A) DATED 1.3.2012 ON FOLLOWING GRO UNDS : 1. THE LD. CIT(A) HAS ERRED IN CONFIRMING THE DISA LLOWANCE MADE BY THE LD. AO OF YOUR APPELLANTS CLAIM OF DEDUCTION U/S 80IA ALLOWABLE ON THE INCOME FROM POWER GENERATED BY WIND MILL AMOUNTING TO RS.11 39 374/-. 2. THE LD. CIT(A) ERRED IN UPHOLDING THAT THE UNABS ORBED LOSSES AND DEPRECIATION OF WINDMILL UNIT FOR AY 2002-03 TO AY 2004-05 THAT WERE ADJUSTED BY YOUR APPELLANT AGAINST THE HOTEL INCOME WERE TO BE NOTIONALLY SET OFF AGAINST THE PROFITS OF THE WIND MILL UNIT FOR AY 2007-08 B EFORE COMPUTING THE ELIGIBLE PROFIT FOR DEDUCTION U/S 80IA. 3. YOUR APPELLANT PRAYS BEFORE YOUR HONOUR THA T THE INJUSTICE DONE BY THE LD. AO MAY PLEASE BE REMOVED AND THE DEDUCTION BE ALLOW ED AS PER LAW. 2. THE RELEVANT FACTS GIVING RISE TO THIS APPEAL AR E THAT THE ASSESSEE IS A FIRM AND RUNNING RESTAURANT AND OTHER BUSINESS CARRIED ON IS OF GENERATION OF ELECTRICITY BY WIND I.T.A. NO. 4093/MUM/2012 2 MILL GENERATOR. THE ASSESSEE COMMENCED WIND MILL PROJECT IN THE YEAR 31.12.2001. DURING THE YEAR IT CLAIMED DEDUCTION U/S 80IA(4)(IV ) OF THE INCOME TAX ACT 1961 (THE ACT) FROM WIND MILL GENERATOR ON INCOME /PROFIT GEN ERATED FROM WIND MILL. THE AO STATED THAT THE CLAIM OF DEDUCTION U/S 80IA SHOULD BE DISALLOWED IN VIEW OF THE FACT THAT THE ASSESSEE HAD NOT ADJUSTED THE NOTIONAL UN-ABSOR BED DEPRECIATION AND LOSSES OF EARLIER YEARS I.E. FOR THE ASSESSMENT YEARS 2002-0 3 TO 2004-05 WHICH WAS RS.95 16 486/- AGAINST THE INCOME OF BUSINESS ELIG IBLE FOR DEDUCTION U/S 80IA(IV) (A) OF THE ACT . THE AO DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE THAT SECTION 80IA HAD GIVEN OPTION TO THE ASSESSEE TO CLAIM DEDUCTION FOR 10 CONSECUTIVE ASSESSMENT YEARS (OUT OF 15 YEARS) BEGINNING FROM YEAR ENDING IN WH ICH THE UNDERTAKING BEGINS TO OPERATE. DURING THE ASSESSMENT PROCEEDINGS THE AS SESSEE PLACED RELIANCE ON THE DECISION OF CHENNAI BENCH OF THE TRIBUNAL IN THE CASE OF MOHAN BREWERIES AND DISTILLERIES LTD REPORTED IN 24 SOT 170 WHEREIN IT HAS BEEN HELD : SINCE ASSESSEE HAD ADOPTED TO CLAIM DEDUCTION U/S 80IA ONLY IN AY 2005-06 IN LIEU OF SECTION 80IA(5). THERE WAS NO QUESTION OF S ETTING OF NOTIONALLY CARRIED FORWARD UNABSORBED DEPRECIATION OR LOSS OF EARLIER YEARS AGAINST PROFITS OF UNITS AND THE ASSESSEE WAS ENTITLED TO CLAIM DEDUCTION U /S 80IA(IV) ON CURRENT ASSESSMENT PROFITS THE AO CONSIDERING THE DECISION OF THE CHENNAI BEN CH OF THE TRIBUNAL IN THE CASE OF PRASAD PRODUCTIONS PVT.LTD (2006)98 ITD 212 (CHENN AI) THE DECISION OF THE KOLKATA BENCH OF THE TRIBUNAL IN THE CASE OF ITO V/S KANC HAN OIL INDUSTRIES LTD 92 ITD 557(KOL) AND THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF GOLDMINE SHARES AND FINANCE (P) LTD REPORTED IN 113 ITD 209 WHEREIN IT HAS BEEN HELD THAT THE UNABSORBED LOSSES/UNABSORBED DEPRECIATION RELATING TO THE ELIGIBLE BUSINESS ARE TO BE TAKEN INTO ACCOUNT IN DETERMINING THE QUANTUM OF DEDUCTION ADMISSIBLE UNDER SECTION 80IA EVEN THOUGH THESE UNABSORBED LOSSES/DE PRECIATION RELATING TO THE ELIGIBLE BUSINESS MAY ACTUALLY HAVE BEEN SET OFF AGAINST THE PROFITS OF THE ASSESSEE FROM NON- ELIGIBLE BUSINESS OR OTHER SOURCES. THE AO HELD THAT NOTIONAL LOSSES ON ACCOUNT OF UNABSORBED DEPRECIATION AND BUSINESS LOSS FOR THE P ERIOD FROM ASSESSMENT YEAST 2002- 03 TO 2004-05 OF RS.95 16 486/- WERE REQUIRED TO B E ADJUSTED TILL IT STARTED GENERATING INCOME. THE WINDMILL OF THE ASSESSEE HAD SHOWN PRO FIT FOR THE FIRST TIME IN THE ASSESSMENT YEAR 2005-06. THE AO STATED THAT THE ASSESSEE WAS REQUIRED TO ADJUST THE INCOME OF RS.11 39 374/- OF ELIGIBLE BUSINESS A GAINST THE NOTIONAL LOSSES OF EARLIER YEAR. ACCORDINGLY AFTER ADJUSTING NOTATIONAL L OSS THE DEDUCTION U/S 80IA WOULD BE AT RS.NIL. BEING AGGRIEVED THE ASSESSEE FILED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. I.T.A. NO. 4093/MUM/2012 3 3. THE LD. CIT(A) CONFIRMED THE ACTION OF THE AO VI DE PARAGRAPH 3.3 OF THE IMPUGNED ORDER WHICH READS AS UNDER : 3.3 I HAVE CONSIDERED THE FACTS OF THE CASE. THE APPELLANT HAS CLAIMED DEDUCTION U/S.80IA OF THE ACT ON THE PROFITS EARNED ON GENERATION OF POWER GENERATED BY WIND MILL AMOUNTING TO RS.11 39 374/-. THIS WIND MILL WAS INSTALLED/SET UP/COMMENCED IN A.Y.2002-03. IN A.Y.2 002-03 2003-04 AND 2004- 05 THERE WERE NO PROFITS FROM THE WIND MILL ACTIVI TY. THEREFORE THE DEPRECIATION AND LOSSES ON WIND MILL WERE ADJUSTED BY APPELLANT IN THOSE YEARS AGAINST THE INCOME OF HOTEL INCOME. IN A.Y.2005-06 THE APPELLA NT FIRST TIME EARNED PROFIT ON WIND MILL. IN A.Y.2005-06 THE APPELLANT FIRST TIME CLAIMED DEDUCTION U/S.80-IA OF THE ACT. IN A.Y.2006-07 ALSO THE APPELLANT EARNED I NCOME FROM WIND MILL ACTIVITY. AS EXPLAINED THE DEPRECIATION AND LOSSES OF WIND M ILL FOR A.Y.2002-03 TO 2004- 05 WERE ADJUSTED BY APPELLANT AGAINST INCOME FROM H OTEL INCOME IN THOSE YEARS AND THEREFORE PRACTICALLY THERE REMAINED NO UNABSO RBED DEPRECIATION AND LOSSES OF WIND MILL ACTIVITY. HOWEVER THE A.O. HELD THAT THE DEPRECIATION AND LOSSES OF A.Y.2002-03 TO 2004-05 OF WIND MILL HAVE TO BE NOTI ONALLY BROUGHT FORWARD FOR ADJUSTING AGAINST THE PROFITS OF THE YEAR UNDER CON SIDERATION EARNED FROM WIND MILL ACTIVITY AND THE BALANCE INCOME WAS ALLOWABLE AS DEDUCTION U/S.80-IA OF THE ACT. NOW THE QUESTION FOR CONSIDERATION IS AS TO WH ETHER WHEN THE DEPRECIATION AND LOSSES OF EARLIER YEARS WERE ALREADY ADJUSTED A GAINST HOTEL INCOME THE DEPRECIATION AND LOSSES HAVE AGAIN TO BE NOTIONALLY BROUGHT FORWARD FOR ADJUSTING AGAINST THE INCOME FROM WIND MILL OF THE YEAR UNDER CONSIDERATION. I HAVE CONSIDERED THE FACTS OF THE CASE. I HAVE NOT ICED THAT THE ISSUE DISCUSSED IN ABOVE PARA WAS ALSO THERE IN APPELLAN T'S CASE IN A.Y.2005-06. THE CIT(A)-23 MUMBAI VIDE APPEAL ORDER DTD.04.02.2011 DECIDED THE ISSUE AGAINST THE APPELLANT UPHOLDING THE A.O'S ACTION IN SETTLI NG OFF INCOME FROM GENERATION OF ELECTRICITY AGAINST NOTIONAL LOSS OF EARLIER YEA RS. FOLLOWING THE APPEAL ORDER OF MY PREDECESSOR I.E. CIT(A)-23 MUMBAI FOR A.Y.2005- 06 THIS ISSUE IS DECIDED AGAINST THE APPELLANT AND THEREFORE THESE GROUNDS OF APPEAL ARE DISMISSED. HENCE THIS APPEAL BY THE ASSESSEE. 4. DURING THE COURSE OF HEARING THE LD.AR SUBMITTE D THAT THE LD.CIT(A) MADE DISALLOWANCE BY FOLLOWING HIS PREDECESSORS ORDER F OR THE EARLIER ASSESSMENT YEAR 2005- 06. SHE SUBMITTED THAT THE ASSESSEE FILED APPEAL AGAINST THE ORDER OF THE LD. CIT(A) FOR THE FIRST TIME FOR ASSESSMENT YEAR 2005-06 BEFORE T HE MUMBAI BENCH OF THE TRIBUNAL AND THE TRIBUNAL IN ITA NO.4226/MUM/2011 VIDE ITS ORDER DATED 6.2.2013 BY FOLLOWING THE DECISION OF THE HONBLE MADRAS HIGH COURT IN T HE CASES OF CIT V/S EMRALD JEWEL INDUSTRY P.LTD (2011) 53 DTR 263 (MAD) AND VELYUDH ASWAMY SPINNING MILLS (P) LTD 231 CTR 268 (MAD); 340 ITR 477 (MAD) DECIDED THE IS SUE IN FAVOUR OF THE ASSESSEE SUBJECT TO THE FINDING THAT THE CLAIM OF THE ASSE SSEE THAT THE LOSSES WERE ALREADY ADJUSTED AGAINST THE INELIGIBLE PROFITS OF THE ASSE SSEE BE VERIFIED. THE LD. AR FILED A COPY OF THE SAID ORDER (SUPRA) TO SUBSTANTIATE HE R SUBMISSIONS. SHE SUBMITTED THAT THE SIMILAR ISSUE AGAIN CAME UP BEFORE THIS TRIBUNAL IN ASSESSEES OWN CASE IN ITA I.T.A. NO. 4093/MUM/2012 4 NO.6360/MUM/2011 (AY-2008-09) AND THE TRIBUNAL VIDE ITS ORDER DATED 8.2.2013 DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. A COPY OF THE SAID ORDER IS PLACED AT PAGES 32 TO 44 OF THE PAPER BOOK. SHE SUBMITTED THAT THE ISSUE STANDS COVERED IN FAVOUR OF THE ASSESSEE BY THE ABOVE SAID ORDERS (SUPRA) IN ASSESS EES OWN CASE. THE LD. DR HAS NOT DISPUTED THE ABOVE CONTENTION OF THE ASSESSEE SAVE AND EXCEPT RELIED ON THE ORDER OF THE LD. CIT(A). 5. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE LD. REPRESENTATIVE OF THE PARTIES AND ALSO PERUSED THE ORDERS OF THE AUTHORIT IES BELOW. WE HAVE ALSO GONE THROUGH THE EARLIER ORDERS OF THE TRIBUNAL DATED 6 .2.2013 COPY OF WHICH ARE PLACED AT PAGES 28 TO 31 OF THE PAPER BOOK AND THE ORDER DAT ED 8.2.2013 COPY OF WHICH IS PLACED AT PAGES 32 TO 44 OF PAPER BOOK (SUPRA). WE OBSERVE THAT THE TRIBUNAL HAS STATED THAT THE ABOVE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISIONS OF THE HONBLE MADRAS HIGH COURT WHEREIN IT HAS BEEN HELD THAT THE ASSESSEE- COMPANY IS ELIGIBLE FOR DEDUCTION U/S 80IA IN RESP ECT OF THE INCOME FROM WINDMILL INSTALLED BY IT AND THE UNABSORBED DEPRECIATION SE T OFF IN EARLIER YEARS CANNOT BE REDUCED FROM THE PROFITS FOR COMPUTING THE DEDUCTIO N U/S 80IA OF THE ACT. HOWEVER THE TRIBUNAL STATED THAT THE MATTER BE RESTORED TO FIND OUT THE CLAIM OF THE ASSESSEE THAT THE LOSSES WERE ALREADY ADJUSTED AGAINST THE PROF ITS OF INELIGIBLE UNITS OF THE ASSESSEE IN EARLIER YEARS AND DIRECTED THE LD. CIT(A) FOR AD JUDICATING THE ISSUE AFRESH ACCORDINGLY. RESPECTFULLY FOLLOWING THE EARLIER ORDERS OF THE TR IBUNAL IN ASSESSEES OWN CASE (SUPRA) WE SET ASIDE THE IMPUGNED ORDER OF THE LD. CIT(A) A ND RESTORE THE ISSUE TO THE LD. CIT(A) TO ADJUDICATE THE SAME BY FOLLOWING THE EARL IER ORDERS OF THE TRIBUNAL AFTER GIVING DUE OPPORTUNITY OF HEARING TO THE PARTIES. H ENCE GROUNDS OF APPEAL TAKEN BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSE. 6. IN THE RESULT THE APPEAL FILED BY THE ASSESSE E IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED AFTER HEARING LD. REPRESENTATIVE OF THE PARTIES IN THE OPEN COURT ON 9TH JULY 2013 $ / 0 9TH JULY 2013 $ SD /- SD/- (RAJENDRA) (B.R. MITTAL) / ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI; 0 DATED 09/07/2013 . . ./ SRL SR. PS I.T.A. NO. 4093/MUM/2012 5 !' #' / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. ' ! / THE RESPONDENT. 3. 4 ( ) / THE CIT(A)- 4. 4 / CIT 5. 5 '7 ( 7 / DR ITAT MUMBAI 6. / GUARD FILE. / BY ORDER 5 ' //TRUE COPY// / (DY./ASSTT. REGISTRAR) / ITAT MUMBAI