ACIT, Tiruppur v. M/s. Best International, Tiruppur

ITA 574/CHNY/2010 | 2006-2007
Pronouncement Date: 09-07-2010 | Result: Dismissed

Appeal Details

RSA Number 57421714 RSA 2010
Assessee PAN AACFN9608F
Bench Chennai
Appeal Number ITA 574/CHNY/2010
Duration Of Justice 2 month(s) 11 day(s)
Appellant ACIT, Tiruppur
Respondent M/s. Best International, Tiruppur
Appeal Type Income Tax Appeal
Pronouncement Date 09-07-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 09-07-2010
Assessment Year 2006-2007
Appeal Filed On 28-04-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BENCH B CHENNAI (BEFORE SHRI PRADEEP PARIKH VICE-PRESIDENT AND SHRI GEORGE MATHAN JUDICIAL MEMBER) .. I.T.A. NO.574/MDS/2010 ASSESSMENT YEAR : 2006-07 THE ASST. COMMISSIONER OF INCOME-TAX CIRCLE-I TIRUPUR. (APPELLANT) V. M/S. BEST INTERNATIONAL 89/2 BEST INDUSTRIAL ESTATE PADMAVATHIPURAM AVINASHI ROAD TIRUPUR-641 603. PAN : AACFN9608F (RESPONDENT) APPELLANT BY : SHRI P.B. SEKARAN RESPONDENT BY : SHRI R. KUMAR O R D E R PER GEORGE MATHAN JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LEARNED CIT(APPEALS)-II COIMBATORE IN APPEAL NO. 315C/08-0 9 DATED 02-02-2010 FOR THE ASSESSMENT YEAR 2006-07. 2. IN THE REVENUES APPEAL THE REVENUE HAS RAISED T HE FOLLOWING GROUNDS : 1. THE ORDER OF THE LEARNED CIT(A) IS AGAINST FA CTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED CIT(A)ERRED IN G RANTING ADDITIONAL DEPRECIATION ON WIND ENERGY GENERATORS U/S. 32(1)(II A) AS IT IS ADMISSIBLE ONLY FOR THE ASSESSEE ENGAGED IN THE BUSINESS OF MANUFACTURE OR PRODUCTION OF ARTICLE OR THING. ITA NO.574/MDS/10 2 3. THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED TH E FACT THAT WEG DOES NOT MANUFACTURE OR PRODUCE ANY A RTICLE OR THING BUT ENERGY WHICH CANNOT BE CONSTRUED A S AN ARTICLE OR THING. THE EXPRESSION MANUFACTURE A ND PRODUCE ARE NORMALLY ASSOCIATED WITH MOVABLE ARTICLE OR GOO DS BIG AND SMALL- BUT THEY ARE NEVER EMPLOYED TO DENOTE TH E ACTIVITY OF THE GENERATION OF POWER. 4. THE LEARNED CIT(A) OUGHT TO HAVE OBSERVED THA T IN SECTION 32A(2) THE BUSINESS OF GENERATION OR DISTRI BUTION OF ELECTRICITY OR ANY OTHER FORM OF POWER IS MENTIONED SEPARATELY FROM THE BUSINESS OF MANUFACTURE OR PROD UCTION OF ANY ARTICLE OR THING WOULD HAVE COVERED THE GENERATION OF POWER ALSO THERE WAS NO NECESSITY FOR ENACTING A SEPARATE CLAUSE IN SECTION 32A(20 FOR THIS PURPOSE. 5. THE LEARNED CIT(A) OUGHT TO H AVE OBSERVED THAT THE DECISION OF THE JURISDICTIONAL BENCH OF THE ITAT IN THE CASE OF TAMILNADU CHLORATES V. JCIT (2006) 98 ITD 1 (CHENNA I) WHILE DEALING WITH THE EXPRESSION MANUFACTURE OR P RODUCE ARTICLES IN SECTION 80HH(2) LAID DOWN AS UNDER: THE EXPRESSION MANUFACTURE AND PRODUCE ARE NORMALLY ASSOCIATED WITH MOVABLES-ARTICLES OR GOODS BIG AND SMALL- BUT THEY ARE NEVER EMPLOYED TO DENOTE THE ACTIVITY OF GENERATION OF POWER. IN THE SHORTER OXFORD DICTIONARY THE WORD ARTICLE IS DEFINED A COMMODITY; A PIECE OF GOODS OR PROPERTY. POWER GENERATION DOES NOT FIT WITHIN THE DEFINITION OF THE WORD ARTICLE.IF GENERATION OF POWER COULD BE PLACED WITHIN THE AMBIT OF THE TERM ARTICLE THERE WAS NO NECESSITY OF SPECIFYING SEPARATELY THE SAME IN THE ITA NO.574/MDS/10 3 SECTION. THIS CLEARLY MANIFEST THE INTENT OF THE LEGISLATURE THAT THE WORD ARTICLE USED IN SECTION 80HH(2) DOES NOT INCLUDE WITHIN ITS AMBIT POWER GENERATION. 6. IT IS SUBMITTED THAT THE DECISION OF THE HONBLE HIGH COURT AT MADRAS IN THE CASE OF CIT V. M/S. HI-TECH ARAI LTD. HAS NOT BEEN ACCEPTED BY REVENUE AND A SLP HAS BEEN FILED IN THE APEX COURT AGAINST THE SAID DECISION. 7. FOR THESE AND OTHER GROUNDS THAT MAY BE A DDUCED AT THE TIME OF HEARING THE ORDER OF THE LEARNED CI T(APPEALS) MAY BE CANCELLED AND THAT OF THE ASSESSING OFFICER RESTORED. 3. SHRI P.B. SEKARAN LEARNED CIT (DR) REPRES ENTED ON BEHALF OF THE REVENUE AND SHRI R. KUMAR ADVOCATE REPRESENTED ON BEHALF O F THE ASSESSEE. 4. THE APPEAL FILED BY THE REVENUE IS TIME BARRED B Y 2 DAYS. THE LEARNED DR HAS EXPLAINED THE REASONS FOR THE DELAY VIDE LET TER OF THE ASSESSING OFFICER DATED 30.6.2010. AS WE ARE CONVINCED THAT THE DELA Y WAS DUE TO REASONS BEYOND THE CONTROL OF THE AO THE DELAY IS CONDONED AND THE APPEAL IS DISPOSED OF ON MERITS. 5. AT THE TIME OF HEARING IT WAS CLEARLY AGREED BY BOTH THE PARTIES THAT THE ISSUE IN THE APPEAL BEING THAT THE ADDITIONAL DEPRE CIATION IN RESPECT OF WIND MILLS WAS SQUARELY COVERED BY THE DECISION OF THE JURISDI CTIONAL HIGH COURT OF MADRAS IN THE CASE OF HI-TECH ARAI LTD. (321 ITR 477) WHER EIN THE HONBLE HIGH COURT HAS HELD AS FOLLOWS: ITA NO.574/MDS/10 4 IN THE CASE ON HAND THE ASSESSEE IS STATED TO HA VE SET UP TWO WIND MILLS IN ADDITION TO THE ALREADY EXISTING FOUR WIND MILLS AND THEREBY INCREASED ITS POWER GENERATION CAPACITY BY ABOVE 50 PER CENT. IT IS TRUE THAT THE ASSESSEE IS A COMPAN Y ENGAGED IN THE BUSINESS OF MANUFACTURE OF OIL SEEDS MOULDED R UBBER PARTS REED VALUE ASSEMBLIES APART FROM GENERATION OF POWE R. AFTER THE INSTALLATION OF THE ADDITIONAL WIND MILLS BOTH PRIOR TO AS WELL AS AFTER THE INSTALLATION OF THE ADDITIONAL WIND MI LLS THE ASSESSEE WAS USING WIND ENERGY FOR GENERATING POWER FOR ITS CAPTIVE CONSUMPTION APART FROM SELLING THE SURPLUS POWER GENERATED TO THE TAMIL NADU ELECTRICITY BOARD. AS F AR AS APPLICATION OF SECTION 32(1)(IIA) OF THE ACT IS CON CERNED WHAT IS REQUIRED TO BE SATISFIED IN ORDER TO CLAIM THE ADDI TIONAL DEPRECIATION IS THAT THE SETTING UP OF A NEW MACHIN ERY OR PLANT SHOULD HAVE BEEN ACQUIRED AND INSTALLED AFTER MARCH 31 2002 BY AN ASSESSEE WHO WAS ALREADY ENGAGED IN THE BUSI NESS OF MANUFACTURE OR PRODUCTION OF ANY ARTICLE OR THING. THE SAID PROVISION DOES NOT STATE THAT THE SETTING UP OF A N EW MACHINERY OR PLANT WHICH WAS ACQUIRED AND INSTALLED UP TO MA RCH 31 2002 SHOULD HAVE ANY OPERATIONAL CONNECTIVITY TO THE ART ICLE OR THING THAT WAS ALREADY BEING MANUFACTURED BY THE ASSESSEE . THEREFORE THE CONTENTION THAT THE SETTING UP OF A WIND MILL HAS NOTHING TO DO WITH THE POWER INDUSTRY NAMELY MANU FACTURE OF OIL SEEDS ETC. IS TOTALLY NOT GERMANE TO THE SPEC IFIC PROVISION CONTAINED IN SECTION 32(1)(IIA) OF THE ACT. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE I SSUE IN THE APPEAL IS SQUARELY COVERED BY THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. ITA NO.574/MDS/10 5 HI TECH ARAI LTD. REFERRED TO SUPRA WHEREIN IT HA S BEEN HELD THAT THE ASSESSEE WOULD BE ENTITLED TO ADDITIONAL DEPRECIATION ON THE NEW PLANT AND MACHINERY WHICH HAVE BEEN ACQUIRED AND INSTALLED. RESPECTFUL LY FOLLOWING THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE ABOVE CASE THE FINDING OF THE LEARNED CIT(A) STANDS CONFIRMED. IN THE CIRCUMSTANCES THE APPEAL OF THE REVENUE IS DISMISSED. 7. IN THE RESULT REVENUES APPEAL IS DISMISSED. 8. THE ORDER WAS PRONOUNCED IN THE COURT ON 09-07-2 010. SD/- SD/- ( PRADEEP PARIKH) (GEORGE MATHAN) VICE-PRESIDENT JUDICIAL MEMBER CHENNAI DATED THE 9 TH JULY 2010. H. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT(A) (4) CIT (5) D.R. (6) GUARD FILE