2015 (6) TMI 1093 - AT - Income Tax

ITAT Upholds CIT (A) Decision on Section 80-IA Deduction

The Dy. Commissioner of Income Tax, Corporate Circle -I Coimbatore. Versus M/s. Defree Engineering Pvt. Ltd.

The ITAT affirmed the CIT (A)'s decision, emphasizing the importance of following the High Court's judgment in cases where no stay has been granted by the ... Deduction us/ 80- IA - Held that:- From the facts of the case it appears that the Ld. Assessing Officer was of the view that since the Revenue was on appeal against the decision of the Hon’ble Madras High Court in the case Velayudhaswamy Spinning Mills P. Ltd [2010 (3) TMI 860 - Madras High Court] before the Hon’ble Apex Court, he need not follow that decision. He did not realize that mere pendency of the SLP before the Apex Court is not a valid ground for not following the judgment of the Hon’ble Madras High Court. Further, it is not the case of the Revenue that the judgment of the Hon’ble Madras High Court in the case Velayudhaswamy Spinning Mills P. Ltd (surpa) is stayed by the Hon’ble Apex Court. It is pertinent to mention that in the absence of any stay granted by the Hon’ble Apex Court against the operation of the judgment of the Hon’ble Madras High Court, all the lower judiciaries as well as quasi judicial authorities are bound to follow the decision of the Hon’ble Jurisdictional High Court. Since the Ld.CIT(A) has rightly followed the decision of the Hon’ble Jurisdictional Madras High Court(supra) and held the issue in favour of the assessee, we do not find it necessary to interfere with his order . Therefore we hereby confirm the order of the Ld. Ld. CIT (A). Issues:Appeal against order allowing deduction under section 80-IA of the Income Tax Act based on a decision of the Jurisdictional High Court.Analysis:1. Appeal by Revenue against CIT(A) Order:The Revenue filed an appeal against the order of the Commissioner of Income Tax (Appeals) regarding the allowance of deduction under section 80-IA of the Income Tax Act. The core issue revolved around the Revenue's contention that the CIT (A) erred in allowing the deduction based on the decision of the Jurisdictional High Court, despite the Revenue's appeal pending before the Apex Court.2. Assessment and Disallowance of Deduction:The assessee, a Private Limited company engaged in manufacturing and trading, filed its income tax return for the assessment year 2011-12. During assessment, the Assessing Officer disallowed the benefit of section 80-IA on windmills claimed by the assessee. The AO justified this disallowance by citing the pending appeal of the Revenue before the Apex Court regarding the matter.3. CIT(A) Decision in Favor of Assessee:On appeal by the assessee, the CIT (A) ruled in favor of the assessee, allowing the deduction under section 80-IA. The CIT (A) based this decision on the precedent set by the Jurisdictional High Court's judgment in a similar case. The CIT (A) directed the AO to allow the claim of deduction under section 80-IA, emphasizing the importance of following the High Court's decision.4. ITAT Decision and Conclusion:During the hearing, both parties presented their arguments, with the Revenue supporting the AO's decision and the assessee relying on the High Court's judgment. The ITAT carefully examined the case and concluded that the AO's decision to disallow the deduction solely based on the pending appeal before the Apex Court was not justified. The ITAT emphasized that in the absence of a stay granted by the Apex Court against the High Court's judgment, lower authorities are bound to follow the High Court's decision. Consequently, the ITAT upheld the CIT (A)'s order in favor of the assessee, dismissing the Revenue's appeal.In conclusion, the ITAT affirmed the CIT (A)'s decision, emphasizing the importance of following the High Court's judgment in such cases where no stay has been granted by the Apex Court. The appeal by the Revenue was dismissed, and the order in favor of the assessee was confirmed.