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2015 (5) TMI 147
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.... Tax benefit was inextricably linked to the industrial undertaking and was integral part of the profit derived from power generation by the said undertaking, eligible for deduction u/s 80IA(i) 2.The Id. CIT(A) was not justified in rejecting the Appellant's contention that the Sales Tax benefit granted to the Appellant was part of a beneficial scheme of the State Government to promote generation of wind energy and, therefore, was eligible for deduction u/s 80IA(i). 3.The Ld. CIT(A) was not justified in not appreciating that because of the amendment brought in sub-section (2) of section 80IA by the Finance Act, 1999 w.e.f 1/04/2000, the Appellant had option to claim deduction u/s 80IA for any ten consecutive assessment years out of fifteen years beginning from the year of generation of electricity. 4.The Ld. CIT(A) was not justified in not appreciating that sec.80IA(1) did not provide for the meaning of the term' initial year' and the Appellant had opted for 2003-04 as the initial year for claiming deduction u/s 80IA(1). 5.The Ld. CIT(A) was not justified in not appreciating that there was no notional loss of Rs. 1,60,32,591/- to be carried forward to Assessme....
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.... advisor who has given necessary instruction to draft and file appeal against the appellate order. That, on account of the said mistake or inadvertence of the staff of the consultant / legal advisor appeal against the said assessment order could not be filed within the period of limitation. That, there was no deliberate delay or inaction on the part of the appellant Company in filing the said appeal. Solemnly affirmed on this day of 29th November of 2013, at Patan Deponent Before me, Notary Public" 6. The learned Authorized Representative for the assessee placed reliance on the ratios laid down on the following cases:- i) Collector Land Acquisition, Anantnag & Anr. Vs. Mst. Katiji & Ors, 1987 SCC (2) 107 JT 1987 (1) 537 ii) CIT Vs. West Bengal Infrastructure Development Finance Corporation Ltd. (2011) 196 TAXMAN 321 (SC) iii) CIT Vs. Smt. B. Sumangaladevi (2012) 26 taxmann.com 26 (Kar.) (iv) M/s. Prima Paper & Engineering Pvt. Ltd. Vs. CIT in ITA (L) No.403 of 2013, vide order dated 09.07.2013 7. The learned Departmental Representative for the Revenue on the other hand pointed out that the appeal of assessee was dismissed by the CIT(A) on 03.09.2007....
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....unity to the appellant to lead evidence and to prove the issues so formulated. 3. In our opinion, ends of justice would be met by setting aside the impugned orders and matter is remitted to the Executing Court to consider and dispose of appellant's objections filed under Order 21 Rule 90 of CPC on merits and in accordance with law, at an early date. It is pertinent to point out that unless malafides are writ large on the conduct of the party, generally as a normal rule, delay should be condoned. In the legal arena, an attempt should always be made to allow the matter to be contested on merits rather than to throw it on such technicalities. Apart from the above, appellant would not have gained in any manner whatsoever, by not filing the appeal within the period of limitation. It is also worth noticing that delay was also not that huge, which could not have been condoned, without putting the respondents to harm or prejudice. It is the duty of the Court to see to it that justice should be done between the parties." 10. We further find that the Hon'ble Bombay High Court in M/s. Prima Paper & Engineering Pvt. Ltd. Vs. CIT (supra) on the issue of condonation of delay of 515 day....
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....pproved by the Madras High Court in Velayudhaswamy Spinning Mills Pvt. Ltd. Vs. Asst.ClT, (2010) 231 CTR (Mad) 368 and (iii) the delay in filing the appeal has been caused on account of what appears to be negligence on the part of the staff of the appellant's consultant, we are of the view that interests of justice would be served if delay in filing the appeal is condoned, subject to the condition that the appellant shall pay costs quantified at Rs. 10,000/- to the respondent-, which shall be paid within one month from today." 11. The learned Departmental Representative for the Revenue on the other hand had placed reliance on the various decisions of different Tribunals which cannot be applied in view of the ratio laid down by the jurisdictional High Court in M/s. Prima Paper & Engineering Pvt. Ltd. Vs. CIT (supra) and also the ratio propounded by the Hon'ble Supreme Court on the issue. The learned Departmental Representative for the Revenue also placed reliance on the ratio laid down by the Hon'ble Bombay High Court in Somerset Place Co-operative Housing Society Ltd. Vs. ITO (supra), wherein the Hon'ble Bombay High Court had not condoned the delay in filing the appeal....
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....stallation of wind energy generator units, the State Government had published a policy on 12.03.1998, according to which, sales tax benefit was available equivalent to the qualifying investment on wind energy generation projects. The said benefit was allowed subject to certain conditions, one such condition was that the wind energy generated from the wind power plants had to be sold to Maharashtra State Electricity Board at a fixed rate of 225 paisa per unit. Another condition was that the plant had to successfully operate every year with a minimum of 12% plant load factor. In case, the said 12% load factor is not obtained, the sales tax benefit would not be available under the scheme. The sales tax benefit, which was equivalent to the amount of investment in plant & machinery, new building, etc. was to be disbursed in six equal installments over a period of six years under the condition that the plant had successfully operated every year with a minimum of 12% plant load factor. As per the assessee, since the sales tax benefit was inextricably linked to the industrial undertaking carrying on the activity of wind generation energy, it was entitled to the deduction under section 80IA....
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....A of the Act, the same should be understood as profit directly arising from the business and not incidental to. The CIT(A) further held that the sale of sales tax subsidy received by the assessee sold to the outside parties, was not the direct result of any generation or distribution of power and it was further held that just because the assessee got this benefit by virtue of its windmill generation, it could not be said that the sale of such benefit was part of main activity. Accordingly, it was held that the profit derived by the assessee on sale of sales tax benefit was to be assessed as income from other sources, on which the assessee was not entitled to the claim of deduction under section 80IA of the Act. With regard to the re-computation of the deduction allowable to the assessee under section 80IA of the Act on the profits generated from windmill power generation, the CIT(A) noted the provisions of the Act and observed that since the section 80IA(5) starts with non-obstinate clause overriding the effect of provisions of section 80AB of the Act also mandates that the profits of eligible business would have to be computed as if they were the only source of income. Against the....
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....out that the issue arising in the present appeal is in relation to the sales tax subsidy received i.e. whether it is part of the business receipt and is entitled to the deduction under section 80IA of the Act. The learned Authorized Representative for the assessee further pointed out that the receipt is similar in nature as considered by the Pune Bench of the Tribunal in Rasiklal M. Dhariwal (HUF) Vs. DCIT in ITA No.575/PN/2007 & 150/PN/2008 relating to assessment years 2003- 04 & 2004-05, vide order dated 31.03.2011, the Tribunal held the receipt to be a revenue receipt. It was further pointed out by the learned Authorized Representative for the assessee that the sales tax subsidy received by the assessee was an integral part of the business income and hence was business receipt, which had been declared as business receipts by the assessee. However, the deduction under section 80IA of the Act had not been allowed on such sales tax subsidy by the Assessing Officer by applying the ratio laid down by the Hon'ble Supreme Court in CIT Vs. Sterling Foods (supra). It was further contended by him that in the case of the assessee, there was only one unit producing electricity through two w....
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....eme was given under prescribed conditions. One of the conditions was that the wind energy generated had to be sold to Maharashtra State Electricity Board at a fixed rate, subject to certain escalations and further, the assessee had to obtain 12% plant load factor and in the year, in which it was not so obtained, the assessee was not entitled to the sales tax benefit. The said benefit was available up to an amount of qualifying investment in plant and machinery, new buildings, technical development, designing, etc. Admittedly, the assessee had qualified the conditions of the scheme and was given the aforesaid sales tax subsidy. The claim of the assessee before the authorities below was that the said sales tax benefit availed by the assessee is in inextricably linked to the industrial undertaking carrying on the activity of wind generation energy. Since it is directly linked to the manufacturing of wind energy and was also derived from carrying on of industrial activity of wind energy, it was entitled to the claim of deduction under section 80IA of the Act on such sales tax subsidy. 19. The Pune Bench of the Tribunal in Rasiklal M. Dhariwal (HUF) Vs. DCIT (supra) had considered th....
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....R 84 . It was there held that the expression 'attributable', was wider in import than the expression 'derived from'. The expression of wider import, namely, 'attributable to', was used when the Legislature intended to cover receipts from sources other than the actual conduct of the business. The Division Bench of the High Court observed that to obtain the benefit of section 80HH the assessee had to establish that the profits and gains were derived from its industrial undertaking and it was just not sufficient that a commercial connection was established between the profits eared and the industrial undertaking. The industrial undertaking itself had to be the source of the profit. The business of the industrial undertaking had directly to yield that profit. The industrial undertaking had the direct source of that profit and not a means to earn any other profit. Reference was also made to the meaning of the word 'source', and it was held that the import entitlements that the assessee had earned were awarded by the Central Government under the Scheme to encourage exports. The source referable to the profits and gains arising out of the sale proceeds of the import entitlement was, t....
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....see was on the ratio laid down by the Hon'ble Delhi High Court in CIT Vs. Koshika Telecom Ltd. (supra), where the issue was whether the income in the nature of interest from deposits was from business income or other sources. The Hon'ble Delhi High Court held that where the deposits made by the assessee were inextricably linked to the business of the assessee, the income derived on such deposits could not be treated as income from other sources. The said ratio does not help the assessee vis-à-vis the claim of deduction under section 80IA of the Act. 24. Another reliance placed upon by the learned Authorized Representative for the assessee was on the ratio laid down by Hon'ble Gauhati High Court in CIT Vs. Meghalaya Steels Ltd. (supra), wherein the Hon'ble High Court held that the transport subsidy, power subsidy, interest subsidy and insurance subsidy reduced the cost of production of an industrial undertaking and since there was first degree nexus between the said subsidies and the profits and gains derived by an industrial undertaking, therefore, it was entitled to the deduction under section 80IB / 80IC of the Act in respect of the said subsidies so received. The propo....
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....ibunal in assessee's own case in ITA No.2227/PN/2013 relating to assessment year 2008- 09, wherein the Tribunal vide order dated 31.10.2014 had held the assessee to be entitled to the claim of deduction under section 80IA of the Act at the exercise of an option of 10 consecutive years. Further, the Tribunal also had held that where the losses have been adjusted against the assessable income other than the profits of the industrial undertaking, then the said losses could not be availed to be adjusted against the income arising in the year in which the assessee had shown profits from the said industrial undertaking. 28. The learned Departmental Representative for the Revenue placed reliance on the order of CIT(A). 29. We have heard the rival contentions and perused the record. We find that both the issues raised vide grounds of appeal Nos.3 to 5 were considered by the Tribunal in assessee's own case and it was held as under:- "7. We have heard the rival contentions and perused the record. We find that the issue arising in the present appeal in relation to the provisions of section 80-IA(5) of the Act. Similar issue arose before the Tribunal in the case of Shri Sangram Patil ....
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....f in the A.Y. 2004-05. The A.O., notionally brought forward unabsorbed depreciation for the A.Y. 2003-04 to the impugned A.Y. 2004-05 and denied the claim for deduction made by the assessee u/s. 80IA in respect of the profit earned by it in A.Y. 2004-05. The Ld. A.R. submitted that sub-section (2) of Section 80IA provides an option to the assessee to choose 10 consecutive A.Ys. out of 15 years for claiming the deduction. He submitted that the term initial year in sub-section (5) of 80IA is not defined and is used in contradiction to the words "beginning from the year" used in sub-section (2). He submitted that the assessee chose A.Y. 2004-05 as initial A.Y being the first year in which it claimed deduction u/s. 80IA and therefore, losses/depreciation beginning from A.Y. 2004-05 alone could only be brought forward and set off. Depreciation of the preceding A.Y. 2002-03 could not have been notionally brought forward and set off against profit for the A.Y. 2004- 05. The Ld. A.R. placed heavy reliance on the decision of Hon'ble Madras High Court in the case of Velayudhaswamy Spinning Mills (P) Ltd Vs. ACIT (Supra). He submitted that the decision of Hon'ble Madras High Court will prevai....
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.... that in its recent decision dt. 21st January 2011, the Hyderabad Bench of the Tribunal in the case of Hyderabad Chemical Supplies Ltd. Vs. ACIT (Supra) has also decided an identical decision in favour of the Revenue following the decision of Special Bench of the Tribunal in the case of ACIT Vs. Goldman Shares & Finance (P) Ltd. (Supra). He submitted that the Hyderabad Bench of the Tribunal while deciding the issue has also discussed the decision of Hon'ble Madras High Court in the case of Velayudhaswamy Spinning Mills (P) Ltd Vs. ACIT (Supra). The Ld. D.R. submitted that even in the case of Liberty India Vs. CIT (Supra), the Hon'ble Supreme Court has been pleased to explain the intention of Parliament and scope of deduction u/s. 80IA and 80IB of the Act. The Hon'ble Supreme Court has been pleased to hold that such profits are to be computed as if such eligible business is the only source of income of the assessee. The devices adopted to reduce or inflate the profit of eligible business has got to be rejected in view of the overriding provisions of Sub-section (5) of Section 80IA of the Act. 13. Having been considered the above submissions, we find that the issue raised in Groun....
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....cent decision of Hon'ble jurisdictional Bombay High Court in the case of Commissioner of Central Excise Vs. Valson Dyeing, Bleaching and Printing Works (Supra) wherein the Hon'ble Bombay High Court has been pleased to hold in a case of excise matter that Tribunal is bound by the decision of High Court , even of a different State, so long as there is no contrary decision of any other High Court. The Hon'ble Bombay High Court has been pleased to hold further that the Tribunal had no option but to follow the judgment of the Madras High Court. An authority like an Income Tax Tribunal acting anywhere in the country has to respect the law laid down by the High Court, though of a different State, so long as there is no contrary decision of any other High Court on that question. We thus respectfully following the ratio laid down by the Hon'ble jurisdictional High Court in the case of Commissioner of Central Excise Vs. Vakson Dyeing, Bleaching and Printing Works (Supra) hold that the Tribunal is bound by the decision of the Hon'ble Madras High Court on an identical issue in the case of Velayudhaswamy Spinning Mills (P) Ltd Vs. ACIT (Supra). We thus respectfully following the decision taken ....
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....e decided accordingly and not on the basis of decision of Special Bench of the Tribunal in the case of Goldmine Shares and Finance (P) Ltd. (supra) which was to the contrary. In this context, the Tribunal came to the conclusion that when the assessee exercised option identifying ten consecutive years as contained in sub-section (2) of section 80-IA of the Act, only the losses of the year beginning from such initial assessment year are to be brought forward and set-off while applying the provisions of section 80-IA(5) of the Act and not the losses of earlier years which otherwise were set-off against other income of the assessee. 8. At the time of hearing, the learned DR has not brought to our notice any decision of a High Court contrary to that of the Hon'ble Madras High Court in the case of Velaydhaswamy Spinning Mills (P) Ltd. (supra) on the issue in question. Therefore, we find that the controversy before us is no longer res integra and is in fact covered in favour of the assessee by the decision of Pune Bench of the Tribunal in the case of Serum International Ld. (supra) which has been decided following the decision of the Hon'ble Madras High Court in the case of Velaydhaswa....