Commissioner Of Income Tax, Coimbatore v. M/S.abt Ltd

In the High Court of Judicature at Madras Dated: 27.10.2014 Coram The Honourable Mr.JUSTICE R.SUDHAKARandThe Honourable Mr.JUSTICE R.KARUPPIAH Tax Case (Appeal) No.559 of 2014 Commissioner of Income Tax, Coimbatore..... Appellant Vs. M/s.ABT Ltd.,C/o M/s.Subbaraya Aiyar Padmanabhan & Ramamani, Advocates,75A, Dr.Radhakrishnan Salai,Mylapore, Chennai - 600 004. .... Respondent APPEAL under Section 260A of the Income Tax Act against theorder dated 03.01.2013 made in I.T.A.No.1633/Mds/2011 on the fileof the Income Tax Appellate Tribunal 'B' Bench, Chennai against theorder of the Deputy Commissioner of Income Tax Company I(2)Coimbatore dated 3.12.2010 and made in PAN/GIR No. andagainst the order of the Commissioner of Income Tax (Appeals)-1Coimbatore dated 12.07.2011 and made in Appeal No.240/10-11. For Appellant : Mr.T.R.Senthilkumar Standing counsel for Income Tax J U D G M E N T(Delivered by R.SUDHAKAR,J.) This Tax Case (Appeal) is filed by the Revenue as against theorder of the Income Tax Appellate Tribunal raising the followingsubstantial questions of law: "i) Whether under the facts and circumstances ofthe case, the Income Tax Appellate Tribunal was rightin holding that, the assessee has satisfied therequirement of second proviso to Rule 5(1A) of theIncome Tax Rules, and they are entitled fordepreciation on windmills as per Appendix I is valid? ii) Whether under the facts and circumstances ofthe case, the Income Tax Appellate Tribunal was rightin law in granting depreciation at 80% on windmills,even though the proviso to section 32(1)(i) and Rule 5https://hcservices.ecourts.gov.in/hcservices/(1A) clearly stipulate that only rate of depreciation on the method as provided for in Appendix I A will berelevant for power generating Machinery? iii) Whether under the facts and circumstancesof the case, the Income Tax Appellate Tribunal wasright in law in granting depreciation at 80% onwindmills, even though the assessee is entitled at therate of 7.69% of the cost and this rate has correctlybeen allowed by the assessing officer? iv) Whether under the facts and circumstances ofthe case, the Income Tax Appellate Tribunal was rightin law in holding that the assessee is entitled forhigher rate of depreciation even though the assesseehad filed return of income within the due date and hasalso not exercised its option separately? v) Whether based on the material available beforethe Income Tax Appellate Tribunal, it could have cometo the conclusion that the assessee has explained thecredits to the satisfaction of the assessing officerand therefore the addition under Section 68 is notwarranted?" 2. The issue involved in this Tax Case (Appeal) is two-fold.The first issue relates to the claim of depreciation by theassessee on the installation of windmill, which according to theRevenue is contrary to Rule 5(1A) Appendix 1A of the Income TaxRules. 3. Learned Standing counsel appearing for the Revenue submitsthat the above-said issue is covered by a decision of this Courtdated 09.09.2014 made in T.C.(A)Nos.330 of 2013 etc. batch. 4. In the above-said decision, this Court, following thedecision of the Bombay High Court reported in 229 ITR 772 (CIT V.Vijaya Hirasa Kalamkar (HUF), held as follows: "20. A reading of the above-said decision of theBombay High Court makes it clear that if the assesseeexercised the option in terms of second proviso to Rule 5(1A) of the Income Tax Rules at the time of furnishing ofreturn of income, it will suffice and no separate letteror request or intimation with regard to of exercise ofoption is required. Since the returns are filed inaccordance with Section 139(1) of the Income Tax Act andthe form prescribed therein make a provision forexercising an option in respect of the claim ofdepreciation, no separate procedure is required, ascontended by the Department. We are in agreement withthe reasoning of the Tribunal. "20. A reading of the above-said decision of theBombay High Court makes it clear that if the assesseeexercised the option in terms of second proviso to Rule 5(1A) of the Income Tax Rules at the time of furnishing ofreturn of income, it will suffice and no separate letteror request or intimation with regard to of exercise ofoption is required. Since the returns are filed inaccordance with Section 139(1) of the Income Tax Act andthe form prescribed therein make a provision forexercising an option in respect of the claim ofdepreciation, no separate procedure is required, ascontended by the Department. We are in agreement withthe reasoning of the Tribunal. https://hcservices.ecourts.gov.in/hcservices/ 21. Accordingly, the question of law is answered in 5. Following the above-said decision of this Court,substantial questions of law Nos.1 to 4 are answered in favour ofthe assessee and against the Revenue. 6. The second issue relates to additions made under Section68 of the Income Tax Act on account of unexplained cash credit. Theassessee is a company engaged in the business of parcel service,Maruti dealership and service station, petrol bunk, wind energy andfettling. For the assessment years 2005-06 and 2006-07, theassesseeclaimedtheexpenditureincurredtowardsconstruction/renovation of building on leased premises as revenueexpenditure. The Assessing Officer disallowed the same, butallowed 10% depreciation. Apart from that, the Assessing Officermade additions towards unexplained fixed deposits under Section 68of the Income Tax Act. On appeal, the Commissioner of Income Tax(Appeals), after analysing the documents filed by the assessee,allowed the appeal filed by the assessee, which was confirmed bythe Income Tax Appellate Tribunal. 7. The Tribunal, after perusing the order of the Commissionerof Income Tax (Appeals) agreed with the contention of the assesseeand held in favour of the assessee. For better clarity, therelevant portion of the order of the Tribunal reads as follows: "16. The second ground of appeal of the Revenue iswith regard to addition made under section 69 of theAct on account of unexplained cash credit. A perusalof para 13 of the order of the CIT(A) shows that duringthe course of appellate proceedings, the assessee wasable to produce documents and the details of repaymentmade through cheque. Even the bank confirmations werefiled by the assessee before the CIT(A) showing thatthe cheques issued by the assessee were encashed by therespective parties. The assessee had also furnishedidentity of persons with complete details of addressesand the FD applications showing details. Aftersatisfying himself with the documents, the CIT(A) hasallowed the ground of appeal of the assessee. The DRcould not controvert the findings of the CIT(A) on thisissue. We, therefore, do not see any reason tointerfere with the findings of the CIT(A) on thisissue. No other issue has been raised in this appealof the Revenue. Since both the issues are decidedagainst the Revenue, the appeal of the Revenue for theassessment year 2008-09 is dismissed being devoid ofmerit." 8. We have perused the order of the Commissioner of IncomeTax (Appeals) and that of the Income Tax Appellate Tribunal. Onfacts, it is evident that the Commissioner of Income Tax (Appeals)https://hcservices.ecourts.gov.in/hcservices/has gone into every details of payments and held in favour of the assessee. On the basis of documents and details, which weresupported by records, the identity of the persons, who have enteredinto the transaction, has also been verified and found to becorrect. 9. Being pure question of fact, we do not find any reason tointerfere with the order of the Tribunal. We find no merit in thisTax Case (Appeal). Accordingly, this Tax Case (Appeal) standsdismissed. No costs. 8. We have perused the order of the Commissioner of IncomeTax (Appeals) and that of the Income Tax Appellate Tribunal. Onfacts, it is evident that the Commissioner of Income Tax (Appeals)https://hcservices.ecourts.gov.in/hcservices/has gone into every details of payments and held in favour of the assessee. On the basis of documents and details, which weresupported by records, the identity of the persons, who have enteredinto the transaction, has also been verified and found to becorrect. 9. Being pure question of fact, we do not find any reason tointerfere with the order of the Tribunal. We find no merit in thisTax Case (Appeal). Accordingly, this Tax Case (Appeal) standsdismissed. No costs. Sd/-Assistant Registrar//True Copy//Sub Assistant RegistrarslTo1. The Assistant Registrar, The Income Tax Appellate Tribunal 'B' Bench, III floor, Rajaji Bhavan, Bestent Nagar, Chennai.902. The Commissioner of Income Tax (Appeals)-I, Coimbatore.3. The Deputy Commissioner of Income-tax, Company Circle-I(2), Coimbatore.+ 1 cc to Mr.T.R. Senthilkumar, Advocate Sr.50265T.C.(A) No.559 of 2014UG(CO)Eu 07.11.14