Commissioner Of Income Tax, Madurai v. M/S. Vtm Limited

Date:- 08.09.2009 Coram The Honourable Mr. Justice F.M. IBRAHIM KALIFULLA and The Honourable Mrs. Justice R. BANUMATHI T.C. (A) No.881 of 2009 Commissioner of Income Tax,Madurai. ... Appellant ..vs.. M/s. VTM Limited ... Respondent Tax Case Appeal filed against the order dated 13.2.2009 passed by the Income Tax AppellateTribunal, Madras 'B' Bench in ITA No.661/Mds/2008. For Appellant : Ms. Pushya Sitaraman JUDGMENT (Judgment was delivered by F.M. IBRAHIM KALIFULLA, J.) The Revenue has come forward with this appeal, raising the following substantial questions of law: "(i) Whether on the facts and circumstances of the case, the Tribunal was right in allowing the claimof additional depreciation on windmill u/s 32(1)(iia)? (ii) Whether on the facts and circumstances of the case, the Tribunal was right in holding thatgeneration of power by windmill would amount to manufacture or production of any article orthing?" 2. We heard Ms. Pushya Sitaraman, learned Standing Counsel appearing for the appellant. Thelearned counsel in his submissions contended that the Tribunal under similar circumstances earlierdisallowed the additional depreciation claimed under Section 32(1)(iia) of the Income Tax Act,whereas by the impugned order, the Tribunal has taken a diplomatic opposite view and on thisground itself the order is liable to be set aside. The learned counsel then contended that theadditional depreciation was claimed on the setting up of wind mills for generation of power andinasmuch as the assessee is only engaged in the manufacture of textile goods, the setting up of awind mill has absolutely no connection for the manufacture of textile goods, which is the powerindustry and therefore, the assessee was not entitled to claim the additional depreciation as allowedunder Section 32(1)(iia) of the Act. 3. We are not in a position to appreciate either of the contentions of the learned counsel for thepetitioner. As far as the first contention is concerned, when the Tribunal by the impugned order hasapplied Section 32(1)(iia) of the Act, to the facts involved in the case of the assessee and has foundthat the assessee is entitled for the additional depreciation claimed under the said provision, itcannot be held that simply because Co-ordinate Bench of the Tribunal had earlier taken a differentview, the Tribunal on this occasion also ought to have followed the same. When we find that theTribunal has applied the law correctly in the impugned order, there is no gain saying that there wasan earlier order by the Co-ordinate Bench and therefore, for that reason, this time also the Tribunalshould have blindly followed its own earlier decision even if such earlier decision did not reflect thecorrect position of the law. 4. As far as the contention based on Section 32(1)(iia) of the Act, is concerned, the assessment yearpertains to 2005-2006. The provision, which is relevant for our purpose, reads as under: (iia) in the case of any new machinery or plant (other than ships and aircraft), which has beenacquired and installed after the 31st day of March, 2002, by an assessee engaged in the business ofmanufacture or production of any article or thing, a further sum equal to fifteen per cent of theactual cost of such machinery or plant shall be allowed as deduction under clause (ii): Provided that such further deduction of fifteen per cent shall be allowed to:- (A) a new industrial undertaking during any previous year in which such undertaking begins tomanufacture or produce any article or thing on or after the 1st day of April 2002; or (B) any industrial undertaking existing before the 1st day of April 2002, during any previous year inwhich it achieves the substantial expansion by way of increase in installed capacity by not less thanten per cent." Provided that such further deduction of fifteen per cent shall be allowed to:- (A) a new industrial undertaking during any previous year in which such undertaking begins tomanufacture or produce any article or thing on or after the 1st day of April 2002; or (B) any industrial undertaking existing before the 1st day of April 2002, during any previous year inwhich it achieves the substantial expansion by way of increase in installed capacity by not less thanten per cent." 5. In the case on hand, the assessee is stated to have set up a wind mill at a cost of Rs.5,85,60,000/-It is true that the assessee is a company engaged in the business of manufacture of textile goods. Asfar as application of Section 32(1)(iia) of the Act, is concerned, what is required to be satisfied inorder to claim the additional depreciation is that the setting up of a new machinery or plant shouldhave been acquired and installed after 31st March 2002 by an assessee, who was already engaged inthe business of manufacture or production of any article or thing. The said provision does not statethat the setting up of a new machinery or plant, which was acquired and installed upto 31.03.2002should have any operational connectivity to the article or thing that was already being manufacturedby the assessee. Therefore, the contention that the setting up of a wind mill has nothing to do withthe power industry, namely, manufacture of oil seeds etc. is totally not germane to the specificprovision contained in Section 32(1)(iia) of the Act. 6. In such circumstances, we are not able to appreciate the contention of the learned standingcounsel for the appellant on the ground that the order of the Commissioner of Income-tax (Appeals)as confirmed by the Tribunal should be interfered with. It cannot also be said that setting up of awind mill will not fall within the expression setting up of a new machinery or plant. We do not findany error in the conclusion of the Tribunal in confirming the order of the Commissioner of Income-tax (Appeals). We, therefore, do not find any question of law much less substantial questionof law to entertain this appeal. The appeal fails and the same is dismissed. No costs. ssa. To The Commissioner of Income Tax,Madurai