Commissioner Of Income Tax v. M/S.g.v.g. Paper Mills Pvt Ltd

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED: 03.07.2018 T.C.A.No.338 of 2018 Commissioner of Income Tax,No.63, Race Course Road,Coimbatore... Appellant/Respondent Vs. M/s.G.V.G. Paper Mills Pvt Ltd.,No.168/2, Sikkandar Batcha Street,Gandhi Nagar, Udumalpet – 642 128... Respondent/Appellant Prayer: Appeal filed under Section 260A of the Income Tax Act,1961, against the order of the Income Tax Appellate Tribunal,'D' Bench, Chennai, dated 28.03.2014 in I.T.A.No.116/Mds/2014preferred against the order dated 30.10.2013 made in AABCG1438Nby the Commissioner of Income Tax (appeals)II Coimbatore againstthe order of the Assistant Commissioner of Income Tax SalaryCircle I, Coimbatore dated 30.12.2011 made in AABCG1438N. (Judgement of this Court was made by S.MANIKUMAR, J.) Challenge in this Tax Appeal, is to an order passed by theIncome Tax Appellate Tribunal in ITA No.116/Mds/2014, dated28.03.2014, by which, the Tribunal dismissed the appealpreferred by the Revenue, against the order of the Commissionerof Income-Tax (Appeals) dated 30.10.2013, for the AssessmentYear 2006-07. 2. Revenue has come up with the above appeal, raising thefollowing substantial question of law:-“Whether the Appellate Tribunal rightin law in holding that assessee is entitledto deduction under Section 80IA withoutsettingoffthelosses/unabsorbeddepreciation pertaining to the windmill, https://hcservices.ecourts.gov.in/hcservices/ which were set off in the earlier yearagainst other business income of theassessee, following the decision of theJurisdiction High Court in the case ofM/s.Velayudhasamy Spinning Mills (340 ITR477) when the same is pending appeal beforethe Hon'ble Supreme Court in SLP Civil 1136of 2011?” 3. As regards substantial question of law, is concerned, itis the fair representation of the learned Senior StandingCounsel for Income Tax Department that this Court has beenconsistently following the decision in M/s.VelayudhaswamySpinning Mills (P) Ltd., v. Assistant Commissioner of Income-Taxreported in 340 ITR 477. He also submitted that challenge tothe same, is pending before the Hon'ble Apex Court in SLPNo.1136 of 2011. 4. Similar to the facts and circumstances of the case, whileadverting to the substantial questions of law raised and afterconsidering the judgment of the Hon'ble Apex Court in LibertyIndia vs. CIT reported in (2009) 225 CTR (SC) 233 : (2009) 28DTR (SC) 73 : (2009) 317 ITR 218 (SC) and the judgment of theRajasthan High Court in CIT vs. Mewar Oil & General Mills Ltd.reported in (2004) 186 CTR (Raj) 141 : (2004) 271 ITR 311 (Raj),a Hon'ble Division Bench of this Court in VelayudhaswamySpinning Mills Pvt. Ltd.,'s case (stated supra), held that oncethe losses and other deductions are set off against the incomeof the assessee in the previous year, it should not be re-openedagain, for the purpose of computation of current year income,under Section 80-I and 80-IA of the Act. 5. Velayudhaswamy Spinning Mills Pvt. Ltd.,'s case (statedsupra), has been followed in CIT v. R.Yuvaraj reported in [2015]57 TAXMANN.COM 252 (Madras), wherein, it is held that though itis contended that SLP filed against the above reported judgment,is pending on the file of the Hon'ble Supreme Court, the effectof the same, would not amount to reversal or erase the dictum. 6. Material on record discloses that while confirming theorder of the Commissioner of Income-Tax (Appeal), the Income-TaxAppellate Tribunal, at paragraph Nos.6 and 7 held as follows:"6. Aggrieved, the assessee preferredan appeal. In the grounds raised before theCIT(A), he pleaded three folded avermentsi.e. reopening was not sustainable, it isentitled for deduction under Section 80IAand the issue was covered by the order ofthe 'Tribunal' in assessment years 2004-05and 2005-2006. We find that the CIT(A) has https://hcservices.ecourts.gov.in/hcservices/ agreed to assessee's latter arguments byobserving as follows: 6. Material on record discloses that while confirming theorder of the Commissioner of Income-Tax (Appeal), the Income-TaxAppellate Tribunal, at paragraph Nos.6 and 7 held as follows:"6. Aggrieved, the assessee preferredan appeal. In the grounds raised before theCIT(A), he pleaded three folded avermentsi.e. reopening was not sustainable, it isentitled for deduction under Section 80IAand the issue was covered by the order ofthe 'Tribunal' in assessment years 2004-05and 2005-2006. We find that the CIT(A) has https://hcservices.ecourts.gov.in/hcservices/ agreed to assessee's latter arguments byobserving as follows: “6.0. I have considered thesubmissions of the assessee andthe material available on record.The assessee has raised anobjection regarding the validityof the reopening of the assessmenton the ground that the reopeninghas been made after the lapse of 4years and that there is no failureon the part of the assessee todisclose any material facts. Ongoing through the case records ofthe assessee it is seen that theassessment was competed originallyu/s143(3) on 10.06.2008 andsubsequently reopened u/s 148on30.3.2011.Therefore,thereopening has been done within the4 year limit and the assessee'sobjectionsarefactuallyincorrect. Therefore, this groundis dismissed and the reopening isheld to be in order.6.1. Coming to the merits ofthe case, it is seen that theassessee has several windmilldivisions and in this year whileclaiming deduction u/s 80IA it hasnot set off of the losses fromWind Mill Farm Division IV. TheAssessing Officer's argument isthat the deductions should beclaimed after the set off of theloss from the other wind milldivision, whereas the assessee'sclaim is that the each wind milldivisions is a separate entity byitself and the option of claimingdeduction u/s 80IA lies with theassessee. The assessee has alsoquotedthecaseofSriVelayudhasamy Spinning Mills Pvt.Ltd (231 CTR 368) (Madras)rendered by the jurisdictionalHigh Court. On perusal of thefacts of the case it is seen thatthe assessee is entitled toexercise its option on claiming 80IA deduction in respect ofdifferent wind mill divisions.There is no compulsion in the Actto treat the activity as anaggregateandcommonunit.Further, the decision in the caseof Sri Velayudhasamy SpinningMills Pvt Ltd will apply inrespect of the claim for the setoff of losses. Therefore theassessee's appeal is allowed.” 7. We have heard the Revenue and gonethrough the case file. Admittedly, whilegranting relief to assessee on merits, theCIT(A) accepted its argument that each windmill division is a separate entity is itselfand option of claiming deduction underSection 80IA rests with the assessee. Fromthe statement of facts filed by the Revenue,it is noticed that its mere argument is thatagainst the decision of the Hon'bleJurisdictional High Court, Special LeavePetition before the Apex Court is pending.In our view, merely because the Revenue'sSpecial Leave Petition is pending does notform a valid ground to adopt a differentapproach in the impugned assessment year inabsence of any distinction on facts beingpointed out. In assessment year 2004-05(supra) the issue has travelled upto the'Tribunal' and stands decided in assessee'sfavour. Thus, in the impugned assessmentyear, we adopt consistency and affirm thefindings of the CIT(A) holding the assesseeeligible for deduction under Section 80IA ofthe Act. The ITA No.116/Mds/2014 is dismissed.” 7. Going through the material on record, we are of the viewthat there are no valid grounds to reverse the above said order,stated supra. Question of law raised is answered against theRevenue and in favour of the assessee. https://hcservices.ecourts.gov.in/hcservices/ 8.In the result, the Tax Case Appeal is dismissed at thestage of admission itself. No costs. The ITA No.116/Mds/2014 is dismissed.” 7. Going through the material on record, we are of the viewthat there are no valid grounds to reverse the above said order,stated supra. Question of law raised is answered against theRevenue and in favour of the assessee. https://hcservices.ecourts.gov.in/hcservices/ 8.In the result, the Tax Case Appeal is dismissed at thestage of admission itself. No costs. -s/d- Assistant Registrar(CS-IV) True Copy Sub-Assistant RegistrarkkTo1. The Income Tax Appellate Tribunal, 'D' Bench, Chennai. 2. The Commissioner of Income Tax(Appeals )II Coimbatore.3. The Assistant Commissioner of Income Tax, Salary Circle I Coimbatore.+1 CC to Mr.T.R. Senthil Kumar, Advocate sr 42996.T.C.A.No.338 of 2018SSV(CO)SP(18/07/2018)