Commissioner Of Income Taxno v. Shri. S.martin355

IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated : 12.1.2016 Coram The Honourable Mr.Justice M.JAICHANDREN and The Honourable Mrs.Justice S.VIMALA Tax Case Appeal No.1228 of 2015--- Commissioner of Income TaxNo.63, Race Course RoadCoimbatore -vs- ...Appellant Shri. S.Martin355-359, Daisy Plaza6[th] Street, GandhipuramCoimbatore – 641 012 ...RespondentTax Case (Appeal) filed under Section 260 A of the IncomeTax Act, 1961 against the order of the Income Tax AppellateTribunal Madras 'C' Bench, dated 31.7.2015 in ITANo.294/Mds/2015. in ITA against the Order dated 12/11/2014 made in Appeal No.448/13-14passed by the Commissioner of Income Tax Appeals-I, Coimbatoreand against the Order dated 18/02/2014 passed by the AdditionalCommissioner of Income Tax Range-I, Coimbatore in AEWPM 3703Qfor the assessment year 2011-12. For appellant : Mr.T.R.Senthil Kumar This Tax Case Appeal has been filed against the order ofthe Income Tax Appellate Tribunal 'C' Bench, Chennai, dated31.7.2015, made in I.T.A.No.294/Mds./2015. https://hcservices.ecourts.gov.in/hcservices/ 2. The brief facts of the case, necessary for the disposalof the appeal, are as follows: 2.1) The assessee, the respondent herein, is an individualhaving income from the sale of lottery tickets, money lendingand also from generating power through windmills. The assesseehad filed its revised return of income, for the assessment year2011-12, on 29.9.2011, declaring a total income ofRs.1,67,28,07,770/-. 2.2. The assessee had claimed a deduction ofRs.6,72,43,719/-, under Section 80IA of the Income Tax Act,1961, (hereinafter referred to as `the Act') on the income fromthe windmill division of the company. The case of the assesseehad been selected for scrutiny assessment and a notice underSection 143(2) of the Act had been issued and served on theassessee. The assessing officer had disallowed Rs.6,72,43,719/-,being the deduction, under Section 80IA of the Act, claimed bythe assessee, holding that the initial assessment year is theyear from which the assessee commences eligible business. Sinceno profits were available for deduction in the financial yearrelevant to the assessment year 2010-11, after notionallybringing forward the unabsorbed depreciation and businesslosses. 2.3. The assessee had claimed 80IA deduction on the basisof the decision of this Court, in Velayudhaswamy Spinning Mills(P) Ltd. Vs. Assistant Commissioner of Income Tax, (231 CTR(Mad.) 368). Challenging the said order, the Revenue had filed aspecial leave petition, which had been admitted by the SupremeCourt, in S.L.P. Civil No.33475 of 2012. 2.4. Aggrieved by the order passed by the assessingofficer, the assessee had filed an appeal before theCommissioner of Income Tax (Appeals). The Commissioner of IncomeTax (Appeals) had held that the issue is covered by the decisionof this Court, in Velayudhaswamy Spinning Mills (P) Ltd. Vs.Assistant Commissioner of Income Tax, (231 CTR (Mad.) 368). Assuch, the claim of the assessee had been allowed. Aggrieved bythe order passed by the Commissioner of Income Tax (Appeals),the Revenue had filed an appeal before the Income Tax AppellateTribunal 'C' Bench, Chennai. The Tribunal, by its impugnedorder, dated 31.7.2015, had dismissed the appeal following thedecision of this Court, in Velayudhaswamy Spinning Mills (P)Ltd. Vs. Assistant Commissioner of Income Tax, (231 CTR (Mad.)368). 3. Challenging the order of the Tribunal, dated 31.7.2015,the Department has filed the present appeal, before this Court,under Section 260A of the Act, raising the following substantialquestions of law. 3. Challenging the order of the Tribunal, dated 31.7.2015,the Department has filed the present appeal, before this Court,under Section 260A of the Act, raising the following substantialquestions of law. "1. Whether under the facts and circumstance ofthe case the Hon'ble Income Tax Appellate Tribunal wasright in law in holding that the assessee is entitledto deduction under Section 80IA without setting offthe losses/unabsorbed depreciation pertaining to thewindmill, which were set off in the earlier yearagainst other business income of the assessee,following the decision of the jurisdiction High Courtin the case of M/s.Velayudhaswamy Spinning Mills (340ITR 477) when the same is pending appeal before theHon'ble Supreme Court in S.L.P.Civil No.33475 of 2012? 2. Whether under the facts and circumstances ofthe case, the Income Tax Appellate Tribunal wascorrect in holding that the initial assessment year inSection 80IA(5) would only mean the year of claim ofdeduction under Section 80IA and not the year ofcommencement of eligible business? 3. Whether on the facts and in the circumstancesof the case, the Tribunal was right in holding thatthe assessee has the option to choose thefirst/initial assessment year of claim for deductionunder Section 80-IA? 4. The learned counsel appearing on behalf of theDepartment had raised the following grounds: "a. The order of the Income Tax AppellateTribunal is erroneous in law and opposed to the factsand circumstances of the case. b. The Income Tax Appellate Tribunal erred inholding that losses and unabsorbed depreciation whichalready stood set off against other income in earlieryears could not be carried forward and set off againstprofits or income of initial/subsequent years inrespect of windmill in computing the deduction underSection 80IA. c. The Income Tax Appellate Tribunal erred inholding that the initial assessment year shall befirst year in which the assessee opts to make theclaim or the sixth year where the assessee had notopted in the earlier years. The Tribunal failed toappreciate that the year of commencement is to beconsidered as the initial assessment year for thepurpose of determining the deduction under Section 80IA. d. The Income Tax Appellate Tribunal failed toappreciate the memorandum explaining the provisions inFinance (No 2) Bill 1980 (123 ITR (St.) 154 alsoexplains that in computing quantum of tax holidayprofits for the unit is to be determined as if suchunits were an independent unit owned by the taxpayer. e. The Income Tax Appellate Tribunal ought tohave appreciated that as per provisions of Section80IA (5) the undertaking eligible for deduction underSection 80IA should be treated as only source ofincome for computing the quantum of deduction. f. The Income Tax Appellate Tribunal erred infollowing the decision of Jurisdictional High Court inthe case of M/s.Vellayuthasamy Spinning Mills when thesame is appeal before the Hon'ble Supreme Court. g. The Income Tax Appellate Tribunal should haveobserved that since sub Section 5 of Section 80IAstarts with a non-obstante clause, the restriction putin sub-section 5 will prevail and deduction under 80IAhas to be restricted accordingly. h. The Income Tax Appellate Tribunal ought tohave appreciated that as per provisions of Section80IA (5) the undertaking eligible for deduction shouldbe treated as only source of income for computing thequantum of deduction.” 5. We have heard the learned the counsel appearing onbehalf of the appellant. We have also perused the recordsavailable before this Court. https://hcservices.ecourts.gov.in/hcservices/ g. The Income Tax Appellate Tribunal should haveobserved that since sub Section 5 of Section 80IAstarts with a non-obstante clause, the restriction putin sub-section 5 will prevail and deduction under 80IAhas to be restricted accordingly. h. The Income Tax Appellate Tribunal ought tohave appreciated that as per provisions of Section80IA (5) the undertaking eligible for deduction shouldbe treated as only source of income for computing thequantum of deduction.” 5. We have heard the learned the counsel appearing onbehalf of the appellant. We have also perused the recordsavailable before this Court. https://hcservices.ecourts.gov.in/hcservices/ 6. It is noted that the facts and circumstances based onwhich the present appeal had arisen are similar to those whichhad already been decided by this court. Further, in a batch ofcases in CIT Vs. Eastman Exports Global Clothing (P) Ltd. [2015]229 Taxman 449/54 Taxmann.com 408 (Madras), this Court hadfollowed the decision rendered in Velayudhaswamy Spinning Mills(P) Ltd. Vs. Assistant Commissioner of Income Tax, (231 CTR(Mad.) 368), and had decided the matter in favour of theassessee and against the Revenue. Taking note of the above saiddecisions, we are constrained to dismiss the present appealfiled by the Revenue, confirming the order passed by theTribunal, dated 31.7.2015. Accordingly, the questions of lawraised in the appeal are answered against the Revenue and infavour of the assessee, for the reasons stated above.Accordingly, the Tax Case Appeal stands dismissed. No costs. -s/d-Assistant Registrar True Copy Sub-Assistant Registrar To 1.The Income Tax Appellate Tribunal Madras 'C' Bench, 2.The Commissioner of Income Tax Appeals-ICoimbatore 3. The Additional Commissioner of Income Tax,Range-I, Coimbatore +1 cc to Mr.T.R.SenthilKumar Advocate sr.2275 Tax Case Appeal No.1228 of 2015 sal(co)aa17/02/2016