Pandian Chemicals Ltd.17A, Vallabai Roadmadurai – 625 002 v. The Commissioner Of Income Taxmadurai

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 28.1.2015 CORAM THE HON'BLE MR.JUSTICE R.SUDHAKARANDTHE HON'BLE MR.JUSTICE R.KARUPPIAH T.C.(A).Nos.1310 and 1331 of 2007 Tamilnadu Chlorates Ltd.17A, Vallabai RoadMadurai – 625 002... Appellantin TC.1310/2007 Pandian Chemicals Ltd.17A, Vallabai RoadMadurai – 625 002. .. Appellantin TC.1331/2007 Vs. The Commissioner of Income TaxMadurai. .. Respondentin both appeals PRAYER: Appeals under Section 260A of the Income Tax Act,1961 against the orders of the Income Tax AppellateTribunal 'C' Bench, Chennai, dated 17.10.2005 made inI.T.A.No.2183/Mds/2003 and dated 5.10.2005 made inI.T.A.No.2167/Mds/2003 for the assessment year 1999-2000agaist theorder of the Commissioner of Income Tax (Appeals)1 dated 4/9/200 made in ITA.Nos.326/01-02, 325/01-02, forthe Assessment year 1999-2000 against the order of theDeputy Commissioner of Income TAx and Company Circle 1,Madurai dated 29/1/2002 made in PA.Nos.49-000-CN-4430, 49-042-9115, for the Assessment Years 1999-2000 respectively. For Appellant :No appearanceFor Respondent :Mr.M.Swaminathan Standing Counsel for Income Tax. J U D G M E N T(Delivered by R.SUDHAKAR, J.) The assessees have filed these appeals challenging theorders of the Income Tax Appellate Tribunal 'C' Bench, https://hcservices.ecourts.gov.in/hcservices/ Chennai, dated 17.10.2005 made in I.T.A.No.2183/Mds/2003 and dated5.10.2005 made in I.T.A.No.2167/ Mds/2003 for the assessment year1999-2000. 2. The appellant in T.C.(A) No.1310 of 2007 is the sisterconcern of the appellant in T.C.(A) No.1331 of 2007. T.C.(A)No.1310 of 2007 was admitted on the following questions of law: (i)Whether the Tribunal was right in holding thatelectricity generated with the help of windmill byharnessing the wind energy into electricity energywould not amount to production or manufacture andthat electricity so produced was also not an“article” or “thing” as referred in Sec.80HH? (ii)Whether the Tribunal was right in rejecting theappellant's claim based on the decision of theSupreme Court in M.P. Electricity Board (XXV STC1888) that “electricity” produced by windmill was“goods” by relying on the decision of Ferens Vs.O'Brien (11QBD)? (iii)Whether the Tribunal was right in its conclusionthat the assessee did not employ any employeemerely because the appellant shared the expenses onsalary in the windmill unit with its parent company i.e., M/s.Pandian Chemicals Ltd. and hence noteligible to claim deduction under Sec.80HH? (iv)Whether the Tribunal was right in holding that theaction of the Assessing Officer in setting off thecarry forward depreciation against the current profits in determining the available profits of thewindmill division u/s 80HH is covered by thedecision of the Supreme Court in Motilal Pesticides(I) Ltd. v. CIT (243 ITR 26)? T.C.(A) No.1331 of 2007 was admitted on the following questions oflaw: 1. (a) Whether the Tribunal was right in holding thatelectricity generated with the help of windmill byharnessing the wind energy into electricity energy wouldnot amount to production or manufacture and thatelectricity so produced was also not an “article” or“thing” as referred in Sec.80HH? (b) Whether the Tribunal was right in rejecting theappellant's claim based on the decision of the SupremeCourt in M.P. Electricity Board (XXV STC 1888) that 2. 3. 4. “electricity” produced by windmill was “goods” by relyingon the decision of Ferens Vs. O'Brien (11QBD)? (c) Whether the Tribunal was right in its conclusion thatthe assessee did not employ any employee merely becausethe appellant shared the expenses on salary in thewindmill unit with its sister company i.e., M/s.TamilnaduChlorates Ltd. and hence not eligible to claim deductionunder Sec.80HH? (b) Whether the Tribunal was right in rejecting theappellant's claim based on the decision of the SupremeCourt in M.P. Electricity Board (XXV STC 1888) that 2. 3. 4. “electricity” produced by windmill was “goods” by relyingon the decision of Ferens Vs. O'Brien (11QBD)? (c) Whether the Tribunal was right in its conclusion thatthe assessee did not employ any employee merely becausethe appellant shared the expenses on salary in thewindmill unit with its sister company i.e., M/s.TamilnaduChlorates Ltd. and hence not eligible to claim deductionunder Sec.80HH? (d) Whether the Tribunal was right in raising the issue,on its own, as to whether the business of generation ofpower was “industrial undertaking”, when no such issue wasraised by either party, and in deciding the issueimpliedly against the assessee? (e) Whether the Tribunal was right in holding that theaction of the Assessing Officer in setting off the carryforward depreciation against the current profits indetermining the available profits of the windmill divisionu/s 80HH is covered by the decision of the Supreme Courtin Motilal Pesticides (I) Ltd. v. CIT (243 ITR 26)? 3. In the orders under challenge passed by the Tribunal, itfollowedanearlierorderdated6.9.2005passedinI.T.A.No.307/Mds/2000 in the case of the assessee in T.C.(A) No.1310of 2007. Concededly, the said order dated 6.9.2005 passed inI.T.A.No.307/Mds/2000 by the Tribunal was the subject matter ofchallenge before this Court in T.C.(A) Nos.1360 of 2006 and batchcases and this Court, by judgment dated 23.7.2012, consideredidentical questions of law and remanded the matter to the AssessingOfficer for reconsidering the claim of deduction in the light of theprovisions of Section 80IA of the Income Tax Act. 4. It is stated that the learned counsel for the appellant haspassed away. However, the learned Standing Counsel for the revenuefairly states that in the light of the decision of this Court dated23.7.2012 in T.C.(A) Nos.1360 of 2006 and batch cases, these appealsmany also be remanded to the Assessing Officer for considering theclaim of deduction in the light of the provisions of Section 80IA ofthe Act. In such view of the matter, these appeals are allowed and theorders passed by the Tribunal are set aside. The matter is remandedto the Assessing Officer for considering the claim of deduction inthe light of the provisions of Section 80IA of the Act. No costs. sasi -s/d- Assistant Registrar(LA) Dt:6/2/2015 True Copy Sub-Assistant RegistrarTo:1. The Assistant Registrar, Income Tax Appellate Tribunal Chennai Bench "C", Chennai.2. The Secretary, Central Board of Direct Taxes, New Delhi.3. The Commissioner of Income Tax (Appeals) - I Madurai.4. The Deputy Commissioner of Income Tax Company Circle I, Madurai.+ 2ccs to Mr.M.Swaminathan, Sr.Standing Cousnel for Income TAx SR 4287jp(co)prk11/2T.C.(A).Nos.1310 and 1331 of 2007