The Commissioner Of Income Tax -1.Coimbatore v. M/S. Elgi Rubber Co Ltd.,(Formerly Known As Elgi Tread India Ltd.)

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATE: 24.02.2021 CORAM: THE HON'BLE MR. JUSTICE M.DURAISWAMY AND THE HON'BLE MRS.JUSTICE T.V.THAMILSELVI T.C.A.No. 393 of 2011 The Commissioner of Income Tax -1.Coimbatore ...Appellant v. M/s. Elgi Rubber Co Ltd.,(Formerly known as Elgi Tread India Ltd.),2000, Trichy Road,Singanallur, Coimbatore 641 005.PAN No. ...Respondent Appeal preferred under Section 260A of the Income Tax Act,1961, against the order of the Income Tax Appellate Tribunal,Madras, "C" Bench, dated 11.02.2011 in I.T.A.No.1568/Mds/2010for the Assessment Year 2007-08. As against the order of the Income Tax AppellateTribunal C-Bench, Chennai dated 11/02/2011 in ITA.No.1567-8; As against the Order of the Commissioner of Income Tax(Appeals)-I, Coimbatore dated 14/07/2010 in Appeal No.245/09-10;and As against the proceedings of the AssistantCommissioner of Income Tax Circle-1(2), Coimbatore for theAssessment year 2007-2008 wide PAN No. . For Appellant : Mrs. K.G. Usha Rani Standing Counsel For Respondent : Mr. M.P. Senthil Kumar JUDGMENT (Judgment was delivered by M. DURAISWAMY, J.) Challenging the order passed in I.T.A.No.1568/Mds/2010 inrespect of the Assessment Year 2007-08 on the file of theIncome Tax Appellate Tribunal, Chennai, ''C'' Bench (forbrevity, the Tribunal), the Revenue has filed the above appeal. 2.1 The Assessing Officer while completing the assessmenthas restricted the assessee's claim for depreciation onstraight line method to 7.69% as per Appendix-1A read with Rule5(1A) of Income Tax Rules on the ground that the assessee hadnot exercised the option under section Proviso to Rule 5(1A) ofthe Incomes Tax Rules for claiming depreciation at a higherrate, in a separate form. 2.2 Against the said order, the assessee preferred anappeal before the Commissioner of Income Tax (Appeals) and theCommissioner of Income Tax (Appeals) allowed the depreciationclaimed by the assessee on account of wind mill and deleted thedisallownace made by the Assessing Officer. Against the saidorder, the Revenue preferred an appeal before the Income TaxAppellate Tribunal and the Tribunal dismissed the appeal. TheAssessing Officer also rejected the claim for deduction undersection 801A on wind mills, since the loss incurred in one windmill, if set off against the profit of another wind mill,resulted in a negative figure. More over, the assessee did notmaintain separate sets of accounts for each undertaking asrequired under section 801A(7) and Rule 18BB(2). 2.3Against the said order, the assessee preferred anappeal before the Commissioner of Income Tax (Appeals)and the Commissioner of Income Tax (Appeals) confirmedthe order of the Assessing Officer disallowing thedepreciation at the higher rate of 80%. The said orderwas challenged by the assessee before the Income TaxAppellate Tribunal and the Tribunal following thedecision reported in (2019) 412 ITR 69 (Mad)[Commissioner of Income Tax, Coimbatore v. Bannari AmmanSugars Limited] held that the assessee is eligible fordeduction under section 80-1A on generation of powerwhether used for captive consumption or otherwise, bytreating each wind mill a separate unit. Against thesaid order, the Revenue has filed the above appeal. 3.The appeal was admitted on 28.09.2011 on the followingsubstantial questions of law: “(i) Whether on the facts and circumstancesof the case, the Tribunal was right in law inholding that the assessee have satisfied therequirement of Second Proviso to Rule 5(1A) ofthe Income Tax Rules, and they are entitled fordepreciation on Wind Mills as per Appendix-I isvalid? 3.The appeal was admitted on 28.09.2011 on the followingsubstantial questions of law: “(i) Whether on the facts and circumstancesof the case, the Tribunal was right in law inholding that the assessee have satisfied therequirement of Second Proviso to Rule 5(1A) ofthe Income Tax Rules, and they are entitled fordepreciation on Wind Mills as per Appendix-I isvalid? (ii)Whether on the facts and circumstances ofthe case, the Tribunal was right in law ingranting 80% of depreciation on WindMills, even though the proviso to section32(1)(i) and Rule 5(1A) clearly stipulatethat only rate of depreciation on costmethod as provided for in Appendix -1A willbe relevant for power generating Machinery?the case, the Tribunal was right in law ingranting 80% of depreciation on WindMills, even though the proviso to section32(1)(i) and Rule 5(1A) clearly stipulatethat only rate of depreciation on costmethod as provided for in Appendix -1A willbe relevant for power generating Machinery? (iii)Whether on the facts and circumstancesof the case, the Tribunal was right in lawin granting depreciation at the rate of 80%on Wind Mills, even though the assessee isentitled 7.69% of the cost and this rateof depreciation has been correctly allowedby the Assessing Officer?of the case, the Tribunal was right in lawin granting depreciation at the rate of 80%on Wind Mills, even though the assessee isentitled 7.69% of the cost and this rateof depreciation has been correctly allowedby the Assessing Officer? (iv)Whether on the facts and circumstances ofthe case, the Tribunal was right in law inholding that, the assessee is entitled forhigher rate of depreciation even though theassessee has filed return on due date andhas also not exercise his optionseparately?the case, the Tribunal was right in law inholding that, the assessee is entitled forhigher rate of depreciation even though theassessee has filed return on due date andhas also not exercise his optionseparately? (v)Whether on the facts and circumstances ofthe case, the Tribunal was right insetting aside the orders of the lowerauthorities and the claim of the assesseethat the deduction under section 801A ofthe act would be available even for acaptive ;unit is valid? (vi) Whether on the facts and circumstancesof the case, the Tribunal was right in law inholding that, each wind mill has to beconsidered as a separate undertaking fordeduction under section 801A of the Act?" 4.Mr. M.P. Senthil Kumar, learned counsel appearing for therespondent submitted that the questions of law Nos. 1 to 4respondent submitted that the questions of law Nos. 1 to 4 https://hcservices.ecourts.gov.in/hcservices/ are covered by the decisions of the Hon'ble DivisionBench of this court reported in (2015) 55 Taxmann.com 428(Madras) [Commissioner of Income Tax, Coimbatore, v. KikaniExports (P) Ltd.] and wherein the Hon'ble Division Benchdecided the questions of law in favour of the assessee. 5.So far as the question of law No.5 is concerned, thelearned counsel appearing for the respondent submitted thatthe said question of law is covered by the decisions ofthe Hon'ble Division Bench of this court reported in(2014) 51 Taxmann.com 183 (Madras) [Commissioner of IncomeTax, Trichy v. Cethar Ltd.] and (2019) 104 Taxmann.com 1(Madras) [Commissioner of Income Tax, Coimbatore v.Bannari AmmanSugars Ltd.,] wherein the respective Hon'bleDivision Bench decided the issue in favour of theassessee. 6.So far as the question of law No.6 is concerned, thelearned counsel appearing for the respondent submitted thatthere is no necessity for deciding this question of lawfor the reason that 5th question of law would cover thesame. 5.So far as the question of law No.5 is concerned, thelearned counsel appearing for the respondent submitted thatthe said question of law is covered by the decisions ofthe Hon'ble Division Bench of this court reported in(2014) 51 Taxmann.com 183 (Madras) [Commissioner of IncomeTax, Trichy v. Cethar Ltd.] and (2019) 104 Taxmann.com 1(Madras) [Commissioner of Income Tax, Coimbatore v.Bannari AmmanSugars Ltd.,] wherein the respective Hon'bleDivision Bench decided the issue in favour of theassessee. 6.So far as the question of law No.6 is concerned, thelearned counsel appearing for the respondent submitted thatthere is no necessity for deciding this question of lawfor the reason that 5th question of law would cover thesame. 7. In these circumstances, following the ratio laid downin the Judgments reported in (2015) 55 Taxmann.com 428 (Madras)[cited supra], (2014) 51 Taxmann.com 183 (Madras) [cited supra.]and (2019) 104 Taxmann.com 1 (Madras) [cited supra], we decidethe questions of law Nos. 1 to 5 in favour of the assessee.Since the 5th question of law covers the 6th question of laws,we are not giving any separate finding with regard to the 6thquestion of law In these circumstances, the appeal is liableto be dismissed. Accordingly, the same is dismissed. Nocosts. Sd/- Assistant Registrar(CS V) Rj //True Copy// Sub Assistant Registrar To 1. The Commissioner of Income Tax(Appeals-I), Coimbatore. Coimbatore. 2. The Income Tax Appellate Tribunal, Chennai, ''C'' Bench. 3. The Assistant Commissioner of Income Tax Circle-1(2), Coimbatore. +1cc to Mr.T.R.Senthil Kumar, Advocate, Sr.11075.+1cc to Mr.M.P.Senthil Kumar, Advocate, Sr.11305. T.C.A.No. 393 of 2011 MGR[co]NSK 26/07/2021