The Commissioner Of Income Tax v. Pongalur Pioneer Textiles Pvt. Ltd

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 10.11.2014 CORAM THE HON'BLE MR.JUSTICE R.SUDHAKARANDTHE HON'BLE MR.JUSTICE G.M.AKBAR ALI The Commissioner of Income Tax 63, Race Course RoadCoimbatore – 641 018. .. Appellant Vs. Pongalur Pioneer Textiles Pvt. Ltd.No.8, Sundaram Apartments89, Race Course RoadCoimbatore – 641 018.PAN: .. Respondent PRAYER: Appeal under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal 'C' Bench, Chennai, dated 23.5.2014 made in I.T.A.No.2089/Mds/2012 for the assessment year 2005-2006. For Appellant :Mrs.HemalathaStanding Counsel J U D G M E N T (Delivered by R.SUDHAKAR, J.) The Revenue has filed this appeal challenging the order of the Income Tax Appellate Tribunal 'C' Bench, Chennai, dated 23.5.2014 made in I.T.A.No.2089/Mds/2012 for the assessment year 2005-2006, by raising the following questions of law: (i) Whether under the facts and circumstances of the case, the Income Tax Appellate Tribunal was right in holding that, the assessee has satisfied the requirement of second proviso to Rule 5(1A) of the Income Tax Rules, and they are entitled for depreciation on windmills as per Appendix I is valid? (ii) Whether under the facts and circumstances of the case, the Income Tax Appellate Tribunal was right in law in granting depreciation at 80% on windmills, even though the proviso to section 32(1)(i) and Rule 5(1A) clearly stipulate that only rate of depreciation on the method as provided for in Appendix IA will be relevant for power generating Machinery? (iii) Whether under the facts and circumstances of the case, the Income Tax Appellate Tribunal was right in law in granting depreciation at 80% on windmills, even though the assessee is entitled at the rate of 7.69% of the cost and this rate has correctly been allowed by the assessing officer? (iv) Whether under the facts and circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that the assessee is entitled to higher rate of depreciation even though the assessee had filed return of income within the due date and has also not exercised its option separately? 2. The issue involved in this Tax Case (Appeal) relates to the claim of depreciation by the assessee on the installation of windmill, which according to the Revenue is contrary to Rule 5(1A) of the Income Tax Rules and Appendix 1A. 3. The learned standing counsel appearing for the Revenue submits that the above said issue is covered by a decision of this Court dated 09.09.2014 made in T.C.(A)Nos.330 of 2013 etc. batch. 4. In the above said decision, this Court, following a decision of the Bombay High Court reported in CIT V. Vijaya Hirasa Kalamkar (HUF), [1998] 229 ITR 772, held as follows: "20. A reading of the above-said decision of the Bombay High Court makes it clear that if the assessee exercised the option in terms of second proviso to Rule 5(1A) of the Income Tax Rules at the time of furnishing of return of income, it will suffice and no separate letter or request or intimation with regard to of exercise of option is required. Since the returns are filed in accordance with Section 139(1) of the Income Tax Act and the form prescribed therein make a provision for exercising an option in respect of the claim of depreciation, no separate procedure is required, as contended by the Department. We are in agreement with the reasoning of the Tribunal. 21. Accordingly, the question of law is answered in favour of the assessee and against the Revenue." 5. Following the above said decision of this Court, the substantial questions of law raised are answered in favour of the assessee and against the Revenue and accordingly, this Tax Case (Appeal) stands dismissed. Index:NoInternet:Yessasi (R.S.J.) (G.M.A.J.)10.11.2014 To: 21. Accordingly, the question of law is answered in favour of the assessee and against the Revenue." 5. Following the above said decision of this Court, the substantial questions of law raised are answered in favour of the assessee and against the Revenue and accordingly, this Tax Case (Appeal) stands dismissed. Index:NoInternet:Yessasi (R.S.J.) (G.M.A.J.)10.11.2014 To: 1. The Assistant Registrar,Income Tax Appellate TribunalChennai Bench "C", Chennai.Income Tax Appellate TribunalChennai Bench "C", Chennai. 2. The Secretary, Central Board of Direct Taxes, New Delhi.of Direct Taxes, New Delhi. 3. The Commissioner of Income Tax (Appeals)-I Coimbatore. Coimbatore. 4. The Assistant Commissioner of Income Tax Company Circle-I(1), Coimbatore. Company Circle-I(1), Coimbatore. (5) R.SUDHAKAR,J.and G.M.AKBAR ALI,J. (sasi) T.C.(A).No.874 of 2014