The Commissioner Of Income Tax v. M/S. Hinduja Foundries Limited,(Formerly Known As M/S. Ennore Foundries Ltd.),Katthivakkam High Road, Ennore, Chennai - 600 057Pan : Aaas Ce 1078 K . In All Tca

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED : 09.07.2021 CORAMTHE HON'BLE MR. JUSTICE M.DURAISWAMYAND THE HON'BLE MRS.JUSTICE R.HEMALATHA Tax Case Appeal Nos.648 to 650 of 2016 The Commissioner of Income Tax,No.121, Mahatma Gandhi Road,Chennai - 600 034. ... Appellant inall TCAs v. M/s. Hinduja Foundries Limited,(formerly known as M/s. Ennore Foundries Ltd.),Katthivakkam High Road, Ennore, Chennai - 600 057PAN : AAAS CE 1078 K . in all TCAs ... Respondent T.C.A. No. 648/2016 :Appeal preferred under Section 260Aof the Income Tax Act, 1961, against the order of the IncomeTax Appellate Tribunal, Madras, “A” Bench, dated 19.02.2016 inI.T.A.No.1591/Mds/2015 for the Assessment Year 2007-2008. T.C.A. No. 649/2016 :Appeal preferred under Section 260Aof the Income Tax Act, 1961, against the order of the IncomeTax Appellate Tribunal, Madras, “A” Bench, dated 19.02.2016 inI.T.A.No.1592/Mds/2015 for the Assessment Year 2009-2010. T.C.A. No. 650/2016 :Appeal preferred under Section 260Aof the Income Tax Act, 1961, against the order of the IncomeTax Appellate Tribunal, Madras, “A” Bench, dated 19.02.2016 inI.T.A.No.1593/Mds/2015 for the Assessment Year 2010-2011against the order of the Commissioner of Income Tax(A)-6,Chennai-34 in ITA No.127, 128/CIT(A)/2011-12 & ITA No.171 &172/CITA)-6/2013-2014 dated 13.02.2015 for the Assessment Year2007-08, 2009-10 and 2010-11, against the Assessment order ofthe Deputy Commissioner of Income Tax, Company Circle II(I),Chennai, for the Assessment Year 2007-08, 2009-10 and 2010-11dated 30/12/2011. https://hcservices.ecourts.gov.in/hcservices/ For Appellant : Mr.Karthik Ranganathanin all TCAs Senior Standing Counsel For Respondent : Mr.R.Venkat Narayanan in all TCAs for M/s. Subbaraya Aiyar & Padmanabhan COMMON JUDGMENT (Judgment was delivered by M.DURAISWAMY, J.) Challenging the common order passed in I.T.A.Nos.1591/Mds/2015, 1592/Mds/2015 and 1593/Mds/2015 in respect ofthe Assessment Years 2007-2008, 2009-2010 and 2010-2011 onthe file of the Income Tax Appellate Tribunal, Chennai “A”Bench, (for brevity, the Tribunal), the Revenue has filedthe above appeals. 2.1 The assessee is a limited company engaged inthe business of Foundries. The Assessing Officer found thatthe assessee had claimed additional depreciation undersection 32(1)(iia) of the Income Tax Act for the AssessmentYears 2007-2008, 2009-2010 and 2010-2011 on the openingWritten Down Value on the plant and machinery purchasedin the earlier years. The Assessing Officer further observedthat the assessee had claimed the additional depreciation onthe second half of the financial years 2005-06, 2007-08 and2008-09 @ 10% on these plant and machineries and the remaining10% in the subsequent financial years relevant to theassessment years in question. As the additional depreciationis allowable only in the year of purchasing the new plant andmachinery, the Assessing Officer rejected the assessee's claimof additional depreciation on the brought forward opening WDVand added the same to the total income of the assessee. 2.2 Aggrieved over the order passed by the AssessingOfficer, the assessee preferred an appeal before theCommissioner of Income Tax(Appeals) and the Commissioner ofIncome Tax dismissed the appeals. Challenging the same,the assessee preferred appeals before the Income TaxAppellate Tribunal, and the Tribunal, by its order dated19.02.2016 allowed the appeals of the assessee.Challenging the order passed by the Income Tax AppellateTribunal, the Revenue has filed the above appeals. 3. The above appeals were admitted on thefollowing substantial questions of law: “(i) Whether on the facts andcircumstances and in law, the ITAT was rightin law in holding that additional depreciationcan be allowed in the next year, in case, thesame cannot be allowed in the earlier year? https://hcservices.ecourts.gov.in/hcservices/ 3. The above appeals were admitted on thefollowing substantial questions of law: “(i) Whether on the facts andcircumstances and in law, the ITAT was rightin law in holding that additional depreciationcan be allowed in the next year, in case, thesame cannot be allowed in the earlier year? https://hcservices.ecourts.gov.in/hcservices/ (ii) Whether on the facts andcircumstances and in law, the ITAT was rightin ignoring the jurisdictional High Court'sdecision in the case of M.M. Forgings Ltd(Reported in349 ITR 673)? (iii) Whether on the facts andcircumstances and in law, the ITAT was rightin ignoring the second provision of Section 32(1), when there are no provisions in thestatute to carry forward the balance additionaldepreciation to the following years?" 3. When the appeals are taken up for hearing, Mr.KarthikRanganathan, learned Senior Standing Counsel appearing for theappellant, fairly submitted that the questions of lawinvolved in the present appeals were already decided againstthe Revenue in the Judgment of the Hon'ble Division Bench ofthis Court dated 18.03.2020 in T.C.A. No 228 of 2011 [M/s.Comstar Automative Technologies Private Ltd., MaraimalaiNagar, Chengalpattu District - v. The Deputy Commissioner ofIncome Tax Company Circle - I (3), Chennai], wherein theHon'ble Division Bench held as follows:- " ................ 26. In the aforesaidJudgment, the reason for such conclusion arrived atby the Hon'ble Apex Court has been explained atpara 17 in unequivocal terms. The Apex Court hasspecifically held that, at the stage of theaggregate of the incomes under other heads, theprovisions for set off and carry forward containedin Sections 70, 72 and 74 of the Act would be apremature for application. The deduction underSection 10A therefore would be prior to thecommencement of the exercise to be undertaken underChapter VI of the Act for arriving at the totalincome of the Assessee from the gross totalincome. Ultimately, the issue has been settled withthe following words of the Hon'ble Apex Court inthe said decision "the stage of deduction would bewhile computing the gross total income of theeligible undertaking under Chapter IV of the Actand not at the stage of computation of the totalincome under Chapter VI." 27. Therefore the law has been settled by thesaid decision of the Hon'ble Apex Court, where inclear terms, it has been held that, the deductionseither under Section 10A or 10B would be made whilecomputing the gross total income of the eligibleundertaking (like the Assessee) under Chapter IV ofthe Act and not at the stage of computation of thetotal income under Chapter VI of the Act. https://hcservices.ecourts.gov.in/hcservices/ 28. Here in the case in hand, the total income was first arrived at by the Revenue through theAssessing Officer in the Assessment Order bycomputing the total income by way of broughtforward or carry forward the depreciation allowanceof the earlier Assessment Years and set off theunabsorbed depreciation first and making the returnNil, thereby leaving the Assessee in a positionwhere it could not claim any deduction underSection 10B as there was no income after set off ofcarry forward depreciation and unabsorbeddepreciation from earlier years. 29. This method of computing the income in thepresent case made by the Revenue is totally againstthe said law as has been declared by the Hon'bleApex Court in the aforesaid decision inCommissioner of Income-tax v. Yokogawa India Ltd.,(cited supra). 30. Therefore we have no hesitation to holdthat, the decision of the ITAT, which is impugnedherein, would not stand in the legal scrutiny, inview of the law having been declared by the Hon'bleApex Court. Therefore, we are of the view that, theSubstantial Question of Law raised in this Appealis covered by the said decision, therefore it canbe answered accordingly. 29. This method of computing the income in thepresent case made by the Revenue is totally againstthe said law as has been declared by the Hon'bleApex Court in the aforesaid decision inCommissioner of Income-tax v. Yokogawa India Ltd.,(cited supra). 30. Therefore we have no hesitation to holdthat, the decision of the ITAT, which is impugnedherein, would not stand in the legal scrutiny, inview of the law having been declared by the Hon'bleApex Court. Therefore, we are of the view that, theSubstantial Question of Law raised in this Appealis covered by the said decision, therefore it canbe answered accordingly. 31. In the result, the Appeal is allowed andthe Substantial Question of Law raised in thisAppeal is answered in favour of the Assessee andagainst the Revenue. There shall be however noorder as to costs. " 4. The learned Senior Standing Counsel appearing for theappellant further submitted that following the Judgment dated18.03.2020 made in T.C.A. No 228 of 2011, the DivisionBench of this Court already decided the questions of lawagainst the Revenue by its Judgement dated 01.04.2021 madein T.C.A.Nos.1101 & 1102 of 2015 [The Commissioner of IncomeTax, Chennai. v. M/s. Caterpillar India Pvt. Limited,Chennai] and dismissed the appeals. 5. Mr.R.Venkat Narayanan, learned counsel appearing forthe respondent submitted that in view of the ratio laid downby the Hon'ble Division Bench of this court in T.C.A. No 228of 2011 [cited supra] and the Judgement made inT.C.A.Nos.1101 & 1102 of 2015 [cited supra], cited supra, thequestions of law may be decided against the revenue and theappeals may be dismissed. 6. In view of the submissions made by the learned counselhttps://hcservices.ecourts.gov.in/hcservices/on either side, following the Judgment dated 18.03.2020 made in T.C.A. No 228 of 2011 [cited supra] and the Judgementdated 01.04.2021 made in T.C.A.Nos.1101 & 1102 of 2015[cited supra], the questions of law are decided againstthe revenue and in favour of the assessee. Accordingly, theTax Case Appeals are dismissed. No costs. Sd/-Assistant Registrar(CS-IX) //True copy// Sub Assistant Registrar RjTo1. The Registrar, The Income Tax Appellate Tribunal, Chennai “A” Bench 2. The Deputy Commissioner of Income Tax, Company Circle II(I), Chennai.3. The Commissioner of Income Tax(A)-6, No.121, Mahatma Gandhi Road, Nungambakka, Chennai-34. +1cc to M/s. Subbaraya Aiyar, Advocate SR.No.32216 Tax Case Appeal Nos.648 to 650 of 2016 PPA(CO)GMY(02/08/2021)