Txa18,19-16 v. Txa18,19-16

1 Txa18,19-16 IN THE HIGH COURT OF BOMBAY AT GOA TAX APPEALS NO. 18 & 19 OF 2016 The Principal Commissioner of Income Tax, having Office at Aayakar Bhavan, Patto Plaza, Panaji, Goa. …..... Appellant. V/s. M/s. Chowgule & Company Pvt. Ltd., Chowgule House, Mormugao Harbour, Goa 403803 PAN …..... Respondent. Ms. Asha Desai, Advocate for the Appellant. Mr. Mihir Naniwadekar, and Mr. Purushottam R. Karpe, Advocates forthe Respondent. CORAM :- F.M. REIS & NUTAN D. SARDESSAI, JJ. Date : - 30 MARCH 2016. ORAL ORDER : (PER F.M. REIS, J.) Heard Ms. Asha Desai, learned Counsel appearing for the appellant and Mr. Mihir Naniwadekar, learned Counsel appearing forthe respondent. 2 Txa18,19-16 2.The above appeal challenges the orders passed by theAuthorities below, whereby additional depreciation under Section32(1)(iia) of the Income Tax Act, came to be allowed though therespondents/assessees were carrying out processing of iron ore. 3.Ms. Asha Desai, learned Counsel appearing for theappellant submits that such activities cannot be considered to be“production” as, according to her, the respondent is carrying out onlyprocessing and not extraction of iron ore. The learned Counsel has,thereafter, taken us through the findings of the Assessing Officer topoint out that the explanation given by the respondent was notaccepted as the respondents were carrying out processing activities.The learned Counsel has, thereafter, pointed out that as there is nomaterial on record to suggest that the respondents were carrying outextraction of iron ore, there is no question of allowing any additionaldepreciation for the equipments used for such purpose in terms of theprovisions of the Income Tax Act. The learned Counsel, as such,submits that there are substantial questions of law which arise forconsideration in the present appeal. On the other hand, Mr. Mihir Naniwadekar, learned 3 Txa18,19-16 Counsel appearing for the respondent, has pointed out that the ordersof the learned Income Tax Appellate Tribunal (ITAT), as well as theCommissioner of Income Tax (Appeals) clearly point out thatadditional depreciation was allowed to the respondent for the previousAssessment Years by the ITAT on the ground that therespondent/assessee was carrying out activities of extraction, as well asprocessing of iron ore. The learned Counsel further points out that assuch, it is late in the day for the appellant to now contend that therespondents were not carrying out extraction of iron ore andconsequently, not doing any production activities. The learned Counselfurther submits that this aspect is no longer res integra in view of theJudgment of this Court reported in [2014] 47 taxmann.com 21(Bombay) in the case of Commissioner of Income-tax, Goa vs.Salgaonkar & Brothers (P.) Ltd., wherein relying upon a Judgment ofthe Apex Court in the case of CIT Vs. Sesa Goa Ltd., reported in[2005] 142 Taxman 16, this Court has taken a view that additionaldepreciation is permitted in terms of Section 32(1)(iia) of the IncomeTax Act when the assessee is carrying out extraction and processing ofiron ore activities. The learned Counsel, as such, submits that there areno substantial questions of law which arise in the present appeal. 4 Txa18,19-16 4 Txa18,19-16 5.We have considered the submissions of the learnedCounsel and we have also gone through the record. On perusal of theorder passed by the CIT(A) we find that it is clearly noted therein thatthe ITAT while allowing the additional depreciation for theAssessment Year 2002-03 had clearly considered that the respondent/assessee was engaged in the business of extraction and processing ofiron ore. It is also not in dispute that even for the relevant AssessmentYears 2006-07 and 2007-08, the same activities were being carried outby the respondents/assessees. In such circumstances, the contention ofMs. Asha Desai, learned Counsel appearing for the appellant that therespondent/assessee were carrying out only processing of the iron oreand not carrying out extraction and processing of the iron ore cannotbe accepted. 6.In the case of Commissioner of Income-tax, Goa vs. Salgaonkar & Brothers (P.) Ltd., (supra), wherein one of us (F.M.Reis, J.) was a party, this Court has observed at para 7, thus : “ 7. Considering the said observations, as it is notdisputed by the appellant that the respondents areengaged in the business of processing of iron ore in theplant and generation of windmill energy which is heldto be a manufacturing activity within the said provisionof Section 32(1)(iia) of the Income Tax Act, the 5 Txa18,19-16 observations of the Apex Court in the decision citedsupra, are thus clearly applicable to the facts of thepresent case. The ITAT in the impugned order dated 8thAugust, 2013 has rightly observed at para 8 thus : “8. We are of the opinion that the AO hasexamined the claim of assessee regardingadditional depreciation on machinery andwindmill and allowed the claim in the yearunder consideration. We are of the opinion thatthe ITO acted in accordance with the law andmakes an assessment the same cannot bebranded as erroneous by CIT simply becauseaccording to him the order have been notwritten elaborately. This view is also supportedby the decision of Bombay High Court in thecase of Gabriel Indian Limited 203 ITR 108. Weare also of a view that when AO has made theinquiry and allowed the additional depreciationon machinery and windmill. An order cannot betermed as erroneous unless it is not inaccordance with the law. We find that assesseeis entitle to additional depreciation onmachinery as per the decision of Hon'bleSupreme Court in the case of CIT vs. Sesa GoaLtd, 271 ITR 331 as well as assessee is entitleadditional depreciation on windmill operation asper the decision of Madras High Court in thecase of CIT vs. V T M Limited, 319 ITR 336.When AO has taken one of the possible view thepower of revision u/s. 263 cannot be exercised.This view is supported by the decision ofHon'ble Supreme Court in the case of Max IndiaLtd, 295 ITR 282. In view of these decisions weallow the appeal of the assessee in the yearunder consideration.” Taking note of the said observations and the undisputed facts in the 6 Txa18,19-16 present case, we find that the substantial questions of law proposed bythe appellant would no longer survive for the reasons recorded in thecase of Commissioner of Income-tax, Goa vs. Salgaonkar & Brothers(P.) Ltd., (supra). We find that there are no substantial questions of lawwhich arise in the appeal in terms of the provisions of the Income TaxAct. Consequently, the appeal stands rejected. NUTAN D. SARDESSAI, J. F.M. REIS, J. ssm.