TMI Blog2009 (11) TMI 556X X X X Extracts X X X X X X X X Extracts X X X X ..... on once exercised shall be final and shall apply to all the subsequent assessment years, then for the subsequent years there is no requirement of exercising any separate option. - appeals have satisfied the requirement of second proviso to r. 5(1A) - Issue is decided in favour of assessee. - - - - - Dated:- 20-11-2009 - Member(s) : N. BARATHVAJA SANKAR., VIJAY PAL RAO. ORDER-BY THE BENCH: These appeals by the four assessees are directed against different orders of CIT(A) for the respective assessment years arising from assessment orders under s. 143(3) r/w s. 147 of IT Act. Since the appeals are from same group of asses sees and common issues are raised, they are clubbed together, heard together and disposed of by this composite order. The assessees in these appeals have raised various grounds. However only two common issues arise in these appeals which are as under: "(i) Whether the CIT(A) is justified in holding that the reopening of assessment is legal and valid? (ii) Whether the CIT(A) is justified in deleting the denial of depreciation @ 80 per cent on windmill on the ground that the assessees did not exercise option as per second proviso to r. 5(1A) bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sallowed the claim of 80 per cent depreciation in windmill and allowed depreciation on windmill at 7.69 per cent of actual cost applying r. 5(1A), the rate of depreciation admissible vide Appendix 1A of IT Rules. On appeal the CIT(A) confirmed the orders of AO for disallowing the depreciation at higher rate of 80 per cent. 5. Before us the learned counsel for the assessee had submitted that windmill is specified as energy saving device being 'G' at S. No. (xiii) in Appendix providing the rate of depreciation and therefore the rates under Appendix 1A-a general rate cannot prevail over the specified rate under Appendix 1 in respect of renewal energy devices. He has further submitted that as per the provisions of s. 32(1)(i) read with relevant rules and Appendix of depreciation, it is clear that where the legislature treats a particular class of assets differently or raised under a generic, the scope for bringing that specific class under the generic description for the purpose of allowing depreciation is not permissible. He has thus stressed his point that when there is no doubt about the windmills engaged in generation of power, the rate prescribed in Appendix 1 would be applicabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nocent assessees even otherwise when the assessee fulfils the requirement provided in r. 5(1A). He has again pointed out that there is no prescribed form or method for intimation of exercise of option given in the statute or under the Rules in this respect which clearly shows that this requirement is not mandatory and the claim made by the assessee in the returns of income and also the relevant record showing the claim of the assessee filed along with return of income fulfil the requirement of second proviso of r. 5(1A) of the IT Rules. The assessee applied the rate of depreciation on windmill as provided in Appendix 1 and determined their liability for payment of advance tax which is self-assessment. Therefore at the time of paying the advance tax it would be treated as exercising of option in respect of depreciation claimed by the assessees. To support this contention the learned counsel for the assessees referred and relied upon the decision of the Hon'ble jurisdictional High Court in the case of Asstt. CIT vs. A.R. Enterprises (2005) 194 CTR (Mad) 44 : (2005) 274 ITR 110 (Mad). He has also referred and relied upon the decision of the Delhi Benches of the Tribunal in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undertaking specified under s. 32(1)(i) may be permitted to avail depreciation at normal rates under sub-r. (1) r/w Appendix 1, at the option of the assessee, provided such option is exercised before the due date for furnishing the return of income under s. 139(1) of the IT Act, 1961." (i) Since the assessee has not exercised the option as required by the rules before the due date for submission of the return of income under s. 139(1), the assessee is not entitled for depreciation on windmills @ 80 per cent. The meaning of "before" as per P. Ramanathan Iyer Law Lexicon is as follows: 'When used as a preposition, it does not indicate a period of time as do the preposition for, during and throughout, but merely an event or act preceding any time or earlier than or previously the time mentioned.' (ii) When the legislature uses certain words, in its wisdom, the same cannot be questioned because it is a prerogative of the legislature to frame the law. (b) The assessee tried to compare his case with a trust case where Form No. 10 is to be filed for spending certain amount during the assessment year. The words used in ss. 11, 12 and ss. 80 and 44AB report are 'along with' where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ." In view of the above he contended that the assessee is not entitled for depreciation @ 80 per cent since it has not complied with the provisions of exercising its option for claiming the depreciation @ 80 per cent. 7. We have considered the rival contentions, relevant record and various decisions relied upon by both the parties. The undisputed factual position emerging out of the record is that in the case of first assessee in ITA Nos. 826 and 827 of 2009 the return of income for the asst. yr. 2003-04 was filed on due date but the return of income for 2005-06 was filed after the due date as prescribed under s. 139(1) of IT Act. Similarly, in the case of the second assessee in ITA Nos. 828 and 829 of 2009 the return of income for the asst. yr. 2003-04 was filed on due date and for the asst. yr. 2005-06 was filed after due date. In the case of third assessee in ITA No. 832 of 2009 the return of income was filed on due date, In the case of the fourth assessee in ITA Nos. 833 to 836 of 2009 all the returns for the four assessment years were filed on due dates. As far as the entitlement of higher rate of depreciation on windmill as per Appendix 1 to r. 5(1A) is concerned, there i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder obligation to allow the deduction of depreciation as per the provisions of sub-s. (1) of s. 32. Since two rates of depreciation are prescribed as per Appendix 1 as well as Appendix 1A to r. 5 of IT Rules in respect of assets of the undertaking engaged for generation and distribution of power, thus to make it clear and to facilitate the AO has to see which of the rates provided under two different appendices of depreciation shall be allowed, second proviso to r. 5(1A) requires the assessee to exercise its option that depreciation be allowed as per Appendix 1. Though the proviso stipulates that if such option is exercised before the due date of furnishing the return of income under sub-s. (1) of s. 139 of the IT Act, in our view the second proviso to r. 5(1A) is only to facilitate the AO in discharging of its obligation as per Expln. 5 to sub-s. (1) of s. 32 of IT Act so that the depreciation shall be allowed as per the option of the assessee and not on the discretion of the AO. The AO is otherwise under obligation to allow the depreciation but because the depreciation specified under two different Appendices 1 and 1A and the choice is given to the assessee in respect of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of CIT vs. G.R. Govindarajulu Sons Charities, the Hon'ble jurisdictional High Court has held as under at p. 152: "The other contention raised by learned counsel for the appellant is that the assessee failed to exercise the option as contemplated under s. 11 (2) of the Act in a prescribed form, namely, Form No. 10. But the said contention was rightly rejected by both the CIT(A) and the Tribunal. There is no mandatory requirement under s. 11 (1) of the Act requiring the assessee to exercise the option when he seeks relief under s. 11(1) of the Act, as it is enough for the assessee to submit a statement along with the return to exercise such option." Further, in the case of CIT vs. Adar Tea Products Co., the Hon'ble jurisdictional High Court has held at p. 46 as under: "The Supreme Court has held that if a provision is made in the context of a law providing for concessional rates of tax for the purpose of encouraging an industrial activity, a liberal construction should be put upon the language of the statute vide CIT vs. Strawboard Manufacturing Co. Ltd. (1989) 77 CTR (SC) 75 : (1989) Supp 2 SCC 523. The items in an exemption notification are to be strictly construed, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n benefits are available. In case of ambiguity the construction which preserves the right to the one which defeats it, has to be preferred. After all, this is a taxing statute which in case of doubt should be interpreted in favour of a taxpayer. Had the legislative intention been to make 31st Dec., 1975, the last day for making the declaration, it could have clearly said so in the proviso. The very fact that the date 1st Jan., 1976, is in terms mentioned indicates that the time-limit was up to that date. That in a given case the word 'before' in the context of the time can be construed as 'not after' is well-settled. [R vs. Arkwright, (1848) 12 QB 960]. This Court in the case of Premchand Nathmal Kothari vs. Kisanlal Bachharaj Vyas AIR 1976 Bom 82, had read the word 'before' in s. 3 of the Maharashtra (Vidarbha Region) Agricultural Debtors' Relief Act, 1969, as 'upto'." From the above-mentioned decisions, it is clear that the word 'before' would have to be construed as upto or not after. The Hon'ble Bombay High Court has specifically referred to provisions of s. 139 of the Act while explaining the expression of the word 'before'. Therefore we hold that the option exercised by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med the depreciation as per Appendix 1 which was accepted and allowed by the AO by passing a scrutiny assessment order under s. 143(3) of 31st March, 2005, we note that the AO has in para No. 7 of the said assessment order found the depreciation claimed by the assessee to be correct. If that is so, then there is no requirement of further exercising of the option in subsequent years. Accordingly there is no substance in the stand taken by the Revenue that the assessee has not exercised the option before the due date of filing the return of income. 11. In the case of the third assessee in ITA No. 832 of 2009, the return of income was filed on due date. Therefore the same is within the period prescribed under second proviso to r. 5(1A). In the case of the fourth assessee in ITA Nos. 833 to 836 of 2009 all the returns were filed on due dates. Therefore the assessee has exercised the option well within time. 12. In view of the above discussion we hold that the assessees in all these appeals have satisfied the requirement of second proviso to r. 5(1A) and therefore they are entitled for depreciation on windmills as per Appendix 1. 13. In the result, the appeals of the asses sees ar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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