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M/s Chettinad Cement Corporation Ltd Versus The Asstt. Commissioner of Income-tax /Jt. CIT Company Circle I (3) / Dy. CIT, Large Taxpayer Unit, Chennai and The Dy. Commissioner of Income-tax, Large Taxpayer Unit, Chennai Versus M/s Chettinad Cement Corporation Ltd

2016 (4) TMI 81 - ITAT CHENNAI

Disallowance of deduction u/s 80IA - profit by way of generation of electricity which was actually consumed by the assessee in the production of cement - Held that:- The assessee is eligible for deduction u/s 80IA of the Act even in respect of the power generated and used for captive consumption. By respectfully following the judgment of the Madras High Court in assessee’s own case for assessment year 2001-02, the orders of the lower authorities are set aside and the Assessing Officer is directe .....

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hallenged by the Revenue before this Tribunal. The Tribunal confirmed the order of the CIT(A) wherein additional depreciation was allowed. In view of the above, this Tribunal is of the considered opinion that the assessee is eligible for additional depreciation as claimed - Decided in favour of assessee

Depreciation on goodwill - Held that:- Goodwill is nothing but an intangible asset. Explanation 3 to sec.32 clearly says that intangible assets being know-how, patents, copyrights, tra .....

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red for taxation. Once the advance made by the assessee was subject matter of taxation at the time of provision, the same cannot be added to the total income when it was actually written off. This Tribunal is of the considered opinion that disallowing would amount to double taxation. In view of the above, this Tribunal is of the considered opinion that the CIT(A) has rightly allowed the claim of the assessee .- Decided in favour of assessee

Additional depreciation on addition made to .....

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in assessee’s own case for assessment year 2003-04, considered this issue and found that building for housing thermal power plant is eligible for depreciation at higher rate. The additional plant and machinery used for upgrading the existing machinery is also eligible for additional depreciation. Therefore, this Tribunal is unable to uphold the orders of the lower authorities. Accordingly, the orders of the lower authorities are set aside and the Assessing Officer is directed to allow additional .....

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tly reopened the assessment by issuing notice u/s 148 of the Act. This Tribunal do not find any reason to interfere with the order of the CIT(A).

Bad and doubtful debts while computing the book profit u/s 115JB of the Act - Held that:- Section 115JB(2) Explanation 1 (c) clearly says that the book profits computed under the Companies Act are to be increased by an amount or amounts set aside for provision made for meeting liabilities other than ascertained liabilities. Since bad and do .....

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see and the Revenue filed appeals for assessment years 2006-07 and 2008-09. The Revenue also filed appeal for assessment year 2010-11. Therefore, we heard all the appeals together and disposing of the same by the common order. I.T.A.No.344/Mds/2012 A.Y 2008-09 2. The first ground in assessee s appeal is with regard to disallowance of deduction u/s 80IA of the Act. 3. Shri S.Sridhar, ld. Counsel for the assessee submitted that the assessee claimed deduction u/s 80IA of the Act on the profit earne .....

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ar 2001-02. The ld. Counsel further submitted that the assessee filed an appeal against the order of this Tribunal for assessment year 2001-02 in I.T.A.No. 1029/Mds/2009 before the Madras High Court. The Madras High Court allowed the claim of the assessee by a judgment dated 18.1.2012 in Tax Case(Appeal) No.757 of 2007. Therefore, the CIT(A) is not justified in placing reliance on the order of this Tribunal for assessment year 2001-02. The ld. Counsel further placed his reliance on the judgment .....

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acturing activity of the assessee . Therefore, the power plant viz. windmill is an integral part of the cement factory of the assessee. According to the ld. DR, the CIT(A) has rightly confirmed the disallowance made by the Assessing Officer. 5. We have considered the rival submissions on either side and also perused the material available on record. The question arises for consideration is whether the assessee is eligible for deduction u/s 80IA of the Act on the profit by way of generation of el .....

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, this Tribunal is of the considered opinion that the assessee is eligible for deduction u/s 80IA of the Act even in respect of the power generated and used for captive consumption. By respectfully following the judgment of the Madras High Court in assessee s own case for assessment year 2001-02, the orders of the lower authorities are set aside and the Assessing Officer is directed to allow deduction u/s 80IA on the profit arising out of generation of power which was used for captive consumptio .....

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1633/Mds/2008, the ld. Counsel submitted that this Tribunal by placing reliance on the judgment of the Apex Court in CIT vs Karnataka Power Corporation, 247 ITR 268, confirmed similar addition deleted by the CIT(A) in assessment year 2003-04. 8. We heard Dr.Milind Madhukar Bhusari, ld. DR also. According to the ld. DR, the assessee constructed additional building and claimed depreciation @ 20%. The ld. DR submitted that the building was used for generation of power for captive consumption. The a .....

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was used for captive consumption. We have gone through the order of this Tribunal for the assessment year 2003-04 in I.T.A.No. 1633/Mds/2008. The assessee claimed 20% additional depreciation. This Tribunal after considering the nature of the building found that the building constructed by the assessee may not be used for any other purpose other than for generating electricity, therefore, by placing reliance on the judgment of the Apex Court in CIT vs Karnataka Power Corporation(supra), found th .....

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e for assessment year 2003-04, the orders of the lower authorities are set aside and the Assessing Officer is directed to allow additional depreciation. 10. In the result, the assessee s appeal is allowed. I.T.A.No.448/Mds/2012-A.Y 2008-09 11. In this Revenue s appeal, the first ground is with regard to deletion of deduction u/s 80IA of the Act in respect of the power generated from captive power plant. 12. We heard Dr.Milind Madhukar Bhusari, ld. DR and Shri S.Sridhar ld. Counsel for the assess .....

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dency of the SLP before the Apex Court is not a ground to take a different view. Therefore, this Tribunal do not find any infirmity in the order of the CIT(A) and accordingly, the same is confirmed. 14. Coming to the next ground of appeal, Dr.Milind Madhukar Bhusari, ld. DR submitted that the assessee claimed depreciation on goodwill. The Assessing Officer disallowed the claim of the assessee by following the order of Ahmedabad Bench of this Tribunal in the case of Bharabhai J. Vyas vs ITO, 97 I .....

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essee. Therefore, no interference is called for. 16. We have considered the rival submissions on either side and also perused the material available on record. Goodwill is nothing but an intangible asset. Explanation 3 to sec.32 clearly says that intangible assets being know-how, patents, copyrights, trademarks, licences, franchises or any other business or commercial rights of similar nature, is eligible for depreciation. The goodwill being a commercial right acquired by the assessee is eligibl .....

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made for the purpose of getting support service from the nonresidents. By writing off the advances made by the assessee, it will become the income of the non-residents u/s 9 of the Act. Therefore, it cannot be allowed as expenditure in the hands of the assessee merely because the same was written off. According to the ld. DR, the Assessing Officer has rightly disallowed the claim of the assessee. However, on appeal by the assessee, the CIT(A) found that the advances made by the assessee was writ .....

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ul advances made by the assessee. The provision was offered for taxation. Therefore, it is not correct to say that the advance made was not subject matter of taxation. During the year under consideration the amount which could not be recovered was written off in the books of account. Since the provision made was already offered for taxation, the amount which was written off has to be allowed as deduction in view of the judgment of the Apex Court in CIT vs TRF Ltd, 323 ITR 397. 20. We have consid .....

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tion. In view of the above, this Tribunal is of the considered opinion that the CIT(A) has rightly allowed the claim of the assessee . Therefore, this Tribunal do not find any reason to interfere with the order of the CIT(A). Accordingly, the same is confirmed. 21. In the result, the Revenue s appeal is dismissed. I.T.A.No. 1085/Mds/2012-A.Y 2006-07 22. In this Revenue s appeal for assessment year 2006-07, the only issue arises for consideration is with regard to depreciation on goodwill. 23. Dr .....

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he goodwill. According to the ld. DR, the entire paid-up share capital of the transferor companies were cancelled due to amalgamation. Referring to the copy of the Balance Sheet as on 31.3.2005, more particularly page No.3 of the paper book, the ld. DR submitted that the capital asset was not shown as an asset in the balance sheet. The quantification of the goodwill in the hands of the transferor companies was made only as a balancing figure. According to the ld. DR, the assessee is not eligible .....

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amalgamation, the rights and obligations of the amalgamated companies were transferred to the assessee-company. Therefore, it may not be correct to say that no asset was transferred to the assessee-company. Moreover, Explanation 3 to sec. 32 clearly says that the commercial right acquired by the assessee is eligible for depreciation as intangible asset. Goodwill being a commercial right, the assessee is definitely entitled for depreciation. Therefore, this Tribunal do not find any reason to int .....

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8 and found that the assessee is eligible for additional depreciation u/s 36(1)(iia) of the Act. Therefore, according to the ld. Counsel, the assessee is eligible for additional depreciation. 29. On the contrary, Dr.Milind Madhukar Bhusari, ld. DR submitted that the assessee is not eligible for additional depreciation. According to the ld. DR, the machinery on which additional depreciation was claimed was already in use. The machinery on which the assessee claimed additional depreciation was use .....

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this Tribunal in I.T.A.No. 1633/Mds/2008 for the assessment year 2003-04 in assessee s own case. This Tribunal found that the assessee is eligible for additional depreciation. By following the order of this Tribunal in assessee s own case for assessment year 2003-04 and for the reasons stated therein, the Assessing Officer is not justified in disallowing the claim of the assessee. Accordingly, the orders of the lower authorities are set aside and the Assessing Officer is directed to allow addit .....

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igible for additional depreciation to the extent of 34,79,705/-. 33. We have considered the rival submissions on either side and also perused the material available on record. The assessee claimed additional depreciation to the extent of 34,79,705/-. Referring to the addition made by the assessee towards plant and machinery for the assessment year 2005-06, no deduction shall be allowed in respect of any machinery which was already used in India. The additional machinery purchased by the assessee .....

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that building for housing thermal power plant is eligible for depreciation at higher rate. The additional plant and machinery used for upgrading the existing machinery is also eligible for additional depreciation. Therefore, this Tribunal is unable to uphold the orders of the lower authorities. Accordingly, the orders of the lower authorities are set aside and the Assessing Officer is directed to allow additional depreciation on the additional plant and machinery. 34. In the result, the assessee .....

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he assessee is eligible for depreciation on the building which form part of the captive power plant. Therefore, this Tribunal do not find any reason to interfere with the order of the CIT(A). Accordingly, the same is confirmed. 37. The next ground with regard to depreciation on goodwill. 38. We heard Dr.Milind Madhukar Bhusari, ld. DR and Shir S.Sridhar, ld. Counsel for the assessee. This Tribunal is of the considered opinion that goodwill is an intangible commercial right, therefore, the assess .....

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he assessee is eligible for depreciation on the goodwill. Accordingly, the order of the CIT(A) is confirmed. 39. The next ground is with regard to additional depreciation on captive power plant. 40. We heard Dr.Milind Madhukar Bhusari, ld. DR and Shri S.Sridhar, ld. Counsel for the assessee. 41. The very same issue was considered by this Tribunal for assessment year 2003-04 in assessee s own case in I.T.A.No. 1633/Mds/2008. This Tribunal found that the assessee is eligible for additional depreci .....

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Counsel for the assessee submitted that initially the Assessing Officer allowed the claim of the assessee for bad and doubtful debts to the extent of 22,03,700/- while computing the income u/s 115JB of the Act. To bring this provision for bad and doubtful debts for taxation, the Assessing Officer has reopened the assessment by issuing notice u/s 148. According to the ld. Counsel, the provision made cannot be considered for computation of book profit. According to the ld. Counsel, the Assessing .....

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