Tax Management India. Com
Law and Practice  :  Digital eBook
Research is most exciting & rewarding


  TMI - Tax Management India. Com
Follow us:
  Facebook   Twitter   Linkedin   Telegram

TMI Blog

Home

2016 (9) TMI 1045

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... e used in any manufacturing activity. However, a windmill which generates power is itself engaged in the manufacturing of production of an article or thing. We found support from the judgement in the case of Associated Bearing Co. Ltd. vs. Commissioner of Income-tax (2005 (10) TMI 75 - BOMBAY High Court ) and Commissioner of Income Tax vs. Atlas Export Enterprise (2015 (3) TMI 846 - MADRAS HIGH COURT ). Therefore, while relying upon the judgement, we hold that the assessee clearly satisfied the conditions of section 31(1)(iia) and is entitled to the claim of additional depreciation in respect of wind mills. - Decided in favour of assessee - I.T.A. No. 2844/Mum/2013 - - - Dated:- 10-8-2016 - Shri Jason P. Boaz (AM) and Shri Sandeep Gosain (JM) For The Assessee : Shri Hiro Rai For The Department : Shri G.M. Doss ORDER Per Sandeep Gosain, Judicial Member :- The present appeal has been filed by the assessee against the order passed by learned CIT u/s. 263 of the I.T. Act on the following grounds:- The Grounds of Appeal raised herein are all without prejudice to one another: 1. The learned CIT was not justified in initiating revision proceedings u/s 263 .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... . 1 4. Ground No. 1 relates to the jurisdiction and maintainability of the order u/s. 263 of the Act therefore we thought it fit to decide the said issue firstly. Before us, learned AR representing the assessee referred to the show cause notice issued by CIT(A) and the operational portion of the notice dated 04.02.2013 is reproduced as under: A perusal of records shows that the assesee had claimed and was allowed depreciation of ₹ 11,05,66,720/ - which included additional depreciation of ₹ 1,65,04,000/- on Windmill . However, this windmill was not used in any manufacturing activity. Therefore, this do s not qualify for additional depreciation. Also, the as o e had claimed deduction of profit derived from the Unit Lapiz Digital Services of ₹ 4,74,76,455/- out of which profit of ₹ 1,15,91,571/- was not derived from export of articles such as sundry receipts of ₹ 1,08,68,525/- and sundry balance written back was ₹ 7,23,046/-. These receipts are not derived from export of article, things or computer software. No deduction is allowable on this income u/s.10A. 2. Having regard to material on record, it is clear that the Assessment Or .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... nour has stated that the profit of ₹ 1,15,91,5711- comprising of sundry receipts of ₹ 1,08,68,525/- and sundry balances written back of ₹ 7,23,046/- is not derived from export and is therefore, not eligible for deduction U/S 10A. In this regard, it is submitted that the sundry receipts of ₹ 1,08,68,525/- comprise of the following 2 items: 1. Exchange fluctuation gain ₹ 1,07,60,887/- 2. Notice pay recovered ₹ 1,07,638/- ₹ 1,08,68,525/- Copies of the ledger accounts of these 2 items are enclosed at pages 1 to 19 of the Paper Book. Similarly, sundry balances written back of ₹ 7,23,046/- comprise of provisions made for expenses which were found to be in excess and hence written back. The relevant copy of the ledger account is enclosed at page 20 of the Paper Book. As far as exchange fluctuation gain is concerned, it is submitted that this is nothing but an accretion to the sales made by the assessee. It is clearly derived from the export of .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... d in this respect learned AR relied upon the following Judgments :- 1. Star India Ltd. vs. Additional Commissioner of Income Tax Revision --Validity Revision on a ground different from the one stated in notice Assessment sought to be revised on the ground that while allowing deduction under s.80HHF the expenses incurred in foreign currency for providing technical services outside India have not been reduced from export turnover and total turnover--- However, revision done on the ground that the matter needs to be examined-In any case, the CIT has not given any findings against the assesse at all and yet he has proceeded to direct the AO to examine the issue again Revision was not therefore sustainable. The show-cause notice is issued on the ground that the computation is incorrect but the revision is exercised on the ground that the matter was not examined on merits. The reason which can be inferred from the revision order under section 263 (that the AO has not verified the issue) is different from the reason set out in the show-cause notice (that such expenses cannot be allowed). If a ground of revision is not mentioned in the show-cause notice, it cannot be made .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... elementary reason that the grounds on which order was subjected to revision are different, vis- -vis the grounds on which revision proceedings were actually initiated. A plain reading of impugned revision order clearly shows that the conclusions drawn in the revision proceedings are materially different than the reasons for which revision proceedings were initiated. 6. On the other hand learned Departmental Representative relied upon the order passed by learned CIT. 7. We have considered the rival submissions and perused the record. At the very outset we have anyalised the show-cause noticed issued by learned CIT and subsequently order passed by learned CIT which reads as under :- In view of the above, it is clear that the AO s order allowing for such depreciation without enquiry has resulted in error within the meaning of Section 263 of the I.T. Act,1961; this error has differently caused prejudice to the revenue because of allowance of excess depreciation to the extent of ₹ 1,65,04,000/-. Accordingly, it is held that order of the AO in this regard is erroneous insofar as it is prejudicial to the interest of revenue within the meaning of section 263 of I.T. Act,1 .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... exercised on the ground that the matter was not examined on the merits. The reason which can be inferred from the revision order u/s 263 is different from the reason set out in the show cause notice and therefore in that case it was held that if a ground of revision is not mentioned in the show-cause notice, then it cannot be made the basis of the order for the reason that assessee would have had no opportunity to meet the point. Hon ble ITAT Delhi Bench in the case of B.S. Sangwan vs. ITO (supra) has also categorically held that the commissioner started by pointing out, that he saw as, glaring illegalities in the assessment order, which was subjected to revision proceedings, but what he concluded was that the said assessment order was passed without making proper requisite and desired inquiries . Therefore, the Hon ble ITAT has held in the above cited case that a revision order can only be passed on the ground on which the assessee has been given a reasonable opportunity of being heard, and it is not open to the Commissioner to set out one reason ground for revising the order but actually revise the order on some other ground. 8. Considering the other judgments relied upon .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

 

 

 

 

Quick Updates:Latest Updates