The Commissioner Of Income Tax-Ii vs M/S.Appolo Tyrs Ltd
2021 Latest Caselaw 15895 Ker

            IN THE HIGH COURT OF KERALA AT ERNAKULAM
                              PRESENT
                THE HONOURABLE MR.JUSTICE S.V.BHATTI
                                  &
        THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS
     MONDAY, THE 2ND DAY OF AUGUST 2021 / 11TH SRAVANA, 1943
                          ITA NO. 87 OF 2014
 AGAINST THE ORDER IN ITA 616/2011 OF I.T.A.TRIBUNAL,COCHIN BENCH,
                             ERNAKULAM
APPELLANT/S:

          THE COMMISSIONER OF INCOME TAX-II
          COCHIN.

          BY ADVS.
          SRI.CHRISTOPHER ABRAHAM, INCOME TAX DEPARTMENT
          SRI.K.M.V.PANDALAI, INCOME TAX DEPARTMENT



RESPONDENT/S:

          M/S.APPOLO TYRS LTD
          CHERUPUZHPAM BUILDING, SHANMUGHAM ROAD, KOCHI-682 031.

          BY ADVS.
          SRI.V.ABRAHAM MARKOS
          SRI.V.ABRAHAM MARKOS
          SRI.ABRAHAM JOSEPH MARKOS
          SRI.BINU MATHEW
          SRI.ISAAC THOMAS
          SRI.JOSEPH MARKOSE SR.
          SRI.NOBY THOMAS CYRIAC
          SRI.TOM THOMAS KAKKUZHIYIL




      THIS INCOME TAX APPEAL HAVING COME UP FOR HEARING ON 02.08.2021,
THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
 I.T.A. No.87/2014
                                     -2-




                           JUDGMENT

S.V.Bhatti, J.

Heard learned Standing Counsel Mr. Christopher Abraham and

learned Senior Counsel Mr. Joseph Markos for parties.

2. The Commissioner of Income Tax/Revenue is the

appellant. M/s.Apollo Tyres Ltd., Kochi/Assessee is the respondent.

The subject appeal is at the instance of Revenue from the order of

Income Tax Appellate Tribunal (for short 'the Tribunal') Cochin

Bench in ITA No.616/Coch/2011 dated 20.12.2013. The controversies

canvassed in the appeal relate to the Assessment Year 2007-08.

3. The appeal deals with the controversy on availing 50% of

depreciation, unavailed under Section 32(1)(iia) in the previous

year, whether could be allowed in the subsequent year or not; the

correctness of the order of Tribunal in setting aside the dis-

allowance of the balance investment of the assessee amounting to I.T.A. No.87/2014

Rs.51,80,000/- in Gujarat Perstop Electornics Ltd. (GPEL); and

availing deduction under Section 80-IA for the DG Power Generation

Units 1 and II, treating them as 'undertaking'.

4. Substantial question nos.1 and 2 read as follows:

"1. Whether, on the facts and in the circumstances of the case and on an interpretation of Sec. 32(1)(iia) read with the second proviso the Tribunal is right in law in holding that "the balance 50% of the depreciation has to be allowed in the subsequent year" and is not the above finding against law and perverse?

2. Whether, on the Tribunal is right in law in holding that "the second proviso to section 32(1)(ii) is to mean that 10% should be allowed in the year in which the machinery is acquired and installed and the balance 10% has to be impliedly allowed in the subsequent year" and is not the above interpretation against law and the intention of the legislature?"

4.1 The circumstances leading to the disagreement between

the Revenue and the assessee are not in dispute and the fact that

the assessee at the first instance availed 50% of additional

depreciation allowed under Section32(1)(iia) of the Act. The

assessee could avail 50% of the allowed depreciation on account of I.T.A. No.87/2014

the fact that the equipment for which depreciation was claimed was

not used was not used for more than 180 days in the previous year

2006-07. Thus, the assessee claimed 10% of permissible 20%

depreciation in the previous year 2006-07 and claimed balance 50%,

i.e., 10% of 20%, in the Assessment Year 2007-08. The Tribunal held

that there is no restriction in the Income Tax Act that balance of

one-time-incentive in the form of additional sum of depreciation

cannot be availed in the subsequent year.

4.2 Learned Senior Counsel appearing for the assessee refers

to and relies on the judgments in Commissioner of Income-tax, Madurai

v. T P Textiles (P) Ltd.1 and Commissioner of Income-tax, Bangalore v.

Rittal India (P) Ltd2 for sustaining the view taken by the Tribunal. It

is also argued that the clarificatory amendment made to Section

32(1)(ii) with effect from 01.10.2016 supports the deduction claimed

by the assessee. The amendment, no doubt, was introduced with

effect from 01.10.2016, is a clarificatory amendment. The decisions

1 (2017) 79 taxmann.com 411 (Madras) 2 (2016) 66 taxmann.com 4 (Karnataka) I.T.A. No.87/2014

relied on by the assessee are directly on the point and we are in full

agreement with the view taken by the Madras and Karnataka High

Courts. The propositions stated in the reported judgment applies in

all fours. By following the reasons and principles laid down in T P

Textiles (P) Ltd. and Rittal India (P) Ltd (supra), question nos.1 and 2

are answered against the Revenue and in favour of the assessee.

5. Counsel appearing for the parties, after taking note of

substantial question nos.3(a) and 3(b), suggested to the Court for

reframing the questions and the reframed question reads as follows:

"3. Whether on the facts and circumstances of the case the Appellate Tribunal is right in setting aside the Order of the Assessing Officer disallowing the balance investment of the Appellant amounting to Rs.51,80,000/- in Gujarat Perstop Electronics Ltd. (GPEL)"

5.1 The reframed question has bearing on the view

expressed by this Court on a similar question stated in the

Assessment Year 2002-03 and the judgment is reported in I.T.A. No.87/2014

Commissioner of Income-Tax v. Apollo Tyres Ltd3 . Point no.3 in the

reported judgment deals with these aspects of the matter and by

following the judgment in Apollo Tyres Ltd (supra), the question is

answered in favour of the assessee and against the Revenue.

6. Substantial question nos.4 and 5 read thus:

"4. Whether on the facts and in the circumstances of the case the Tribunal is right in law and fact in holding that DG Power Generation Units 1 and II constituted an "undertaking" under Sec. 801A of the Income tax Act?

5. Whether DG Power Generation units I and II are entitled to the benefit of Sec. 801A of the Income Tax Act?"

6.1 It is also stated, as a matter of fact, that the questions

raised in this appeal, namely question nos.4 and 5 are similar to the

questions raised by the Revenue in ITA No. 69/2011 and ITA

No.70/2011 for the Assessment Year 2002-03. On 27.02.2019 the

appeals filed by the Revenue were dismissed. Our attention has

been drawn to the reasoning and conclusion recorded by this Court

on similar questions framed in ITA Nos.69 and 70 of 2011. 3 (2019) 419 ITR 100 I.T.A. No.87/2014

By following the reasoning and conclusion recorded in ITA

Nos.69 and 70/2011, the substantial questions of law raised as

question nos.4 and 5 are answered in favour of the assessee and

against the Revenue.

The appeal is dismissed. No order as to costs.

Sd/-

S.V.BHATTI JUDGE

Sd/-

BECHU KURIAN THOMAS JUDGE

jjj I.T.A. No.87/2014

APPENDIX OF ITA 87/2014

PETITIONER ANNEXURE

ANNEXURE A COPY OF THE ASSESSMENT ORDER U/S.143(3) RWS 144C DATED 21/10/2011 PASSED BY THE ASSESSING OFFICER FOR AY 2007-08.

ANNEXURE B COPY OF THE ITAT'S ORDER NO.616/COCH/2011 DATED 20/12/2013.