Madras High Court
The Commissioner Of Income Tax vs M/S. Elgi Rubber Co Ltd on 24 February, 2021
T.C.A.No. 393 of 2011
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATE: 24.02.2021
CORAM:
THE HON'BLE MR. JUSTICE M.DURAISWAMY
AND
THE HON'BLE MRS.JUSTICE T.V.THAMILSELVI
T.C.A.No. 393 of 2011
The Commissioner of Income Tax -1.
Coimbatore ... Appellant
v.
M/s. Elgi Rubber Co Ltd.,
(Formerly known as Elgi Tread India Ltd.),
2000, Trichy Road,
Singanallur, Coimbatore 641 005.
PAN No.AAACE4565F ... Respondent
Appeal preferred under Section 260A of the Income Tax Act,
1961, against the order of the Income Tax Appellate Tribunal, Madras,
"C" Bench, dated 11.02.2011 in I.T.A.No.1568/Mds/2010 for the
Assessment Year 2007-08.
For Appellant : Mrs. K.G. Usha Rani
Standing Counsel
For Respondent : Mr. M.P. Senthil Kumar
JUDGMENT
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T.C.A.No. 393 of 2011
(Judgment was delivered by M. DURAISWAMY, J.)
Challenging the order passed in I.T.A.No.1568/Mds/2010 in
respect of the Assessment Year 2007-08 on the file of the Income Tax
Appellate Tribunal, Chennai, ''C'' Bench (for brevity, the Tribunal), the
Revenue has filed the above appeal.
2.1 The Assessing Officer while completing the assessment has
restricted the assessee's claim for depreciation on straight line method to
7.69% as per Appendix-1A read with Rule 5(1A) of Income Tax Rules
on the ground that the assessee had not exercised the option under
section Proviso to Rule 5(1A) of the Incomes Tax Rules for claiming
depreciation at a higher rate, in a separate form.
2.2 Against the said order, the assessee preferred an appeal before
the Commissioner of Income Tax (Appeals) and the Commissioner of
Income Tax (Appeals) allowed the depreciation claimed by the assessee
on account of wind mill and deleted the disallownace made by the
Assessing Officer. Against the said order, the Revenue preferred an
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T.C.A.No. 393 of 2011
appeal before the Income Tax Appellate Tribunal and the Tribunal
dismissed the appeal. The Assessing Officer also rejected the claim for
deduction under section 801A on wind mills, since the loss incurred in
one wind mill, if set off against the profit of another wind mill, resulted
in a negative figure. More over, the assessee did not maintain separate
sets of accounts for each undertaking as required under section 801A(7)
and Rule 18BB(2).
2.3 Against the said order, the assessee preferred an appeal
before the Commissioner of Income Tax (Appeals) and the
Commissioner of Income Tax (Appeals) confirmed the order of the
Assessing Officer disallowing the depreciation at the higher rate of
80%. The said order was challenged by the assessee before the Income
Tax Appellate Tribunal and the Tribunal following the decision reported
in (2019) 412 ITR 69 (Mad) [Commissioner of Income Tax,
Coimbatore v. Bannari Amman Sugars Limited] held that the
assessee is eligible for deduction under section 80-1A on generation
of power whether used for captive consumption or otherwise, by treating
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T.C.A.No. 393 of 2011
each wind mill a separate unit. Against the said order, the Revenue has
filed the above appeal.
3.The appeal was admitted on 28.09.2011 on the following
substantial questions of law:
“(i) Whether on the facts and circumstances of
the case, the Tribunal was right in law in holding
that the assessee have satisfied the requirement of
Second Proviso to Rule 5(1A) of the Income Tax
Rules, and they are entitled for depreciation on Wind
Mills as per Appendix-I is valid?
(ii) Whether on the facts and circumstances of
the case, the Tribunal was right in law in granting
80% of depreciation on Wind Mills, even though the
proviso to section 32(1)(i) and Rule 5(1A) clearly
stipulate that only rate of depreciation on cost
method as provided for in Appendix -1A will be
relevant for power generating Machinery?
(iii) Whether on the facts and circumstances
of the case, the Tribunal was right in law in granting
depreciation at the rate of 80% on Wind Mills, even
though the assessee is entitled 7.69% of the cost and
this rate of depreciation has been correctly allowed
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T.C.A.No. 393 of 2011
by the Assessing Officer?
(iv) Whether on the facts and circumstances
of the case, the Tribunal was right in law in holding
that, the assessee is entitled for higher rate of
depreciation even though the assessee has filed
return on due date and has also not exercise his
option separately?
(v) Whether on the facts and circumstances of
the case, the Tribunal was right in setting aside the
orders of the lower authorities and the claim of the
assessee that the deduction under section 801A of
the act would be available even for a captive ;unit is
valid?
(vi) Whether on the facts and circumstances
of the case, the Tribunal was right in law in holding
that, each wind mill has to be considered as a
separate undertaking for deduction under section
801A of the Act?"
4. Mr. M.P. Senthil Kumar, learned counsel appearing for the
respondent submitted that the questions of law Nos. 1 to 4 are covered
by the decisions of the Hon'ble Division Bench of this court reported in
(2015) 55 Taxmann.com 428 (Madras) [Commissioner of Income
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T.C.A.No. 393 of 2011
Tax, Coimbatore, v. Kikani Exports (P) Ltd.] and wherein the
Hon'ble Division Bench decided the questions of law in favour of the
assessee.
5. So far as the question of law No.5 is concerned, the learned
counsel appearing for the respondent submitted that the said question of
law is covered by the decisions of the Hon'ble Division Bench of this
court reported in (2014) 51 Taxmann.com 183 (Madras)
[Commissioner of Income Tax, Trichy v. Cethar Ltd.] and (2019)
104 Taxmann.com 1 (Madras) [Commissioner of Income Tax,
Coimbatore v. Bannari AmmanSugars Ltd.,] wherein the respective
Hon'ble Division Bench decided the issue in favour of the assessee.
6. So far as the question of law No.6 is concerned, the learned
counsel appearing for the respondent submitted that there is no necessity
for deciding this question of law for the reason that 5th question of law
would cover the same.
7. In these circumstances, following the ratio laid down in the
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T.C.A.No. 393 of 2011
Judgments reported in (2015) 55 Taxmann.com 428 (Madras) [cited
supra], (2014) 51 Taxmann.com 183 (Madras) [cited supra.] and
(2019) 104 Taxmann.com 1 (Madras) [cited supra], we decide the
questions of law Nos. 1 to 5 in favour of the assessee. Since the 5th
question of law covers the 6th question of laws, we are not giving any
separate finding with regard to the 6th question of law In these
circumstances, the appeal is liable to be dismissed. Accordingly, the
same is dismissed. No costs.
[M.D., J.] [T.V.T.S., J.]
24.02.2021
Index : Yes/No
Internet : Yes
Rj
To
The Income Tax Appellate Tribunal,
Chennai, ''C'' Bench
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T.C.A.No. 393 of 2011
M. DURAISWAMY, J.
and
T.V. THAMILSELVI, J.
Rj
T.C.A.No. 393 of 2011
24.02.2021
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