Madras High Court
The Commissioner Of Income Tax vs M/S. Hinduja Foundries Limited on 9 July, 2021
Tax Case Appeal Nos.648 to 650 of 2016
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 09.07.2021
CORAM
THE HON'BLE MR. JUSTICE M.DURAISWAMY
AND
THE HON'BLE MRS.JUSTICE R.HEMALATHA
Tax Case Appeal Nos.648 to 650 of 2016
The Commissioner of Income Tax,
No.121, Mahatma Gandhi Road,
Chennai - 600 034. ... Appellant in all TCAs
v.
M/s. Hinduja Foundries Limited,
(formerly known as M/s. Ennore Foundries Ltd.),
Katthivakkam High Road, Ennore,
Chennai - 600 057
PAN : AAAS CE 1078 K . ... Respondent in all TCAs
T.C.A. No. 648/2016 : Appeal preferred under Section 260A of the Income
Tax Act, 1961, against the order of the Income Tax Appellate Tribunal,
Madras, “A” Bench, dated 19.02.2016 in I.T.A.No.1591/Mds/2015 for the
Assessment Year 2007-2008.
T.C.A. No. 649/2016 : Appeal preferred under Section 260A of the Income
Tax Act, 1961, against the order of the Income Tax Appellate Tribunal,
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Tax Case Appeal Nos.648 to 650 of 2016
Madras, “A” Bench, dated 19.02.2016 in I.T.A.No.1592/Mds/2015 for the
Assessment Year 2009-2010.
T.C.A. No. 650/2016 : Appeal preferred under Section 260A of the Income
Tax Act, 1961, against the order of the Income Tax Appellate Tribunal,
Madras, “A” Bench, dated 19.02.2016 in I.T.A.No.1593/Mds/2015 for the
Assessment Year 2010-2011.
For Appellant : Mr.Karthik Ranganathan
in all TCAs Senior Standing Counsel
For Respondent : Mr.R.Venkat Narayanan
in all TCAs for M/s. Subbaraya Aiyar & Padmanabhan
COMMON JUDGMENT
(Judgment was delivered by M.DURAISWAMY, J.)
Challenging the common order passed in I.T.A.Nos. 1591/Mds/2015,
1592/Mds/2015 and 1593/Mds/2015 in respect of the Assessment Years 2007-
2008, 2009-2010 and 2010-2011 on the file of the Income Tax Appellate
Tribunal, Chennai “A” Bench, (for brevity, the Tribunal), the Revenue has
filed the above appeals.
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Tax Case Appeal Nos.648 to 650 of 2016
2.1 The assessee is a limited company engaged in the business of
Foundries. The Assessing Officer found that the assessee had claimed
additional depreciation under section 32(1)(iia) of the Income Tax Act for
the Assessment Years 2007-2008, 2009-2010 and 2010-2011 on the opening
Written Down Value [WDV] on the plant and machinery purchased in the
earlier years. The Assessing Officer further observed that the assessee had
claimed the additional depreciation on the second half of the financial years
2005-06, 2007-08 and 2008-09 @ 10% on these plant and machineries and the
remaining 10% in the subsequent financial years relevant to the assessment
years in question. As the additional depreciation is allowable only in the year
of purchasing the new plant and machinery, the Assessing Officer rejected the
assessee's claim of additional depreciation on the brought forward opening
WDV and added the same to the total income of the assessee.
2.2 Aggrieved over the order passed by the Assessing Officer, the
assessee preferred an appeal before the Commissioner of Income Tax(Appeals)
and the Commissioner of Income Tax dismissed the appeals. Challenging
the same, the assessee preferred appeals before the Income Tax Appellate
Tribunal, and the Tribunal, by its order dated 19.02.2016 allowed the appeals
of the assessee. Challenging the order passed by the Income Tax Appellate
Tribunal, the Revenue has filed the above appeals.
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Tax Case Appeal Nos.648 to 650 of 2016
3. The above appeals were admitted on the following substantial
questions of law:
“(i) Whether on the facts and circumstances and in
law, the ITAT was right in law in holding that additional
depreciation can be allowed in the next year, in case, the
same cannot be allowed in the earlier year?
(ii) Whether on the facts and circumstances and
in law, the ITAT was right in ignoring the jurisdictional
High Court's decision in the case of M.M. Forgings Ltd
(Reported in349 ITR 673)?
(iii) Whether on the facts and circumstances and
in law, the ITAT was right in ignoring the second
provision of Section 32(1), when there are no provisions in
the statute to carry forward the balance additional
depreciation to the following years?"
3. When the appeals are taken up for hearing, Mr.Karthik Ranganathan,
learned Senior Standing Counsel appearing for the appellant, fairly submitted
that the questions of law involved in the present appeals were already decided
against the Revenue in the Judgment of the Hon'ble Division Bench of this
Court dated 18.03.2020 in T.C.A. No 228 of 2011 [M/s. Comstar
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Tax Case Appeal Nos.648 to 650 of 2016
Automative Technologies Private Ltd., Maraimalai Nagar, Chengalpattu
District - v. The Deputy Commissioner of Income Tax Company Circle - I
(3), Chennai], wherein the Hon'ble Division Bench held as follows:-
" ................ 26. In the aforesaid Judgment, the reason for
such conclusion arrived at by the Hon'ble Apex Court has been
explained at para 17 in unequivocal terms. The Apex Court has
specifically held that, at the stage of the aggregate of the
incomes under other heads, the provisions for set off and carry
forward contained in Sections 70, 72 and 74 of the Act would be
a premature for application. The deduction under Section 10A
therefore would be prior to the commencement of the exercise to
be undertaken under Chapter VI of the Act for arriving at the
total income of the Assessee from the gross total income.
Ultimately, the issue has been settled with the following words
of the Hon'ble Apex Court in the said decision "the stage of
deduction would be while computing the gross total income of
the eligible undertaking under Chapter IV of the Act and not at
the stage of computation of the total income under Chapter VI."
27. Therefore the law has been settled by the said
decision of the Hon'ble Apex Court, where in clear terms, it has
been held that, the deductions either under Section 10A or 10B
would be made while computing the gross total income of the
eligible undertaking (like the Assessee) under Chapter IV of the
Act and not at the stage of computation of the total income
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Tax Case Appeal Nos.648 to 650 of 2016
under Chapter VI of the Act.
28. Here in the case in hand, the total income was first
arrived at by the Revenue through the Assessing Officer in the
Assessment Order by computing the total income by way of
brought forward or carry forward the depreciation allowance of
the earlier Assessment Years and set off the unabsorbed
depreciation first and making the return Nil, thereby leaving the
Assessee in a position where it could not claim any deduction
under Section 10B as there was no income after set off of carry
forward depreciation and unabsorbed depreciation from earlier
years.
29. This method of computing the income in the present
case made by the Revenue is totally against the said law as has
been declared by the Hon'ble Apex Court in the aforesaid
decision in Commissioner of Income-tax v. Yokogawa India
Ltd., (cited supra).
30. Therefore we have no hesitation to hold that, the
decision of the ITAT, which is impugned herein, would not stand
in the legal scrutiny, in view of the law having been declared by
the Hon'ble Apex Court. Therefore, we are of the view that, the
Substantial Question of Law raised in this Appeal is covered by
the said decision, therefore it can be answered accordingly.
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Tax Case Appeal Nos.648 to 650 of 2016
31. In the result, the Appeal is allowed and the
Substantial Question of Law raised in this Appeal is answered in
favour of the Assessee and against the Revenue. There shall be
however no order as to costs. "
4. The learned Senior Standing Counsel appearing for the appellant
further submitted that following the Judgment dated 18.03.2020 made in
T.C.A. No 228 of 2011, the Division Bench of this Court already decided the
questions of law against the Revenue by its Judgement dated 01.04.2021
made in T.C.A.Nos.1101 & 1102 of 2015 [The Commissioner of Income
Tax, Chennai. v. M/s. Caterpillar India Pvt. Limited, Chennai] and
dismissed the appeals.
5. Mr.R.Venkat Narayanan, learned counsel appearing for the respondent
submitted that in view of the ratio laid down by the Hon'ble Division Bench of
this court in T.C.A. No 228 of 2011 [cited supra] and the Judgement made
in T.C.A.Nos.1101 & 1102 of 2015 [cited supra], cited supra, the questions of
law may be decided against the revenue and the appeals may be dismissed.
6. In view of the submissions made by the learned counsel on either side,
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Tax Case Appeal Nos.648 to 650 of 2016
following the Judgment dated 18.03.2020 made in T.C.A. No 228 of 2011
[cited supra] and the Judgement dated 01.04.2021 made in T.C.A.Nos.1101 &
1102 of 2015 [cited supra], the questions of law are decided against the
revenue and in favour of the assessee. Accordingly, the Tax Case Appeals
are dismissed. No costs.
[M.D., J.] [R.H., J.]
09.07.2021
Index : Yes / No
Internet : Yes
Rj
To
The Income Tax Appellate Tribunal,
Chennai “A” Bench
M. DURAISWAMY, J.
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Tax Case Appeal Nos.648 to 650 of 2016
and
R.HEMALATHA, J.
Rj
Tax Case Appeal Nos.648 to 650 of 2016
09.07.2021
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