M/s. K.S.P.S. Natarajan & Co. v. The Asst. Commissioner of Income-tax, Circle-(I), Tuticorin
[Citation -2014-LL-1217-10]

Citation 2014-LL-1217-10
Appellant Name M/s. K.S.P.S. Natarajan & Co.
Respondent Name The Asst. Commissioner of Income-tax, Circle-(I), Tuticorin
Court HIGH COURT OF MADRAS
Relevant Act Income-tax
Date of Order 17/12/2014
Assessment Year 1998-99
Judgment View Judgment
Keyword Tags specific provision • electricity board • backward area • generation and supply of electricity • admissibility of deduction
Bot Summary: Respondent Appeal filed under Section 260-A of the Income Tax Act against the order dated 17.05.2006, passed by the Income Tax Appellate Tribunal, Madras 'C' Bench, made in ITA No.211/Mds/2005. Aggrieved against the said assessment order, the appellant preferred an appeal to the Commissioner of Income Tax. Aggrieved over the said order of CIT, the appellant preferred an appeal to the Income Tax Appellate Tribunal reiterating the submissions as taken before both the lower authorities. The Tribunal, following its order in Tamil Nadu Chlorates case, held that generation of electricity would not amount to production of goods and articles and the appellant is not entitled to the relief under Section 80IA and dismissed the appeal filed by the assessee. Vide order dated 23.7.12, while deciding the appeals of the assessee in M/s.Tamilnadu Chlorates Vs The Commissioner of Income Tax, held as follows :- 2. Considering the misdirection in the orders of the Commissioner of Income Tax and the Income Tax Appellate Tribunal, we feel, the 4 proper course herein would be to set aside the order of the Tribunal and remit the matter back to the Assessing Officer for considering the claim of deduction in the light of the provisions under Section 80IA. Accordingly, these Tax Case Appeals stand allowed. In the present case also, the substratum on which the earlier order of the Tribunal was set aside by this Court, is similar and we are inclined to allow the appeal by way of remand to the Tribunal.


IN HIGH COURT OF JUDICATURE AT MADRAS DATE : 17.12.2014 CORAM HONOURABLE MR. JUSTICE R.SUDHAKAR AND HONOURABLE MR. JUSTICE R.KARUPPIAH T.C. NO. 487 OF 2007 M/s.K.S.P.S. Natarajan & Co. 13A/1, Meenakshipuram West Tuticorin Appellant - Vs - Asst. Commissioner of Income Tax Circle (I), Tuticorin. Respondent Appeal filed under Section 260-A of Income Tax Act against order dated 17.05.2006, passed by Income Tax Appellate Tribunal, Madras 'C' Bench, made in ITA No.211/Mds/2005. For Appellant : Mr. Vijayaraghavan for M/s.Subbaraya Iyer For Respondent : Mr. Swaminathan, assisted by Ms. V.Pushpa JUDGMENT (DELIVERED BY R.SUDHAKAR, J.) Aggrieved by order of Appellate Tribunal in dismissing appeal filed by it, assessee is before this Court challenging said order by filing present appeal and this Court, vide order dated 26.6.07, framed following substantial questions of law for consideration :- 2 1) Whether on facts and in circumstances of case, Appellate Tribunal was right in holding that appellant is not entitled to deduction u/s 80IA of Act of profits from generation of electricity through wind electricity generators for assessment year 1999-00? 2) Whether on facts and in circumstances of case, Appellate Tribunal was right in law in holding that generation of electricity would not amount to production of goods and article and hence not entitled to deduction u/s 80 IA of Act? 2. appellant/assessee is engaged in business of electricity and case on hand relates to assessment year 1998-99 during which year, appellant filed return of income to extent of Rs.10,15,880/=. assessment was reopened under Section 147 and same was completed on 16.2.04 and claim under Section 80 IA to extent of Rs.8,28,447 was disallowed, being income earned from generation of power through windmill. Aggrieved against said assessment order, appellant preferred appeal to Commissioner of Income Tax (Appeals). However, CIT (Appeals) rejected contentions advanced by appellant and held that provisions of Section 80 IA(2)(v) are applicable as held by Apex Court in M.P. Electricity Board case (25 STC 188) and upheld order of Assessing Officer. 3. Aggrieved over said order of CIT (Appeals), appellant preferred appeal to Income Tax Appellate Tribunal reiterating submissions as taken before both lower authorities. Tribunal, following its order in Tamil Nadu Chlorates case (ITA No.307/2000 dated 6.9.05), held that generation of electricity would not amount to production of goods and articles and, therefore, appellant is not entitled to relief under Section 80IA and dismissed appeal filed by assessee. Aggrieved by said order of Tribunal, 3 appellant is before this Court by filing present appeal. 4. Heard learned counsel appearing for appellant/assessee and learned counsel appearing for respondent. 5. It is pointed out by learned counsel that without considering merits of appellant's claim under Section 80IA, Tribunal had proceeded to dismiss appeal primarily on ground that decision in Tamil Nadu Chlorates case (ITA No.307/2000) is squarely applicable to facts of case. It was pointed out by learned counsel at time of hearing that this Court in TCA No.1360/06, etc. vide order dated 23.7.12, while deciding appeals of assessee in M/s.Tamilnadu Chlorates Vs Commissioner of Income Tax, held as follows :- 2. assessee herein is located in backward area and is manufacturing potassium chlorates. It also installed windmills for generation of electricity. assessee filed returns claiming deduction under Section 80HH and 80I of Income Tax Act. reading of order of Commissioner of Income Tax (Appeals) and Income Tax Appellate Tribunal show confusion in their mind as regards granting of relief under Chapter VIA. When there is specific provision to consider claim on generation and distribution of energy under Section 80IA and on admitted fact that assessee's windmills are located in backward area, Tribunal and other authorities should have adverted their attention to specific provision for deduction, i.e., Section 80IA. In assessment made for assessment year 1996-97, Officer had rightly pointed out that claim could be considered only under Section 80 IA. As far as claim under Section 80I is concerned, there is hardly any material for them to consider whether claim was with reference to electricity generation, in which event, here again, question could be considered only under Section 80IA and not under Section 80I. 3. Considering misdirection in orders of Commissioner of Income Tax (Appeals) and Income Tax Appellate Tribunal, we feel, 4 proper course herein would be to set aside order of Tribunal and remit matter back to Assessing Officer for considering claim of deduction in light of provisions under Section 80IA. Accordingly, these Tax Case Appeals stand allowed. Connected M.P. No.1 of 2006 in T.C. (A) No.2536 of 2006 stands closed. No costs. 6. In present case also, substratum on which earlier order of Tribunal was set aside by this Court, is similar and, therefore, we are inclined to allow appeal by way of remand to Tribunal. 7. Therefore, without this Court answering above questions of law, Tribunal is called upon to address same, since original authority has already declined to grant deduction under Section 80IA. Tribunal shall therefore, re-examine issues above in light of claim under Section 80IA. 8. This appeal, is accordingly, allowed by way of remand to Tribunal. However, there shall be no order as to costs. (R.S.J.) (R.K.J.) 17.12.2014 Index : Yes/No Internet : Yes/No GLN 5 To 1. Income Tax Appellate Tribunal Madras 'C' Bench Chennai. 2. Asst. Commissioner of Income Tax Circle (I), Tuticorin. 6 R.SUDHAKAR, J. AND R.KARUPPIAH, J. GLN T.C. NO. 487 OF 2007 17.12.2014 M/s. K.S.P.S. Natarajan & Co. v. Asst. Commissioner of Income-tax, Circle-(I), Tuticorin
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