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Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI
Before: SHRI ABY T. VARKEY & SHRI S.R.RAGHUNATHA
आदेश / O R D E R PER ABY T. VARKEY, JM: These are appeals preferred by the assessee company against the order of the Learned Commissioner of Income Tax (Appeals)/NFAC, (hereinafter in short "the Ld.CIT(A)”), Delhi, dated 12.10.2023 for the Assessment Years (hereinafter in short "AY”) 2007-08, 2010-11 & 2012- 13.
At the outset, both the parties agreed that grounds of appeal raised by the assessee are similar/identical. Therefore, we will adjudicate the (AY 2007-08) (AY 2010-11) ITA No.793/Chny/2024 (AY 2012-13) M/s. NLC India Ltd. :: 2 ::
appeal for AY 2007-08 and result of which, will be followed for AY’s 2010- 11 & 2012-13.
The main grievance of the assessee is against action of the Ld.CIT(A) concluding that since the assessee didn’t reply to his notice dated 27.09.2023, hence, he presumed that the assessee doesn’t have any objection to the Remand Report filed by the AO dated 11.01.2023 and therefore, he upheld the action of the AO [but mistakenly noted that assessee’s appeals have been allowed, whereas, it was not allowed].
Thus, the claim of the assessee regarding depreciation on electrical installations, the Ld CIT(A) dismissed, based on the Remand Report of the AO. In this context, it was pointed out to us by the Ld. Counsel for the assessee, Ms.Krishna Lassya, Advocate, that the Ld.CIT(A) has dismissed the appeal on wrong assumption that assessee doesn’t have any objection to the Remand Report filed by the AO dated 11.01.2023 despite notice from his office dated 27.09.2023. According to Ld AR, the assessee never received the notice issued by him [Ld CIT(A)] on 27.09.2023 (supra) and for supporting such a contention has filed the following relevant details which support her contention [of non-service of notice] which are reproduced as under:
1) Copy of e-mail received from the National Informatics Centre portal evidencing non-receipt of mails dated 27.09.2023 and 12.10.2023
(AY 2007-08) (AY 2010-11) ITA No.793/Chny/2024 (AY 2012-13) M/s. NLC India Ltd. :: 3 ::
2) Copy of inbox with respect to 'itax.corp@nlcindia.in and murthy.v.s@nlcindia in evidencing non-receipt of mails dated 27.09.2023 and 12.10.2023
3) Judicial Decisions evidencing serving of Orders to the registered e-mail ID of the Appellant
- Kothandaraman Praesh v. Additional / Joint / Deputy / Assistant Commissioner of Income-tax, Income tax Officer, National e- Assessment Centre, Delhi (2023) 154 taxmann.com 425 (Madras)
- Adaikathal Nallathankgal Padaippu Veedu v. Income-tax Officer, Exemptions (2024) 159 taxmann.com 465 (Chennai-Trib)
- Sachin Notified Area v. Principal Commissioner of Income-tax (2023) 153 taxmann.com 689 (Surat-Trib)
4) Copy of the Notice uploaded on the e-portal dated 27.09.2023
5) Screenshots of the Notice uploaded on the e-portal (evidencing lack of attachments along with the Notice dated 27.09.2023)
6) Judicial Decisions evidencing requirement to pass Order after affording an opportunity of personal hearing.
From a perusal of the aforesaid documents, we are convinced that the assessee didn’t receive the purported notice issued by the Ld.CIT(A) on 27.09.2023 calling for the comments on the Remand Report filed by the AO dated 11.01.2023. Therefore, there is clear violation of natural justice which vitiates the impugned order of the Ld.CIT(A). Be that as it may, the Ld.AR brought to our notice that the assessee company (NLC India Ltd.) is a Public Sector Undertaking and is a Navaratna and a Government of India Enterprise, which is engaged in the mining of lignite and power generation. For AY 2007-08, the assessee had filed return of income (RoI) on 27.10.2007 declaring total income of Rs.885,81,96,819/- and the return was processed u/s.143(1) of the Income Tax Act, 1961 (hereinafter in short "the Act”). And thereafter, scrutiny assessment
(AY 2007-08) (AY 2010-11) ITA No.793/Chny/2024 (AY 2012-13) M/s. NLC India Ltd. :: 4 :: u/s.143(3) of the Act was completed on 24.12.2009, wherein, the total assessed income was determined at Rs.14,27,71,10,102/-. Subsequently, notice u/s.148 of the Act was issued on 28.03.2012 and an order u/s.143(3)/147 was passed on 21.11.2012. It was brought to our notice that the issue involved in this appeal is that the assessee had categorized electrical installations as part of the 15% depreciation block viz., Electrical installations under this category comprised of panels, switch yards, switch gears and various types of cables for transmission of power. The AO vide order under Section 143(3) read with Section 147 held that the rates of depreciation have to be applied as per the description and also the nomenclature of the asset and accordingly, restricted the depreciation on electrical installations to 10% as opposed to the 15% claimed by the Appellant. Thus, according to the Ld.AR, depreciation amounting to Rs.2,69,55,110/- was disallowed. Against the said disallowance, the Appellant preferred an appeal before the Ld. Commissioner of Income Tax (Appeals) who vide Order dated 23.09.2013 citing the decision of the Hon'ble Supreme Court in CIT v. Karnataka Power Corporation (2001) 247 ITR 268 (SC) held that if it serves an Assessee's 'special technical requirement, it will qualify as a plant and depreciation at 15% shall be allowed. The Ld.CIT(A) allowed depreciation at the rate of 15% to the assessee.
(AY 2007-08) (AY 2010-11) ITA No.793/Chny/2024 (AY 2012-13) M/s. NLC India Ltd. :: 5 ::
Aggrieved by the action of the Ld.CIT(A), the Department filed an appeal before the Tribunal and the Tribunal vide Order dated 28.04.2017 held as under:
3.3. As per the Assessment Order and breakup of block of assets, there are two types of electrical installations. Electrical installations installed in mines for the purpose of excavation, generation and transmission activities and the electrical installations installed in the building, godown, bus station etc. We agree with the Ld. CIT (A) that the electrical installations installed for the purpose of excavation, transmission of mining activities required to be considered as a plant as per the decisions relied upon by the Assessee Whereas, the electrical installations installed in the administrative buildings, bus stations etc, perform the functions of normal transmission of electricity cannot be held as a plant. The Assessee also relied on the decision of Kutti Spinners Pvt Ltd 34 ITR 0470. The Co-ordinate Bench of ITAT, Chennai held in the cited case that the electrical cables fittings and other electrical works connected with the wind mill considered as a single capacity unit and eligible for depreciation @ 80%. Our view is supported by the Co-ordinate Bench decision cited supra
Therefore, the issue is remitted the matter back to the file of the AO and to examine the electrical installations for the purpose of mining activity and installed for the purpose of normal electricity supply such as administrative buildings, canteen and bus stations etc., and allow the depreciation 15% in respect of installations made in the mines and 10% in respect of the buildings, Canteen. Bus Station etc.
Pursuant to the aforesaid order of the Tribunal, the AO vide e-mail dated 03.12.2020 sought for certain details in connection with the Vivad Se Vishwas (VSV) proceedings which included details pertaining to the electrical installations. According to the Ld.AR, the said mail of AO didn’t specifically mention that the details sought was in pursuance of the remand direction as directed by this Tribunal (supra). And the AO erroneously passed giving effect order under Section 254 of the Act (to the order passed by the Tribunal) dated 10.12.2020, wherein, he held that the addition made with respect to depreciation on electrical
(AY 2007-08) (AY 2010-11) ITA No.793/Chny/2024 (AY 2012-13) M/s. NLC India Ltd. :: 6 :: installations is not altered as the assessee didn’t furnish the break-up as directed by the Tribunal. Aggrieved by the action of the AO, the assessee filed an appeal before the Ld. Commissioner of Income Tax (Appeals), who called for the remand report from the AO with respect to category wise break up of electrical installations. The Ld.CIT(A) after receiving the remand report from the AO on 11.01.2023, issued notice to the assessee dated 27.09.2023 to offer the comments on the said remand report. The Ld.CIT(A) finding no compliance from assessee, formed an opinion that assessee didn’t had any objection to the Remand Report of AO and passed the impugned order. As noted (supra) the assessee never received the notice dated 27.09.2023 on the registered e-mail ID of the assessee. It was brought to our notice that even the remand report of the AO (dated 11.01.2022) wasn’t served upon the assessee by any mode.
Therefore, the impugned Order dated 12.10.2023 passed by the Ld.CIT(A) upholding the action of the AO is vitiated for violation of natural justice.
Moreover, it was brought to our notice that the impugned order of the Ld.CIT(A) was only uploaded on the Income Tax Portal and not sent to the registered e-mail of the assessee; and the assessee belatedly saw the impugned order and immediately filed the appeal which resulted in 105 days delay, which is prayed to be condoned. We find force in the (AY 2007-08) (AY 2010-11) ITA No.793/Chny/2024 (AY 2012-13) M/s. NLC India Ltd. :: 7 ::
submissions of the Ld.AR and taking note on the Affidavit filed by the assessee (Chairman-cum-Managing Director) dated 21.03.2024 for the reasons given therein, we condone the delay in filing of these appeals and for the ends of justice and fair play, we set aside the impugned order of the Ld.CIT(A) and restore the appeals back to the file of the Ld.CIT(A) with a direction to adjudicate the grounds of appeal raised by the assessee de novo and the assessee is directed to file its reply to the Remand Report filed by the AO dated 11.01.2023 and the Ld.CIT(A) to pass orders in accordance to law by speaking order. To avoid any future communications between the assessee and the Department, the following e-mails ID’s have been furnished by the assessee, which may be used by the Department to communicate with the assessee: i. itax.corp@nicindia.in ii. murthy.v.s@nlcindia.in iii. v.suresh@nlcindia.in iv. sanjay.sen@nicindia.in v. sppatnaik@nicindia.in
8. In respect of Appeals for AYs 2010-11 & 2012-13, in the light of the aforesaid action taken for AY 2007-08, the same will apply mutatis- mutandis for those years; and therefore, the respective orders of the Ld.CIT(A) are set aside and restored back to his file for de novo adjudication in accordance to law.
(AY 2007-08) (AY 2010-11) ITA No.793/Chny/2024 (AY 2012-13) M/s. NLC India Ltd. :: 8 ::
In the result, appeals filed by the assessees are allowed for statistical purposes.
Order pronounced on the 26th day of July, 2024, in Chennai.