Ashok Leyland Wind Energy Ltd., CHENNAI V. DCIT, CHENNAI

CO 140/CHNY/2016

• Counselvise Citation: [2017] 123 COUNSELVISE.COM (IT) 2765 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 10 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 03-02-2017
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 02-02-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 23-09-2016
• Court: TRIBUNAL
• Department Lawyers: A B KANNAN CA
• Assessee Lawyers: N RANGARAJ
• Keywords: Capital asset; Depreciation
• Section: 143(3); 32

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI , . , ' # BEFORE SHRI SANJAY ARORA, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A. NO. 2228/MDS/2016 & C.O. NO. 140/MDS/2016 / ASSESSMENT YEAR : 2011-12 DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE -1(1), CHENNAI - 600 034. VS. M/S. ASHOK LEYLAND WIND ENERGY LTD., NO. 1, SARDAR PATEL ROAD, GUINDY, CHENNAI - 600 032. [PAN: AAICA 8787F] ( / APPELLANT) ( RESPONDENT/CROSS OBJECTOR) % & / APPELLANT BY : SHRI N. RANGARAJ, CIT )*% & / RESPONDENT BY : SHRI A.B. KANNAN, CA & /DATE OF HEARING : 02.02.2017 & /DATE OF PRONOUNCEMENT : .02.2017 /O R D E R PER BENCH: THE APPEAL IS FILED BY THE REVENUE AND THE CROSS O BJECTION BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOM E TAX (APPEALS)-1, CHENNAI IN :-2-: I.T.A. NO 2228/MDS/2016 C.O. NO. 140/MDS/2016 ITA NO. 295/14-15 DATED 02.05.2016 PASSED U/S. 143( 3) AND 250 OF THE INCOME TAX ACT. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: 2.1 THE LD. CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO ALLOW DEPRECIATION IN THE ABSENCE OF ANY EVIDENCE TO PRO VE THE OWNERSHIP OF THE ASSETS. 2.2 THE LD. CIT(A) HAS FAILED TO APPRECIATE THE FAC T THAT THE ASSESSEE HAS PRODUCED THE DETAILS OF REGISTRATION OF WINDMILLS IN ITS NAME ONLY IN THE SUBSEQUENT ASSESSMENT YEAR 2012-13 IN RESPECT OF O NLY 94 OUT OF THE TOTAL 154 UNITS AND WAS ALLOWED CORRESPONDING DEPR ECIATION. THE OWNERSHIP OF THE REMAINING 60 UNITS HAVE NOT BEEN PRODUCED TILL DATE. 3. THE BRIEF FACTS OF THE CASE THAT THE ASSESSEE CO MPANY IS ENGAGED IN POWER GENERATION THROUGH WINDMILLS, OPERATION AND M AINTENANCE OF WIND ENERGY GENERATORS AND POWER MANAGEMENT AND FILED THE RETUR N OF INCOME FOR THE ASSESSMENT YEAR 2011-12 ON 29.09.2011 WITH LOSS OF RS. 25,10,96,478/-AND THE RETURN OF INCOME WAS PROCESSED U/S. 143(1) OF THE A CT. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND NOTICE U/S. 14 3(2) OF THE ACT WAS ISSUED. IN COMPLIANCE TO THE NOTICE, THE LD. AR OF THE ASSESSE E APPEARED FROM TIME TO TIME AND THE CASE WAS DISCUSSED. THE ASSESSING OFFICER ON P ERUSAL OF THE FINANCIAL STATEMENTS FOUND THAT THE ASSESSEE HAS CLAIMED DEPRECIATION ON WINDMILLS RS. 27,04,41,600/- PURCHASED ON 01.01.2011. THE ASSESSING OFFICER CAL LED FOR THE PURCHASE BILLS, AGREEMENT WITH TNEB, TNEB COMMISSIONING CERTIFICATE AND THE LAND DOCUMENTS ON :-3-: I.T.A. NO 2228/MDS/2016 C.O. NO. 140/MDS/2016 WHICH WINDMILLS ARE ERECTED. THE LD. AR FURNISHED SALE INVOICE OF WINDMILLS DATED 01.01.2011 ISSUED BY THE INDUS IND BANK FOR 154 WIN DMILLS FOR AN AGGREGATE COST OF RS. 67,61,04,008/- AND COPY OF MEMORANDUM OF AGREEM ENT DATED 18.10.2010 WITH HINDUJA FOUNDRIES FOR POWER PURCHASE AND NAME TRANS FER ISSUED BY SUPERINTEND ENGINEER, TANGEDCO, TIRUNELVELI. THE ASSESSING OFF ICER OBSERVED THAT THE ASSESSEE COMPANY HAS PRODUCED ONLY SALE BILLS FROM THE INDUS IND BANK AND CLAIMED AS OWNER OF THE WINDMILLS. WHEREAS, THE OWNERSHIP OF THE WI NDMILL CANNOT BE CHANGED BY ISSUE OF SALE BILL AND WINDMILLS ARE CONNECTED TO T HE GRID OF THE TNEB, NAME TRANSFER OF THE WINDMILLS IS ESSENTIAL TO PROVE THE STATUS O F OWNERSHIP. FURTHER, THE LD. AO IS OF THE OPINION THAT THE ASSESSEE COMPANY HAS NOT PR ODUCED THE NAME TRANSFER EVIDENCE FROM TNEB FOR WINDMILLS PURCHASED FROM IND US IND BANK AND ALSO ANY EVIDENCE SUPPORTING TRANSFER OF LAND UPON WHICH WIN DMILLS WERE ERECTED AND COULD NOT SUBSTANTIATE WITH DOCUMENTS OF OWNERSHIP OF THE WINDMILLS. THEREFORE, THE ASSESSING OFFICER DISALLOWED DEPRECIATION ON WINDMI LLS RS. 27,04,41,600/- AND PASSED ORDER U/S. 143(3) DATED 27.03.2014. 4. AGGRIEVED BY THE ORDER, ASSESSEE COMPANY FILED A N APPEAL WITH THE COMMISSIONER OF INCOME TAX (APPEALS). IN THE APPEL LATE PROCEEDINGS, THE LD. AR ARGUED THE GROUNDS AND REITERATED THE SUBMISSIONS M ADE IN THE ASSESSMENT PROCEEDINGS. THE LD. AR EXPLAINED THE OWNERSHIP OF THE WINDMILLS AND SUPPORTED WITH THE DETAILS OF OWNERSHIP AS REFERRED AT PAGE 3 PARA 6 OF THE ORDER AND RELIED ON THE JUDICIAL DECISIONS. THE LD. CIT(A) CONSIDERED THE FINDINGS OF THE ASSESSING OFFICER AND THE SUBMISSIONS OF THE ASSESSEE AND PER USED THE MEMORANDUM OF :-4-: I.T.A. NO 2228/MDS/2016 C.O. NO. 140/MDS/2016 AGREEMENT AND THE INVOICE COPIES AND FOUND THAT THE ASSESSING OFFICER HAS DISALLOWED THE CLAIM OF DEPRECIATION, AS THERE IS N O EVIDENCE IN SUPPORT OF TRANSFER OF LAND ON WHICH WINDMILLS ARE ERECTED OR ATTACHED TO. FURTHER, THE LD. CIT(A) RELIED ON PROVISIONS OF SECTION 32 OF THE ACT FOR ALLOWING TH E CLAIM OF DEPRECIATION ON WINDMILLS AND THE LD. AO HAS NOT DISPUTED OWNERSHIP OF THE WI NDMILL BUT WANTED EVIDENCE OF TRANSFER OF THE LAND IN THE SAID FINANCIAL YEAR. T HE LD. CIT(A) OBSERVED AT PARA 9 OF THE ORDER WHICH READ AS UNDER: '9. THE PROVISIONS ARE CONTAINED IN SEC. 32 OF THE ACT ALLOWS CLAIM OF DEPRECIATION ON TANGIBLE ASSETS SUCH AS WINDMILL S WHICH ARE OWNED WHOLLY OR PARTLY AND USED FOR THE PURPOSE OF THE BUSINESS OR PROFESSION OF THE CLAIMANT. IN THIS CASE, THERE APPEARS TO BE NO DIS PUTE ON THE OWNERSHIP OF THE IMPUGNED WINDMILLS. THIS IS SO AS EVIDENCED BY THE SALE BILLS WHICH HAD BEEN NOT DISPUTED BY THE AO AND RELIED UPON BY THE APPELLANT. THE LAND TRANSFER AND THE TITLE TRANSFER WAS PENDING BUT THA T WOULD NOT ADVERSELY IMPAIR THE OWNERSHIP OF THE APPELLANT OVER THE WIND MILLS. ONCE THE OWNERSHIP OF THE ASSETS WAS NOT DISPUTED WITH THAT OF THE USAGE OF THE SAME FOR THE PURPOSE OF ITS BUSINESS, THE APPELLANT WOUL D AUTOMATICALLY BE ENTITLED TO DEPRECIATION. IN FACT DEPRECIATION WAS TO BE GR ANTED IRRESPECTIVE OF THE CLAIM MADE BY THE ASSESSEE AS PROVIDED FOR IN THE S TATUTE. THE DENIAL OF DEPRECIATION WAS NOT BASED ON ANY FINDING BY THE AO THAT THE TRANSACTION WAS SHAM. IN MY CONSIDERED VIEW THEREFORE, WITH THE OW NERSHIP AND USE OF THE ASSETS FOR THE PURPOSES OF ITS BUSINESS NOT BEING I N DSPUTE, THE AO'S REFUSAL TO ALLOW DEPRECIATION CANNOT BE UPHELD. THESE BEING F ACTUAL FINDINGS, I AM OF THE CONSIDERED VIEW THAT THE PLEA MADE BY THE APPEL LANT WITH REGARD TO CLAIM OF DEPRECIATION MUST SUCCEED. THIS GROUND OF APPEA L IS ALLOWED.' AND ALLOWED THE APPEAL OF THE ASSESSEE. :-5-: I.T.A. NO 2228/MDS/2016 C.O. NO. 140/MDS/2016 5. AGGRIEVED BY THE CIT(A) ORDER, THE REVENUE HAS F ILED AN APPEAL BEFORE THE TRIBUNAL. BEFORE US, THE LD. DR ARGUED THAT THE LD. CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER IN ALLOWING THE DEP RECIATION ON THE WINDMILLS IRRESPECTIVE OF THE FACT THAT THERE IS NO EVIDENCE OF LAND OWNERSHIP IN RESPECT OF THE WINDMILLS. FURTHER, THE WINDMILLS WERE PURCHASED D IRECTLY FROM THE BANK AND THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE OF TRANSFER DEED / PATTA IN RESPECT OF LAND ON WHICH ERECTION OF WINDMILLS ARE COMPLETED. CONT RA, THE LD. AR OF THE ASSESSEE RELIED ON THE ORDERS OF THE CIT(A) AND EXPLAINED TH AT THE ASSESSEE-COMPANY HAD SUBSEQUENTLY TAKEN UP REGISTRATION OF LAND IN PIECE MEAL IN PHASES, DUE TO CERTAIN CLEARANCES FROM THE LAND OWNERS AND COMPLYING OTHER TRANSFER ISSUES. FURTHER, THE LD. AR SUBMITTED THAT THE MAXIMUM REGISTRATIONS/TRA NSFER OF LAND OWNERSHIP ARE COMPLETED AND THERE IS ABSOLUTELY NO DISPUTE ON THE OWNERSHIP OF THE LAND AND PRAYED FOR DISMISSING THE REVENUE APPEAL. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ASSESSEE CLAIMS TO HAVE PURCHASED LAND S FROM INDUS IND BANK ALONG WITH THE WINDMILLS, AND DULY ACCOUNTED FOR THE SAME IN ITS BOOKS OF ACCOUNT, ALSO PAYING CONSIDERATION THEREFOR. THE LANDS WERE THOUG H PENDING TRANSFER AT THE RELEVANT TIME, AND THEIR REGISTRATION IN ITS NAME, COMPLETING THE PROCESS (OF TRANSFER), HAS BEEN COMPLETED ONLY RECENTLY, I.E., DURING THE YEAR 2016. IN OUR VIEW, WHAT WOULD BE RELEVANT IS IF THERE HAS BEEN TRANSFE R OF LAND/S IN TERMS OF SECTION 2(47)(V) OF THE ACT. WE, ACCORDINGLY, ONLY CONSIDER IT PROPER THAT THE MATTER BE RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR E XAMINING THE ASPECT OF THE TRANSFER OF LAND/S ON WHICH THE SUBJECT WINDMILLS (154) ARE ERECTED IN-AS-MUCH AS THEY FORM :-6-: I.T.A. NO 2228/MDS/2016 C.O. NO. 140/MDS/2016 PART OF ONE, INTEGRATED UNIT/S. DEPRECIATION, WE MA KE IT CLEAR, WOULD THOUGH BE EXIGIBLE ON THE COST EXCLUSIVE OF THE COST OF LAND, WHICH THE LD. AR INFORMS HAS BEEN ACCOUNTED FOR SEPARATELY. WE, ACCORDINGLY, DIRECT S O, SETTING ASIDE THE IMPUGNED ORDER. THE AO SHALL ADJUDICATE IN ACCORDANCE WITH L AW, ISSUING DEFINITE FINDINGS OF FACT. FURTHER, THE ASSESSEE, ON WHOM THE ONUS TO PR OVE ITS CLAIM/S LIE, SHALL BE PROVIDED ADEQUATE OPPORTUNITY OF HEARING AND SHALL CO-OPERATE IN SUBMITTING THE REQUIRED INFORMATION. 7. THE ASSESSEE HAS FILED CROSS OBJECTION CO. NO. 1 40/MDS/2016 SUPPORTING THE CIT(APPEAL) ORDER. SINCE, WE HAVE S ET ASIDE THE CIT(A) ORDER AND REMITTED THE DISPUTED ISSUE TO THE FILE OF THE ASSE SSING OFFICER, THE CROSS OBJECTION BECOMES INFRUCTOUS AND DISMISSED 8. IN THE RESULT, REVENUE APPEAL ITA NO. 2228/MDS/2 016 IS ALLOWED FOR STATISTICAL PURPOSES AND CROSS OBJECTION CO NO. 140 /MDS/2016 IS DISMISSED. ORDER PRONOUNCED ON FRIDAY, THE 03RD DAY OF FEBRUAR Y, 2017 AT CHENNAI. SD/- ( ) (SANJAY ARORA) / ACCOUNTANT MEMBER SD/- ( . ) (G. PAVAN KUMAR) ' /JUDICIAL MEMBER /CHENNAI, / /DATED: 03RD FEBRUARY, 2017 JPV & )'12 32 /COPY TO: 1. %/ APPELLANT 2. )*% /RESPONDENT 3. 4 ( )/CIT(A) 4. 4 /CIT 5. 2 )'' /DR 6. 8 /GF