M/S. KATARIA INFRASTRUCTURE CORPORATION, Indore V. THE DCIT (CENTRAL)-I, Ratlam

CO 18/IND/2015

• Counselvise Citation: [2016] 123 COUNSELVISE.COM (IT) 1918 (ITAT-INDORE)
• Duration Of Justice: 9 month(s) 21 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 11-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 20-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA; RAJIV VARSHNAY
• Assessee Lawyers: P D NAGAR
• Keywords: Unexplained cash credit; Capital asset; Depreciation; Documents seized
• Section: 143(3); 153A; 133(6); 68

Judgement Text

KATARIA INFRASTRUCTURE CO. LTD. IT(SS)A NO. 22/IND/2015 & OTHERS 1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER AND SHRI B.C. MEENA, HONBLE ACCOUNTANT MEMBER IT(SS)A NOS.22/IND/2015 AND ITA 689/IND /2014 A.Y.20 06-07 DY. COMMR. OF INCOME TAX (CENTRAL)-I, INDORE ::: APPELLANT VS M/S KATARIA INFRASTRUCTURE CORPN. RATLAM ::: RESPONDENT CO NO. 18/IND/2015 ARISING OUT OF IT(SS) A NOS.22/IND/2015 M/S KATARIA INFRASTRUCTURE CORPN. RATLAM ::: OBJECTOR VS DY. COMMR. OF INCOME TAX (CENTRAL)-I,INDORE ::: RESPONDENT REVENUE BY SHRI RAJIV VARSHNAY & SHRI R.A.VERMA ASSESSEE BY SHRI P.D. NAGAR DATE OF HEARING 9.12.2015 DATE OF PRONOUNCEMENT 12 .1.2016 KATARIA INFRASTRUCTURE CO. LTD. IT(SS)A NO. 22/IND/2015 & OTHERS 2 O R D E R PER BENCH IT(SS)A NO. 22/IND/2015 FILED BY THE REVENUE AND C.O. 18/IND/2015 FILED BY THE ASSESSEE EMANATE FROM TH E ORDER OF THE LEARNED CIT(A)-II, INDORE, DATED 31.10.2 014. IT(SS) A NO. 689/IND/2014 FILED BY THE REVENUE EMANAT ES FROM THE ORDER OF THE CIT(A)-26, MUMBAI DATED 14.8.20 14. 2. THE ASSESSEE IS A FIRM ENGAGED IN THE BUSINESS OF GENERATION OF WING POWER ENERGY THROUGH WIND MILLS A ND SALE THEREOF. IN THE REVENUES APPEAL ONE OF THE ISSUE S INVOLVED IS DEPRECIATION ON WIND MILL. THE ASSESSEE F IRM HAS PURCHASED 3 WIND MILLS IN THE ASSESSMENT YEARS 2003 - 04 AND 2004-05 FROM M/S ENERCON INDIA LIMITED BY ENTERING INTO TURN-KEY CONTRACTS. THE ASSESSING OFFI CER DID NOT ALLOW DEPRECIATION. HOWEVER, THE LEARNED CIT(A) GRANTED RELIEF TO THE ASSESSEE BY HOLDING AS UNDER :- KATARIA INFRASTRUCTURE CO. LTD. IT(SS)A NO. 22/IND/2015 & OTHERS 3 3.1 I HAVE GONE THROUGH THE RELEVANT PARAS OF ASSESSMENT ORDER WHEREIN THE A.O. HAS GIVEN REASONS FOR DISALLOWING THE DEPRECIATION CLAIMED @80% ON WI ND MILL PLANT. I HAVE ALSO GONE THROUGH THE WRITTEN SUBMISSIONS OF THE APPELLANT WHICH ARE REPRODUCED ABOVE. THE VARIOUS DOCUMENTS FILED IN SUPPORT OF CL AIM FILED IN THE FORM OF PAPER BOOK HAVING 430 PAGES HA VE ALSO BEEN GONE THROUGH. 3.2 THE ORDER PLACED BY THE APPELLANT TO PURCHASE T HE WIND MILLRELEVANS THAT IT IS A TURNKEY CONTRACT FOR TRANSPORTATION, INSTALLATION, ERECTION, COMMISSIONI NG AND MAINTENANCE OF THE PLANT. THE PURCHASE AND OWNERSHI P OF PLANT HAVE BEEN EVIDENCED THROUGH VARIOUS DOCUMENTS VIZ. I.E PURCHASSER ORDER FOR THE WIND MI LL, II NATURE OF CONTACT WHICH IS FOUND TO BE ASED ON TURN KEY, III. SALE INVOICES RAISED BY M/S ENERCON INDIA LTD. , IV. TRIPARTITE AGREEMENT AMONGST APPELLANT, M/S RAJASTH AN KATARIA INFRASTRUCTURE CO. LTD. IT(SS)A NO. 22/IND/2015 & OTHERS 4 RENEWAL ENERGY CORPORATION LTD. ANDM/S ENERCON IND IA ISSUED BY M/S AJMER VIDYUT VITARAN NIGAM LTD. VI. C OPY OF SUBLEASE OF LAND, ON WHICH WIND MILL WAS INSTALL ED, EXECUTED IN FAVOUR OF APPELLANT, VII. INSURANCE POL ICY ON THE PLANT IN FAVOUR OF APPELLANT, VIII. CERTIFICATE OF GENERATION OF POWER ISSUED BY RESPECTIVE ELECTRICIT Y BOARDS, IX. COPIES OF DEBIT NOTES RAISED TOWARDS SA LE OF ENERGY, X. COPIES OF BANK STATEMENTS IN WHICH THE S ALE PROCEEDS OF ELECTRICITY RECEIVED FROM ELECTRICITY B OARDS, HAVE BEEN CREDITED, XI. PHOTOGRAPHS OF PLANT HAVING NAME OF APPELLANT INSCRIBED ON THE WIND MIL.IT IS A LSO NOT DISPUTED THAT THE APPELLANT HAS REFLECTED THE INCOM E ON ACCOUNT OF SALE OF ELECTRICITY TO GOVERNMENT OWNED ELECTRICITY BOARDS. THE A.O. HAS DISCUSSED THE CONT ENTS OF PURCHASE AGREEMENT AMONGST THE APPELLANT AS POWWER PRODUCER, M/S ENERCON INDIA LTD. AS DEVELOPE R AND M/S RAJASTHAN RAJYA VIDYUT PRASARAN NIGAM LTD. IT KATARIA INFRASTRUCTURE CO. LTD. IT(SS)A NO. 22/IND/2015 & OTHERS 5 HAAS BEEN NOTICED BY THE A.O.THAT PERMISSION TO SET THER WIND ENERGY HAS BEEN GIVEN TO M/S ENERCON INDIA LTD . AND FURTHER IT IS ALSO BROUGHT OUT THAT M/S ENERCON INDIA LTD. HAS FACILITATED THE APPELLANT TO INJECT AND TR ANSMIT THE ENERGY SO GENERATED IN THE STATE GRADE. THESE A RE THE OPERATIONAL FACILITIES PROVIDED BY M/S ENERCON INDIA LTD. HAVING TECHNICAL KNOWHOW TO THE PURCHASER OF A LL THE WIND MILL WHICH CANNOT VITIATE THE OWNERSHIP OF THE PLANT AND THE FACT THAT THE APPELLANT HAS MADE HUGE INVESTMENT AND RECEIVED THE SALE PROCEEDS OF ELECTR ICITY. FURTHER AT PARA 10.9 OF THE ASSESSMENT ORDER THE A. O. HAS BROUGHT OUT AND DISCUSSED VARIOUS DOCUMENTS SEIZED DURING THE COURSE OF SEARCH PROCEEDINGS WHIC H ARE USED AS INDICATORS THAT THE APPELLANT IS NOT TH E REAL OWNER OF THE WIND MILL. IHAVE GONE THROUGH THESE PA PERS AND FOUND THAT NONE OF THE PAPERS AS DSICUSSED UNDE R PARA10.9 ESTABLISH THAT THE APPELLANT IS NOT THE RE AL KATARIA INFRASTRUCTURE CO. LTD. IT(SS)A NO. 22/IND/2015 & OTHERS 6 OWNER OF THE WIND MILL. THE PAPER LISTED AT SERIAL NO. II. I.E. LPS-A1/35, PAGE 98 IS A LETTER WRITTEN BY SR.MANAGER, PROJECT CO-ORDINATION, ENERCON INDIA LT D. WHICH IS ADDRESSED TO M/S P.D. POWER I.E. THE APPEL LANT AND ENCLOSES ORIGINAL POWER PURCHASE AGREEMENT BETWEEN D.P.AND GUJARAT URJA VIKAS NIGAM. THE PAPER LISTED AT SERIAL NO. III O.E. LPS-A1/35 PAGE 46 IS A LSO A LETTER WRITTEN BY M/S ENERCON INDIA LTD. TO THE APP ELLANT WHEREBY COMMISSIONING CERTIFICATE FROM GEDA HAS BEE N FORWARDED. SIMILARLY THE PAPER LISTED AT SERIAL NO. IV, I.E. LPS-A1/35 PAGE 42 IS A LETTER FROM M/S ENERCON INDIA LTD. TOD.. POWER INTIMATING THE DATE FOR REGISTRATI ON OF LAND LEASE AGREEMENT WITH THE APPELLANT IN THE OFFI CE OF SUB-REGISTRAR, KALYANPUR, DISTRICT JAMNAGAR, GUJARA T. THE PAPER LISTED AT SERIAL NO. V, LPS A1/12 IS ALSO A LETTER WRITTEN BY G.M. (MARKETING), M/S ENERCON IND IA LTD. WRONGLY WRITTEN BY A.O. AS SR. MANAGER, PROJEC T CO- KATARIA INFRASTRUCTURE CO. LTD. IT(SS)A NO. 22/IND/2015 & OTHERS 7 ORDINATION REGARDING REALISATION TOWARDS THE SALE O F WERS AFTER ADJUSTMENT OF PROCESSING CHARGES PERTAIN ING TOD.P. POWER. SIMILARLY, THE PAPER LISTED AT SERIAL NO. VI IE. LPS-A1/19 PAGE 56 WRONGLY WRITTEN AS PAGE NO. 52 AND CLARIFIED BY A.O. DURING THE COURSE OF APPEAL PROCEEDINGS AS IS ALSO A LETTER FROM D.P. POWER, TH E APPELLANT TO M/S ENERCON INDIA LTD. WHEREBY A CHEQU E OF RS.1.01 CRORES HAS BEEN FORWARDED FOR PURCHASE O F VARIOUS MACHINERY RELEVANT TO WIND MILL. THE PAPER LISTED AT SERIAL NO. VII. I.E. LPS-A1/12, PAGE 49 IS ALSO FOUND TO BE THE LETTER WRITTEN BY SR. MANAGER,PROJE CT COORDINATION TO D.P. POWER REGARDING GEDA FORM AND SUB LEASE DEED. ALL THESE DOCUMENTS ARE IN THE NATR UE OF FACILITATION GIVEN BY THE M/S ENERCON INDIA LTD. WH O WAS FOUND ENGAGED FOR LOOKING AFTER THE AFFAIRS OF THE APPELLANT. I DO NOT SEE ANY CONTENT IN THESE LETTER S TO PROVE THAT EITHER THE APPELLANT WAS NOT THE KATARIA INFRASTRUCTURE CO. LTD. IT(SS)A NO. 22/IND/2015 & OTHERS 8 OWNER/POSSESSOR OF THE WIND MILL OR THE REALISATION ON ACCOUNT OF SALE OF ELECTRICITY WERE NOT RECEIVED BY THE APPELLANT COMPANY. 3.3 IT IS ALSO SEEN THAT M/S ENERCON INDIA LTD. IS A MULTI-NATIONAL COMPANY WHICH HAS PAID ITS PART OF T AXES ON THE INCOME EARNED ON SALE OF WIND MILLS. ACCORDI NG TO INDIAN WIND FARM DICTIONARY AS MANY AS 5000 WIND MILLS HAVE BEEN SOLD AND COMMISSIONED BY IT IN THE SAME MANNER AS HAS BEEN DONE FOR THE APPELLANT. THE OWNERSHIP OF WIND MILL CAN BE SAID TO HAVE PASSED I N FAVOUR OF APPELLANT ON THE DATE OF INVOICE RAISED B Y THE SUPPLIER. M/S ENERCON INDIA LTD. HAS NOT CLAIMED DEPRECIATION ON THE MACHINE AT ANY STAGE AS AN OWNE R. IT IS OBSERVED THAT THE APPELLANT BESIDES INVESTING ITS CAPITAL HAS RAISED LOAN FROM SBI AGAINST HYPOTHECAT ION OF WIND MILL. THIS FACT IS FOUND EVIDENCED THROUGH A SANCTION LETTERDATED 14.9.2007. THEREFORE, INVESTME NT KATARIA INFRASTRUCTURE CO. LTD. IT(SS)A NO. 22/IND/2015 & OTHERS 9 MADE FOR ACQUIRING A PLOT WITH MOTIVE OF EARNING PR OFIT CANNOT BE CONSTRUED AS SIMPLE FINANCIAL TRANSACTION . 3.4 DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S 153A OF IT ACT, 1961 SPECIFIC INQUIRIES HAVE BEEN F OUND MADE FROM THE SUPPLIER OF MACHINE REGARDING TRANSFE R OF OWNERSHIP AND FROM GUJARAT ELECTRICITY BOARD AND M. P. ELECTRICITY BOARD REGARDING PURCHASE OF ELECTRICITY GENERATED BY THE WIND MILL UNDER CONSIDERATION. BOT H THE COMPANY AND ELECTRICITY BOARDS HAVE CONFIRMED T HE GENUINENESS OF TRANSACTIONS AND QUERIES RAISED BY T HE AUTHORITIES HAD BEEN APPROPRIATELY REPLIED TO. THE A.O. IS FOUND TO HAVE VISITED PERSONALLY OR THROUGH STAFF T O SEE THE INSTATLLATION AND OWNERWHIP OF THE WIND MILL . THE TECHNICAL ISSUES RELATED TO INSTALLATION OF PLANT, BILLING ETC. ARE STATED TO HAVE BEEN DISCUSSED WITH THE STA FF AT SITE. A FEW PHOTOGRAPHS OF SUCH VISITES HAVE BEEN F ILED BY APPELLANT WHICH ARE PLACED ON RECORD. THEREFORE, THE KATARIA INFRASTRUCTURE CO. LTD. IT(SS)A NO. 22/IND/2015 & OTHERS 10 EXISTENCE AND INSTALLATION OF WIND MILLS WITHIN SPE CIFIED PERIOD ARE NOT DISPUTED. 3.5 THE CONTENTION OF THE A.O. THAT M/S ENERCON IND IA LTD. HAS SOLD WIND MILL TO FACILITATE THE APPELLANT TO CLAIM THE DEPRECIATION HAS NOT BEEN BORNE OUT OF THE FACT S AND CIRCUMSTANCES OF THE CASE. IF THE OWNERSHIP OF MILL IS NOT TRANSFERRED WHY SHOULD THE COMPANY PAY THE TAXES ON THE INCOME EARNED ON SUCH TRANSACTION AND LOSE THE BENEFIT OF DEPRECIATION. THE A.O. HAS ALSO NOT DISP UTED THE INCOME EARNED AND OFFERED BY APPELLANT COMPANY ON ACCOUNT OF SALE OF POWER GENERATED THROUGH THESE WI ND MILLS FOR TAXATION PURPOSE. THEN THERE IS NO REASON WHY THE OWNERSHIP AND CLAIM OF DEPRECIATION ON WIND MIL L COULD BE DOUBTED. THE INSTALLATION AND MAINTENANCE OF PLANT BY M/S ENERCON INDIA LTD. IS A NORMAL FEATURE IN TURNKEY PROJECTS PARTICULARLY WHEN THE COMPANY IS SPECIALISED IN THE FILED OF OPERATION, TRANSMISSION AND KATARIA INFRASTRUCTURE CO. LTD. IT(SS)A NO. 22/IND/2015 & OTHERS 11 MAINTENANCE OF SUCH PLANT. MOREOVER, IT IS OBSERVED THAT THE COMPANY HASA RECOVERED RECURRING CHARGES ON SUC H SERVICES FROM THE APPELLANT. THEREFORE, IS MY OPINI ON, THE OPERATION AND MAINTENANCE OF PLANT BY THE SUPPLIER COMPANY BEING IN POSSESSION OF TECHNICAL KNOWHOW, DOES NOT TAKE AWAY THE RIGHT OF OWNERSHIP OF WINDMI LL FROM THE APPELLANT. 3.6 TRANSFER AND SALE ARE DEFINED IN RESPECTIVE A CTS I.E. TRANSFER OF PROPERTY ACT AND SALE OF GOODS AC T. ACCORDING TO THESE STATUTES, THE SALE BECOMES COMPL ETE ONCE THE INVOICE IS RAISED IN FAVOUR OF BUYER FOR T HE PRICE PAID BY IT UNDER A CONTRACT OF SALE. THEREFORE, TRA NSFER OF OWNERSHIP IS COMPLETE ONCE THE SALE IS COMPLETE. TH E SECTION 2(47) OF INCOME TAX ACT DEFINES THE WORD TR ANSFER IN RELATION TO A CAPITAL ASSET WHICH INCLUDES SALE OR EXTINGUISHMENT OF RIGHTS THEREIN. THE SUBSECTION IV OF SECTION 2(47) INCLUDED ANY TRANSACTION INVOLVING KATARIA INFRASTRUCTURE CO. LTD. IT(SS)A NO. 22/IND/2015 & OTHERS 12 OWNERSHIP OR ANY IMMOVABLE PROPERTY IN A PART PERFORMANCE OF CONTRACTS IN THE NATURE AS REFERRED IN SECTION 53(A) OF TRANSFER OF PROPERTY ACT. 3.7 IN THE INSTANT CASE, TRANSFER OF ASSET IS NOT O NLY COMPLETE IN TERMS OF TRANSFER OF PROPERTY ACT BY TH E BENEFITS OUT OF THE SAID ASSET HAVE ALSO BEEN DERIV ED BY THE APPELLANT IN THE FORM OF INCOME ON ACCOUNT OF S ALE OF ELECTRICITY TO VARIOUS PARTIES. MOREOVER, THERE IN NO DISPUTE THAT THE APPELLANT HAS MADE A HUGE INVESTME NT RUNNING INTO CRORES FOR INSTALLATION OF WIND MILLS PARTLY BY OBTAINING LOAN FROM THE FINANCIAL INSTITUTIONS. THESE FACTS HAVE EEN EXAMINED BY A.O. FROM BOOKS OF ACCOU NTS OF APPELLANT AND ASCERTAINED FROM INDEPENDENT INQUR IES CONDUCTED BY THE A.O. FROM ELECTRICITY BOARDS REMIT TING THE PRICE OF ELECTRICITY DIRECTLY TO APPELLANT. TH E HON'BLE SUPREME COURT IN THE CASE OF MYSORE MINERALAS LTD. VS. CIT, 239 ITR 775 (SC) HAS HELD THAT THE BENEFIT OF KATARIA INFRASTRUCTURE CO. LTD. IT(SS)A NO. 22/IND/2015 & OTHERS 13 DEPRECIATION HAS TO GO TO THE PERSON WHO MAKES THE CAPITAL INVESTMENT WHICH GRADUALLY REDUCES THE VALU E OF INVESTMENT. THE RELEVANT PART OF JUDGMENT IS REPROD UCED HEREUNDER :- IN OUR OPINION, THE TERM OWNED AS OCCURRING IN SECTION 32(1) OF THE INCOME TAX ACT, 1961 MUST BE ASSIGNED A WIDER MEANING. ANYONE IN POSSDSSION OF PROPERTY IN HIS OWN TITLE EXERCISING SUCH DOMINATION OVER THE PROPE RTY AS WOULD ENABLE OTHERS BEING EXCLUDED THEREFROM AND HAVING THE RIGHT TO USE AND OCCUPY THE PROPERTY AND /OR TO ENJOY ITS USEFRUCT IN HIS OWN RIGHT WOULD BE THE OWNER OF THE BUILDINGS THOUGH A FORMAL DEED OF TITLE MAY NOT HAVE BEEN EXECUTED AND REGISTYERED AS CONTEMPLATED BY THE TRANSFER OF PROPERTY ACT, THE REGISTRATION ACT, ETC. BUILDING OWNED BY THE ASSESSEE THE EXPRESSION AS OCCURING IN SECTION 32(1) OF THE INCOME TAX ACT MEA NS THE PERSON WHO HAVING ACQUIRED POSSESSION OVER THE KATARIA INFRASTRUCTURE CO. LTD. IT(SS)A NO. 22/IND/2015 & OTHERS 14 BUILDING IN HIS OWN RIGHT USES THE SAME FOR THE PUR POSES OF THE BUSIENSS OR PROFESSION THOUGH A LEGAL TITLE HAS NOT BEEN CONVEYED TO HIM CONSISTENTLY WITH THE REQUIREM ENTS OF LAWS SUCH AS THE TRANSFER OF PROPERTY ACT AND TH E REGISTRATION ACT, ETC. BUT NEVERTHELESS IS ENTITLED TO HOLD THE PROPERTY TO THE EXCLUSION OF OTHERS. ..THE VERY CONCEPT OF DEPRECIATION SUGGESTS THAT THE TAX BENEFIT ON ACCOUNT OF DEPRECIATION LEGITIMATELY BELONGS TO ONE WHO HAS INVESTED IN THE CAPITAL ASSE T IS UTILISING THE CAPITAL ASSWET AND THEREBY LOSING GRA DUALLY INVESTMENT CAUSED BY WEAR AND TEAR AND WOULD NEED T O REPLACE THE SAME BY HAVING LOST VALUE FULLY OVER A PERIOD OF TIME. 3.8 IN THE SAME CASE OF MYSORE MINERALS LTD. HON'BL E SUPREME COURT HAS HELD THAT KEEPING IN VIEW THE OB JECT AND SCHEME OF INCOME TAX ACT IN TAXING THE INCOME T HE REAL OWNER IS THER ONE WHO IS ENTITLED TO RECEIVE I NCOME KATARIA INFRASTRUCTURE CO. LTD. IT(SS)A NO. 22/IND/2015 & OTHERS 15 FROM SUCH PROPERTY. THE RELEVANT PART OF DECISION I S REPRODUCED HEREUNDER :- WE ARE CONSCIOUS OF THE SETTLED POSITION THAT UNDE R THE COMMON LAW, OWNER MEANS A PERSON WHO HAS GOT VALI D TITLE LEGALLY CONVEYED TO HIM AFTER COMPLYING WITH THE REQUIREMENTS OF LAW SUCH AS THE TRANSFER OF PROPERT Y ACT, REGISTRATION ACT, ETC. BUT IN THE CONTEXT OF SECTION 22 OF THE INCOME TAX ACT, GHAVING REGARD TO THE GRO UND REALITIES AND FURTHER HAVING REGARD TO THE OBJECT O F THE INCOME TAX ACT, NAMELY, TO TAX THE INCOME, WE ARE OF THE VIEW OWNER IS A PERSON WHO IS ENTITLED TO REC EIVED INCOME FROM THE PROPERTY IN HIS OWN RIGHT. 3.9 IN THE CASE OF MYSORE MINERALS LTD. THE DEPRECIATION WAS DISALLOWED ON THE GROUND THAT THE CAPITAL ASSET WAS NOT REGISTERED IN THE NAME OF ASSESSEE. WHEREAS IN THE CASE OF APPELLANT THE TRA NSFER OF WIND MILL HAS DULY TAKEN PLACE AS SOON AS THE SA LE BILL KATARIA INFRASTRUCTURE CO. LTD. IT(SS)A NO. 22/IND/2015 & OTHERS 16 OF THE MACHINERY HAS BEEN RAISED AND CONSIDERATION FOR THE SAME HAS BEEN PAID. THEREFORE IN VIEW OF THE AB OVE, I DO NOT FIND ANY REASON TO DOUBT THE OWNERSHIP AND POSSESSION OF THE WIND MILL FOR CLAIMING DEPRECIATI ON AT HIGHER RATE. THE PURPOSE OF GIVING HIGHER RATE OF DEPRECIATION ON INSTALLATION OF WIND MILL IS TO HAR NESS AND ENCOURAGE GENERATION OF NON-CONVENTIONAL SOURCE OF ENERGY. DENIAL OF SAME SHALL MEAN THE DEFEAT OF PURPOSE. IT HAS ALSO BEEN BROUGHT TO MY NOTICE THAT CIT(A) IN THE CASE OF APPELLANT HAVE ALLOWED SUCH DEPRECIATION ON GHIGHER RATE AND THE DEPARTMENT HAD NOT PREFERRED FURTHER APPEALS AGAINST SUCH DECISIONS. I N THE INSTANT CASE, THE OWNERSHIP HAS BEEN FURTHER POVED BY DIRECT INQUIRIES FROM THE SUPLIER/ELECTRICITY BOARD AND PHYSICAL VERIFICATION OF EXISTENCE OF SAME THROUGH SPOT VISITS. THEREFORE, I DO NOT FIND ANY ADVERSE MATERI AL BROUGHT OUT BY THE A.O. TO CONTROVERT THE FINDINGS OF THEN KATARIA INFRASTRUCTURE CO. LTD. IT(SS)A NO. 22/IND/2015 & OTHERS 17 CSIT(A) IN THE CASE OF M/S P.D. POWER, AN ASSOCIATE CONCERN OF THE APPELLANT. 3.10 IN VIEW OF THE ABOVE DISCUSSION, IT IS APPAREN T THAT THE APPELLANT HAS OWNED AND POSSESSIOED THE WIND MI LL MADE HUGE INVESTMENT SOLD ELECTRICITY TO VARIOUS ELECTRICITY BOARDS, REFLECTED THE SALE PROCEEDS OF ELECTRICITY IN BOOKS OF ACCOUNTS DURING THE PERIOD UNDER CONSIDERATION. THEREFORE, THE ACTION OF A.O. DENYIN G THE DEPRECIATION CANNOT BE SUSTAINED. ACC A.O. IS DIREC TED TO ALLOW THE DEPRECIATION @ 80% IN THE RELEVANT A.YS. FROM A.Y. 2006-07 TO A.Y. 2012-13 AS PER PROVISIONS OF INCOME TAX ACT, 1961. THESE GROUNDS OF APPEAL ARE ALLOWED. 3. THE LEARNED DR RELIED UPON THE ORDER OF THE ASSES SING OFFICER WHEREAS THE LEARNED COUNSEL FOR THE ASSESSEE RELIED UPON THE ORDER OF THE LEARNED CIT(A). KATARIA INFRASTRUCTURE CO. LTD. IT(SS)A NO. 22/IND/2015 & OTHERS 18 4. WE HAVE HEARD BOTH THE SIDES. AFTER HEARING WE ARE O F THE VIEW THAT THE ASSESSEE WAS ABLE TO ESTABLISH THE OWNERSHIP OF THE WIND MILL BY WAY OF FILING FOLLOWI NG DOCUMENTS :- A) PURCHASE ORDERS FOR WIND TURBINE (WIND MILL) PLACED TO M/S. ENERCON INDIA LTD AS PER TURN-KEY CONTRACT I.E. FOR SUPPLY OF WIND MILL, TRANSFORMERS & TOWER, ERECTION AND COMMISSIONING OF THE WIND MILL AT SITE. B) COPIES OF INVOICES RAISED BY THE SUPPLIER OF WIND MILLS I.E. M/S. ENERCON INDIA LTD. DURING A.Y. 2003- 04 & 2007-08 C) THE SUB - LEASE DEED OF LAND BY M/S. ENERCON INDIA LTD IN THE FAVOUR OF APPELLANT FOR SETTING UP THE WIND MILL. D) COPY OF SANCTION LETTERS ISSUED BY HDFC BANK LTD WHO SANCTIONED TERM LOAN AGAINST HYPOTHECATION OF WIND MILLS. E) TRI - PARTY AGREEMENTS EXECUTED ON VARIOUS DATES BETWEEN M/S. RAJSTHAN RAJYA VIDYUT PRASARAN NIGAM LIMITED (RVPN), M/S. ENERCON INDIA LTD AND THE APPELLANT WHEREBY AFTER INSTALLATION, ERECTION AND COMMISSIONING, RVPN HAD AGREED TO PURCHASE POWER GENERATED IN THE WIND MILL. F) COMMISSIONING CERTIFICATES ISSUED BY JVVNL AND KATARIA INFRASTRUCTURE CO. LTD. IT(SS)A NO. 22/IND/2015 & OTHERS 19 GEDA G) CERTIFICATE OF GENERATION OF POWER ISSUED BY RESPECTIVE JVVNL. H) INSURANCE POLICY IN FAVOUR OF OWNER OF THE WIND MILLS I.E. APPELLANT ISSUED BY INSURANCE COMPANY. I) SPECIMEN COPIES OF DEBIT NOTES RAISED BY THE APPELLANT TO STATE ELECTRICITY BOARDS BASED ON ELECTRICITY UNITS GENERATED AND TRANSMITTED IN POWER GRID AND COPIES OF BANK STATEMENTS OF HDFC IN SUPPORT OF PAYMENT RECEIVED. WE ALSO FIND THAT THE ASSESSEES NAME ALSO FIGURES IN TH E LIST OF WIND FARM OWNERS OF INDIA. M/S ENERCON INDIA L TD. HAS RECORDED SALES OF WIND MILLS TURBINE TO THE ASSESS EE. THE ASSESSEE HAS ALSO GOT THE INSURANCE POLICIES IN ITS NAME. ALL THESE PROVE THE ASSESSEES OWNERSHIP BEYO ND ANY DOUBT. WE WOULD LIKE TO STATE THAT DURING THE SEARC H OPERATION CARRIED OUT AT THE PREMISES OF THE ASSESSEE O N 7.11.2011. NO INCRIMINATING DOCUMENT PERTAINING TO PURCHASES OF THE WIND MILL TURBINES WERE FOUND AND SE IZED. ONLY REGULAR PAPERS AND CORRESPONDENCE RELATING TO M/S D.P. POWER WERE FOUND AND SEIZED. THESE DOCUMENTS WE RE KATARIA INFRASTRUCTURE CO. LTD. IT(SS)A NO. 22/IND/2015 & OTHERS 20 ONLY PURCHASE INVOICES OF THE WIND MILLS, COMMISSION ING CERTIFICATE, LAND LEASE AGREEMENT WITH ENERCON INDIA LIMITED AND LETTERS ISSUED BY ELECTRICITY BOARD REGARD ING FORWARDING OF CHEQUES IN FAVOUR OF THE FIRM, THEREFORE , THESE PAPERS CANNOT BE SAID TO BE INCRIMINATING DOCUMENTS. T HE ASSESSING OFFICER HAS PHYSICALLY VERIFIED THE LOCATION OF DIFFERENT WIND MILLS, THEREFORE, WE ARE UPHOLDING TH E ORDER OF THE LEARNED CIT(A) ON THIS ISSUE. 5. THE ASSESSEE HAS CHALLENGED THE VALIDITY OF ASSESSMEN T U/S 153A OF THE ACT. HOWEVER, AT THE TIME OF HEARIN G, THIS GROUND WAS NOT PRESSED. THEREFORE, THE SAME IS DISMIS SED FOR WANT OF PROSECUTION. 6. IN BOTH THESE REVENUES APPEALS, THE OTHER GROUND IS AGAINST THE DELETING THE ADDITION OF RS.54,50,170/- MAD E BY THE ASSESSING OFFICER U/S 68 OF THE ACT. THE ASS ESSEE HAS RECEIVED CASH CREDIT OF RS.18 LACS FROM BABITA KHANDELWAL AND RS.36,50,170/- FROM CHANDRAKNANT KATARIA INFRASTRUCTURE CO. LTD. IT(SS)A NO. 22/IND/2015 & OTHERS 21 MEHTA. THIS ADDITION WAS MADE BY THE ASSESSING OFFICER WHILE MAKING ORDER U/S 143(3) OF THE ACT WHICH WAS DE LETED BY THE LEARNED CIT(A). IN THE REVENUES APPEAL, THE ITAT RESTORED THE ISSUE TO THE ASSESSING OFFICER. THE A SSESSING OFFICER AGAIN MADE THE ADDITION WHILE MAKING ORDER U/S 254 OF THE ACT. THE ASSESSEE FILED THE APPEAL AND THE LEARNED CIT(A)-26, MUMBAI, DELETED THE ADDITION. THE ADDITION WAS ALSO MADE FOR THE AMOUNT WHILE MAKING THE ORDER U/S 153A READ WITH SECTION 143(3) OF THE ACT. HERE ALSO, THIS ADDITION WAS DELETED BY THE LEARNED CIT(A) ON THE BASIS THAT THIS ADDITION WAS DELETED BY THE LEARNED CIT( A) VIDE ITS ORDER DATED 24.8.2014. 7. WE HAVE HEARD BOTH THE SIDES. AFTER HEARING BOTH TH E SIDES, WE ARE OF THE VIEW THAT THE ASSESSEE HAS SUBMIT TED RELEVANT DOCUMENTS WITH REGARD TO THESE CREDITORS. TH E RETURN OF INCOME FILED BY BABITA KHANDELWAL FOR THE ASSESSMENT YEAR 2006-07 ALONG WITH COPY OF CAPITAL KATARIA INFRASTRUCTURE CO. LTD. IT(SS)A NO. 22/IND/2015 & OTHERS 22 ACCOUNT AND STATEMENT OF AFFAIRS WAS FILED. A COPY OF BAN K ACCOUNT OF BABITA KHANDELWAL FOR THE PERIOD FROM 10.11.2005 TO 31.12.2005 WAS ALSO FILED. BABITA KHANDELWAL HAS RECEIVED THE AMOUNT FROM D.P. JEWELLERS AND SHE HAS EXPLAINED THE SOURCE OF SOURCE. SHE HAS ALSO RESPONDED TO THE NOTICE ISSUED U/S 133(6) OF THE AC T. SHE ALSO HAS SUBMITTED AN AFFIDAVIT AFFIRMING THAT SHE HAS ADVANCED THE AMOUNT TO THE ASSESSEE. IN THE CASE OF CHANDRAKANT MEHTA ALSO THE COPY OF RETURN OF INCOME WAS FILED FOR THE RELEVANT ASSESSMENT YEAR, COPY OF ACCOUN T AND STATEMENT OF AFFAIRS WAS ALSO FILED, BANK STATEMENT WAS ALSO FILED, AN AFFIDAVIT WAS ALSO SUBMITTED. THE SOURCE OF TH E ADVANCE WAS FROM THE LONG TERM CAPITAL GAIN OF RS.74,15,926/- ON THE SALE OF SHARES. THUS, HE IS ABL E TO EXPLAIN THE SOURCE OF THE SOURCE. THIS ADDITION HAS BE EN DELETED BY THE LEARNED C.I.T. (A) BY REL YING ON THE KATARIA INFRASTRUCTURE CO. LTD. IT(SS)A NO. 22/IND/2015 & OTHERS 23 DECISION OF THE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SMT. SUSHILA DEVI KHADARIA; 319 ITR 413 WHEREIN IT WAS HELD AS UNDER :- HELD, DISMISSING THE APPEAL, (I) THAT ADMITTEDLY A LL THESE FRESH LOANS WERE TAKEN BY ACCOUNT PAYEE CHEQUES AND THE RECORD INDICATED THAT THERE WAS NO CASH PAYMENT IN THE ACCOUNT OF THE BORROWER PRIOR T O THE ISSUANCE OF SUCH CHEQUES. AFTER ANALYSING THE ENTIRE EVIDENCE REGARDING GRANT OF THESE LOANS, THE RE WAS A CONCURRENT FINDING OF FACT OF THE COMMISSIONE R (APPEALS) AS WELL AS THE TRIBUNAL THAT THE LOANS WE RE GENUINE LOANS. THE DETAILS OF REPAYMENTS WERE ALSO FURNISHED. THERE WAS ALSO A CONCURRENT FINDING THAT THE AMOUNT OF RS.4,36,838 WAS THE INTEREST PAID BY THE ASSESSEE ON SUCH GENUINE LOANS. THE ADDITIONS I N RESPECT OF SUCH LOANS AND INTEREST WERE NOT VALID. KATARIA INFRASTRUCTURE CO. LTD. IT(SS)A NO. 22/IND/2015 & OTHERS 24 (II) THAT THE ASSESSEE HAD BEEN PURCHASING AND SELLING SHARES AS A PART OF HER INVESTMENT. THE ASSESSEE HAD ALSO RECEIVED INCOME BY WAY OF DIVIDENDS ON THESE SHARES. THIS INCOME ALONG WITH FINANCE CHARGES AND THE INTEREST WAS SHOWN AS INCOM E FROM OTHER SOURCES. THE INTEREST WAS PAID ON LOANS OBTAINED FOR MAKING THESE INVESTMENTS IN SHARES. IT WAS DEDUCTIBLE UNDER SECTION 57(III).' THE LEARNED CIT(A) HAS ALSO RELIED UPON THE DECISION OF THE BOMBAY HIGH COURT IN THE CASE OF CIT VS. TANIA INVESTMENTS P. LTD.; 322 ITR 394 (BOM) WHEREIN IT W AS HELD AS UNDER :- THE ASSESSING OFFICER DISALLOWED THE LOSS ON THE GROUND THAT THERE WAS NO MATERIAL. ON CALLING REMAN D REPORT FROM THE ASSESSING OFFICER, THE ASSESSING OF FICER KATARIA INFRASTRUCTURE CO. LTD. IT(SS)A NO. 22/IND/2015 & OTHERS 25 ON REMAND IN HIS REPORT ADMITTED THAT THE IDENTITY OF THE PARTIES AND ALSO THAT THERE WAS CORRESPONDING ENTRI ES IN THE BOOKS OF ACCOUNTS. THE COMMISSIONER (APPEALS) CONSEQUENTLY ALLOWED THE APPEAL. THE TRIBUNAL DELET ED THE ADDITION MADE BY THE ASSESSING OFFICER TOWARDS UNEXPLAINED CASH CREDITS. ON APPEAL CONTENDING THAT THE CAPACITY TO ADVANCE LOAN WAS NOT ESTABLISHED AN D THE TRIBUNAL OUGHT TO HAVE RESTORED THE MATTER TO T HE ASSESSING OFFICER FOR CONSIDERATION: HELD, DISMISSING THE APPEAL, THAT THE BOOKS OF ACCOUNTS WERE AVAILABLE TO THE ASSESSING OFFICER AN D THE BOOKS THEMSELVES WOULD INDICATE THE CAPACITY OF THE PARTY TO ADVANCE LOAN. THERE WAS NO FURTHER NEED ON THE PART OF THE ASSESSEE TO PROVE THE CAPACITY OF T HE CREDITOR. THUS, THE REASONING ADOPTED BY THE TRIBUN AL WAS SUSTAINABLE. KATARIA INFRASTRUCTURE CO. LTD. IT(SS)A NO. 22/IND/2015 & OTHERS 26 8. CONSIDERING ALL THESE FACTS, WE SUSTAIN THE ORDER O F THE LEARNED CIT(A) AND DISMISS THE REVENUES APPEALS AND THE CROSS OBJECTION OF THE ASSESSEE IS ALSO DISMISSED. PRONOUNCED IN OPEN COURT ON 12 TH JANUARY, 2016 SD/- SD/- (D.T. GARASIA) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER 12 TH JANUARY, 2016 DN/-