M/S. KATARIA INDUSTRIES PVT. LTD., Ratlam V. THE DCIT (CENTRAL)-I, Indore

CO 23/IND/2015

• Counselvise Citation: [2016] 123 COUNSELVISE.COM (IT) 1927 (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: Capital asset; Depreciation; Validity of assessment; Documents seized
• Section: 143(3); 153A; 133(6); 68; 132

Judgement Text

M/S KATARIA WIRES PVT.LTD. IT(SS)A NOS. 27 TO 31/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.27 TO 31/IND/2015 & ITA 75/IND/ 2015 A.YS.2006-07,2008-09,2009-10,2010-11,2011-12 & 2012-13 DY. COMMR. OF INCOME TAX (CENTRAL)-I, INDORE ::: APPELLANT VS M/S KATARIA WIRES PVT. LTD. RATLAM ::: RESPONDENT CO NOS. 23 TO 25/IND/2015 ARISING OUT OF IT(SS) A NOS.2727,28 & 75/IND/2015 M/S KATARIA WIRES PVT. LTD. RATLAM ::: OBJECTOR VS DY. COMMR. OF INCOME TAX (CENTRAL)-I,INDORE ::: RESPONDENT M/S KATARIA WIRES PVT.LTD. IT(SS)A NOS. 27 TO 31/IND/2015 & OTHERS 2 IT(SS)A NOS. 3 TO 5/IND/2015 A.YS.2009-10, 2010-11 & 2011-12 M/S KATARIA WIRES PVT. LTD. RATLAM ::: APPELLANT 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 11 . 1 .201 6 O R D E R PER BENCH ALL THESE APPEALS FILED BY THE REVENUE AND THE CROSS OBJECTIONS AND APPEALS FILED BY THE ASSESSEE EMANAT E FROM DIFFERENT ORDERS OF THE LEARNED CIT(A)-II, INDO RE, DATED 31.10.2014 FOR THESE ASSESSMENT YEARS. 2. THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING AND SALE OF STEEL WIRE AND ALSO GENERATION OF WING POWER ENERGY THROUGH WIND MIL LS M/S KATARIA WIRES PVT.LTD. IT(SS)A NOS. 27 TO 31/IND/2015 & OTHERS 3 AND SALE THEREOF. IN ALL THESE REVENUES APPEALS ONE OF THE ISSUES INVOLVED IS DEPRECIATION ON WIND MILL. THE ASS ESSEE COMPANY HAS PURCHASED 5 WIND MILLS IN THE ASSESSMENT YEARS 2003-04, 2004-05, 2007-08 AND 2008-09 FROM M/S ENERCON INDIA LIMITED BY ENTERING INTO TURN-KEY CONT RACTS. THE ASSESSING OFFICER DID NOT ALLOW DEPRECIATION. HOW EVER, THE LEARNED CIT(A) GRANTED RELIEF TO THE ASSESSEE BY H OLDING AS UNDER :- 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. M/S KATARIA WIRES PVT.LTD. IT(SS)A NOS. 27 TO 31/IND/2015 & OTHERS 4 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 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 M/S KATARIA WIRES PVT.LTD. IT(SS)A NOS. 27 TO 31/IND/2015 & OTHERS 5 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 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 M/S KATARIA WIRES PVT.LTD. IT(SS)A NOS. 27 TO 31/IND/2015 & OTHERS 6 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 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 M/S KATARIA WIRES PVT.LTD. IT(SS)A NOS. 27 TO 31/IND/2015 & OTHERS 7 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- 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 M/S KATARIA WIRES PVT.LTD. IT(SS)A NOS. 27 TO 31/IND/2015 & OTHERS 8 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 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 M/S KATARIA WIRES PVT.LTD. IT(SS)A NOS. 27 TO 31/IND/2015 & OTHERS 9 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 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 M/S KATARIA WIRES PVT.LTD. IT(SS)A NOS. 27 TO 31/IND/2015 & OTHERS 10 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 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 M/S KATARIA WIRES PVT.LTD. IT(SS)A NOS. 27 TO 31/IND/2015 & OTHERS 11 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 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. M/S KATARIA WIRES PVT.LTD. IT(SS)A NOS. 27 TO 31/IND/2015 & OTHERS 12 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 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 M/S KATARIA WIRES PVT.LTD. IT(SS)A NOS. 27 TO 31/IND/2015 & OTHERS 13 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 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 M/S KATARIA WIRES PVT.LTD. IT(SS)A NOS. 27 TO 31/IND/2015 & OTHERS 14 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 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. M/S KATARIA WIRES PVT.LTD. IT(SS)A NOS. 27 TO 31/IND/2015 & OTHERS 15 ..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 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 M/S KATARIA WIRES PVT.LTD. IT(SS)A NOS. 27 TO 31/IND/2015 & OTHERS 16 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 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 M/S KATARIA WIRES PVT.LTD. IT(SS)A NOS. 27 TO 31/IND/2015 & OTHERS 17 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 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 M/S KATARIA WIRES PVT.LTD. IT(SS)A NOS. 27 TO 31/IND/2015 & OTHERS 18 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). 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 M/S KATARIA WIRES PVT.LTD. IT(SS)A NOS. 27 TO 31/IND/2015 & OTHERS 19 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) C OMMISSIONING CERTIFICATES ISSUED BY JVVNL AND 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. M/S KATARIA WIRES PVT.LTD. IT(SS)A NOS. 27 TO 31/IND/2015 & OTHERS 20 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 TERM LOAN SANCTIONED FROM THE BANK AND ALSO THE INSURANCE POLICIES IN ITS NAME. ALL T HESE PROVE THE OWNERSHIP BEYOND ANY DOUBT. WE WOULD LIKE TO STATE THAT DURING THE SEARCH OPERATION CARRIED OUT AT THE PREMISES OF THE ASSESSEE ON 7.11.2011. NO INCRIMINATI NG DOCUMENT PERTAINING TO PURCHASES OF THE WIND MILL TUR BINES WERE FOUND AND SEIZED. ONLY REGULAR PAPERS AND CORRESPONDENCE RELATING TO M/S D.P. POWER WERE FOUND AND SEIZED. THESE DOCUMENTS WERE ONLY PURCHASE INVOICES OF THE WIND MILLS, COMMISSIONING CERTIFICATE, LAND LEASE AGREEMENT WITH ENERCON INDIA LIMITED AND LETTERS ISSUE D BY ELECTRICITY BOARD REGARDING FORWARDING OF CHEQUES IN FAVOUR OF THE FIRM, THEREFORE, THESE PAPERS CANNOT BE SAID TO BE INCRIMINATING DOCUMENTS. THE ASSESSING OFFICER HAS M/S KATARIA WIRES PVT.LTD. IT(SS)A NOS. 27 TO 31/IND/2015 & OTHERS 21 PHYSICALLY VERIFIED THE LOCATION OF DIFFERENT WIND MI LLS, THEREFORE, WE ARE NOT ONLY UPHOLDING THE ORDER OF TH E LEARNED CIT(A) ON THIS ISSUE BUT WE ALSO TEND TO ALLOW THE GROUNDS REGARDING VALIDITY OF ASSESSMENT RAISED IN THE CROSS OBJECTION OF THE ASSESSEE IN THE ASSESSMENT YEAR S WHERE NO ASSESSMENT WAS ABATED. IN THE CASE OF M/S MUKESH SANGLA HUF, IT(SS)A NOS. 94 & 95/IND/2015 AND OTHERS THE INDORE BENCH OF ITAT, INDORE, VIDE ITS O RDER DATED 5 TH NOVEMBER, 2015 HAS DECIDED AS UNDER :- 43. WE HAVE HEARD BOTH THE SIDES. WE HAVE ALS O GONE THROUGH THE CASE LAWS RELIED UPON BY BOTH THE SIDES . WE HAVE ALSO CONSIDERED VARIOUS RELEVANT FACTS OF THE CASE. IT IS A SETTLED LEGAL POSITION THAT ONCE A SEARCH AND SEI ZURE ACTION HAS TAKEN PLACE U/S 132 OF THE ACT OR A REQUISITION HAS BEEN MADE U/S 132A, THE PROVISIONS OF SECTION 153A TRIGG ED AND ASSESSING OFFICER IS BOUND TO ISSUE NOTICE U/S 153A OF THE ACT. ONCE NOTICES ARE ISSUED U/S 153A OF THE ACT TH EN M/S KATARIA WIRES PVT.LTD. IT(SS)A NOS. 27 TO 31/IND/2015 & OTHERS 22 ASSESSEE IS LEGALLY OBLIGED TO FILE RETURN OF INCOM E FOR SIX YEARS. THE ASSESSMENT AND REASSESSMENT FOR SIX YEAR S SHALL BE FINALISED BY THE ASSESSING OFFICER. IT IS ALSO HELD BY VARIOUS COURTS THAT ONCE NOTICE U/S 153A OF THE ACT ISSUED, THEN ASSESSMENT FOR SIX YEARS SHALL BE AT LARGE BOT H FOR ASSESSING OFFICER AND ASSESSEE HAVE NO WARRANT OF L AW. IT HAS BEEN ALSO HELD THAT IN THE ASSESSMENT YEARS WHE RE ASSESSMENTS HAVE BEEN ABATED IN TERMS OF SECOND PRO VISO TO SECTION 153A THEN ASSESSING OFFICER ACTS UNDER ORIG INAL JURISDICTION AND ONE ASSESSMENT IS MADE FOR TOTAL I NCOME INCLUDING THE ADDITION MADE ON THE BASIS OF SEIZED MATERIAL. BUT WHERE THERE IS NO ABATEMENT OF ASSESSMENTS AND ASSESSMENTS WERE COMPLETED ON THE DATE OF SEARCH TH EN ADDITION CAN BE MADE ONLY ON THE BASIS OF INCRIMINA TING DOCUMENTS OR UNDISCLOSED ASSETS, ETC. IN THESE CASE S THERE WAS NO INCRIMINATING DOCUMENT FOUND AND SEIZED IN R ELATION TO SALE AND REPURCHASE OF SHARES OF ADROIT INDIA LT D. NO M/S KATARIA WIRES PVT.LTD. IT(SS)A NOS. 27 TO 31/IND/2015 & OTHERS 23 ASSESSMENT PROCEEDINGS WERE ABATED IN THESE ASSESSM ENT YEARS OF THESE ASSESSEES. THUS ASSESSMENTS FOR THE SE ASSESSMENT YEARS WERE COMPLETED ON THE DATE OF SEAR CH. THE ASSESSMENTS WERE COMPLETED U/S 143(3) OF THE ACT RE AD WITH SECTION 153A/153C OF THE ACT AFTER THE SEARCH. IT I S AN UNDISPUTED FACT THAT NO INCRIMINATING MATERIAL IN R ELATION TO THE INVESTMENT BY THESE ASSESSEES IN SHARES OF ADRO IT INDIA LIMITED DURING THE FINANCIAL YEAR RELEVANT TO THE A SSESSMENT YEAR 2007-08 AND TRANSFER OF SHARES DURING THE FINA NCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR 2008-09 AND REACQUISITION OF SOME SHARES IN THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR 2010-11 WERE FOUND AND SEIZED. THERE WAS NO ABATEMENT OF ANY PROCEEDINGS IN THESE CASES FOR THESE ASSESSMENT YEARS IN TERMS OF SECOND PROVISO T O SECTION 153A OF THE ACT. IN THE CASE OF MUKESH SANGLA HUF, THE PROCEEDINGS WERE INITIATED U/S 153C OF THE ACT. THE HON'BLE JURISDICTIONAL HIGH COURT IN A RECENT DECISION IN T HE CASE OF M/S KATARIA WIRES PVT.LTD. IT(SS)A NOS. 27 TO 31/IND/2015 & OTHERS 24 CIT VS. MECHMAN WHILE DECIDING THE ISSUE RELATING T O ASSESSMENTS MADE BY ISSUING THE NOTICE U/S 153C OF THE ACT HAS HELD THAT THE ASSESSING OFFICER BEFORE ISSUING NOTICE U/S 153C OF THE ACT HAS TO RECORD SATISFACTION. HON'BLE HIGH COURT HELD THAT THE ASSESSING OFFICER HAVING JURISD ICTION WHILST GIVING NOTICE TO SUCH OTHER PERSON (OTHER TH AN THE PERSON REFERRED TO IN SECTION 153A) MUST APPLY PROP RIO VIGORE. AFTER RECEIPT OF THE MATERIALS, THE ASSESS ING OFFICER HAVING JURISDICTION IS EXPECTED TO CONDUCT INQUIRY AND DUE VERIFICATION OF THE RELEVANT FACTS BEFORE FORMING H IS PRIMA FACIE SATISFACTION. THE ASSESSING OFFICER MUST FORM HIS INDEPENDENT VIEW BEFORE ISSUE OF NOTICE. THERE IS N O SEIZED MATERIAL BELONGING TO THE ASSESSEE WHICH WAS FOUND AND SEIZED IN RELATION TO ADDITIONS MADE. IN VIEW OF T HIS FACT, THERE IS NO JUSTIFICATION FOR ACTION U/S 153C OF TH E ACT THAT TOO WITHOUT RECORDING SATISFACTION. IN OUR CONSIDER ED VIEW, THE ASSESSING OFFICER MUST HAVE SOME MATERIAL TO PR IMA M/S KATARIA WIRES PVT.LTD. IT(SS)A NOS. 27 TO 31/IND/2015 & OTHERS 25 FACIE SATISFY HIMSELF TO RECORD THE SATISFACTION PR IOR TO ISSUE OF NOTICE U/S 153C OF THE ACT. HON'BLE JURISDICTION AL HIGH COURT HELD THAT WHERE NO SATISFACTION HAS BEEN RECO RDED BY THE ASSESSING OFFICER BEFORE ISSUING NOTICE U/S 153 C OF THE ACT AND NO PAPERS/DOCUMENTS/ASSETS WERE SEIZED BELO NGING TO THE ASSESSEE THEN NO PROCEEDINGS U/S 153C OF THE ACT CAN BE INITIATED. WITH REGARD TO THE ASSESSMENT MADE ON THE BASIS OF NOTICES ISSUED U/S 153A OF THE ACT, WE WOU LD LIKE TO HOLD THAT IN A RECENT DECISION HON'BLE DELHI HIGH C OURT IN THE CASE OF CIT VS. KABUL CHAWLA (SUPRA) HAS HELD THAT COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE ASSESSING OFFICER WHILE MAKING ASSESSMENT U/S 153A OF THE ACT, ONLY ON THE BASIS OF SOME INCRIMINATING MATERI AL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITIO N OF DOCUMENTS OR UNDISCLOSED INCOME OR PROPERTY DISCOVE RED IN THE COURSE OF SEARCH WHICH WAS NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL M/S KATARIA WIRES PVT.LTD. IT(SS)A NOS. 27 TO 31/IND/2015 & OTHERS 26 ASSESSMENT. IN ALL THESE CASES NO ASSESSMENTS WERE PENDING ON THE DATE OF SEARCH FOR BOTH THE ASSESSME NT YEARS 2008-09 AND 2010-11. NO ASSESSMENTS WERE ABATED IN TERMS OF SECOND PROVISO TO SECTION 153A OF THE ACT. HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. KABUL CHAWL A (SUPRA) HAS CONSIDERED VARIOUS HIGH COURT DECISIONS RELIED UPON BY THE LEARNED DR. THE HON'BLE DELHI HIGH COURT HAS CONSIDERED THE CASES OF CANARA HOUSING DEVELOPMENT CO. VS. DCIT; MADUGULA VS. DCIT; CIT VS. CHETANDAS LAXMANDAS AND CIT VS. ANIL KUMAR BHATIA (SUPRA). T HE ONLY DECISION OF THE HON'BLE ALLAHABAD HIGH COURT I N THE CASE OF CIT VS. RAJ KUMAR ARORA; 367 ITR 517 RELIED ON BY THE LEARNED DR WAS NOT CONSIDERED BY HON'BLE DELHI HIGH COURT WHILE DECIDING THE ISSUE IN THE CASE OF KABUL CHAWLA. THE HON'BLE ALLAHABAD HIGH COURT HAS REVERSED THE O RDER OF THE TRIBUNAL AND REMANDED THE ISSUE TO THE TRIBUNAL TO CONSIDER THE APPEAL OF THE DEPARTMENT ON MERITS. IT IS A M/S KATARIA WIRES PVT.LTD. IT(SS)A NOS. 27 TO 31/IND/2015 & OTHERS 27 SETTLED LEGAL POSITION THAT WHEN TWO VIEWS ARE POSS IBLE ON A PARTICULAR ISSUE THEN THE VIEW FAVOURABLE TO THE AS SESSEE SHOULD BE FOLLOWED AS HELD BY THE HON'BLE APEX COUR T IN THE CASE OF CIT VS. VEGETABLE PRODUCTS; 88 ITR 192. RE SPECTFULLY FOLLOWING THE DECISION OF THE HON'BLE APEX COURT, W E ALLOW THESE GROUNDS OF APPEAL OF THE ASSESSEE. 5. THE OTHER ISSUE RAISED IN THE REVENUES APPEAL FOR THE ASSESSMENT YEARS 2011-12 AND 2012-13 IS WITH REGARD TO DEDUCTION CLAIMED U/S 80IA ON THE PROFIT EARNED FROM THE BUSINESS OF WIND MILLS. THE LEARNED CIT(A) GRANTED TH E RELIEF BY HOLDING AS UNDER:- 7.1 I HAVE GONE THROUGH THE RELEVANT PARAS OF ASSESSMENT ORDER AND ALSO THE WRITTEN SUBMISSIONS AND THE SAME HAS BEEN CONSIDERED IN THE LIGHT OF DISCUSSION MADE ON THE ISSUE OF ALLOWABILITY OF DEPRECIATION @ 80% ON WIND MILL. IT IS OBSERVED THAT THE A.O. AT PARA 13.3 HAS BROUGHT OUT THAT DEDUCTION U/S 80IA IS AVAILABLE ONLY TO AN UNDERTAKING WHICH IS ENGAGED IN THE BUSINESS OF GENERATION OF POWER BUT NOT AVAILABLE TO PERSONS WHO EXECUTES WORKS CONTRACT. FURTHER IT IS REASONED THAT SINCE THE APPELLANT COMPANY IS NOT M/S KATARIA WIRES PVT.LTD. IT(SS)A NOS. 27 TO 31/IND/2015 & OTHERS 28 INDUSTRIAL UNDERTAKING FOR GENERATION OF POWER, THE EXEMPTION U/S 80IA IS NOT ALLOWABLE. FURTHER, IN THE NEXT PARA I.E. PARA 10.4 THE A.O. HAS WENT ON T O ADD THAT THE KATARIYA GROUP OF CONCERNS ARE MERE FINANCERS OF POWER GENERATING PROJECTS. THEY HAVE NEITHER DEVELOPED NOR MAINTAINED OR OPERATED THE INFRASTRUCTURE FACILITY TO GENERATE POWER. THE A.O. KEEPING IN MIND THE ABOVEMENTIONED REASONS HAS DISALLOWED THE CLAIM OF APPELLANT U/S 80IA FOR THE RELEVANT ASSESSMENT YEAR AMOUNTING TO RS.23,28,653/-. I HAVE GIVEN MY DETAILED FINDING REGARDING THE OWNERSHIP, POSSESSION, INVESTMENT BY APPELLANT AND EARNING OF INCOME OUT OF SALE PROCEEDS OF ELECTRICITY WHILE DISCUSSING THE GROUND NO. 6 TO 8 WHEREIN IT HAS BEEN DECIDED THAT THE APPELLANT HAS BEEN THE OWNER OF WIND MILL PRODUCT WITH SUBSTANTIAL INVESTMENT, PARTLY THROUGH BORROWINGS FROM THE FINANCIAL INSTITUTIONS. IT IS A LSO FOUND THAT THE OWNERSHIP OF THE WIND MILL HAS ALSO TRANSFERRED TO THE APPELLANT THROUGH RESPECTIVE STATUTES OF TRANSFER OF PROPERTY ACT AND TRANSFER O F GOODS ACT. PROPER BILLING OF THE MACHINERY HAS BEEN MADE AND THE CONSIDERATION FOR THE WIND MILL HAS BEEN PAID. THERE IS NO DISPUTE THAT THE APPELLANT HAS NOT ONLY EARNED INCOME ON ACCOUNT OF SALE OF ELECTRICITY GENERATING IN THE WIND MILL UNDER CONSIDERATION BUT ALSO HAS OFFERED SAME FOR TAXATION PURPOSES. THEREFORE, THE REASONS GIVENBY THE A.O. FOR REJECTING THE CLAIM OF THE APPELLANT U /S 80IA HAS NOT BEEN FOUND JUSTIFIABLE. MOREOVER, THE A.O. HAS NOT DISCUSSED NON FULFILMENT OF CONDITIONS LAID DOWN U/S 80IA TO BE ELIGIBLE TO MAKE THE CLAIM UNDER THE SAID SECTION EXCEPT STATING THAT THE APPELLANT IS NOET AN INDUSTRIALUNDERTAKING AND HAS M/S KATARIA WIRES PVT.LTD. IT(SS)A NOS. 27 TO 31/IND/2015 & OTHERS 29 NEITHER DEVELOPED NOR MAINTAINED AND OPERATED THE INFRASTRUCTURE FACILITITTY TO GENERATE POWER. I DO NOT SUBSCRIBE TO THE VIEW OF A.O. AS THESE ARE NOT THE CONDITIONS PRECEDENT TO THE CLAIM OF EXEMPTION U/S 80IA. SECTION 80IA4(IV) SPECIFIES THE APPLICABILITY OF THIS SECTION WHICH STATES THAT AN UNDERTAKING WHICH IS SET UP IN ANY PART OF INDIA FOR GENERATION OR GENERATION AND DISTRIBUTION OF POWER AT ANY TIME DURING THE PERIOD SPECIFIED IN THE RELEVANT SECTION . THEREFORE, THE ACTION OF A.O. IN REJECTING THE CLAI M OF THE APPELLANT HAS BEEN FOUND MISPLACED PARTICULARLY WHEN THE A.O. HAS NOT FOUND ANY INFIRMITIES IN COMPLETE YEARWISE DETAILS OF INCOME, DEPRECIATION AND CLAIM U/S 80IA AS HAS BEEN REPRODUCED ABOVE AS WELL AS REPRODUCED IN THE ASSESSMENT ORDER. ACCORDINGLY, THE A.O. IS DIRECTE D TO ALLOW THE CLAIM OF THE ASSESSEE U/S 80IA FOR THE RELEVANT ASSESSMENT YEAR. THIS GROUND OF APPEAL IS ALLOWED. 6. WE HAVE ALREADY UPHELD THE ORDER OF THE LEARNED CIT (A) WITH REGARD TO OWNERSHIP OF THE WIND MILL. WE ALSO SU STAIN THE ORDER OF THE LEARNED CIT(A) ON THIS ISSUE. THE ASSESSEE SHALL BE ENTITLED FOR DEDUCTION U/S 80IA AS HELD BY T HE LEARNED CIT(A). THESE GROUNDS OF REVENUES APPEALS REL ATING TO THIS ISSUE ARE, THEREFORE, DISMISSED. M/S KATARIA WIRES PVT.LTD. IT(SS)A NOS. 27 TO 31/IND/2015 & OTHERS 30 7. THE OTHER ISSUE IN THE APPEAL FOR THE ASSESSMENT YE AR 2011-12 IS WITH REGARD TO DELETION OF ADDITION OF RS.30,30,000/- MADE BY THE ASSESSING OFFICER U/S 68 OF THE ACT. 8. DURING THE RELEVANT PERIOD THE ASSESSEE HAS RECEIV ED SHARE APPLICATION MONEY OF RS.30,20,000/- FROM M/S SON IC BIO EXTRACTION LIMITED. THE ASSESSING OFFICER ADDED T HE AMOUNT U/S. 68 OF THE ACT. HOWEVER, THE LEARNED CIT(A ) GRANTED RELIEF AS UNDER :- A CAREFUL PERUSAL OF THE SUBMISSIONS OF THE APPELLANT REVEALED THAT IT WAS A COMPELLING BUSINES S EXPEDIENCY WHICH NECESSITATED THE SUBSCRIBING COMPANY TO INVEST IN THE SHARE CAPITAL OF THE APPELLANT. IT HAS ALSO BEEN BROUGHT OUT THAT THE FATHERS OF DIRECTORS OF APPELLANT COMPANY AND M/S SONIC BIOCHEM EXTRACTION PVT. LTD. WERE FAMILY FRIENDS AND THE DIRECTORS WERE VERY WELL KNOWN TO M/S KATARIA WIRES PVT.LTD. IT(SS)A NOS. 27 TO 31/IND/2015 & OTHERS 31 EACH OTHER. I HAVE ALSO GONE THROUGH THE CASE LAWS CITED BY THE A.O. AT PARA 11.7 OF THE ASSESSMENT ORDER AND FOUND THAT BOTH THE CASE LAWS ARE DISTINGUISHABLE ON FACTS FROM THE FACTS OF THE PRES ENT CASE. IN VIEW OF ABOVE DISCUSSION, IT IS CLEAR THAT THE A.O. HAS BROUGHT NOTHING ON RECORD TO DISPROVE THE GENUINENESS OF TRANSACTION. THEREFORE, THE ADDITION ON ACCOUNT OF SHARE SUBSCRIPTION MONEY RECEIVED FROM M/S SONIC BIOCHEM EXTRACTION PVT. LTD. AMOUNTING TO RS.30,20,000/- IN THE A.Y. 2011-12 IS DIRECTED TO BE DELETED.. 9. WE HAVE HEARD BOTH THE SIDES. THE ASSESSEE HAS RECEIVED SHARE APPLICATION MONEY FROM M/S SONIC BIOCHE M EXTRACTION PVT. LTD. WHICH HAS A PERMANENT ACCOUNT NUMBER. NET WORTH OF THE COMPANY IS ABOUT RS. 40 CROR ES. THE INVESTOR COMPANY HAS ALSO CONFIRMED THE INVESTMEN T WHILE THE INFORMATION WAS CALLED FOR U/S 133(6) OF TH E ACT M/S KATARIA WIRES PVT.LTD. IT(SS)A NOS. 27 TO 31/IND/2015 & OTHERS 32 BY THE ASSESSING OFFICER. M/S SONIC BIOCHEM EXTRACTI ON PVT. LTD. HAS ALSO REPRESENTED BEFORE THE ASSESSING OFFICER TO CONFIRM THE INVESTMENTS MADE IN THE ASSESSEE COMP ANY. THE COPY OF BANK STATEMENT WAS ALSO FURNISHED. THE ASSESSMENT ORDER MADE BY THE INCOME TAX AUTHORITIES FO R THE ASSESSMENT YEARS 2006-07, 2008-09 AND 2010-11 WERE ALSO PLACED ON RECORD OF M/S SONIC BIOCHEM EXTRACTION PVT. LTD. FOR THE ASSESSMENT YEAR 2010-11 THE RETURN OF INCOME OF THE INVESTOR COMPANY M/S SONIC BIOCHEM EXTRACTION PVT. LTD. WAS RS.4,05,78,550/-. THE TURNOVER AND NET WORTH OF THIS INVESTOR COMPANY CAN BE SUMMARISED AS UNDER : A.Y. NETWORTH TURNOVER 2006-07 RS.10.91 CRORES RS.129.61 CRORES 2007-08 RS.11.84 CRORES RS.147.84 CRORES 2008-09 RS.14.61 CRORES RS.248.90 CRORES 2009-10 RS.33.40 CRORES RS.304.81 CRORES 2010-11 RS.41.51 CRORES RS.248.33 CRORES 2011-12 RS.39.99 CRORES RS.286.72 CRORES ALL THESE FACTS ESTABLISH THAT THERE WAS NO DOUBT REGARD ING IDENTITY AND CAPACITY OF SONIC BIOCHEM EXTRACTIONS LTD . THE TRANSACTIONS WERE ESTABLISHED TO BE GENUINE, THERE FORE, M/S KATARIA WIRES PVT.LTD. IT(SS)A NOS. 27 TO 31/IND/2015 & OTHERS 33 THE ASSESSEE WAS ABLE TO DISCHARGE THE ONUS PLACED UPON IT AS PER THE PROVISIONS OF SECTION 68 OF THE ACT. THER EFORE, WE FIND NO MERIT IN THIS GROUND OF THE REVENUES APPEAL AND UPHOLD THE ORDER OF THE LEARNED CIT(A). WE WOULD ALSO LIKE TO MENTION THAT THE CASE LAWS RELIED UPON BY THE REV ENUE CIT VS.P. MOHANAKALA; 291 ITR 278 AND SUMATI DAYAL; 214 ITR 801 WERE HAVING TOTALLY DIFFERENT FACTS. IN THE CAS E OF P.MOHANKALA THE FOREIGN CURRENCY RECEIVED AND IN THE C ASE OF SUMATI DAYAL THE EARNING WAS FROM HORSE RACING. THEREFORE, THE RATIO LAID DOWN BY THE HON'BLE APEX CO URT IN THESE JUDGMENTS IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. BY HOLDING SO, WE DISMISS THIS GROUND OF THE REVENUES APPEAL. 10. THE OTHER ISSUE IN THE ASSESSEES APPEALS/CROS S OBJECTIONS FOR THE ASSESSMENT YEARS 2009-10 TO 2011-1 2 IS WITH REGARD TO DISALLOWANCE OF DIRECTORS REMUNERATION AN D SUSTAINING THE SAME BY THE LEARNED CIT(A). THE DETAILS OF M/S KATARIA WIRES PVT.LTD. IT(SS)A NOS. 27 TO 31/IND/2015 & OTHERS 34 THE DIRECTORS REMUNERATION WHICH WAS CONSIDERED EXCES SIVE AND PARTIAL DISALLOWANCE WAS MADE IS SUMMARISED AS UNDER :- NAME OF THE DIRECTOR A.Y. 2009-10 A.Y. 2010-11 A.Y. 2011-12 SHRI MANOHARLAL KATARIA RS. 6,60,000/- RS. 6,60,000 /- RS. 6,60,000/- SHRI ANOKHILAL KATARIA RS. 10,08,000/- RS. 10,08,00 0/- RS. 10,08,000/- SHRI KANTILAL KATARIA RS. 18,00,000/- RS. 18,00,000 /- RS. 18,00,000/- TOTAL RS. 34,68,000/- RS. 34,68,000/- RS. 34,68,000/- AMOUNT DISALLOWED BASED ON TURNOVER OF THE COMPANY RS. 1,22,602/- RS. 1,37,990/- RS. 11,03,693/- 11. AT THE OUTSET OF HEARING, THE LEARNED COUNSE L FOR THE ASSESSEE SUBMITTED THAT HON'BLE ITAT IN THE CASE O F THE ASSESSEE IN ITA NOS. 731 AND 732/IND/2013 FOR THE ASSESSMENT YEARS 2007-08 AND 2008-09 HAS ALLOWED THIS ISSUE VIDE ITS ORDER DATED 16.9.2015 THE RELEVANT POR TION OF WHICH IS AS UNDER :- 4. WE HAVE HEARD BOTH THE SIDES. AFTER HEARING, WE FIND THAT THE REMUNERATION PAID BY THE ASSESSEE WAS WELL WITH IN THE M/S KATARIA WIRES PVT.LTD. IT(SS)A NOS. 27 TO 31/IND/2015 & OTHERS 35 PERMISSIBLE LIMIT UNDER SCHEDULE XIV OF THE COMPANI ES ACT. FURTHER, THERE WAS INCREASE IN THE PROFITABILITY OF THE COMPANY. HOWEVER, THE NET LOSS WAS DUE TO INVESTMEN T IN WIND MILLS AND CLAIMING DEPRECIATION THEREON AT 80% . THE ASSESSEE HAS PAID TAX UNDER MAT. THE REMUNERATION P AID TO THE DIRECTORS WAS APPROVED BY THE BOARD OF DIRECTOR S AND SHAREHOLDERS IN THE ANNUAL GENERAL BODY MEETING. I T IS ALSO FOUND THAT THE DIRECTORS ARE PAYING TAX AT THE HIGH EST MAXIMUM MARGINAL LIMIT, THEREFORE, THERE APPEARS TO BE NO EVASION OF TAX THROUGH THIS PAYMENT AND REMUNERATIO N TO DIRECTORS. 5. IN VIEW OF THE ABOVE FACTS, THE ASSESSEES CASE IS FIT IN THE CLARIFICATION ISSUED BY CBDT WHEN PROVISIONS WE RE INSERTED IN THE INCOME TAX ACT FOR HOLDING SO. WE A LSO GET SUPPORT FROM THE FOLLOWING DECISIONS :- (I) CIT VS. INDO SAUDI SERVICES (TRAVEL) P.LTD.; (2 009) 310 ITR 306(BOM) M/S KATARIA WIRES PVT.LTD. IT(SS)A NOS. 27 TO 31/IND/2015 & OTHERS 36 (II) CIT VS. EDWARD KEVENTER (P) LTD. (1972) 86 ITR 370 (CAL) (III) CALCUTTA ART STUDIOS (PVT.) LTD.VS.CIT; 118 I TR 572(CAL) (IV) KASHIPRASAD CARPETS(P)LTD.VS. CIT; 148 ITR 710 (ALL) (V) NEWTON STUDIOS LTD. VS.CIT; 28 ITR 378 (MAD.) THEREFORE, ON THE SAME REASONS, WE DELETE THIS ADDITIO N AND ALLOW THIS GROUND OF THE ASSESSEES APPEALS. 12. IN THE RESULT, ALL THE APPEALS OF THE REVENUE STAND DISMISSED AND ALL THE CROSS OBJECTIONS AND THE APPEALS O F THE ASSESSEE ARE ALLOWED. PRONOUNCED IN OPEN COURT ON 11 TH JANUARY, 2016 SD/- SD/- (D.T. GARASIA) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER 11 TH JANUARY, 2016 DN/- M/S KATARIA WIRES PVT.LTD. IT(SS)A NOS. 27 TO 31/IND/2015 & OTHERS 37