SUNSTONE ENGINEERING, Jaipur V. ITO, Jaipur

ITA 1018/JPR/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9698 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 03-03-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 21-11-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R A VERMA CIT DR DHK
• Keywords: Business income; Depreciation; Opportunity of being heard; Additional depreciation
• Section: 14A

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH HKKXPUN] YS[KK LNL; DS LE{K BEFORE: SHRI BHAGCHAND, ACCOUNTANT MEMBER VK;DJ VIHY LA-@ ITA NO. 1018/ & 1019JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2012-13 & 2013-14 M/S. SUNSTONE ENGINEERING INDUSTRIES (P)LTD. L-5, B-11, KRISHNA MARG, C-SCHEME, JAIPUR CUKE VS. THE ITO WARD- (T&J) JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AABCS 9144 D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 1098/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2013-14 THE ACIT CIRCLE- 6, JAIPUR CUKE VS. M/S. SUNSTONE ENGINEERING INDUSTRIES (P)LTD. L-5, B-11, KRISHNA MARG, C-SCHEME, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AABCS 9144 D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY: SHRI AMIT KOTHARI, CA JKTLO DH VKSJ LS@ REVENUE BY: SHRI R.A. VERMA, ADDL. CIT - DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 03/03/2017 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 07/03/2017 VKNS'K@ ORDER PER BHAGCHAND, AM THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDER OF THE LD. CIT(A)-2, JAIPUR DATED 21-09-2016 FOR THE ASSESSMEN T YEAR 2012-13. FURTHER, THE ASSESSEE AND REVENUE HAS FILED THE CRO SS APPEALS AGAINST THE ITA NO.1018/JP/2016 M/S. SUNSTONE ENGINEERING INDUSTRIES (P) LTD.,JAIPU R VS. ITO, WARD- (T&J), JAIPUR 2 ORDER OF THE LD. CIT(A)-2, JAIPUR DATED 19-09-2016 FOR THE ASSESSMENT YEAR 2013-13. THE GROUNDS OF APPEAL RAISED BY THE A SSESSEE AND THE REVENUE IN THE RESPECTIVE APPEALS ARE AS UNDER:- ITA NO. 1018/JP/2016 ASSESSEE (A.Y. 2012-13) 1. (A) THE LD. CIT(A) HAS ERRED IN NOT ALLOWING HIGHER DEPRECIATION CIVIL FOUNDATION WORK AND HAS ERRED IN NOT TREATING THE SAME AS PART OF THE WIND MILL COST. (B) THE LD. CIT(A) HAS ALSO ERRED IN NOT APPRECIATING THE FACT THAT THE SAID ISSUE WAS FULLY COVERED BY THE DECISION OF HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF K.K. ENTERPRISES. 2. THE DISALLOWANCE OF ADDITIONAL DEPRECIATION ON S UCH CIVIL WORK FOUNDATION BY NOT TREATING THE SAME AS P ART OF THE WIND MILL. 3. THE LD. CIT(A) HAS ERRED IN NOT ALLOWING SET OFF LOSS ON SHARES AMOUNTING TO RS. 8,34,916/- CLAIMED AS BU SINESS LOSS. THE LD. CIT(A) LD. CIT(A) HAS ERRED IN SUSTAI NING THE ACTION OF THE AO IN TREATING THE SAME AS SHORT TERM LOSS WHILE DENYING SET OFF AGAINST OTHER INCOME. ITA NO. 1019/JP/2016 ASSESSEE (A.Y. 2013-14) 1. (A) THE LD. CIT(A) HAS ERRED IN NOT ALLOWING HIGHER DEPRECIATION CIVIL FOUNDATION WORK AND HAS ERRED IN NOT TREATING THE SAME AS PART OF THE WIND MILL COST. (B) THE LD. CIT(A) HAS ALSO ERRED IN NOT APPRECIATING THE FACT THAT THE SAID ISSUE WAS FULLY COVERED BY THE DECISION OF HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF K.K. ENTERPRISES. 2. THE LD. CIT(A) HAS ERRED IN SUSTAINING ADDITION OF RS. 68,559/- BY INVOKING SECTION 14A. ITA NO.1018/JP/2016 M/S. SUNSTONE ENGINEERING INDUSTRIES (P) LTD.,JAIPU R VS. ITO, WARD- (T&J), JAIPUR 3 3. THE LD. CIT(A) HAS ERRED IN NOT ALLOWING SET OFF OF LOSS OF RS. 36,778/- CLAIMED AS BUSINESS LOSS BY TREATIN G THE SAME AS CAPITAL LOSS ITA NO. 1098/JP/2016 REVENUE (A.Y. 2013-14) 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN D ELETING THE ADDITION OF RS. 22,94,27/- MADE BY THE AO ON ACCOUN T OF DISALLOWANCE OF DEPRECIATION ON WINDMILL IGNORING T HE FACT THAT CIVIL STRUCTURE AND INTERNAL/ EXTERNAL POWER L INES DO NOT CONSTITUTE THE PLANTS. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS JUSTIFIED IN DEL ETING THE DISALLOWANCE OF RS. 3516,590/- MADE BY THE AO ON AC COUNT OF ADDITIONAL DEPRECIATION ON WINDMILL. 2.1 FIRST OF ALL, THE APPEAL OF THE ASSESSEE FOR TH E ASSESSMENT YEAR 2012- 2013 IS TAKEN UP FOR ADJUDICATION. 3.1 APROPOS GROUND NO. 1(A), (B) AND 2 OF THE ASSES SEE, THE FACTS AS EMERGES FROM THE ORDER OF THE LD. CIT(A) IS AS UNDE R:- GROUND NO. 1(A) AND 1(B) 3.3 I HAVE PERUSED THE FATS OF THE CASE, THE ASSESSMENT ORDER AND THE SUBMISSIONS OF THE APPELLA NT. AS NOTED IN THE ASSESSMENT ORDER, THE ASSESSEE COMPANY HAD SET UP A WINDMILL ELECTRIC TURBINE GENERATOR IN FEB. 20 11. THE ASSESSING OFFICER EXAMINED THE CLAIM OF DEPRECIATIO N OF RS. 1,40,66,354/- WHICH CONSISTED OF WIND ENERGY OR WIN DMILL WORTH RS. 2,71,82,555/- BUILDING AND CIVIL FOUNDATI ON WORK OF RS. 30,89,793/- AND PLANT AND MACHINERY WHICH CO NSISTED OF ELECTRICAL LINES AND INSTALLATION OF RS. 48,93,5 38/-. THE ASSESSING OFFICER AFTER DISCUSSING THE FACTS RESTRI CTED THE DEPRECIATION ON THE CIVIL FOUNDATION WORK TO BE TRE ATED AS ITA NO.1018/JP/2016 M/S. SUNSTONE ENGINEERING INDUSTRIES (P) LTD.,JAIPU R VS. ITO, WARD- (T&J), JAIPUR 4 BUILDING AT 5% (50% OF 10%) AND ELECTRICAL INSTALLA TION AT 15% (50% OF 30%) TREATING THE SAME AS PLANT AND MAC HINERY IN THE PRESENT PROCEEDINGS, IT WAS SUBMITTED THAT I N RELATION TO DEPRECIATION ON WIND MILL, INSTALLED IT EMS LIKE CONCRETE TOWER, CONVERTERS AND TRANSFORMERS, CABLE NETWORKING ARE ALSO PLANT AND MACHINERY AD SINCE SP ECIFIC RATE OF DEPRECIATION IS PROVIDED FOR THE WIND MILL, THESE ITEMS WOULD ALSO BE ELIGIBLE FOR THE SAME RATE OF DEPRECI ATION. RELIANCE WAS PLACED ON VARIOUS DECISIONS ON THE ISS UE. THIS ISSUE CAME UP IN ANOTHER CASE OF M/S. GANGAUR EXPOR TS FOR THE ASSESSMENT YEAR 2012-13 WHEREIN IT HAD BEEN HEL D BY PREDECESSOR THAT WHILE ELECTRICAL INSTALLATION, WOU LD BE A PART OF WIND MILL HOWEVER, THE CIVIL FOUNDATION WORK WOU LD FORM PART OF BUILDING AND DEPRECIATION RATE OF 10% WOULD BE ALLOWABLE. THE HON'BLE ITAT IN ITS JUDGEMENT DATED 17-06- 2016 HAS UPHELD THIS FINDINGS. THE RELEVANT PORTION OF THE SAME IS REPRODUCED (AT PAGES 9 TO 11 OF LD. CIT(A) S ORDER). IN VIEW OF THE ABOVE, AND FOLLOWING THE DECISION OF THE ITAT ON THIS ISSUE THIS GROUND OF APPEAL IS PARTLY ALLOWED. GROUND NO. 2 4.3 I HAVE PERUSED THE FACTS OF THE CASE, THE ASSESSMENT ORDER AND THE SUBMISSION OF THE APPELLAN T. THE AO HAS ALLOWED THE ADDITIONAL DEPRECIATION CLAIMED BY THE ASSESSEE WHICH HAD BEEN CLAIMED AT 50% IN THE PREVI OUS YEAR. HOWEVER, DUE TO APPLICABILITY OF DIFFERENT RA TES OF DEPRECIATION BY THE ASSESSEE AND ASSESSING OFFICER ON THE WIND MILL ITSELF, THERE IS A DIFFERENCE OF AMOUNT O F RS. 3,08,979/- WHICH HAS NOT BEEN ALLOWED BY ASSESSING OFFICER. IN VIEW OF THE GROUND 1 WHERE THE ISSUE OF RATE OF DEPRECIATION ON WIND MILL HAS BEEN DISCUSSED, THIS MODIFIED. THE ASSESSING OFFICER TO ACCORDINGLY MODIFY THE QUA NTUM OF ADDITIONAL DEPRECIATION. THIS GROUND OF APPEAL IS P ARTLY ALLOWED. ITA NO.1018/JP/2016 M/S. SUNSTONE ENGINEERING INDUSTRIES (P) LTD.,JAIPU R VS. ITO, WARD- (T&J), JAIPUR 5 3.2 DURING THE COURSE OF HEARING, THE LD. AR OF THE ASSESSEE RELIED ON THE DECISION OF HON'BLE RAJASTHAN HIGH COURT IN TH E CASE OF CIT VS. K.K. ENTERPRISES (2014) 108 DTR 0109 (RAJ) PRAYING THERE IN THAT BOTH THE GROUNDS I.E. 1(A), (B) AND 2 ARE COVERED BY THE DEC ISION OF HON'BLE JURISDICTIONAL HIGH COURT IN WHICH HON'BLE COURT H ELD THAT CIVIL STRUCTURE AND ELECTRIC FITTING, EQUIPMENTS ARE PART AND PARCE L OF WIND MILL AND DEPRECIATION ON INVESTMENT OF SUCH WORK SHOULD BE A LLOWED . 3.3 DURING THE COURSE OF HEARING, THE LD. DR SUPPOR TED THE ORDERS OF THE AUTHORITIES BELOW. 3.4 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS NOTED THAT THE ISSUES RA ISED BY THE ASSESSEE ARE COVERED BY THE DECISION OF HON'BLE JURISDICTIONAL H IGH COURT IN THE CASE OF CIT VS. K.K. ENTERPRISES WHEREIN THE OBSERVATION OF THE HON'BLE COURT IS AS UNDER:- HELD:- THE ISSUE INVOLVED IN THESE APPEALS HAS BEEN CONSIDERED BY THE HON'BLE GUJARAT HIGH COURT I N TAX APPEAL NO. 604/2012 DECIDED ON 29-1-2013, IN COMMISSIONER OF INCOME TAX, AHEMDABAD-III VS. PARRY ENGINERNG AND ELECTRONICS (P) LTD. IN THE CASE AFOR ESAID HON'BLE GUJARAT HIGH COURT HELD THAT WINDMILL WO ULD REQUIRE SCIENTIFICALLY DESIGNED MACHINERY IN ORDER TO HARNESS THE WIND ENERGY TO THE MAXIMUM POTENTIAL. SUCH DEVI CE HAS TO BE FITTED AND MOUNTED ON A CIVIL CONSTRUCTION, E QUIPPED WITH ELECTRIC FITTINGS IN ORDER TO TRANSMIT THE ELE CTRICITY SO GENERATED. SUCH CIVIL STRUCTURE AND ELECTRIC FITTIN GS, THEREFORE, IT CAN BE WELL IMAGED, WOULD BE HIGHLY SPECIALIZED. THUS, ITA NO.1018/JP/2016 M/S. SUNSTONE ENGINEERING INDUSTRIES (P) LTD.,JAIPU R VS. ITO, WARD- (T&J), JAIPUR 6 SUCH CIVIL CONSTRUCTION AND ELECTRIC FITTING WOULD HAVE NO USED OTHER THAN FOR THE PURPOSE OF FUNCTIONING OF T HE WIND MILL. ON THE OTHER HAND, IT CAN BE EASILY IMAGINED THAT WINDMILL CANNOT FUNCTION WITHOUT APPROPRIATE INSTAL LATION AND ELECTRIFICATION. IN OTHER WORDS, THE INSTALLATI ON OF WIND MILL AND THE CIVIL STRUCTURE AND THE ELECTRIC FITTI NGS ARE SO CLOSELY INTERCONNECTED AND LINKED AS TO FORM THE CO MMON PLANT. AS ALREADY NOTED, THE LEGISLATURE HAS PROVID ED FOR HIGHER RATE OF DEPRECIATION OF 80 PER CENT ON RENEW ABLE ENERGY DEVISES INCLUDING WIND MILL AND ANY SPECIALL Y DESIGNED DEVISE, WHICH RUNS ON WIND MILL. THE CIVIL STRUCTURE AND ELECTRIC FITTINGS, EQUIPMENTS ARE PART AND PARC EL OF THE WIND MILL AND CANNOT BE SEPARATED FORM THE SAME. TH E ASSESSEE'S CLAIM FOR HIGHER DEPRECIATION ON SUCH IN VESTMENT WAS, THEREFORE, RIGHTLY ALLOWED. CONCLUSION :- C IVIL STRUCTURE AND ELECTRIC FITTING, EQUIPMENTS ARE PART AND PARCEL OF WIND MILL AND DEPRECIATION ON INVESTMENT OF SUCH WORK SHOULD BE ALLOWED . RESPECTFULLY FOLLOWING THE DECISION OF HON'BLE JU RISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. K.K. ENTERPRISES (SUPRA), T HE GROUND NO. 1(A),(B) AND 2 OF THE ASSESSEE ARE ALLOWED. 4.1 APROPOS GROUND NO. 3 OF THE ASSESSEE, THE FACTS AS EMERGES FROM THE ORDER OF THE LD. CIT(A) IS AS UNDER:- 5.3 I HAVE PERUSED THE FACTS OF THE CASE, THE AO AND THE SUBMISSIONS OF THE APPELLANT. THE ASSESSING OFF ICER ON EXAMINATION OF THE BALANCE SHEET AND RELEVANT DOCUM ENTS AND SUBMISSIONS MADE BY THE ASSESSEE OBSERVED THAT ASSE SSEE COMPANY CLAIMED SHORT TERM LOSS ON SALES OF SHARES OF RS. 8,24,443/- AS BUSINESS LOSS, RS., 5,914/- OTHER CHA RGES ON SHARES AND RS. 4,559/- ON STT ON SHARES TOTALING TO RS. 8,34,916/-. THIS SHORT TERM LOSS ON SHARES HAD BEEN SHOWN AS EXPENSES IN PROFIT AND LOSS ACCOUNT WHILE THE AO O PINED ITA NO.1018/JP/2016 M/S. SUNSTONE ENGINEERING INDUSTRIES (P) LTD.,JAIPU R VS. ITO, WARD- (T&J), JAIPUR 7 THAT THE COMPANY IS ENGAGED IN THE BUSINESS OF MANU FACTURE OF EMERY FLOUR MILLS, MILLS STONE, MACHINERY ETC. A ND SHARES HELD AT THE END OF F.Y. 31 ST MARCH 2012 AS CURRENT INVESTMENTS. FURTHER, IN THE AUDIT REPORT ON QUANTI TATIVE DETAILS OF SHARES TRADED WAS REPORTED. IT WAS FURTHER SEEN THAT THE ASSESSEE HIMSELF HAS CLAIMED THE SAME TO BE SHORT TERM CAPITAL LOSS IN T HE LETTER WRITTEN ON 12-12-2014 AND BUSINESS LOSS IN LETTER D ATED 13- 03-2015. THE ASSESSING OFFICER BASED ON THE ABOVE T REATED THE LOSS AS SHORT TERM CAPITAL LOSS UNDER THE HEAD CAPITAL GAIN TREATING THE TRANSACTION AS INVESTMENT ACTIVI TY AND DID NOT ALLOW SET OFF AGAINST BUSINESS INCOME ACCORDING LY TO SET 72 OF THE I.T. ACT, 1961. IN THE PRESENT PROCEEDING S, THE AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE LOSS O N ACCOUNT OF SHARES WAS PART OF THE BUSINESS LOSS AND THE SA ME CAN ALSO BE NOT TREATED A SPECULATIVE IN VIEW OF THE AMENDME NTS MADE IN SECTION 43(5). RELIANCE WAS ALSO ON CIRCULAR NO. 6/2016 DATED 29 TH FEB. 2016 WITH REGARD TO ISSUE OF TAXABILITY OF SURPLUS ON SALE OF SHARES AND SECURITIES. IN VIEW OF THE REASONS DISCUSSED BY THE ASSESSING OFFICER FOR HOLDING THE SAME AS CAPITAL LOSS AS WEL L AS THE FACT THAT THE ASSESSEE ITSELF ADMITTED IT TO BE A CAPITA L LOSS INITIALLY BEFORE THE ASSESSING OFFICER, THE SUBMISSIONS OF TH E AUTHORIZED REPRESENTATIVE CANNOT BE AGREED TO. FURT HER THE CIRCULAR GIVES THE OPTION TO THE ASSESSEE BUT IN TH IS CASE, THE FACTS SHOWS THAT THE ASSESSEE ITSELF WAS TREATING T HE LOSS AS CAPITAL LOSS. AS REGARDS SECTION 43(5), IT HAS CERT AIN CONDITIONS ATTRACTED AS TO WHAT TRANSACTIONS CANNOT BE TREATED AS SPECULATIVE. NO DETAILS FOR THE SAME WERE FURNIS HED. THE STAND OF THE ASSESSING OFFICER IS CONFIRMED AND THE GROUND OF APPEAL IS DISMISSED. 4.2 DURING THE COURSE OF HEARING, THE LD. AR OF THE ASSESSEE PRAYED THAT THE LD. CIT(A) HAS ERRED IN NOT ALLOWING THE SET OF F OF LOSS ON SHARES ITA NO.1018/JP/2016 M/S. SUNSTONE ENGINEERING INDUSTRIES (P) LTD.,JAIPU R VS. ITO, WARD- (T&J), JAIPUR 8 AMOUNTING TO RS. 8,34,916/-. THE LD. AR OF THE ASSE SSEE RELIED ON THE CBDT CIRCULAR NO. 6/2016 DATED 29 TH FEB. 2016. 4.3 ON THE OTHER HAND, THE LD. DR RELIED ON THE ORD ERS OF THE AUTHORITIES BELOW. 4.4 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS NOTED THAT DURING THE C OURSE OF HEARING THE LD. AR OF THE ASSESSEE REPEATED THE SAME ARGUMENTS AS M ADE BEFORE THE LD. CIT(A). IN THE APPEAL BEFORE THIS BENCH, THE LD. AR OF THE ASSESSEE SUBMITTED THAT DETAILS OF LOSS ON SALE OF SHARES WE RE SUBMITTED BEFORE THE AUTHORITIES BELOW (PAGE15 TO 18 OF THE PAPER BOOK). THE SAME WAS CLAIMED AS BUSINESS LOSS WHILE THE AO TREATED THE S AME AS SHORT TERM CAPITAL LOSS. THE LD. AR OF THE ASSESSEE PLACED REL IANCE ON CBDT CIRCULAR NO. 6/2016 DATED 29 TH FEB. 2016 TO THIS EFFECT. FROM THE PERUSAL OF THE FACTS AS MENTIONED BY THE AO IN HIS ORDER, I NOTED THAT THE LD. CIT(A) HAS RIGHTLY CONFIRMED THE ACTION OF THE AO BY NOT ALLOW ING THE SET OFF OF LOSS ON SHARES AMOUNTING TO RS. 8,34,916/- CLAIMED AS BU SINESS LOSS BY THE ASSESSEE. THUS GROUND NO. 3 OF THE ASSESSEE IS DISM ISSED. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED. 5.1 THE APPEAL OF THE ASSESSEE FOR THE ASSESSMENT Y EAR 2013-2014 IS TAKEN UP FOR ADJUDICATION. ITA NO.1018/JP/2016 M/S. SUNSTONE ENGINEERING INDUSTRIES (P) LTD.,JAIPU R VS. ITO, WARD- (T&J), JAIPUR 9 6.1 THE GROUND NO. 1(A) AND (B) OF THE ASSESSEE IS AS UNDER:- 1. (A) THE LD. CIT(A) HAS ERRED IN NOT ALLOWING HIGHER DEPRECIATION CIVIL FOUNDATION WORK AND HAS E RRED IN NOT TREATING THE SAME AS PART OF THE WIND MILL COST . (B) THE LD. CIT(A) HAS ALSO ERRED IN NOT APPRECIATING THE FACT THAT THE SAID ISSUE WAS FULLY COVERED BY THE DECISION OF HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF K.K. ENTERPRISES. 6.2 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THIS ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THIS BENCH IN ASSESSEE'S OWN CASE FOR THE ASSESS MENT YEAR 2012-12 IN ITA NO. 1018/JP/2016 (SUPRA). THUS THE DECISION TAK EN THEREIN SHALL APPLY MUTATIS MUTANDIS IN ASSESSEE'S OWN CASE IN IT A NO. 1019/JP/2016 FOR THE ASSESSMENT YEAR 2013-14. HENCE, THE GROUND NO. 1(A) AND (B) OF THE ASSESSEE IS ALLOWED. 7.1 THE GROUND NO. 2 OF THE ASSESSEE IS REGARDING S USTAINING THE ADDITION OF RS. 68,559/- BY THE LD. CIT(A) BY INVOK ING THE PROVISIONS OF SECTION 14. THE FACTS AS EMERGES FROM THE ORDER OF THE LD. CIT(A) IS AS UNDER:- 5.3 I HAVE PERUSED THE FACTS OF THE CASE, THE ASSESSMENT ORDER AND THE SUBMISSIONS OF THE APPELLA NT. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS EARNE D DIVIDEND INCOME OF RS. 1,73,404/- WHILE AN EXPENDIT URE OF RS. 6,77,136/- WAS INCURRED DURING THE YEAR. THE AU THORIZED REPRESENTATIVE EXPLAINED THAT PROVISIONS OF SECTION 14A OF THE I.T. ACT WERE NOT APPLICABLE AS SOME INVESTMENT S AND ITA NO.1018/JP/2016 M/S. SUNSTONE ENGINEERING INDUSTRIES (P) LTD.,JAIPU R VS. ITO, WARD- (T&J), JAIPUR 10 ADVANCES WERE INTEREST BEARING AND ALSO THAT THE AS SESSEE HAD A SHARE CAPITAL OF RS. 19,75,000/- AND RESERVES OF RS. 2,14,50,506/- WHICH ADEQUATELY COVER SUCH ADVANCES AND INVESTMENT IN SHARES. THE ASSESSING OFFICER DID NOT AGREE WITH THE SAME AS NO DETAILS OF AVAILABILITY OF FUND S WITH DETAILS OF INVESTMENT AND THEIR LINKAGE TO OWN FUND S WAS PROVIDED. THE PROVISIONS OF SECTION 14A WERE INVOKE D AND A DISALLOWANCE OF RS. 68,559/- WAS MADE. IN THE PRESE NT PROCEEDINGS, THE SUBMISSIONS MADE BEFORE THE ASSESS ING OFFICER HAVE BEEN REITERATED. HOWEVER, NO DETAILS O F INVESTMENT MADE, OWN FUNDS AVAILABLE AND THE AVAILA BILITY OF THE SAME AT THE TIME OF MAKING THE INVESTMENTS HAS BEEN DEMONSTRATED. THE DISALLOWANCE MADE BY THE ASSESSIN G OFFICER IS CONFIRMED. GROUND OF APPEAL IS DISMISSED . 7.2 DURING THE COURSE OF HEARING, THE LD. AR OF THE ASSESSEE PRAYED FOR DELETION OF ADDITION OF RS. 68,559/- SUSTAINED BY T HE LD. CIT(A) BY INVOKING THE PROVISIONS OF SECTION 14. THE LD. AR O F THE ASSESSEE FILED THE WRITTEN SUBMISSION TO THIS EFFECT AS UNDER:- THE AO MADE ADDITION OF RS. 68,559/- ON THE BASIS OF CERTAIN INVESTMENTS MADE IN SHARES AND MUT UAL FUND BY INVOKING SECTION 14A WHICH HAS BEEN CONFIRMED BY THE LD. CIT(A). THE ASSESSEE HAD CLAIMED THAT NO EXPEND ITURE WAS REQUIRED TO BE INCURRED AS SUCH NO DISALLOWANCE WAS WARRANTED. FURTHER THE INTEREST NET WAS ONLY RS. 10 ,914/- (PAID RS. 6,77,136/- AND RECEIVED RS. 6,66,222/-). ALTERNATIVELY ONLY PROPORTIONATE DISALLOWANCE OUT O F INTEREST PAID COULD BE MADE. THERE WAS NO NEW INVESTMENT MAD E DURING THE YEAR. LETTER IS SUBMITTED TO AO GIVING D ETAILED FACTS AT PAGES 11 AND 12 OF THE PAPER BOOK. SHARES OF DIWAKAR LEASING AND FIN. (P) LTD. AND SHARES OF SAB OOK ENGITECH (P) LTD. AND HDFC EQUITY WERE OLD SHARES. OTHER CURRENT INVESTMENTS SHOWN IN BALANCE SHEET WERE ALS O OLD INVESTMENTS. FURTHER THERE WAS SHARE CAPITAL OF RS. 19,75,000/- AND RESERVES OF RS. 2,14,50,556/- WHICH ITA NO.1018/JP/2016 M/S. SUNSTONE ENGINEERING INDUSTRIES (P) LTD.,JAIPU R VS. ITO, WARD- (T&J), JAIPUR 11 ADEQUATELY COVERS THE INVESTMENTS MADE. RELIANCE IS PLACED ON FOLLOWING DECISIONS. (A) DCIT VS. COSMOS INTERNATIONAL LTD. (2014) 41 CC H 32 (B) BHARAT SHANTILAL KADAKIA VS. ITO (2013) 35 CC H 352 CIT VS. GUJARAT POWER CORPORATION (2013) 352 ITR 583 (D) CIT VS. SUZLON ENERGY LTD. (2013) 354 ITR 630 (GUJ) (E) CIT VS. DEEPAK MITTAL (2013) 361 ITR 131 (P&H ) 7.3 THE LD. DR RELIED ON THE ORDERS OF THE AUTHORIT IES BELOW. 7.4 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE AO DURING THE COURSE OF AS SESSMENT PROCEEDINGS OBSERVED THAT THE ASSESSEE HAD EARNED DIVIDEND INCO ME OF RS. 1,73,404/- WHILE AN EXPENDITURE OF RS. 6,77,136/- WAS DURING T HE YEAR. DURING ASSESSMENT PROCEEDINGS, THE LD. AR OF THE ASSESSEE EXPLAINED THAT SECTION 14A OF THE ACT ARE NOT APPLICABLE AS SOME INVESTMEN TS AND ADVANCES WEE INTEREST BEARING AND ALSO THAT THE ASSESSEE HAD A S HARE CAPITAL OF RS. 19,75,000/- AND RESERVES OF RS. 2,14,50,506/- WHICH ADEQUATELY COVERS SUCH ADVANCES AND INVESTMENT IN SHARES. THE AO DID NOT AGREE WITH THE SUBMISSIONS OF THE ASSESSEE AS NO DETAILS OF AVAILA BILITY OF FUNDS WITH DETAILS OF INVESTMENTS AND THEIR LINKAGE TO OWN FUN DS WAS PROVIDED. THEREFORE, THE AO INVOKED THE PROVISIONS OF SECTION 14A OF THE ACT MADE A DISALLOWANCE OF RS. 68,559/- WHICH HAS BEEN CONFI RMED BY THE LD. ITA NO.1018/JP/2016 M/S. SUNSTONE ENGINEERING INDUSTRIES (P) LTD.,JAIPU R VS. ITO, WARD- (T&J), JAIPUR 12 CIT(A) IN FIRST APPEAL. TAKING INTO CONSIDERATION T HE FACTS, CIRCUMSTANCES OF THE CASE AND THE WRITTEN SUBMISSION OF THE ASSES SEE, THE ASSESSEE IS DIRECTED TO SUBMIT THE DETAILS OF INVESTMENT MADE, OWN FUNDS AVAILABLE AND THE AVAILABILITY OF THE SAME AT THE TIME OF MAK ING INVESTMENT RELATING TO THE LINKAGE OF THE OWN FUNDS BEFORE THE AO. THE AO IS DIRECTED TO PROVIDE ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE IN ACCORDANCE WITH LAW. THUS GROUND NO. 2 OF THE ASSESSEE IS ALLO WED FOR STATISTICAL PURPOSES. 8.1 THE GROUND NO. 3 OF THE ASSESSEE IS REGARDING N OT ALLOWING SET OFF OF LOSS OF RS. 36,778/- CLAIMED AS BUSINESS LOSS BY TREATING THE SAME AS CAPITAL LOSS. 8.2 AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIALS AVAILABLE ON RECORD, IT IS NOTED THAT THE SIMILAR ISSUE WAS R AISED BY THE ASSESSEE IN A.Y. 2012-13 WHICH HAS BEEN DISMISSED BY THIS BENCH IN ASSESSEE'S OWN CASE IN ITA NO. 1018/JP/2016. SINCE, THE DECISION H AS BEEN TAKEN AGAINST THE ASSESSEE IN ASSESSEE'S OWN CASE FOR THE ASSESSM ENT YEAR 2012-13, THEREFORE, THE SAME RESULT SHALL APPLY MUTATIS MUTA NDIS IN ASSESSEE'S OWN CASE FOR THE ASSESSMENT YEAR 2013-13. THUS GROUND N O. 3 OF THE ASSESSEE IS DISMISSED. ITA NO.1018/JP/2016 M/S. SUNSTONE ENGINEERING INDUSTRIES (P) LTD.,JAIPU R VS. ITO, WARD- (T&J), JAIPUR 13 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED FOR STATISTICAL PURPOSES. 9.1 THE GROUNDS OF APPEAL OF THE REVENUE FOR THE A. Y. 2013-14 IS TAKEN UP FOR ADJUDICATION AS UNDER:- 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN D ELETING THE ADDITION OF RS. 22,94,27/- MADE BY THE AO ON ACCOUN T OF DISALLOWANCE OF DEPRECIATION ON WINDMILL IGNORING T HE FACT THAT CIVIL STRUCTURE AND INTERNAL/ EXTERNAL POWER L INES DO NOT CONSTITUTE THE PLANTS. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS JUSTIFIED IN DEL ETING THE DISALLOWANCE OF RS. 3516,590/- MADE BY THE AO ON AC COUNT OF ADDITIONAL DEPRECIATION ON WINDMILL. 9.2 AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIALS AVAILABLE ON RECORD, IT IS NOTED THAT THE SIMILAR ISSUE HAS B EEN DECIDED IN FAVOUR OF THE ASSESSEE IN ITA NO. 1018/JP/2016 FOR THE ASSESS MENT YEAR 2012-13 BY OBSERVING AS UNDER:- I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED TH E MATERIALS AVAILABLE ON RECORD. IT IS NOTED THAT THE ISSUES RAISED BY THE ASSESSEE ARE COVERED BY THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. K. K. ENTERPRISES WHEREIN THE OBSERVATION OF THE HON'BLE COURT IS AS UNDER:- HELD:- THE ISSUE INVOLVED IN THESE APPEALS HAS BEEN CONSIDERED BY THE HON'BLE GUJARAT HIGH COURT I N TAX APPEAL NO. 604/2012 DECIDED ON 29-1-2013, IN COMMISSIONER OF INCOME TAX, AHEMDABAD-III VS. PARRY ENGINERNG AND ELECTRONICS (P) LTD. IN THE CASE AFOR ESAID HON'BLE GUJARAT HIGH COURT HELD THAT WINDMILL WO ULD ITA NO.1018/JP/2016 M/S. SUNSTONE ENGINEERING INDUSTRIES (P) LTD.,JAIPU R VS. ITO, WARD- (T&J), JAIPUR 14 REQUIRE SCIENTIFICALLY DESIGNED MACHINERY IN ORDER TO HARNESS THE WIND ENERGY TO THE MAXIMUM POTENTIAL. SUCH DEVI CE HAS TO BE FITTED AND MOUNTED ON A CIVIL CONSTRUCTION, E QUIPPED WITH ELECTRIC FITTINGS IN ORDER TO TRANSMIT THE ELE CTRICITY SO GENERATED. SUCH CIVIL STRUCTURE AND ELECTRIC FITTIN GS, THEREFORE, IT CAN BE WELL IMAGED, WOULD BE HIGHLY SPECIALIZED. THUS, SUCH CIVIL CONSTRUCTION AND ELECTRIC FITTING WOULD HAVE NO USED OTHER THAN FOR THE PURPOSE OF FUNCTIONING OF T HE WIND MILL. ON THE OTHER HAND, IT CAN BE EASILY IMAGINED THAT WINDMILL CANNOT FUNCTION WITHOUT APPROPRIATE INSTAL LATION AND ELECTRIFICATION. IN OTHER WORDS, THE INSTALLATI ON OF WIND MILL AND THE CIVIL STRUCTURE AND THE ELECTRIC FITTI NGS ARE SO CLOSELY INTERCONNECTED AND LINKED AS TO FORM THE CO MMON PLANT. AS ALREADY NOTED, THE LEGISLATURE HAS PROVID ED FOR HIGHER RATE OF DEPRECIATION OF 80 PER CENT ON RENEW ABLE ENERGY DEVISES INCLUDING WIND MILL AND ANY SPECIALL Y DESIGNED DEVISE, WHICH RUNS ON WIND MILL. THE CIVIL STRUCTURE AND ELECTRIC FITTINGS, EQUIPMENTS ARE PART AND PARC EL OF THE WIND MILL AND CANNOT BE SEPARATED FORM THE SAME. TH E ASSESSEE'S CLAIM FOR HIGHER DEPRECIATION ON SUCH IN VESTMENT WAS, THEREFORE, RIGHTLY ALLOWED. CONCLUSION :- C IVIL STRUCTURE AND ELECTRIC FITTING, EQUIPMENTS ARE PART AND PARCEL OF WIND MILL AND DEPRECIATION ON INVESTMENT OF SUCH WORK SHOULD BE ALLOWED . IT IS NOTED THAT THE ISSUE RAISED ABOVE BY THE ASSE SSEE ARE COVERED BY THE DECISION OF THE DECISION OF HON 'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. K. K. ENTERPRISES (SUPRA). RESPECTFULLY FOLLOWING THE DEC ISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T VS. K.K. ENTERPRISES (SUPRA), THE GROUND NO. 1(A),(B) AND 2 OF THE ASSESSEE ARE ALLOWED SINCE THE ISSUE OF THE REVENUE IS COVERED WITH THE DECISION OF ITAT JAIPUR BENCH IN ASSESSEE'S OWN CASE FOR THE ASSESSM ENT YEAR 2012-13, ITA NO.1018/JP/2016 M/S. SUNSTONE ENGINEERING INDUSTRIES (P) LTD.,JAIPU R VS. ITO, WARD- (T&J), JAIPUR 15 THEREFORE, THE DECISION TAKEN THEREIN SHALL APPLY M UTATIS MUTANDIS IN REVENUE GROUNDS OF APPEAL. THUS GROUND NO. 1 AND 2 OF THE REVENUE ARE DISMISSED. 10.0 IN THE RESULT, THE APPEALS OF THE ASSESSEE IN ITA NO. 1018/JP/2016 IS PARTLY ALLOWED, ITA NO. 1019/JP/2016 IS PARTLY A LLOWED FOR STATISTICAL PURPOSES AND THE APPEAL OF THE REVENUE IN ITA NO. 1 098/JP/2016 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 07/03/201 7. HKKXPUN ( BHAGCHAND) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 07/03/ 2017 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S. SUNSTONE ENGINEERING INDUSTRIE S (P) LTD., JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- THE ITO, WARD- (T&J) JAIPUR / ACI T, CIRCLE- 6,JAIPUR 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 1018/JP/2016) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ @ ASSISTANT. REGISTRAR