DCIT CIRCLE 3(3)(1), MUMBAI V. ROLTA POWER P.LTD, MUMBAI

ITA 1708/MUM/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7111 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2012-2013
• Appeal Filed On: 16-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: D G PANSARI
• Section: 115JB; 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D, MUMBAI BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.1708/M/2018 ASSESSMENT YEAR: 2012-13 DCIT 3(3)(1), ROOM NO.609, 6 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 VS. M/S. ROLTA POWER PVT. LTD., 21 ST FLOOR, MAKER TOWER F, CUFFE PARADE, MUMBAI 400 005 PAN: AADCR 8964L (APPELLANT) (RE SPONDENT) PRESENT FOR: ASSESSEE BY : SHRI D.G. PANSARI, A.R. REVENUE BY : SHRI RENU KAPOOR, D.R . DATE OF HEARING : 24.04.2019 DATE OF PRONOUNCEMENT : 30.04.2019 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVEN UE AGAINST THE ORDER DATED 19.03.2015 OF THE COMMISSIO NER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2012-13. 2. THE ONLY ISSUE RAISED BY THE REVENUE IS AGAINST THE DELETION OF DISALLOWANCE OF RS.1,13,52,784/- AS MADE BY THE AO IN RESPECT OF POWER AND ELECTRICITY EXPENSES. 3. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS ENGA GED IN THE BUSINESS OF GENERATION, SUPPLY AND DISTRIBUTION OF POWER AND ENERGY AS WELL AS TRADING IN SECURITIES. AND DURIN G THE YEAR ITA NO.1708/M/2018 M/S. ROLTA POWER PVT. LTD. 2 ASSESSEE FILED THE RETURN OF INCOME ON 28.09.2012 D ECLARING A LOSS OF RS.3,40,07,272/- UNDER THE NORMAL PROVISION S OF THE ACT AND RS.3,40,62,827/- UNDER SECTION 115JB OF THE ACT WHICH WAS PROCESSED UNDER SECTION 143(1) OF THE ACT. THEREAF TER, THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND STATU TORY NOTICES WERE ISSUED AND SERVED UPON THE ASSESSEE. THE AO D URING THE COURSE OF ASSESSMENT PROCEEDINGS OBSERVED THAT THE BUSINESS OF POWER GENERATION HAS NOT STARTED DURING THE YEAR UN DER CONSIDERATION AND THE ASSESSEE HAS CLAIMED ENTIRE E XPENSES BY DEBITING THE SAME TO THE P & L ACCOUNT WHICH WERE O THERWISE NOT RELATED TO TRADING ACTIVITIES AND ACCORDINGLY THE AO ASKED THE ASSESSEE TO JUSTIFY THE CLAIM OF SAID EXPENSES RELATING TO POWER GENERATION. THE SAID QUERY OF THE AO WAS REP LIED BY THE ASSESSEE VIDE LETTER DATED 30.10.2014 BY SUBMITTING THAT ASSESSEE HAS ALREADY SET UP 5 MWP GRIND INTERACTIVE SOLAR PHOTOVOLTAIC POWER PROJECT AT PALI DISTRICT, RAJAST HAN DURING THE ASSESSMENT YEAR 2011-12 AND FOR SETTING UP THE SAID BUSINESS THE ASSESSEE HAD ENGAGED EMPLOYEES TO WHOM SALARIES WERE PAID. THE ASSESSEE ALSO SUBMITTED THAT THE EXPENSE S INCURRED AFTER THE DATE OF SETTING UP OF THE PLANT BUT BEFOR E COMMENCEMENT OF BUSINESS ARE ALLOWABLE EXPENSES. T HE CONTENTIONS OF THE ASSESSEE DID NOT FIND FAVOUR WIT H THE AO AND HE DISALLOWED AND ADDED THE ENTIRE EXPENSES CLAIMED IN RESPECT OF POWER AND ELECTRICITY OF RS.1,13,52,784/- TO THE INCOME OF THE ASSESSEE BESIDES MAKING OTHER ADDITIONS. 4. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) ALL OWED THE APPEAL OF THE ASSESSEE BY FOLLOWING THE DECISION OF THE TRIBUNAL IN THE CASE OF SHAPPORJI PALLONJI POWER CO. LTD. IN ITA NOS.4843 ITA NO.1708/M/2018 M/S. ROLTA POWER PVT. LTD. 3 & 759/MUM/2006 AND ALSO THE DECISION OF THE PREDECE SSOR OF LD. CIT(A) AND THUS DELETED THE ADDITION. 5. THE LD. A.R., AT THE OUTSET, SUBMITTED BEFORE TH E BENCH THAT THE ISSUE RAISED IN THE CURRENT APPEAL BY THE REVENUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE IN ASSES SEES OWN CASE IN ITA NO.6708/M/2016 A.Y. 2011-12 BY THE COOR DINATE BENCH WHEREIN THE IDENTICAL ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE. THE LD. A.R. ALSO SUBMITTED THAT AT THE TIME OF PASSING THE ORDER BY THE LD. CIT(A), THE DECISION O F THE CO- ORDINATE BENCH OF THE TRIBUNAL WAS NOT AVAILABLE AN D THEREFORE IS BEING SUBMITTED AND RELIED ON NOW. THE LD. A.R., T HEREFORE, SUBMITTED BEFORE THE BENCH THAT THE APPEAL OF THE R EVENUE MAY KINDLY BE DISMISSED AND ORDER OF THE LD. CIT(A) MAY BE UPHELD. 6. THE LD. D.R., ON THE OTHER HAND, RELIED ON THE G ROUNDS OF APPEAL AND ORDER OF AO. 7. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE OBSERVE THAT IDENTICAL ISSUE WAS ALSO IN VOLVED IN THE PRECEDING ASSESSMENT YEAR 2011-12 AND THE CO-ORDINA TE BENCH OF THE TRIBUNAL HAS DECIDED THE SAME IN FAVOUR OF T HE ASSESSEE IN ITA NO.6708/M/2016 A.Y. 2011-12 VIDE ORDER DATED 21.12.2018. THE OPERATIVE PART IS REPRODUCED AS UN DER: 9. WE NOTICE THAT THE LD. CIT (A) HAS PARTLY ALLOW ED THE EXPENDITURE CLAIMED BY THE ASSESSEE BY FOLLOWED THE DECISION OF THE COORDINATE BENCH RENDERED IN THE CASE OF SHAPPORJI PALLONJI POWER CORPORATION LTD. ITA NOS. 4843 AND 759/MUM/2006 IN WHICH IT HAS BEEN HELD THAT THE BUSINESS ACTIVITIES MAY BE CLASSIFIED INTO TWO BROAD CATEGORIES, FIRSTLY THE ACTIVITIES WHICH ARE IN FUR THERANCE OF SETTING UP OF A BUSINESS AND SECONDLY THE ACTIVITIES WHICH ARE IN FURTHERANC E OF THE COMMENCEMENT OF THE BUSINESS AFTER IT HAS BEEN SET UP. THE BUSINESS IS SET UP WHEN IT IS READY FOR TAKEOFF BUT THE ACTIVITIES FOLLOWING THE SETTING UP OF BUSI NESS PRIOR TO ITS COMMENCEMENT CONSTITUTE THE ESSENTIAL ACTIVITIES FOR COMMENCEMEN T OF BUSINESS AND THE EXPENDITURE INCURRED IN CARRYING ON SUCH ACTIVITIES IS ALLOWABLE DEDUCTION UNDER THE HEAD INCOME FROM BUSINESS. SINCE, THE FINDINGS OF T HE LD. CIT (A) ARE BASED ON THE ITA NO.1708/M/2018 M/S. ROLTA POWER PVT. LTD. 4 DECISION OF THE COORDINATE BENCH, WE DO NOT FIND AN Y INFIRMITY IN THE ORDER OF THE LD. CIT (A)TO INTERFERE WITH. WE THEREFORE UPHOLD T HE FINDINGS OF THE LD.CIT (A) AND DISMISS THIS GROUND OF APPEAL OF THE REVENUE. 8. SINCE THE FACTS OF THE CASE BEFORE US ARE MATER IALLY SAME TO THE ONES AS DECIDED BY THE CO-ORDINATE BENCH OF THE TRIBUNAL IN ITA NO.6708/M/2016 (SUPRA), WE, THEREFORE, RESPECTF ULLY FOLLOWING THE SAME DISMISS THE APPEAL OF THE REVENU E BY UPHOLDING THE ORDER OF LD. CIT(A). 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 30.04.2019. SD/- SD/- (SANDEEP GOSAIN) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 30.04.2019. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY /ASSTT. REGISTRAR, ITAT, MUMBAI.