Ajanta Private Ltd., (Formerly known as Ajanta Ltd.,), Morbi V. The Assistant Commr. Income Tax, Morbi Circle, RAJKOT-GUJARAT

ITA 183/RJT/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7086 (ITAT-RAJKOT)
• Duration Of Justice: 2 year(s) 11 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 24-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 80IA

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT [CONDUCTED THROUGH E COURT AT AHMEDABAD] BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ./ ITA NO. 183/RJT/2016 / ASSESSMENT YEARS: 2010-11 AJANTA PRIVATE LTD. (FORMERLY KNOWN AS AJANTA LIMITED) ORPAT INDUSTRIAL ESTATE RAJKOT MORBI HIGHWAY MORBI 363 641. VS ACIT, MORBI CIRCLE RAJKOT. ASSESSEE BY : SHRI VIMAL DESAI, AR REVENUE BY : SHRI PRAVEEN VERMA, SR.DR / DATE OF HEARING : 26/03/2019 /DATE OF PRONOUNCEMENT : 30/04/2019 O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER : ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST ORDER OF THE LD.CIT(A)- 11, AHMEDABAD DATED 20.1.2016 PASSED FOR THE ASSTT.YEAR 2010-11. 2. SOLE GRIEVANCE OF THE ASSESSEE IS THAT THE LD.CI T(A) HAS ERRED IN CONFIRMING DISALLOWANCE OF RS.2,64,130/- OUT OF DED UCTION CLAIMED UNDER SECTION 80IA ON ACCOUNT OF RE-ALLOCATION OF R EPAIRS & MAINTENANCE AND INSURANCE EXPENSES OF WINDMILLS. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED ITS RETURN OF INCOME ON 29.9.2010 DECLARING TOTAL INCOME AT RS.62 ,41,37,890/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSE SSMENT AND NOTICE UNDER SECTION 143(2) WAS ISSUED AND SERVED UPON THE ASSESSEE. ON ITA NO.183/RJT/2016 - 2 - SCRUTINY OF THE ACCOUNTS, IT REVEALED THAT THE ASSE SSEE HAS CLAIMED DEDUCTION UNDER SECTION 80IA OF THE INCOME TAX ACT, IN RESPECT OF RECEIPTS EARNED FROM SALE OF POWER GENERATED BY THR EE WIND MILLS SITUATED AT BHOGAT. THE ASSESSEE HAD INCURRED EXPE NDITURE OF RS.63,24,080/- TOWARDS REPAIRS & MAINTENANCE AND IN SURANCE. IT HAS 16 WINDMILLS FOR WHICH THIS EXPENDITURE WAS INCURRED. THE ASSESSEE REDUCED PROPORTIONATE EXPENDITURE OUT OF TOTAL I.E. IT DISALLOWED 3/16. A SUM OF RS.11,85,765/- WAS WORKED OUT, WHICH HAS BEE N REDUCED FROM THE GROSS RECEIPTS OF POWER GENERATION ON WHICH 80I A WAS CLAIMED. THE LD.AO WAS NOT SATISFIED WITH THIS TREATMENT. HE DI RECTED THE ASSESSEE TO PRODUCE DETAILS OF EXPENDITURE INCURRED FOR EACH IN DIVIDUAL WIND MILL. THE ASSESSEE WAS UNABLE TO PRODUCE. ACCORDINGLY, T HE AO WORKED OUT A NEW FORMULA. HE OBSERVED THAT 22.82 % OF RECEIPTS ARE BEING GENERATED FROM THESE THREE WIND MILLS AND EXPENDITURE SHOULD ALSO BE WORKED OUT IN THE RATIO OF RECEIPTS. THE AO HAS COMPUTED NET INCOME FROM THREE WIND MILLS AT RS.45,54,649/- AS AGAINST RS.59,72,27 9/- COMPUTED BY THE ASSESSEE. APPEAL TO THE CIT(A) DID NOT BRING ANY R ELIEF TO THE ASSESSEE. THE LD.CIT(A) UPHELD DISALLOWANCE OF RS.2,64,130/- OUT OF DEDUCTION CLAIMED UNDER SECTION 80IA. 4. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT S IMILAR EXERCISE WAS CARRIED OUT BY THE AO IN THE ASSTT.YEAR 2012-13. I N THAT YEAR 20.52% WAS THE EXPENSES WORKED OUT BY THE AO ON ACCOUNT OF TUR NOVER OF THREE WIND MILLS. IN THIS YEAR IT IS 22.82%. WHEN THIS MATTER WENT BEFORE THE LD.CIT(A), THE LD.CIT(A) DID NOT APPROVE THE WORKIN G OF THE AO AND DELETED ADDITION OF RS.1,67,284/-. COPY OF THE CIT (A)S ORDER HAS BEEN PLACED AT PAGE NO.70 TO 86 OF THE PAPER BOOK. THE L D.COUNSEL FOR THE ASSESSEE TOOK US THROUGH PARA 4.4 OF PAGE NO.82 TO 83 OF THE CIT(A)S ITA NO.183/RJT/2016 - 3 - ORDER. HE FURTHER SUBMITTED THAT THIS ORDER WAS CH ALLENGED BY THE REVENUE BEFORE THE TRIBUNAL IN ITA JNO.438/RJT/2016, BUT REVENUE DID NOT CHALLENGE THE FINDING OF THE LD.CIT(A) ON THIS ISSUE. THIS IS THE SUBSEQUENT ORDER. HE CONTENDED THAT REVENUE HAS AC CEPTED THE ORDER OF THE LD.CIT(A), AND THEREFORE, ON THE SIMILAR ANALOG Y THE ADDITION BE DELETED IN THIS YEAR. THE LD.DR WAS UNABLE CONTROV ERT THIS CONTENTION OF THE ASSESSEE. 5. ON DUE CONSIDERATION OF THE ABOVE FACTS, WE ARE OF THE VIEW THAT THIS ADDITION IS NOT SUSTAINABLE ON TWO REASONS VIZ . FIRSTLY, THE LD.CIT(A) IN SUBSEQUENT ASSESSMENT YEAR HAS DELETED SIMILAR A DDITION, AND THIS ORDER HAS BEEN ACCEPTED BY THE REVENUE AND HAS NOT BEEN CHALLENGED BEFORE THE TRIBUNAL. HOWEVER, THE LD.CIT(A) HAS NO T APPLIED SIMILAR ANALOGY IN THE IMPUGNED ORDER HEREIN. THE SECOND RE ASON IS, ONCE THE ASSESSEE HAS TAKEN AVERAGE OF THE EXPENDITURE ON TH E BASIS OF PAST EXPERIENCE, THE AO SHOULD HAVE NOT CHANGED THAT MET HOD WITHOUT POINTING OUT ANY SPECIFIC FLAW. THE ASSESSEE HAS A LSO TAKEN THE AVERAGE. THE AO WORKED OUT THE EXPENDITURE ON ESTIMATE BASIS . THERE IS NO JUSTIFICATION IN THE ANALOGY OF THE AO. DUE TO THE SE REASONS, THE LD.CIT(A) IN SUBSEQUENT YEAR DID NOT ACCEPT THIS WO RKING AT THE END OF THE AO. THEREFORE, CONSIDERING ABOVE FACTS AND CIR CUMSTANCES, WE DELETE THE DISALLOWANCE MADE BY THE AO, AND ALLOW G ROUND OF APPEAL OF THE ASSESSEE. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . PRONOUNCED IN THE OPEN COURT ON 30 TH APRIL, 2018. SD/- (WASEEM AHMED) ACCOUNTANT MEMBER SD/- (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED, 30/04/2019