RRB Energy Ltd., New Delhi V. ITO, New Delhi

ITA 1876/DEL/2013

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4967 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 28-06-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 02-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURENDER PAL
• Assessee Lawyers: K SAMPAT SH V RAJA KUMAR
• Keywords: Business income; Depreciation; Tangible material; Difference of opinion; Reason to believe; Unabsorbed depreciation; Change of opinion
• Section: 143(3); 43D; 147; 148; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL [ DELHI BENCH F, NEW DELHI ] BEFORE SMT. BEENA A. PILLAI, JUDICIAL MEMBER A N D DR. B.R.R. KUMAR, ACCOUNTANT MEMBER ITA NO. 1876/DEL/2013 ASSESSMENT YEAR: 2006-07 RRB ENERGY LTD. GA-1/B1 EXTN. MOHAN COOP. INDL. ESTATE NEW DELHI VS. ITO WARD- 15 (2) NEW DELHI PAN: AAACV0109N (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. K. SAMPAT, SH. V. RAJA KUMAR, ADV. DEPARTMENT BY : SHRI SURENDER PAL, SR. DR DATE OF HEARING : 03-01-2019 DATE OF PRONOUNCEMENT : 22-01-2019 O R D E R PER DR.B.R.R. KUMAR, AM : THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A)-18, NEW DELHI DT. 21/01/2013. 2. IN THE PRESENT APPEAL ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW THE AUTHORITIES BELOW ERRED: I) IN INVOKING PROCEEDING 147/148 OF THE INCOME-TAX ACT, 1961 FOR RE- ASSESSMENT WITHOUT ANY RHYME OR REASON OR MATERIAL; II) IN REJECTING THE OBJECTIONS TO THE REOPENING OF THE ASSESSMENT; III) IN ACTING U/S 147 R.W.S. 143 (3) OF THE ACT TO REDO THE ASSESSMENT SOLELY ON THE BASIS OF CHANGE OF OPINION AND IN VIOLATION OF THE LIMITATIONS ENVISAGED UNDER THE PROVISO TO SECTION 147 OF THE A CT. 2 IV) IN MISCONSTRUING THE PROVISIONS OF SECTION 80IA TO DENY THE EXEMPTION THERE- UNDER; V) IN MISREADING THE FACTS AND ACCOUNTS TO DISALLOW THE ALLEGED EXPENSES AND OTHER SET-OFFS AGAINST POWER GENERATION INCOME; ALL THE ABOVE ACTIONS BEING ARBITRARY, ERRONEOUS, U NTENABLE AND ILLEGAL MUST BE QUASHED WITH DIRECTIONS FOR RELIEF. 3. BRIEF FACTS OF THE CASE ARE AS UNDER: THE ASSESSMENT UNDER SECTION 143(3) WAS COMPLETED ON 31/ 12/2008 WHEREIN THE DEDUCTION UNDER SECTION 80IA OF THE INCOME TAX ACT,196 1 WAS EXAMINED AND AN AMOUNT OF RS. 40,000/- PER ANNUM FOR EACH WING ELECTRI CAL GENERATOR WAS DISALLOWED AMOUNTING TO AN AMOUNT OF RS. 4,00,000/- I N TOTAL. THE MATTER TRAVELLED UP TO LD. CIT(A) WHEREIN SAID AD DITION MADE BY THE A.O. ON ACCOUNT OF PROBABLE EXPENDITURE ON THE WING ELECTRICAL GENERATOR WAS DELETED VIDE ORDER DT. 02/09/2009. NOTICE UNDER SECTION 148 WAS ISSUED ON 30/03/2011 BY T HE ASSESSING OFFICER TO REASSESS THE INCOME FOR THE A.Y. 2006-07. THE OPERATIVE PART OF THE REASONS RECORDED ARE AS UNDER : I. THE ASSESSEE HAS CLAIMED DEDUCTION UNDER SECTION 80IA O N RS. 1,20,02,794/- PERTAINING TO INCOME GENERATED FROM THE UNITS INSTALLED IN THE ASSESSMENT YEARS 1997-98, 1998-99, 2002-03, 2005-06 AND 2006-07. THE GROSS INCOME OF THESE WEGS IS RS. 1,32,72,473/-. THE ASSESSE E HAS DEDUCTED NOTIONAL MAINTENANCE CHARGES AMOUNTING TO RS. 4,80,00 0/- LEAVING A NET INCOME OF RS. 1,20,02,794/- WHICH HAVE BEEN CLAIMED TO BE ELIGIBLE BY THE ASSESSEE. II. THE TEN CONSECUTIVE YEARS OF THE ASSESSEE LAPSE IN A .Y. 2005-06. THUS IN THE CASE OF THE ASSESSEE THE PERIOD OF TAKING DEDUCTION UND ER SECTION 80IA HAS LAPSED AND THEREFORE DEDUCTION IS NOT AVAILABLE FOR THIS YEAR UNDER CONSIDERATION. III. THE CLAIM OF THE ASSESSEE IS ON THE BASIS OF THE WEGS SU BSEQUENTLY INSTALLED IN THE A.Y. 1997-98, 1998-99, 2002-03, 2005 -06 AND 2006-07. THE ASSESSEE IS TRYING CLAIM 80IA DEDUCTION FOR EACH WEG I NSTALLED BY IT FOR THE NEXT TEN CONSECUTIVE ASSESSMENT YEAR. THIS WILL IMPLY T HAT AS LONG AS THE 3 SECTION 80IA DEDUCTION IS THERE THE COMPANY SHALL KEEP ON ENJOYING THE DEDUCTION. THE DEDUCTION IS NOT INTENDED TO BE MADE AVA ILABLE ON ROTATIONAL BASIS. IT IS AMPLY CLEAR THAT IT IS AVAIL ABLE FOR AN ENTERPRISE AND THEN BEGINNING FROM FIRST YEAR OF CLAIM CONTINUES FOR TEN CONSECUTIVE YEARS. THE PERIOD OF CLAIM OF DEDUCTION OF THE ASSESS EE HAS LAPSED AND ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 10A AMOUNTI NG TO RS. 1,20,02,794/- IS NOT ELIGIBLE. 4. THE LD. CIT(A) UPHELD THE ISSUE OF NOTICE ON THE GROU NDS THAT THE ASSESSEE HAS CLAIMED DEDUCTION UNDER SECTION 80IA WITHOUT ACCOUNTING FOR ANY DEPRECIATION OR ANY OTHER EXPENSES OF ANY SOUGHT. IN THE ORIGINAL ASSESSMENT ORDER FRAMED UNDER SECTION 143(3) ONLY THE ISSUE OF NOTIONAL MAINTENANCE CHARGES OF RS. 40,000/- WAS UNDER CONSIDERATION AND THE APPLICATION OF THE PROVISIONS OF SE CTION 80IA(5) HAVE NOT BEEN RAISED THEN. 5. BEFORE US, IT WAS ARGUED BY THE LD. AR THAT EACH WI ND MILL SHOULD BE TREATED AS AN INDEPENDENT UNIT AND THE CLAIM HAS TO BE EXAMINED IN RELA TION TO THE EACH UNITS ELIGIBILITY. NOTWITHSTANDING THIS FACT, HE ARGUED THAT T HERE WAS NO NEW MATERIAL BEFORE THE ASSESSING OFFICER TO ISSUE NOTICE UNDER SECTION 14 8 AS ALL THE RELEVANT MATERIAL STANDS SUBMITTED BEFORE THE ASSESSING OFFICER IN THE ORIGINAL PROCEEDINGS. THERE WAS NO NEW EVIDENCE FOUND OUT OR BROUGHT BY THE ASSESSING OFFICER BEFORE ISSUE OF THE NOTICE. 6. ON THE OTHER HAND THE LD. DR ARGUED THAT THE ASSESSEE H AS NOT CLAIMED DEPRECIATION. HE ARGUED THAT THE PROFITS HAVE TO BE CO MPUTED AS PROVIDED UNDER THE HEAD BUSINESS INCOME FROM SECTION 28 TO SECTION 43D AND THAT INCLUDES DEPRECIATION. THE ASSESSEE OUGHT TO HAVE CLAIM DEPRECIATION, EXPENSES ON POWER GENERATION AND GIVE EFFECT TO UNABSORBED DEPRECIATION. HENCE THE REO PENING IS RIGHTLY VALID. HE FURTHER ARGUED THAT SINCE THIS IS THE ELEVENTH YEAR OF CLAIMING O F EXEMPTION THE ASSESSEE IS NO MORE ELIGIBLE FOR SUCH EXEMPTION AS PER THE PROVISIONS OF SECTION 80IA. 4 7. WE HAVE HEARD THE ARGUMENT OF BOTH THE PARTIES AND GON E THROUGH THE REASONS RECORDED BY THE ASSESSING OFFICER. THE SIMILAR MATTER HAS BEEN EXAMINED IN THE CASE OF RRB ENERGY LTD. IN ITA NO. 397/DEL/2016 BY THE HONBLE DELHI HIGH COURT WHEREIN THE REOPENING OF THE ASSESSMENT WAS QUASHED WHICH WAS BASED ON MERELY CHANGE OF OPINION AND REVIEWED THE EARLIER ASSESSMENT PASSED IN T HE REGULAR ASSESSMENT PROCEEDINGS. THE SIMILAR MATTER WAS ALSO EXAMINED B Y THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF THE ASSESSEE IN THE A.Y. 2004-05 AND HELD THAT THE REOPENING WAS NOT VALID. ON PERUSAL OF THE RECORDS, WE FIND THAT THE L D. CIT(A)S ORDER DT. 02/09/2009 (PARA 6.1) HAS REFERENCE PERTAINING TO THE INSTALLATIO N OF 13 WIND ELECTRIC GENERATORS AND ALSO THE DISALLOWANCES CLAIMED AND AFTER EXAMINATION THE SAME THE DEDUCTION WAS DULY ALLOWED. UNDER SUCH CIRCUMSTANCE IT CANNOT BE SAID THAT THE ASSESSING OFFICER RESTRICTED HIS SCRUTINY ONLY TO THE EXTENT OF DISALLOWI NG OFF EXPENSES AND CHOOSE NOT TO EXAMINE THE ISSUE OF DEDUCTION UNDER SECTION 80IA.TYHE AS SESSING OFFICER HAS EXAMINED THE ISSUE DILIGENTLY AND FORMED AN OPINION ON ALLOWABIL ITY OF THE DEDUCTION AND ALLOWED SUBSEQUENTLY IN THE ASSESSMENT. THUS HAVING ALLOWED IN THE EARLIER PROCEEDINGS UNDER 143(3), IT CANNOT BE SAID THAT THERE IS ESCAPEMENT OF I NCOME ON THE SAME HEAD. THIS AMOUNTS TO ONLY CHANGE OF OPINION 8. FURTHER, ON PERUSAL OF THE FACTS OF THE CASE WE FIND THAT ALL THE MATERIAL FACTS RELEVANT FOR THE COMPLETION OF THE ASSESSMENT WERE BEFOR E THE ASSESSING OFFICER AND THE ASSESSING OFFICER HAS TAKEN A CONSCIOUS DECISION TO ALLOW THE DEDUCTION. THE FORM 10CCD WAS BEFORE THE ASSESSING OFFICER AT THE TIME OF COMPLETION OF ORIGINAL ASSESSMENT. ALL THE MATERIAL FACTS WERE BEFORE THE ASS ESSING OFFICER NO NEW MATERIAL WAS BOUGHT BY THE ASSESSING OFFICER WHILE ISSUING THE NO TICE UNDER SECTION 148. THE ASSESSING OFFICER HAS THE POWERS OF REASSESSMENT AFTER HAVING REASON TO BELIEVE THAT THE INCOME HAS ESCAPED ASSESSMENT BUT IT DOES NOT CONFER PO WERS UPON HIM TO REOPEN THE ASSESSMENT ON MERE CHANGE OF OPINION. THE ASSESSING OFFICE R HAS POWERS TO REOPEN AN ASSESSMENT ONLY ON THE BASIS OF TANGIBLE MATERIAL SUFF ICIENT TO HOLD THAT THERE HAS BEEN ESCAPEMENT OF INCOME FROM THE ASSESSMENT. BUT IN THE CASE AT HAND, THE ASSESSING OFFICER HAS APPARENTLY EXERCISED THE POWERS TO REVIEW UNDER THE GRAB OF REOPENING OF THE ISSUE AS TO THE DEDUCTION UNDER SECTION 80-INCOME TA X ACT,1961 OF THE ACT ALREADY 5 DECIDED BY HIM IN THE ORIGINAL ASSESSMENT ORDER PASSED UNDER SECTION 143(3), WHICH IS NOT PERMISSIBLE UNDER SECTION 147 OF THE ACT. 9. AS A RESULT THE APPEAL OF THE ASSESSEE IS HEREBY AL LOWED. THE ORDER PRONOUNCED ON THE OPEN COURT 22/01/2019 SD/- SD/- (BEENA A. PILLAI) (DR. B.R.R. KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 22/01/2019 BIDHAN COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI 6 DRAFT DICTATED ON DRAFT PLACED BEFORE AUTHOR DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER APPROVED DRAFT COMES TO THE SR.PS/PS KEPT FOR PRONOUNCEMENT ON DATE OF UPLOADING ORDER ON THE WEBSITE FILE SENT TO THE BENCH CLERK DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK DATE OF DISPATCH OF ORDER