M/s ECO RRB Infra Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 2452/DEL/2016

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 7010 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 03-05-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S N MEENA
• Keywords: Depreciation; Unabsorbed depreciation
• Section: 14A; 80IA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C: NEW DELHI BEFORE, SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEM BER AND SHRI O.P.KANT, ACCOUNTANT MEMBER ITA NO.2452/DEL/2016 (ASSESSMENT YEAR-2011-12) M/S ECO RRB INFRA PVT. LTD. 2-C & D, 2 ND FLOOR, M-6, UPPAL PLAZA DISTT. CENTRE, JASOSLA, NEW DELHI-110025 PAN AAACR 0233R VS. DY. CIT , CIRCLE-11(1), NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY SH. V. RAJA KUMAR, ADV. RESPONDENT BY SH. S.N. MEENA, SR. DR ORDER PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER: THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAI NST ORDER DATED 23.02.2016 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-3, NEW DELHI {CIT (A)} FOR ASSESSMENT YEAR 2011-12. 2.0 THE BRIEF FACTS OF THE CASE ARE THAT THE ASSES SEE COMPANY IS ENGAGED IN THE BUSINESS OF RENDERING TECHNICAL CONS ULTANCY AND PROFESSIONAL SERVICES RELATING TO WIND POWER GENERAT ION. THE RETURN OF INCOME WAS FILED DECLARING AN INCOME OF RS.2,85, 18,286/-. THE 2 ITA NO.2452/DEL/2016 M/S ECO RRB IN FRA PVT. LTD. VS. DCIT RETURN OF INCOME WAS REVISED SUBSEQUENTLY FOR THE RE ASON THAT THE BROUGHT FORWARD LOSSES AND UNABSORBED DEPRECIATION WA S NOT ADJUSTED. THE CASE WAS SELECTED FOR SCRUTINY AND DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS OBSERVED THAT THE ASSESSEE HAS CLAIMED DEDUCTION U/S 80IA OF THE INCOME TAX ACT, 1 961 (HEREINAFTER CALLED THE ACT) AMOUNTING TO RS.46,99,020/-. THE ASSESSEE WAS ASKED TO SUBSTANTIATE ITS CLAIM FOR DEDUCTION U/S 8 0IA. THE ASSESSEE SUBMITTED BEFORE THE ASSESSING OFFICER (AO) THAT IT DERIVED INCOME BY CARRYING ON CONSULTANCY IN RENEWABLE AND NON CONVEN TIONAL SOURCE I.E., WIND ENERGY AND, THUS, EARNED COMMISSION ON SA LE OF WIND ELECTRIC GENERATION (WEGS). IT WAS ALSO SUBMITTED TH AT THE OTHER SOURCE OF INCOME WAS FROM THE WIND ELECTRICITY GENERA TORS INSTALLED BY THE ASSEESSEE. IT WAS THE ASSEESSS CLAIM BEFORE THE ASSESSING OFFICER THAT SETTING UP OF NEW WIND ELECTRIC GENERATI ON UNIT IN ANY PART OF INDIA FOR THE PURPOSES OF POWER GENERATION FULLY MET WITH THE INTENTION OF THE LAW MAKERS OF PROMOTING INVESTMENT IN POWER PROJECTS AND WAS, THUS, ELIGIBLE FOR CLAIM OF DEDUCT ION U/S 80IA OF THE ACT. HOWEVER, THE ASSESSING OFFICER WAS OF THE V IEW THAT THE ASSESSEE HAS NOT DERIVED INCOME FROM THE SALE OF WIN D ELECTRICITY 3 ITA NO.2452/DEL/2016 M/S ECO RRB IN FRA PVT. LTD. VS. DCIT GENERATORS BUT FROM COMMISSION ON SALE OF WIND ELECT RIC GENERATION UNIT FROM ITS PRINCIPAL. THE ASSESSING OFFICER ALSO OBSERVED THAT AS PER THE ASSESSEES OWN SUBMISSIONS, THE POWER PLANT HAD BEEN SET UP AS A DEMONSTRATION UNIT TO CONVINCE THE PROSPECTIVE BUYERS FOR PURCHASING WIND ELECTRIC GENERATION UNITS AND, THERE FORE, THE ASSESSEES CLAIM WAS NOT ELIGIBLE FOR DEDUCTION U/S 80IA OF THE ACT. THE AO ALSO NOTED THAT NO EXPENDITURE HAD BEEN DEBI TED TOWARDS POWER GENERATION UNIT BY THE ASSESSEE AND, THEREFOR E, THE CORRECT PROFIT POSITION WAS NOT BEING REPORTED. THE AO PROCE EDED TO DISALLOW THE CLAIM OF DEDUCTION OF RS.46,99,020/-. 2.1 APART FROM THIS, THE ASSESSING OFFICER ALSO DI SALLOWED DEPRECIATION ON WIND ELECTRICITY GENERATORS AND MADE AN ADDITION OF RS.1,15,89,549/- ON THIS ACCOUNT. THE ASSESSING OFF ICER ALSO MADE ADDITION ON ACCOUNT OF DEPRECIATION OF LAND AMOUNTI NG TO RS.1,843/- DISALLOWANCE OUT OF REPAIRS AND MAINTENANCE AMOUNTIN G TO RS.3,72,968/- AND DISALLOWANCE U/S 14A OF THE ACT AM OUNTING TO RS.77,574/-. THE ASSESSMENT WAS COMPLETED AT AN INCO ME OF RS.2,23,25,989/- AFTER GIVING THE BENEFIT OF SET OF F OF BROUGHT FORWARD LOSSES. 4 ITA NO.2452/DEL/2016 M/S ECO RRB IN FRA PVT. LTD. VS. DCIT 2.2 AGGRIEVED, THE ASSESSEE APPROACHED THE LD. FIR ST APPELLATE AUTHORITY WHO PARTLY ALLOWED THE ASSESSEE S APPEAL BY HOLDING THAT IN VIEW OF HIS PREDECESSORS DECISION I N ASSESSMENT YEAR 2009-10, THE ASSESSEES CLAIM OF U/S 80IA OF THE AC T AND DEPRECIATION ON WIND ELECTRICITY GENERATORS WAS NOT ALLOWABLE. SIMILARLY, WITH RESPECT TO DEPRECIATION ON LAND, THE FINDING OF HIS PREDECESSOR IN ASSESSEES APPEAL FOR ASSESSMENT YEA R 2009-10 WAS AGAIN FOLLOWED AND THIS GROUND WAS ALSO REJECTED. TH E LD. CIT (A) ALSO SUSTAINED THE DISALLOWANCE OF EXPENDITURE PERT AINING TO REPAIRS AND MAINTENANCE. HOWEVER, THE DISALLOWANCE U/S 14A OF THE ACT WAS DELETED. 2.3 AGGRIEVED, THE ASSESSEE IS NOW BEFORE THIS TRIB UNAL AND HAS CHALLENGED THE ACTION OF THE LD. CIT (A) BY RAISING THE FOLLOWING GROUNDS OF APPEAL: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT (A) ERRED IN CONFIRMING THE FOLLOWING A CTION OF THE ASSESSING OFFICER: 1. REJECTING CLAIM U/S 80IA OF THE ACT; 2. MAKING ADDITION OF RS.1,15,89,549/- BEING THE AMOUN T OF DEPRECIATION ON WIND ELECTRICITY GENERATORS USED FO R THE PURPOSE OF BUSINESS. 5 ITA NO.2452/DEL/2016 M/S ECO RRB IN FRA PVT. LTD. VS. DCIT 3. NOT PROVIDING DEPRECIATION ON LAND AS CLAIMED. 4. MAKING AN ADDITION OF RS.3,72,968/- ON ACCOUNT OF EXPENSES INCURRED ON REPAIRS AND MAINTENANCE. THE ORDER BEING ARBITRARY, MISCONCEIVED, ERRONEOUS AND UNTENABLE MUST BE QUASHED WITH DIRECTIONS FOR APPRO PRIATE RELIEF. 3.0 AT THE OUTSET, THE LD. AUTHORIZED REPRESENTATI VE SUBMITTED THAT ALL THE GROUNDS RAISED IN THE APPEAL WERE COVERED BY EARLIER ORDERS OF THE TRIBUNAL IN ASSESSEES OWN CAS E. COPIES OF THE ORDERS OF THE ITAT FOR ASSESSMENT YEARS 2006-07, 20 12-13, 2013- 14, 2014-15 AND 2015-16 WERE PLACED ON RECORD. THE LD. AR SUBMITTED THAT ALL THE ISSUES RAISED IN THIS APPEAL HAVE BEEN DECIDED EITHER IN FAVOUR OF THE ASSESSEE OR AGAINST THE ASS ESSEE AND THEREFORE, WERE ACCORDINGLY COVERED. 4.0 PER CONTRA, THE LD. SR. DR FAIRLY CONCEDED THA T ALL THESE ISSUES ARE COVERED BY THE ORDER OF THE TRIBUNAL FOR EARLIER YEARS. 5.0 WE HAVE GONE THROUGH THE RECORDS AND ALSO PERU SED THE ORDERS OF THE TRIBUNAL IN ASESSEES OWN CASE. IT IS SEEN THAT IN ITA NO.400/DEL/2011 AND ITA NO.6149/DEL/2012 FOR ASSESS MENT YEARS 2006-07 AND 2007-08, THE CO-ORDINATE BENCH OF THIS TRIBUNAL VIDE ORDER DATED 27.09.2013 HAS OBSERVED THAT AN IDENTIC AL QUESTION HAD 6 ITA NO.2452/DEL/2016 M/S ECO RRB IN FRA PVT. LTD. VS. DCIT ARISEN IN THE CASE OF RRB CONSULTANCY REPORTED IN [ 2007] 112 TTJ 794 (DEL) WHEREIN IT WAS OBSERVED THAT WHERE THE ASSESSEES MAIN ACTIVITY WAS CONSULTANCY IN THE FIELD OF WIND MILL ENERGY AND WIND MILLS WERE ALSO USED FOR GENERATION OF ELECTRICITY, EXPENDITURE INCURRED BY THE ASSESSEE ON REPAIR AND MAINTENANCE OF WIND M ILL ENERGY GENERATION AND INSURANCE EXPENSES WAS ALLOWABLE AND WAS NOT TO BE DEDUCTED FROM THE INCOME FROM GENERATION WHILE ALLO WING DEDUCTION U/S 80IA . 5.1 IN ASSESSMENT YEAR 2008-09, VIDE ORDER DATED 1 1.05.2012 IN ITA NO.2100/DEL/2011, IN APPEAL PREFERRED BY THE REVENUE, THE CO-ORDINATE BENCH OF THIS TRIBUNAL CONSIDERED THE O RDERS FOR EARLIER YEARS, NAMELY ASSESSMENT YEARS 2000-01 AND 2002-03 AND REACHED A CONCLUSION THAT DEDUCTION U/S 80IA OF THE ACT IS TO BE COMPUTED AFTER SETTING OFF OF DEPRECIATION RELATABLE TO WIND MILLS AGAINST THE INCOME EARNED FROM ELECTRICITY GENERATORS WHICH QUAL IFIED FOR DEDUCTION U/S 80IA OF THE ACT. IN THE ASSESSEES AP PEAL FOR THE SAME YEAR, THE TRIBUNAL RECORDED THAT THE APPEALS AGAINS T THE ORDER OF THE TRIBUNAL WERE PENDING BEFORE THE HONBLE DELHI HIGH COURT AND, THEREFORE, REMANDED THE MATTER TO THE FILE OF THE A SSESSING OFFICER TO 7 ITA NO.2452/DEL/2016 M/S ECO RRB IN FRA PVT. LTD. VS. DCIT TAKE A VIEW AFTER THE HONBLE HIGH COURT ADJUDICATES THE ISSUE SO AS TO AVOID MULTIPLICITY OF PROCEEDINGS. 5.2 FOR ASSESSMENT YEAR 2008-09, IN ITA NO.700/DEL /2013 VIDE ORDER DATED 16.10.2014 AND FOR ASSESSMENT YEAR 2009-10 IN ITA NO.701/DEL/2013 VIDE ORDER DATED 16.10.2014, TH E TRIBUNAL FOLLOWED THE VIEW TAKEN BY THE TRIBUNAL IN ASSESSEE S APPEALS FOR ASSESSMENT YEARS 2006-07 & 2007-08 AND REMANDED THE MATTER TO THE FILE OF THE ASSESSING OFFICER TO ADJUDICATE THE ISSUE AFRESH IN LIGHT OF THE JUDGMENT OF THE HONBLE DELHI HIGH COURT. 5.3 SIMILARLY, REMAND WAS DONE BY THE TRIBUNAL IN ASSESSMENT YEAR 2012-13 IN ITA NO.4633/DEL/2017 WHER EIN VIDE ORDER DATED 06.01.2020 THE ISSUES WERE RESTORED TO T HE FILE OF THE ASSESSING OFFICER. 5.4 THEREFORE, IN VIEW OF THE FACTUAL MATRIX OF TH E CASE, WE ARE OF THE CONSIDERED OPINION THAT IT WOULD BE JUST AND PROPER TO REMAND THIS APPEAL ALSO TO THE FILE OF THE ASSESSING OFFIC ER TO ADJUDICATE THE ISSUES IN HAND AFRESH IN TUNE WITH THE DIRECTIONS IN ITA NO.400/DEL/2011, 6149/DEL/2012, 700/DEL/2013, 701/D EL/2013. THUS, GROUNDS NOS. 1 & 2 ARE ALLOWED FOR STATISTICA L PURPOSES. 8 ITA NO.2452/DEL/2016 M/S ECO RRB IN FRA PVT. LTD. VS. DCIT 5.5 COMING TO GROUND NO.3 CHALLENGING THE DENIAL O F DEPRECIATION ON LANDS, IT IS SEEN THAT THIS ISSUE IS NO LONGER RES INTEGRA AND IT IS SETTLED LAW THAT DEPRECIATION ON LAND CAN NOT BE ALLOWED. EVEN THE ITAT IN ASSESSEES OWN CASE FOR AS SESSMENT YEARS 2006-07 AND 2007-08 IN ITA NO.400/DEL/2011 AND 6149 /DEL/2012 VIDE ORDER DATED 27.09.2013 HAS HELD THAT DEPRECIAT ION ON LAND IS NOT ALLOWABLE. ACCORDINGLY, THE FINDING OF THE LD. CIT (A) IN DISALLOWANING DEPRECIATION ON LAND IS UPHELD AND GRO UND NO.3 OF THE APPEAL IS DISMISSED. 6.0 IN THE FINAL RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22/06/2020. SD/- SD/- (O.P.KANT) (SUDHANSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 22/06/2020 PK/PS COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI