ANAMIKA CONDUCTORS LTD., Jaipur V. ADD. CIT, Jaipur

ITA 266/JPR/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1962 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 7 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 22-06-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 26-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: G M MEHTA
• Keywords: Capital receipt
• Section: 80IB

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YA DAV, AM VK;DJ VIHY LA- @ ITA NO. 266/JP/2016 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2010-11 M/S ANAMIKA CONDUCTORS LTD., B-129 RAJENDRA MARG, BAPU NAGAR, JAIPUR. CUKE VS. THE ACIT, RANGE-6, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AABCA5681P VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI G.M. MEHTA (C.A.) JKTLO DH VKSJ LS @ REVENUE BY : SMT. R. A. VERMA (ADDL.CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 25/10/2017 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 27/10/2017 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. CIT(A)-II, JAIPUR DATED 01.01.2016 FOR A.Y. 2010-11 WHEREIN THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL: (1) THAT LD. CIT(A) WAS NOT JUSTIFIED IN SUSTAININ G THE FOLLOWING DISALLOWANCE/ADDITION: (A) RS. 33,87,883/- ELIGIBLE FOR DEDUCTION UNDER S ECTION 80IA OF IT ACT WHICH WAS COMPENSATION RECEIVED FROM M/S SUZ LON ENERGY LTD. FOR SHORT GENERATION OF POWER FROM WIND MILLS THAN GUARANTEED. (B) RS. 8,19,323/- UNDER SECTION 40(A)(IA) OF IT A CT WHICH WAS THE ACTUAL PAYMENT OF INTEREST TO NBFC; ITA NO. 266/JP/2016 M/S ANAMIKA CONDUCTORS LTD. VS ACIT, JAIPUR 2 (C) REDUCTION OF RS. 50,000/- FROM PRESUMED EXPENSE S OUT OF SALE OF ELECTRICITY GENERATED FROM THE WIND MILL W HICH IS ELIGIBLE FOR DEDUCTION U/S 80IA OF IT ACT. 2. REGARDING 1 ST GROUND OF APPEAL, BRIEFLY THE FACTS OF THE CASE A RE THAT THE ASSESSEE HAS CLAIMED DEDUCTION U/S 80IA IN RESPECT OF GENERATION OF POWER THROUGH ITS WINDMILLS AMOUNTING TO RS. 1,04,76,517/-. THE ASSESSING OFFICER OBSERVED T HAT THE RECEIPTS FROM GENERATION OF POWER INCLUDES AN AMOUNT OF RS. 33,87,883/- RECEIVED FROM M/S SUZLON ENERGY LTD. AN ACCOUNT OF GENERATION GUARANTEE. AS PER ASSESSING OFFICER, THE DEDUCTION U/S 80IA IS ELIGIBLE ONLY ON THE PROFIT DERIVED FROM THE ELIGIBLE BUSIN ESS AND THE AMOUNT OF GENERATION GUARANTEE RECEIVED BY THE ASSESSEE IS A MERE COMPENSATION FOR THE LOW PRODUCTION AND THE SAME SHOULD BE EXCLU DED FROM THE PROFIT ELIGIBLE FOR DEDUCTION U/S 80IA OF THE ACT AND A SH OW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE TO EXPLAIN ITS POSITION. AFT ER CONSIDERING THE REPLY OF THE ASSESSEE, THE ASSESSING OFFICER HELD THAT TH E INCOME EARNED IN THE FORM OF GENERATION GUARANTEE IS NOT DERIVED FRO M THE ELIGIBLE BUSINESS I.E. GENERATION OF ELECTRICITY FROM THE WI NDMILL. REFERRING TO THE AGREEMENT DATED 11.10.2006 ENTERED INTO BY THE ASSESSEE WITH M/S SUZLON ENERGY LTD., THE AO HELD THAT THE AMOUNT REC EIVED IS A MERE COMPENSATION FOR THE LOW PRODUCTION FROM THE WINDMI LL AND IS NOT AGAINST THE SALE RECEIPTS FROM GENERATION OF POWER. IT WAS FURTHER NOTICED BY THE ASSESSING OFFICER THAT OUT OF RS. 33 ,87,883/-, RS. 10,64,280/- PERTAINS TO THE YEAR UNDER CONSIDERATIO N AND THE BALANCE AMOUNT PERTAIN TO THE SHORTFALL IN THE PREVIOUS FIN ANCIAL YEARS. IT WAS FURTHER HELD BY THE ASSESSING OFFICER THAT THE ENER GY SHOULD HAVE BEEN PRODUCED AND WHERE THE ENERGY WAS PRODUCED BUT THE BUYER DID NOT ITA NO. 266/JP/2016 M/S ANAMIKA CONDUCTORS LTD. VS ACIT, JAIPUR 3 PURCHASE AND INSTEAD PAID COMPENSATION FOR THAT, IT COULD HAVE BEEN ELIGIBLE FOR DEDUCTION U/S 80IA OF THE ACT. HOWEVER , IN THE INSTANT CASE THE ELECTRICITY HAS NOT BEEN PRODUCED HENCE, THERE WAS NO QUESTION OF DEDUCTION. IT WAS HELD BY THE AO THAT MERELY ERECT ING A WINDMILL AND NOT PRODUCING ELECTRICITY AND GETTING COMPENSATION FOR THE SAME FROM THE SUPPLIER OF THE WINDMILL CANNOT BE TERMED AS PR OFIT DERIVED FROM GENERATION OF WIND POWER. FURTHER, RELIANCE WAS PLA CED ON THE DECISION OF HONBLE SUPREME COURT IN CASE OF LIBERTY INDIA V . CIT REPORTED IN 183 TAXMAN 349. ACCORDINGLY THE AMOUNT OF RS. 33,87,883 /- WAS TREATED AS PROFIT WHICH IS NOT DERIVED FROM ELIGIBLE BUSINESS AND DEDUCTION U/S 80IA WAS ACCORDINGLY REDUCED TO THAT EXTENT. 3. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO HAS CONFIRMED THE ACTION OF THE ASSESSING OFFICER AND HIS RELEVANT FINDINGS ARE CONTAINED AT PARA 3.3 OF HIS ORDER WHICH IS REPRODUCED AS UNDER:- 3.3 I HAVE PERUSED THE FACTS OF THE CASE, THE ASSE SSMENT ORDER AND THE SUBMISSION OF THE APPELLANT. AN AMOUNT OF R S. 33,87,883/- HAS BEEN CLAIMED FOR DEDUCTION UNDER SE CTION 80IA AND RELATES TO GENERATION GUARANTEE PROVIDED BY SUZ LON ENERGY LTD., THE SELLER OF WINDMILLS. THE POINT NO. 7 OF T HE AGREEMENT DATED 11.10.2006, ARRIVED AT BETWEEN THE ASSESSEE A ND M/S SUZLON ENERGY LTD., THE SUPPLIER AND ERECTOR OF THE WTM, STATES THAT ANY SHORTFALL DUE TO NON-AVAILABILITY OF GRID WOULD BE CONSIDERED AND ACCORDINGLY THE GUARANTEE GENERATION WOULD BE CALCULATED. IT IS FURTHER STATED THAT ANY VARIATION IN THE WIND UPTO 10% OF GENERATION SHALL BE CONSIDERED IN CASE OF SH ORTFALL FOR CALCULATING GENERATION GUARANTEE. IF THERE IS ANY S HORTFALL IN THE SAID GUARANTEED GENERATION CONSIDERING THE GRID SHO RTFALL, SUZLON ITA NO. 266/JP/2016 M/S ANAMIKA CONDUCTORS LTD. VS ACIT, JAIPUR 4 WILL REIMBURSE FOR THE SHORTFALL UNITS AT MSEB POWE R PURCHASE RATE AS APPLICABLE FROM TIME TO TIME. THE ABOVE CLEARLY SHOWS THAT THIS INCOME RELATES TO PENALTIES IMPOSED ON THE SELLER BY THE ASSESSEE COMPANY IF TH E MACHINES DO NOT DELIVER AS PER THE PROMISED PERFORMANCE. THE SE CANNOT BE SAID TO BE DIRECTLY DERIVED FROM THE BUSINESS OF PO WER GENERATION AND DO NOT HAVE A FIRST DEGREE NEXUS WITH THE ELIGI BLE BUSINESS. IN VIEW OF THE ABOVE, DEDUCTION UNDER SECTION 80IA IS NOT ALLOWABLE ON THIS GROUND. FURTHER, AS DISCUSSED BY ASSESSING OFFICER ONLY AN AMOUNT OF RS. 10,64,280/- PERTAINS TO RELEVANT PREVIOUS YEAR WHIL E THE OTHERS ARE FROM PRIOR PREVIOUS YEARS. 4. DURING THE COURSE OF HEARING, THE LD. AR SUBMITT ED AS UNDER:- UNDER WRITTEN AGREEMENT WITH M/S. SUZLON ENERGY LT D FOR THE MINIMUM PRODUCTION OF POWER FROM THE WIND MILLS MAN UFACTURED, SUPPLIED AND LOOKED AFTER BY THE FORMER, THE WIND M ILLS WERE PURCHASED AND GOT ESTABLISHED BY THE ASSESSEE COMPA NY. FOR LOWER PRODUCTION OF POWER THROUGH THE WINDS MILLS, THE ASSESSEE COMPANY WAS TO BE COMPENSATED FOR MINIMUM GUARANTEE D AMOUNT BY M/S. SUZLON ENERGY LID. SINCE THE PRODUCT ION WAS LOWER THAN GUARANTEED AMOUNT, THE APPELLANT COMPANY WAS COMPENSATED BY RS. 33,87,883/-. THE TREATMENT OF AM OUNT OF RS. 33,87,883/- RECEIVED FOR LOWER PRODUCTION/GENERATIO N OF POWER FROM THE WIND MILLS SUPPLIED, COULD EITHER BE THE F OLLOWINGS: (I) COMPENSATION: COMPENSATION IS REIMBURSEMENT BY WAY OF MONEY OR OTHER MODE FOR SOMETHING LOST OR COULD NOT BE RECOVERED. IN ASSESSEE COMPANYS CASE BEFORE INCURR ING TOTAL ITA NO. 266/JP/2016 M/S ANAMIKA CONDUCTORS LTD. VS ACIT, JAIPUR 5 COST/INVESTMENT FOR PURCHASE, ACQUISITION AND INSTA LLATION OF WIND MILLS, IT HAD TAKEN INTO CONSIDERATION, THE GUARANT EED UNITS OF GENERATED POWER SO ALSO THE CONSEQUENTIAL DEDUCTION U/S 80IA OF IT ACT FOR THE WIND MILLS. AFTER TAKING INTO CONSID ERATION, THE ACTUAL GENERATION AND GUARANTEED GENERATION OF POWE R THE ASSESSEE COMPANY WAS PAID COMPENSATION OF RS. 33,87 ,883/-. HAD THE WIND MILLS GENERATED THE POWER AS PER THE G UARANTEED UNITS BY THE MANUFACTURER, THE INCOME TO THE APPELL ANT WOULD HAVE BEEN HIGHER THROUGH SELLING THE UNITS OF GENER ATED POWER SO ALSO THE DEDUCTION U/S 80IA OF IT ACT. THEREFORE CO MPENSATION ON ACCOUNT OF SHORT POWER GENERATION FOR WHICH THE ASS ESSEE COMPANY HAD MADE HUGE INVESTMENTS, SHOULD HAVE BEEN TREATED BY THE LD. AO AT SAME FOOTING AS POWER GENERATION E LIGIBLE FOR DEDUCTION UNDER SECTION 80IA OF IT ACT. (II) CAPITAL RECEIPTS: FROM WRITTEN AGREEMENT/CONTR ACT WITH M/S SUZLON ENERGY LTD, THE ASSESSEE COMPANY COULD ANTIC IPATE THAT FOR TOTAL VALUE/COST PAID FOR INSTALLATION OF THE W IND MILLS TO THE FORMER, THESE WILL GENERATE MINIMUM UNITS OF POWER PER YEAR WHICH IS ALSO ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB OF INCOME TAX ACT. THE LOWER GENERATION OF POWER THAN GUARANT EED BY THE MANUFACTURER BEING VIOLATION AND BREACH OF CONTRACT . REALIZING THE BREACH, THE ASSESSEE COMPANY WAS PAID COMPENSATION OF RS. 33,87,883/- BY M/S SUZLON ENERGY LTD. HONBLE RAJAS THAN HIGH COURT, IN THE CASE OF S. ZORASTER & CO. VS. CIT (20 10) 322 ITR 35 (RAJ) HAS HELD THAT AMOUNT RECEIVED AS COMPENSATION ON BREACH OF CONTRACT IS CAPITAL RECEIPT, NOT SUBJECT TO LEVY OF TAX. LD. AO WAS, THEREFORE, NOT JUSTIFIED IN IGNORING THE JUDGM ENT OF HONBLE ITA NO. 266/JP/2016 M/S ANAMIKA CONDUCTORS LTD. VS ACIT, JAIPUR 6 JURISDICTIONAL HIGH COURT AND IN TAXING THE CAPITAL RECEIPT OF RS. 33,87,883/-. OTHERWISE ALSO FOR COMPENSATION OF RS. 33,87,883/-, ON CORRESPONDING EXPENSES OR PAYMENT WAS INCURRED A ND THEREFORE, THE SAME CANNOT BE TREATED AS REVENUE RE CEIPT. 5. IT WAS FURTHER SUBMITTED BY THE LD AR THAT THE I SSUED IS COVERED BY THE DECISION OF THIS BENCH IN CASE OF M/S RAJAST HAN STATE MINES & MINERALS LTD. (ITA NO. 235/JP/2015 & OTHERS) DATED 30.05.2017 WHEREIN UNDER IDENTICAL FACTS, THE CLAIM OF THE ASS ESSEE TOWARDS THE CLAIM OF LIQUIDATED DAMAGES PAID BY SUZLON ENERGY L TD. DUE TO SHORTFALL IN THE MINIMUM GUARANTEED GENERATION OF POWER UNIT S WAS HELD ELIGIBLE FOR DEDUCTION U/S 80IA OF THE ACT. THE REL EVANT FINDINGS ARE CONTAINED AT PARA 35.3 WHICH IS REPRODUCED AS UNDER :- 35.3 WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE M ATERIAL AVAILABLE ON RECORD. THE LD. CIT(A) DISALLOWED THE CLAIM ON THE BASIS THAT THE FIRST DEGREE IN NEXUS WITH THE OPERATION O F THE UNDERTAKING IS MISSING. THE LD. CIT(A) HAS FOLLOWED THE DECISION OF HIS PREDECESSOR PERTAINING TO THE A.Y. 2010-11. ADMITTEDLY, THIS P AYMENT IS RELATED TO THE CONTRACT BETWEEN THE ASSESSEE AND THE SUPPLIER. THE CONTRACT IS RELATED TO THE WIND MILL INDEPENDENT OF OPERATION O F THE WIND MILL THE PAYMENT OF LIQUIDATED DAMAGES WOULD NOT ARISE. IT IS ONLY ON THE OPERATION OF THE WIND MILL AND THE OUTPUT OF THE EQ UIPMENT SO INSTALLED THIS LIABILITY OF THE PAYMENT OF DAMAGES ARISES. IN THE ABSENCE OF OPERATION, THE ISSUE OF PAYMENT O F SUCH DAMAGES WOULD NOT ARISE. IT IS ONLY WHEN THE WIND MILL BEC OMES OPERATIONAL ON SHORT FALL ON THE PRODUCTION SUCH PAYMENT IS MADE. HONBLE MADHYA PRADESH HIGH COURT IN THE CASE OF CIT VS. PRAKASH OILS LTD. (SUPRA) HELD THAT THE PAYMENT MADE AS AN LIQUIDATED DAMAGES FOR NOT HONOURING THE CONTRACT FOR SALE OF OIL AND DEOILED CAKE, SUCH INCOME IS DIRECTLY DERIVED FROM INDUSTRIAL UNDERTAKING, HENCE ELIGIBLE DEDUCTION U/S 80IA. IN OUR VIEW, THE LD. CIT(A) ERRED IN HOLD ING THAT SUCH INCOME IS NOT DERIVE FROM THE BUSINESS OF THE UNDERTAKING. THEREFORE, WE ITA NO. 266/JP/2016 M/S ANAMIKA CONDUCTORS LTD. VS ACIT, JAIPUR 7 DIRECT THE ASSESSING OFFICER TO ALLOW DEDUCTION U/S 80IA ON THIS RECEIPT. THIS GROUND OF THE ASSESSEES APPEAL IS ALLOWED. 6. HAVING HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD, WE ARE OF THE VIEW THAT ISSUE UNDER CONSIDERATION IS IDENTICAL TO THE ISSUE WHICH WE HAVE DECIDED IN CA SE OF M/S RAJASTHAN STATE MINES & MINERALS LTD. (SUPRA). HENCE, FOLLOW ING THE SAME, THE ASSESSEE IS HELD ELIGIBLE FOR DEDUCTION U/S 80IA IN RESPECT OF RECEIPTS FROM M/S SUZLON ENERGY LTD. FOR SHORTFALL IN THE M INIMUM GUARANTEED PRODUCTION OF THE POWER UNITS. IN THE RESULT, GROU ND TAKEN BY THE ASSESSEE IS ALLOWED. 7. REGARDING GROUND NO. 2, THE ASSESSEE HAS CHALLEN GED THE DISALLOWANCE OF RS. 8,19,323/- U/S 40(A)(IA) OF THE ACT IN RESPECT OF INTEREST PAYMENT TO VARIOUS NBFCS. DURING THE COURS E OF ASSESSMENT PROCEEDINGS, THE AO OBSERVED THAT THE ASSESSEE HAS MADE PAYMENT OF RS. 8,19,323/- TOWARDS INTEREST TO VARIOUS NBFCS W HEREIN ASSESSEE HAS FAILED TO APPLY THE TDS PROVISIONS, ACCORDINGLY IN TERMS OF SECTION 40(A)(IA), THE ASSESSING OFFICER DISALLOWED THE SUM OF RS. 8,19,323/- 8. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTE R IN APPEAL BEFORE THE LD. CIT(A) AND AMONG VARIOUS CONTENTION S RAISED, DRAWING REFERENCE TO THE SECOND PROVISO TO SECTION 40(A)(IA ) OF THE ACT, IT WAS SUBMITTED THAT THE ASSESSEE HAS COLLECTED THE PRESC RIBED CERTIFICATES IN RESPECT OF ALL THE CASH CREDITORS TO WHOM INTEREST WAS PAID WITHOUT DEDUCTION OF TAX U/S 194A OF THE ACT AND RELYING ON THE DECISION OF HONBLE DELHI HIGH COURT IN CASE OF ANSAL LAND MARK TOWNSHIP P. LTD. REPORTED IN 377 ITR 635 WHEREIN THE SECOND PROVISO HAS BEEN HELD TO ITA NO. 266/JP/2016 M/S ANAMIKA CONDUCTORS LTD. VS ACIT, JAIPUR 8 BE DECLARATORY AND CURATIVE IN NATURE AND EFFECTIVE FROM 01.04.2005 AND WHERE THE PAYEE IN THEIR INCOME TAX RETURN OFF ERED THE SUM FOR TAXATION AND PAID TAX THEREON, DISALLOWANCE U/S 40 (A)(IA) WAS NOT JUSTIFIED. THE LD. CIT(A) HOWEVER REFERRED TO THE D ECISION OF HONBLE KERALA HIGH COURT IN CASE OF THOMAS GEORGE MUTHOOT VS. CIT KOTTAYAM REPORTED IN 63 TAXMAN.COM 99 WHEREIN IT WA S HELD THAT THE SECOND PROVISO TO SECTION 40(A)(IA) INTRODUCED WITH EFFECT FROM 01.04.2013 IS ONLY PROSPECTIVE. IT WAS FURTHER HELD BY THE LD CIT(A) THAT THE RECIPIENT HAS SUBSEQUENTLY PAID TAX WILL NOT AB SOLVE PAYER FROM CONSEQUENCE OF DISALLOWANCE UNDER SECTION 40(A)(IA) . 9. DURING THE COURSE OF HEARING, THE LD. AR SUBMITT ED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSSSEE BY THE DECISION OF THE HONBLE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2011-12 IN ITA NO. 818/JP14 DATED 16.08.2016 WHEREIN THE MATTER HAS BEEN SET-AS IDE TO VERIFY THE CERTIFICATES SUBMITTED BY THE PAYEES IN FORM 26AS. IT WAS FURTHER SUBMITTED THAT SIMILAR ISSUE WAS INVOLVED IN AY 201 2-13 IN ITA NO. 612/JP/17 WHEREIN THE MATTER HAS BEEN RECENTLY HEAR D. IT WAS FURTHER SUBMITTED THAT IN THE INSTANT CASE, THE CERTIFICATE S IN THE PRESCRIBED FORM 26A HAVE BEEN DULY SUBMITTED BEFORE THE LD. CI T(A) AND EARLIER ORDER OF THE COORDINATE BENCH MAY KINDLY BE FOLLOWE D. 10. IN ITA NO. 612/JP/17 FOR AY 2012-13 DATED 26.10 .2017, WE HAVE ALREADY EXAMINED THIS ISSUE AND THE RELEVANT FINDIN GS ARE CONTAINED AT PARA 8 WHICH IS REPRODUCED AS UNDER: 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE LD. CIT(A) HA S FOLLOWED THE ITA NO. 266/JP/2016 M/S ANAMIKA CONDUCTORS LTD. VS ACIT, JAIPUR 9 DIRECTIONS OF THE CO-ORDINATE BENCH IN ASSESSEES O WN CASE FOR A.Y. 2011-12 AND HAS REMANDED THE MATTER BACK TO THE ASS ESSING OFFICER TO VERIFY THE CERTIFICATES FROM VARIOUS NBFCS TO WHOM THE ASSESSEE HAS PAID INTEREST DURING THE YEAR IN ORDER TO VERIFY WH ERE THEY HAVE OFFERED THE SAME IN THEIR RETURN OF INCOME AND DEPOSITED TA XES THEREON. FURTHER IN RESPECT OF TESTING CHARGES OF RS. 1,83,732/-, TH E LD. CIT(A) HAS CONFIRMED THE DISALLOWANCE ON ACCOUNT OF NON-DEDUCT ION OF TDS FOLLOWING THE DECISION OF THE HONBLE SUPREME COURT IN CASE OF PALAM GAS SERVICE AND IN RESPECT OF WHICH THERE IS NO DIS PUTE. WE ACCORDINGLY DO NOT SEE ANY INFIRMITY IN THE ORDER OF THE LD. CI T(A) HENCE, THE SAME IS CONFIRMED. THE GROUND OF APPEAL TAKEN BY THE REV ENUE IS DISMISSED AND THE CROSS OBJECTION WHICH IS IN SUPPORT OF THE LD. CIT(A) ORDER IS ALLOWED. 11. FOLLOWING THE ABOVE, THE MATTER IS REMANDED BA CK TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE THE CERTIFICATES F ILED BY THE ASSESSEE IN FORM 26A AND WHERE THE SAME IS FOUND TO BE CORRECT, ALLOW THE NECESSARY RELIEF TO THE ASSESSEE. IN THE RESULT, GR OUND OF APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 12. REGARDING GROUND NO. 3, THE ASSESSEE HAS CHALL ENGED THE SUSTENANCE OF DISALLOWANCE OF RS. 50,000/- WORTH OF EXPENSES WHILE COMPUTING THE INCOME WHICH IS ELIGIBLE FOR DEDUCTIO N UNDER SECTION 80IA OF THE ACT. BRIEFLY THE FACTS OF THE CASE ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ISSUE D A SHOW CAUSE STATING THAT WHY CORPORATE EXPENSES SUCH AS ADMINIS TRATIVE, TRAVELING, TELEPHONE EXPENSES ETC. SHOULD NOT BE ALLOCATED TOW ARDS BUSINESS ITA NO. 266/JP/2016 M/S ANAMIKA CONDUCTORS LTD. VS ACIT, JAIPUR 10 WHICH IS ELIGIBLE DEDUCTION U/S 80IA OF THE ACT. IN RESPONSE, THE ASSESSEE SUBMITTED THAT THERE ARE NO ADMINISTRATIVE EXPENSES AS THE ENTIRE OPERATIONS OF WINDMILLS WERE LOOKED AFTER BY M/S SUZLON INFRASTRUCTURE SERVICES LTD. AND THE ASSESSEE PAID OPERATION AND MAINTENANCE CHARGES EVERY YEAR TO SAID COMPANY. H OWEVER, THE SAID CONTENTION WAS NOT ACCEPTED BY THE ASSESSING OFFICE R. THE RELEVANT FINDING OF THE AO ARE CONTAINED IN PARA 3.2.8 OF T HE ASSESSMENT ORDER WHICH IS REPRODUCED AS UNDER:- 3.2.8 THOUGH THE ASSESSEE HAS PAID TO SUZLON INFRA STRUCTURE SERVICES LTD FOR CARRYING OUT OPERATION AND MAINTEN ANCE OF WIND MILLS, THE POSSIBILITY OF INVOLVEMENT OF INCURRING CERTAIN GENERAL EXPENSES SUCH AS TRAVELLING, TELEPHONE EXPENSES AND OTHER ADMINISTRATIVE EXPENSES CANNOT BE RULED OUT. THERE MUST BE A REGULAR OR AT LEAST PERIODIC SUPERVISION AND PURSUA NCE ON THE PART OF THE ASSESSEE AND ITS STAFF IN SOME WAY OR THE OT HER WITH REGARD TO OPERATION OF PLANT/GENERATION OF POWER, DISTRIBU TION AND RECEIPTS OF SALE PROCEEDS THEREOF. CONSIDERING THES E FACTS, A REASONABLE EXPENSE WHICH IS ESTIMATED TO BE RS. 50, 000/-, CAN BE HELD TO BE DIRECTLY ATTRIBUTABLE TOWARDS CARRYING O UT OF THE ELIGIBLE BUSINESS AND DEDUCTION U/S 80IA IS REDUCED BY THIS AMOUNT. 13. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTE R IN APPEAL BEFORE THE LD. CIT(A) AND THE RELEVANT FINDINGS OF LD. CIT (A) ARE CONTAINED AT PARA 5.3 WHICH IS REPRODUCED AS UNDER:- 5.3 I HAVE PERUSED THE FACTS OF THE CASE, THE ASSE SSMENT ORDER AND THE SUBMISSIONS OF THE APPELLANT. THE ASSESSING OFFICER REDUCED THE DEDUCTION UNDER SECTION 80IA BY RS. 50, 000/- IN THE VIEW OF INVOLVEMENT OF INCURRING CERTAIN GENERAL E XPENSES SUCH AS TRAVELING, TELEPHONE EXPENSES AND OTHER ADMINIST RATIVE EXPENSES WHICH WOULD BE INCURRED FOR RUNNING THE WI NDMILL AND CANNOT BE RULED OUT. THE CONTENTION OF THE ASSESSEE THAT THERE IS ITA NO. 266/JP/2016 M/S ANAMIKA CONDUCTORS LTD. VS ACIT, JAIPUR 11 AN AGREEMENT WITH M/S SUZLON ENERGY LTD WHO WAS SOL ELY RESPONSIBLE FOR RUNNING AND HAD GUARANTEED FOR GENE RATION OF POWER BUT THE EXPENSES FOR REGULAR OR AT LEAST PERI ODIC SUPERVISION AND PURSUANCE ON THE PART OF THE ASSESS EE AND ITS STAFF CANNOT BE DENIED. HENCE REDUCTION OF RS. 50,0 00/- IN THE DEDUCTION UNDER SECTION 80IA MADE BY THE ASSESSING OFFICER IS UPHELD. 14. BEFORE US, THE LD. AR SUBMITTED THAT THE LD. A O HAD DISALLOWED RS. 50,000/-OUT OF EXPENSES INCURRED IN GENERATION OF POWER FROM THE WIND MILLS. SINCE THE OPERATIONS OF ALL WIND MILLS ARE BEING LOOKED AFTER BY M/S SUZLON INFRASTRUCTURE SERVICES LTD. ( A SUBS IDIARY OF M/S SUZLON ENERGY LTD) AND NO EXPENSE WAS INCURRED IN RUNNING OF WIND MILLS BY ASSESSEE COMPANY. WITHOUT CONSIDERING THE ABOVE FAC TS, THE DISALLOWANCE WAS SUSTAINED BY LD. CIT(A) WHO DID NO T ACCEPT THE CONTENTION OF THE ASSESSEE COMPANY. IN DISALLOWING RS. 50,000/- BOTH THE LOWER AUTHORITIES HAVE AVOIDED THE AGREEMENT WI TH M/S SUZLON ENERGY LTD WHO WAS SOLELY RESPONSIBLE FOR RUNNING, MAINTENANCE AND GENERATION OF POWER FROM THE WIND MILLS. 15. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PURSUED THE MATERIAL AVAILABLE ON RECORD. FROM PERUSAL OF THE AGREEMENT ENTERED INTO BY THE ASSESSEE WITH M/S SUZLON, IT IS NOTED THAT THE OPER ATION AND MAINTENANCE OF WINDMILLS HAS BEEN ENTRUSTED BY THE ASSESSEE TO M/S SUZLON WHO SHALL ARRANGE FOR THE SERVICE PROVIDER F OR A PERIOD OF 20 YEARS WHO SHALL BE RESPONSIBLE FOR ROUTINE AND BREA KDOWN MAINTENANCE SERCURITY ARRANGEMENTS, METER READING AND COORDINAT ION WITH RVPNL TO OBTAIN NECESSARY POWER CREDIT REPORTS/CERTIFICATES. FURTHER, REPLACEMENT OF ALL SPARES , CONSUMABLES AND LABOUR CHARGES ARE ITA NO. 266/JP/2016 M/S ANAMIKA CONDUCTORS LTD. VS ACIT, JAIPUR 12 INCLUDED IN THE OVERALL OPERATION AND MAINTENANCE C OST. IN LIGHT OF THE SAME, THE FINDINGS OF THE AO THAT THERE MUST BE A REGULAR OR AT LEAST PERIODIC SUPERVISION AND PURSUANCE ON THE PART OF T HE ASSESSEE AND ITS STAFF IN SOME WAY OR THE OTHER WITH REGARD TO OPERA TION OF PLANT/GENERATION OF POWER, DISTRIBUTION AND RECEIPT S OF SALE PROCEEDS THEREOF ARE NOT IN CONSONANCE WITH THE ABOVE SAID AGREEMENT. FURTHER, WE DO NOT FIND ANY RATIONAL BASIS FOR DETERMINING T HE AMOUNT OF RS 50,000 AS WORKED OUT BY THE AO WHICH IS THUS CLEARL Y IN THE NATURE OF ADHOC AMOUNT WHICH CANNOT BE SUSTAINED IN THE EYES OF LAW. IN THE RESULT, THE GROUND TAKEN BY THE ASSESSEE IS ALLOWED . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 27/10/2017. SD/- SD/- DQY HKKJR FOE FLAG ;KNO (KUL BHARAT) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 27/10/2017. * SANTOSH. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S ANAMIKA CONDUCTORS LTD., B-129 RAJENDRA MARG, BAPU NAGAR, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- ACIT, RANGE-6, JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 266/JP/2016} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR