DCIT, Coimbatore V. M/s. Olive Ecopower Pvt. Ltd., Coimbatore

ITA 3177/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7698 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2012-2013
• Appeal Filed On: 17-11-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: T RAGHUNATHAN
• Keywords: Depreciation

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI [CAMP @ COIMBATORE ] . . . , . , BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER ./ ITA NO. 3177/MDS/2016 / ASSESSMENT YEAR : 2012-13 THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE-1, COIMBATORE. V. M/S. OLIVE ECOPOWER PVT. LTD., NO.484, KAMARAJ ROAD, COIMBATORE 641 015. PAN: AAECC5252H ( ! /APPELLANT) ( '# ! /RESPONDENT) ! $ /APPELLANT BY : SHRI PATHLAVETH PEERYA, CIT '# ! $ /RESPONDENT BY : SHRI T. RAGHUNATHAN, CA $ /DATE OF HEARING : 19.01.2017 $ /DATE OF PRONOUNCEMENT : 28.02.2017 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER : THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) -1, COIMBATORE DATED 22.08.2016 AND PERTAINS TO THE ASSESSMENT YEAR 2012 -13. 2. THE ONLY ISSUE ARISES FOR CONSIDERATION IS DEPREC IATION ON THE WINDMILL. 2 I.T.A. NO. 3177/MDS/2016 3. SHRI PATHLAVETH PEERYA, THE LD. DEPARTMENTAL REP RESENTATIVE SUBMITTED THAT THE ASSESSEE CLAIMED DEPRECIATION ON THE WINDMILL SAID TO BE PURCHASED FROM M/S. KSK WIND ENERGY PRIVATE LIMI TED BY A SLUMP SALE DEED DATED 26.03.2012. REFERRING TO THE AGRE EMENT SAID TO BE ENTERED INTO BETWEEN THE PARTIES, THE COPY OF WHICH IS AVAILABLE AT PAGE NO.1 OF THE PAPER BOOK, THE LD. D.R., SUBMITTED THA T THE PHYSICAL POSSESSION OF THE WINDMILL SHALL BE HANDED OVER TO THE ASSESSEE ON 26.03.2012 AFTER FULL PAYMENT OF RS.138.74 CRORES. IN FACT, THE FULL CONSIDERATION WAS NOT PAID AS ON 26.03.2012. SINCE , THE PAYMENT WAS NOT MADE AS PER THE AGREEMENT, ACCORDING TO THE LD. D.R., THE WINDMILL WAS NOT TRANSFERRED TO THE ASSESSEE. THEREFORE, TH E ASSESSEE IS NOT THE OWNER OF THE SAID WINDMILL. ACCORDING TO THE LD. D .R., FOR THE PURPOSE OF ALLOWING DEPRECIATION, THE ASSESSEE SHALL BE THE OW NER OF THE MACHINERY EITHER WHOLLY OR PARTLY AND THE MACHINERY SHOULD AL SO BE USED BY THE ASSESSEE. IN THIS CONNECTION, THE YEAR UNDER CONSI DERATION, THE ASSESSEE DOES NOT OWN THE WINDMILL. THEREFORE THE D EPRECIATION SHALL NOT BE CLAIMED AT ALL. REFERRING TO THE EXPLANATIO N SAID TO BE OFFERED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER, THE LD. D.R., CLARIFIED THAT THE ASSESSEE ITSELF ADMITTED THAT THE ASSETS ARE CAPITA LIZED IN THE BOOKS OF ACCOUNT AND THE TRANSFER TOOK PLACE AFTER 2 OR 3 MO NTHS FROM THE DATE OF ACQUISITION. EVEN THOUGH THE ASSESSEE CLAIMS BEFOR E THE ASSESSING OFFICER THAT THERE WAS A REVISED AGREEMENT BETWEEN THE PARTIES, THE 3 I.T.A. NO. 3177/MDS/2016 SAME WAS NOT PRODUCED BEFORE THE ASSESSING OFFICER OR BEFORE THE CIT (APPEALS). THE LD. D.R., FURTHER CLARIFIED THAT THE ASSESSEE HAS NOT RECOGNIZED REVENUE FROM THE WINDMILL AND NO INCOME WAS OFFERED FOR TAXATION. THEREFORE, THE CIT(APPEALS) IS NOT JUSTIF IED IN ALLOWING DEPRECIATION TO THE ASSESSEE. REFERRING TO THE JUD GMENT OF THE APEX COURT IN MYSORE MINERALS LTD V CIT(1999) 106 TAXMAN 1 66 (SC), THE LD. D.R., SUBMITTED THAT THE ASSESSEE CANNOT BE CONSIDE RED TO BE A BENEFICIAL OWNER SINCE THERE WAS NO TRANSFER OF WIN DMILL TO THE ASSESSEE. ACCORDING TO THE LD. D.R., THIS AGREEMENT DATED 26. 03.2012 CANNOT BE IGNORED EITHER BY THE ASSESSEE OR BY THE REVENUE WH ILE DETERMINING THE DATE OF HANDING OVER OF THE PHYSICAL POSSESSION OF THE WINDMILL. 4. ON THE CONTRARY, SHRI T. RAGHUNATHAN, THE LD. RE PRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT AS PER THE ORIGINAL AGREEME NT DATED 26.03.2012, BY VIRTUE OF CLAUSE 3, THE PHYSICAL DEL IVERY OF THE WINDMILL HAS TO BE MADE ON 26.03.2012 SUBJECT TO FULL PAYMEN T OF THE SALE CONSIDERATION OF RS.138.74 CRORES. THE LD. REPRESEN TATIVE FURTHER SUBMITTED THAT IN FACT THE FULL SALE CONSIDERATION WAS NOT PAID. HOWEVER, THE WINDMILL WAS TRANSFERRED TO THE ASSESSEE ON 26. 03.2012. ON A QUERY FROM THE BENCH, HOW THE MACHINERY WAS TRANSFERRED O N 26.03.2012 ITSELF, WHEN THE AGREEMENT BETWEEN THE PARTIES CLEARLY SAYS THAT THE TRANSFER HAS TO BE EFFECTED ONLY ON PAYMENT OF FULL SALE CON SIDERATION. THE LD. 4 I.T.A. NO. 3177/MDS/2016 REPRESENTATIVE CLARIFIED THAT INSPITE OF THIS CLAUS E IN THE AGREEMENT, THE WINDMILL WAS PHYSICALLY TRANSFERRED TO THE ASSESSEE . THEREFORE, THE ASSESSEE BECOMES THE OWNER OF THE ASSET. REFERRING TO THE JUDGMENT OF THE APEX COURT IN MYSORE MINERALS LTD ( SUPRA) , THE LD. REPRESENTATIVE SUBMITTED THAT WHEN THE POSSESSION OF THE PROPERTY WAS GIVEN TO THE ASSESSEE AND THE ASSESSEE ENJOYED THE PROPERTY AS I T IS OWNED THEN MERELY BECAUSE THE SAME WAS NOT REGISTERED WITH TNEB CANNOT BE A REASON FOR DISALLOWING THE CLAIM OF THE DEPRECIATIO N. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSES SING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE HAS NOT OWNED THE WINDMILL DURING THE YEAR UNDER CO NSIDERATION. WE HAVE CAREFULLY GONE THROUGH THE AGREEMENT DATED 26. 03.2012. ON 26.03.2012, WHEN THE AGREEMENT WAS EXECUTED BOTH PA RTIES AGREED THAT THE PHYSICAL POSSESSION OF THE WINDMILL SHALL BE HA NDED OVER TO THE ASSESSEE SUBJECT TO FULL PAYMENT OF LUMPSUM CONSIDE RATION OF RS.138.74 CRORES. NOW, THE ASSESSEE CLAIMS THAT INSPITE OF T HIS AGREEMENT, THE PHYSICAL POSSESSION OF THE WINDMILL WAS HANDED OVER TO THE ASSESSEE EVEN THOUGH THE FULL CONSIDERATION WAS NOT PAID. TH E CIT (APPEALS) HAS REFERRED TO ANNUAL REPORT OF M/S. KSK WIND ENERGY P RIVATE LIMITED AND FOUND THAT M/S. KSK WIND ENERGY PRIVATE LIMITED HAS ACKNOWLEDGED THE 5 I.T.A. NO. 3177/MDS/2016 SALE OF WINDMILL TO THE ASSESSEE. THE FACT REMAINS IS THAT THERE WAS AN AGREEMENT BETWEEN THE ASSESSEE AND M/S. KSK WIND EN ERGY PRIVATE LIMITED FOR TRANSFER OF WINDMILL TO THE ASSESSEE. CLAUSE 3 OF THE AGREEMENT CLEARLY SAYS THAT WINDMILL SHALL BE HANDE D OVER TO THE ASSESSEE SUBJECT TO FULL PAYMENT OF RS.138.74 CRORE S. THE ASSESSEE NOW CLAIMS THAT EVEN THOUGH THE PAYMENT WAS NOT MAD E, THE PHYSICAL POSSESSION OF THE WINDMILL WAS TRANSFERRED TO IT. THE CIT (APPEALS) BY REFERRING TO THE JUDGMENT OF THE APEX COURT IN MYSO RE MINERALS LTD ( SUPRA) HAS SIMPLY FOUND THAT THE ASSESSEE IS ELIGIBLE FOR DEPRECIATION. AS RIGHTLY SUBMITTED BY THE LD. D.R., THE PRECONDIT ION FOR ALLOWING DEPRECIATION IS THAT THE ASSESSEE SHALL BE THE OWNE R OF THE ASSET. THE CIT(APPEALS) WITHOUT CONSIDERING WHETHER THE WINDMIL L WAS TRANSFERRED TO THE ASSESSEE HAS ALLOWED THE CLAIM OF THE ASSESSEE. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ACTUAL DATE ON WHIC H THE PHYSICAL POSSESSION OF THE WINDMILL WAS DELIVERED TO THE ASS ESSEE HAS TO BE ASCERTAINED AFTER EXAMINING THE MATERIALS AVAILABLE ON RECORD. SINCE SUCH AN EXAMINATION WAS NOT MADE BY THE CIT (APPEALS ), THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THIS MATTER NEEDS TO BE REEXAMINED. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES AR E SET ASIDE AND THE ISSUE OF CLAIM OF DEPRECIATION WAS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL EXAM INE THE ISSUE AFRESH AND FIND OUT WHEN THE PHYSICAL POSSESSION OF THE WI NDMILL WAS DELIVERED 6 I.T.A. NO. 3177/MDS/2016 TO THE ASSESSEE. THEREAFTER THE ASSESSING OFFICER SHALL DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW AFTER GIVING REASONAB LE OPPORTUNITY TO THE ASSESSEE. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON 28 TH FEBRUARY, 2017 AT CHENNAI. SD/- SD/- ( . ) ( . . . ) (ABRAHAM P. GEORGE) (N.R.S. GAN ESAN) / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, /DATED, THE 28 TH FEBRUARY, 2017. JR. $ ' % & % /COPY TO: 1. ! /APPELLANT 2. '# ! /RESPONDENT 3. '() ( )/CIT(A)-1, COIMBATORE 4. '() /CIT, 5. ' % /DR 6. *+ /GF.