ECO RRB Infra P.Ltd, New Delhi V. ACIT, Circle-8(1), New Delhi

ITA 3509/DEL/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4084 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 23-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S KRISHNAN ADV SH V RAJA KUMAR
• Keywords: Business income; Depreciation; Bad and doubtful debts; Set aside
• Section: 80IA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: FRIDAY-A NEW DELHI SHRI G.S. PANNU, VICE-PRESIDENT AND SHRI K. NARSIMHA CHARY, JUDICIAL MEMBER ITA NOS. 3509, 2199 & 2198/DEL/2019 ASSESSMENT YEARS: 2013-14, 2014-15 & 2015-16 ECO RRB INFRA P. LTD., 2C & D, 2 ND FLOOR, M-6, UPPAL PLAZA, DISTRICT CENTRE, JASOLA, NEW DELHI. PAN : AAACR 0233R (APPELLANT) VS ACIT, CIRCLE -8(1), NEW DELHI. (RESPONDENT) APPELLANT BY : SH. S. KRISHNAN, ADV. SH. V. RAJA KUMAR, ADV. RESPONDENT BY: MS. RAKHI VIMAL , SR. DR ORDER PER K. NARASIMHA CHARY, JM: CHALLENGING THE ORDER DATED 29.12.2017 FOR A.Y. 20 13-14 PASSED BY LD. COMMISSIONERS OF INCOME-TAX (APPEALS)-34, NEW D ELHI (CIT(A)) AND ORDERS DATED 12.02.2019 IN APPEAL NOS. 3/10448/2016 -17 AND 3/10241/2917-18 FOR ASSESSMENT YEARS 2014-15 AND 20 15-16 PASSED BY LD. CIT(A)-3, NEW DELHI, M/S. ECO RRB INFRA PVT. LTD. ( THE ASSESSEE) FILED THESE APPEALS. DATE OF HEARING : 14.02.2020 DATE OF PRONOUNCEMENT: 28.02.2020 2 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF DEVELOPING, OPERATING, MAINTAINING THE INFRASTRUCTURE FACILITY IN THE POWER SECTOR. FOR THE ASSESSMENT YEARS 2013- 14, 2014-15 AND 2015- 16, THE ASSESSING OFFICER DISALLOWED THE CLAIM OF T HE ASSESSEE FOR DEDUCTION U/S. 80IA OF THE INCOME-TAX ACT (THE ACT) ON THE GROUND THAT THE ASSESSEE HAD WRONGLY CLAIMED EXPENSES AND DEPRECIATION RELAT ED TO POWER GENERATION AGAINST NON-TAXABLE CONSULTANCY INCOME A ND THAT IF THE DIRECT EXPENSES ARE ALLOCATED TOWARDS THE INCOME GENERATED FROM POWER GENERATION, THE INCOME FROM POWER GENERATION WILL R ESULT INTO LOSS AND THEREFORE, THERE WOULD NOT BE ANY INCOME TO CLAIM D EDUCTION U/S. 80IA OF THE ACT. 3. IN THE ASSESSMENT YEAR 2014-15, THE ASSESSEE ALS O CLAIMED BAD DEBT OF RS.7,49,106/- IN THE PROFIT AND LOSS ACCOUNT BY STATING THAT THEY HAD SHOWN THE RENTAL INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY IN ASSESSMENT YEAR 2013-14 AND SINCE THE SAME WAS NOT REALISED IT WAS CLAIMED AS BAD DEBT AGAINST THE BUSINESS INCOME. TH E ASSESSING OFFICER DISALLOWED THE SAME. 4. CHALLENGING THE DISALLOWANCE OF CLAIM U/S. 80IA FOR ALL THE THREE YEARS AND ALSO THE DISALLOWANCE OF CLAIM FOR BAD DEBT FOR ASSESSMENT YEAR 2014- 15, THE ASSESSEE PREFERRED APPEALS BEFORE THE LD. C IT(A). LD. CIT(A) AFTER CONSIDERING THE FACTS OF THE CASE NOTICED THAT IDEN TICAL QUESTION HAD ARISEN IN ASSESSEES OWN CASE UNDER IDENTICAL FACTS FOR AS SESSMENT YEARS 2009-10, 2011-12 AND 2012-13 AND IN APPEALS, THE CIT(A) HAD TAKEN A VIEW AGAINST THE ASSESSEE AND THEREFORE, THE CLAIM OF THE ASSESS EE CANNOT BE ALLOWED IN RESPECT OF DEDUCTION U/S. 80IA OF THE ACT. SO ALSO IN RESPECT OF ASSESSMENT YEAR 2014-15 ON THE ASPECT OF DISALLOWANCE OF BAD D EBT, THE LD. CIT(A) HELD 3 THAT U/S. 36(1)(VII) OF THE ACT, ONLY THE BAD DEBTS WHICH WERE CONSIDERED AS INCOME UNDER THE HEAD PROFITS AND GAINS OF BUSINES S CAN BE ALLOWED AS DEDUCTION AND AS MUCH AS THE CLAIM OF DEDUCTION OF RS.7,49,106/- BY THE ASSESSEE DOES NOT HAVE ANY NEXUS WITH THE BUSINESS ACTIVITIES OF THE ASSESSEE, IT CANNOT BE RELATED TO BUSINESS INCOME A ND SUCH A CLAIM CANNOT BE ALLOWED. HE, THEREFORE, DISMISSED THAT GROUND AL SO. THE ASSESSEE IS, THEREFORE, BEFORE US IN THESE APPEALS. 5. AT THE OUTSET, IT IS THE SUBMISSION OF THE LD. A R THAT AS RIGHTLY OBSERVED BY LD. CIT(A), THE FACTS INVOLVED IN THESE THREE YEARS ARE IDENTICAL TO THE FACTS INVOLVED FOR EARLIER ASSESSMENT YEARS 2009-10, 2011-12 AND 2012-13. HE FURTHER SUBMITTED THAT THIS ISSUE WAS D EALT WITH BY COORDINATE BENCH OF THIS TRIBUNAL IN ITA NO. 400/DEL/2011 AND 6149/DEL/2012 FOR THE ASSESSMENT YEARS 2006-07 AND 2007-08 AND PLACED REL IANCE ON THE OBSERVATIONS OF HONBLE DELHI HIGH COURT IN THE CAS E OF RRB CONSULTANTS, 14 TTJ 794 (DELHI). HE SUBMITTED THAT BY ORDER DATED 0 6.01.2020 IN ITA NO. 4633/DEL/2017 FOR ASSESSMENT YEAR 2012-13, THE ISSU E RELATING TO DEDUCTION UNDER SECTION 80IA WAS REMANDED TO THE FILE OF ASSE SSING OFFICER TO ADJUDICATE IT AFRESH IN TUNE WITH THE DIRECTION GIV EN IN ITA NO. 400/DEL/2011 AND 6149/DEL/2012 BY ORDER DATED 27.09.2013 AND ITA NOS. 700 AND 701/DEL/2013 FOR ASSESSMENT YEAR 2008-09 AND 2009-1 0 RESPECTIVELY BY ORDER DATED 16.10.2014. HE, THEREFORE, PRAYED THAT SIMILAR COURSE MAY BE FOLLOWED IN THIS YEAR ALSO. 6. THERE IS NO DENIAL FROM THE REVENUE THAT THE FAC TS INVOLVED IN THESE YEARS ARE IDENTICAL TO THE FACTS INVOLVED FOR THE A SSESSMENT YEARS 2009-10, 2011-12 AND 2012-13 AS OBSERVED BY THE LD. CIT(A). THE DIRECTION GIVEN BY 4 THE TRIBUNAL IN ITA NO. 4633/DEL/2017 FOR THE ASSES SMENT YEAR 2012-13 BY ORDER DATED 06.01.2020 IS ALSO NOT CONTROVERTED. 7. IN EARLIER YEARS, IT WAS HELD THAT DEDUCTION U/S . 80IA HAS TO BE COMPUTED AFTER SETTING OFF THE DEPRECIATION RELATIN G TO WIND MILL AGAINST INCOME EARNED OUT OF ELECTRICITY GENERATED, WHICH Q UALIFIED FOR DEDUCTION U/S. 80IA OF THE ACT. IN THIS FACTUAL AND LEGAL SIT UATION, WE DEEM IT JUST AND PROPER TO FOLLOW THE VIEW TAKEN BY THE TRIBUNAL IN ASSESSEES OWN CASE CONSISTENTLY OVER A PERIOD OF TIME FROM 2000-01. WE , THEREFORE, SET ASIDE THE IMPUGNED ORDER ON THIS ASPECT AND REMAND THE MA TTER TO THE ASSESSING OFFICER TO ADJUDICATE AFRESH IN TUNE WITH THE DIREC TIONS IN ITA NO. 400/DEL/2011 AND 6149/DEL/2012 BY ORDER DATED 27/9/ 2013 AND IN ITA NOS. 700 AND 701 /DEL/ 2013 FOR THE ASSESSMENT YEARS 200 8-09 AND 2009-10 RESPECTIVELY BY ORDER DATED 16/10/2014. GROUNDS OF APPEAL ARE ANSWERED ACCORDINGLY. 8. NOW COMING TO THE SECOND GROUND OF APPEAL FOR AS SESSMENT YEAR 2014-15 RELATING TO DISALLOWANCE OF BAD DEBT CLAIME D BY THE ASSESSEE, THE ASSESSEE PLEADED THAT THEY HAVE DECLARED THE SAID I NCOME IN THE COMPUTATION OF INCOME FOR ASSESSMENT YEAR 2013-14, BUT AN AMOUNT TO THE TUNE OF RS.7,49,106/- COULD NOT BE REALIZED AND THE REFORE, IN THIS ASSESSMENT YEAR, IT WAS WRITTEN OFF AND CLAIMED AS BAD DEBT. 9. ALTHOUGH ACCORDING TO THE ASSESSING OFFICER AND CIT(A), THE BAD DEBT RENT IS NOT ALLOWABLE EXPENSE AGAINST THE BUSINESS INCOME, THERE IS NO DENIAL OF THE FACT PLEADED BY THE ASSESSEE THAT THE RENT W AS SHOWN IN THE BOOKS OF ACCOUNT OF THE ASSESSEE FOR ASSESSMENT YEAR 2013-14 AND WAS OFFERED TO TAX BUT SINCE IT WAS NOT REALIZED, THE SAME WAS WRITTEN OFF AND CLAIMED AS BAD DEBT. IT IS A VERIFIABLE FACT. IF THE RENT WAS SHOW N IN THE BOOKS OF ACCOUNT AND 5 WAS OFFERED TO TAX IN ASSESSMENT YEAR 2013-14, WHEN SUCH RENT WAS NOT ACTUALLY REALISED, THE SAME COULD BE PERMITTED TO B E WRITTEN OFF IN THIS YEAR. WE, THEREFORE, SET ASIDE THE ISSUE TO THE FILE OF A SSESSING OFFICER TO VERIFY WHETHER RENT WAS DECLARED AND OFFERED TO TAX IN ASS ESSMENT YEAR 2013-14 AND IF SO, TO ALLOW THE DEDUCTION OF BAD DEBT IN TH IS ASSESSMENT YEAR. 10. IN THE RESULT, ALL THESE APPEALS ARE ALLOWED FO R STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH FEBRUARY, 2020. SD/- SD/- (G.S. PANNU) (K. NARASIMHA CHARY) VICE-PRESIDENT JUDICIAL M EMBER DATED: 28/02/2020 *AKS*