STATKRAFT MARKETS PRIVATE LTD., NEW DELHI V. DCIT, CIRCLE- 24(2), NEW DELHI

ITA 4536/DEL/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 5780 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 9 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2014-2015
• Appeal Filed On: 10-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R M MEHTA
• Keywords: Depreciation; TDS

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G, NEW DELHI BEFORE SH. BHAVNESH SAINI, JUDICIAL MEMBER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER (THROUGH VIDEO CONFERENCING) ITA NO. 4536/DEL/2017 : ASSTT. YEAR : 2014-15 STATKRAFT MARKETS PVT. LTD., 403, 4 TH FLOOR, SALCON RASVILAS BUILDING, SAKET DISTRICT CENTRE, NEW DELHI-110017 VS DCIT, CIRCLE-24(2), NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. A AQCS6900E ASSESSEE BY : SH. R. M. MEHTA, ADV. REVENUE BY : MS. RICHA KHODA, CIT DR DATE OF HEAR ING: 08 . 0 3 .20 2 1 DATE OF PRONOUNCEMENT: 26 .04 .20 2 1 ORDER PER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A)-30, NEW DELHI DATED 31. 05.2017. 2. THE DETAILS HAVE BEEN TAKEN FROM THE RECORD BEFO RE US. 3. THE LD. CIT (A) UPHELD THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON ACCOUNT OF EMPLOYEE BENEFIT EX PENSES, DEPRECIATION AND OTHER EXPENSES ON THE GROUNDS THAT THE ASSESSEE IS NOT STARTED THEIR BUSINESS OPERATIONS A ND HENCE THE EXPENSES ARE NOT ALLOWABLE. 4. THE RELEVANT FACTS OF THE CASE FOR ADJUDICATION OF THE ISSUE ARE THAT THE ASSESSEE COMPANY WAS INCORPORATED ON 1 3.12.2011 ITA NO. 4536/DEL/2017 STATKRAFT MARKETS PVT. LTD. 2 WITH THE OBJECTIVE TO PURCHASE, SELL, DISTRIBUTE, T RADE, IMPORT, GENERATE AND DEALS ALL TYPES OF ELECTRIC POWER. THE COMPANY EARNED INCOME ON FDRS OF RS.4.42 CR. AND CONSULTANC Y OF RS.13.45 LACS. TO ACHIEVE ITS OBJECTIVE, THERE IS A MANDATORY REQUIREMENT FOR THE COMPANY TO OBTAIN LICENSE FROM CENTRAL ELECTRICITY REGULATORY COMMISSION (CERC) AND FOR TH E SAME, THE ASSESSEE COMPANY HAS APPLIED FOR POWER TRADING LICE NSE TO THE CENTRAL ELECTRICITY REGULATORY COMMISSION (CERC) IN MARCH, 2012 AND FINALLY GOT THE LICENSE IN JUNE, 2012. THE COMPANY HAD ACQUIRED LICENSE TO COMMENCE ITS BUSINESS IN JU NE 2012, HENCE IT CAN BE CONCLUDED THAT THE BUSINESS HAS BEE N COMMENCED IN FY 2013-14. 5. IN REFERENCE TO THE CONTENTION OF AO THAT THE AS SESSEE HAS NOT STARTED ANY REAL OPERATION DURING THE RELEVANT PREVIOUS YEAR AND THE EXPENSES INCURRED ARE PREOPERATIVE EXPENDIT URE, WE HAVE EXAMINED THE FOLLOWING FACTS: 1) APPLICATION OF LICENSE WITH CENTRAL ELECTRICITY REG ULATORY COMMISSION (CERC) - APPLICATION FILED WITH CERC DAT ED 20.03.2012 AS OBTAINING THE LICENSE FROM THE CERC I S MANDATORY REQUIREMENT TO CARRY OUT THE OBJECTIVES O F THE BUSINESS. 2) LICENSE WAS GRANTED BY CERC VIDE NO. 58/TRADING LICENSE/2012/CERC DATED 21.06. 2012. 3) THE ASSESSEE HAS ALSO APPLIED FOR MEMBERSHIP WITH I NDIAN ENERGY EXCHANGE(IEX) DATED 20.11.2013 AND BECAME TH E MEMBER WHICH IS AN ESSENTIAL ACTIVITY CARRIED OUT B Y THE ASSESSEE FOR ATTAINING THE BUSINESS OBJECTIVE. ITA NO. 4536/DEL/2017 STATKRAFT MARKETS PVT. LTD. 3 4) RECRUITED TECHNICALLY QUALIFIED EMPLOYEES THE ROLES OF EMPLOYEES ARE AS FOLLOWS: TO SUPPORT BUSINESS DEVELOPMENT FOR THE MARKETS TEA M. RESPONSIBLE FOR MONITORING REGULATORY DEVELOPMENTS PERFORMING QUANTITATIVE ANALYSIS FOR A RANGE OF COM MERCIAL PRODUCTS AND SERVICES DELIVERING ON A RANGE OF PRICE FORECAST USING DIFFE RENT MODELS RESPONSIBLE FOR MAINTAINING CLOSE COORDINATION WITH ORIGINATION(BUSINESS DEVELOPMENT, PORTFOLIO MANAGEM ENT, & RISK MANAGEMENT) TO SUPPORT FINANCE AND ACCOUNTS OF THE COMPANY 6. BANK ACCOUNTS - DURING THE FINANCIAL YEAR 2013-1 4, THE ASSESSEE HAS THREE OPERATING BANK ACCOUNT I.E. ICIC I, KOTAK MAHINDRA BAN AND YES BANK. 7. AGREEMENT HAVE BEEN ENTERED INTO BY THE ASSESSEE WITH MALANA POWER COMPANY LIMITED (MPCL). THE REVENUE FR OM MPCL AND AD HYDRO POWER IS DULY ACCOUNTED THE AMOUNT OF INR 17,27,663/-. 8. REVENUE FOR MANAGEMENT SERVICES- THE ASSESSEE CO MPANY HAS PROVIDED MANAGEMENT CONSULTANCY SERVICE WERE TO M/S STATKRAFT INDIA PVT. LTD. FOR WHICH FEES OF RS. 13, 45,080/- ,WAS RECEIVED, ON WHICH TDS WAS ALSO MADE. 9. WE HAVE GONE THROUGH THE JUDGMENTS RELIED BY THE ASSESSEE. ITA NO. 4536/DEL/2017 STATKRAFT MARKETS PVT. LTD. 4 JUBILANT OFFSHORE DRILLING PVT. LTD. [TS-771-ITAT- 2014(DEL)] M/S OMNIGLOBE INFORMATION TECH INDIA PVT. LTD. [TS- 526- HC-2014(DEL)] M/S CAREFOUR WC & C INDIA PRIVATE LIMITED VS DCIT [2015] 53 TAXMANN.COM 289 (DELHI) CIT VS SAMSUNG ELECTRONICS INDIA LIMITED [2013]37 TAXMANN.COM 239 (DELHI) M/S JCDECAUX ADVERTISING INDIA (P) LTD [TS-253-HC- 2015(DEL)] M/S CIT VS ESPN SOFTWARE INDIA (P) LTD [2009] 184 TAXMANN 452(DELHI) CIT V. L.G. ELECTRONIC (INDIA) LTD. [2006] 282 ITR 545/[2005] 149 TAXMAN 166 (DELHI) 10. ON GOING THROUGH THE ABOVE FACTS AND CIRCUMSTAN CES MENTIONED FROM POINT 1 TO 9 AND RELYING ON THE JUDG MENTS OF THE HONBLE JURISDICTIONAL HIGH COURTS ABOVE AND SI NCE THE ASSESSEE HAS OBTAINED THE LICENSE TO DO THE BUSINES S, OPENED THE BANK ACCOUNT FOR INCURRING THE BUSINESS EXPENDI TURE, RECRUITED THE QUALIFIED EMPLOYEES TO RUN THE BUSINE SS EFFICIENTLY, RECEIVED MANAGEMENT CONSULTANCY FEES, OBTAINED A ME MBERSHIP OF INDIA ENERGY EXCHANGE( IEX) AND ALSO AS EVIDENT FROM BANK ACCOUNT STATEMENT PAID THE ANNUAL CLIENT REGISTRATI ON FEE OF MALANA POWER COMPANY LIMITED (MPCL) PAID TO IEX FOR CLIENT AND SUBSEQUENT TO WHICH ASSESSEE HAS ENTERED IN TO AGREEMENT WITH MPCL ON APRIL 3, 2014, IN KEEPING IN VIEW THE FACT THAT FOR THE ASSESSMENT YEAR 2012-13, THE LD. CIT (A) ALLOWE D THE EXPENSES AND SUCH DECISION WAS ACCEPTED BY THE REVE NUE AND ITA NO. 4536/DEL/2017 STATKRAFT MARKETS PVT. LTD. 5 FOR THE ASSESSMENT YEAR 2013-14, THE AO HAS ALLOWED THE EXPENSES, FOR THE INSTANT YEAR I.E. A.Y. 2014-15, W E HEREBY HOLD THAT NO DISALLOWANCE ON ACCOUNT OF EXPENDITURE IS C ALLED FOR. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26/04/2021. SD/- SD/- (BHAVNESH SAINI) (DR. B. R. R. KUMAR) JUDICIAL MEMBER ACC OUNTANT MEMBER DATED: 26/04/2021 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR