DEPUTY COMMISSIONR OF INCOME TAX, CIRCLE-6, Jaipur V. RAJASTHAN RENEWABLE ENERGY CORPORATION LTD., Jaipur

ITA 485/JPR/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3695 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 19 day(s)
• Appeal Type: Income Tax (International Taxation) Appeal
• Pronouncement Date: 29-04-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 10-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHANMUGA PRIYA
• Assessee Lawyers: MUKESH GOYAL
• Keywords: Diversion of income
• Section: 37(1)

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 FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA- @ ITA NO. 485/JP/2018 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2011-12 THE DCIT, CIRCLE-6, JAIPUR. CUKE VS. M/S RAJASTHAN RENEWABLE ENERGY CORPORATION LTD., AKSHAY URJA BHAWAN, E-166, YUDHISHTIR MARG, C-SCHEME, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAACL 3171C VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS @ REVENUE BY : MS. SHANMUGA PRIYA (JCIT) FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI MUKESH GOYAL (C.A.) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 05/06/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 07/06/2018 VKNS'K@ ORDER PER: VIJAY PAL RAO, J.M. THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER DATED 31.01.2018 OF LD. CIT (A), JAIPUR FOR THE ASS ESSMENT YEAR 2011- 12. THE REVENUE HAS RAISED THE FOLLOWING GROUND:- (I) WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE DI SALLOWANCE OF CONTRIBUTION TO ENERGY CONSERVATION FUND OF RS. 1,0 0,00,000/- ITA NO. 485/JP/2018 DCIT V. M/S RAJASTHAN RENEWABLE ENERGY CORPORATION LTD. 2 MADE BY AO IGNORING THE FACT THAT CONTRIBUTION TOWA RDS FUND IS APPLICATION OF INCOME AND NOT ALLOWABLE U/S 37(1) O F THE INCOME TAX ACT, 1961. (II) THE APPELLANT CRAVES ITS RIGHTS TO ADD, AMEND OR ALTER ANY OF THE GROUND ON OR BEFORE THE HEARING. 2. THE ONLY ISSUE RAISED IN THIS APPEAL OF THE REVE NUE IS THE CONTRIBUTION MADE BY THE ASSESSEE TO ENERGY CONVERS ATION FUND OF RS. 1,00,00,000/- WAS DISALLOWED BY THE AO HOWEVER, THE SAME WAS ALLOWED BY THE LD. CIT(A). THE ASSESSEE COMPANY WAS NOMINATED AS STATE DESIGNATED AGENCY (SDA) BUREAU OF ENERGY EFFI CIENCY (BEE) MINISTRY OF POWER, GOVERNMENT OF INDIA FOR PROMOTE EFFICIENT USE OF ENERGY AND ITS CONSERVATION. THE ENERGY DEPARTMENT HAS CONSTITUTED RAJASTHAN STATE ENERGY CONSERVATION FUND IN TERMS OF THE PROVISIONS OF ENERGY CONSERVATION ACT, 2001 TO ACHIEVE THE OBJECT S PRESCRIBED IN THE SAID ACT. THE ASSESSEE HAS BEEN CONTRIBUTING TO ENE RGY CONVERSATION FUND FROM TIME TO TIME. FOR THE YEAR UNDER CONSIDER ATION THE ASSESSEE HAS CONTRIBUTED RS. 1 CRORES TO ENERGY CONVERSATION FUND WHICH WAS DISALLOWED BY THE AO ON THE GROUND THAT IT IS NOT A N EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY FOR THE BUSINESS OF THE ASSESSEE BUT IT IS AN APPLICATION OF INCOME. ON APPEAL, THE LD. CIT(A) ALLOWED THE CLAIM ITA NO. 485/JP/2018 DCIT V. M/S RAJASTHAN RENEWABLE ENERGY CORPORATION LTD. 3 OF THE ASSESSEE BY FOLLOWING THE DECISION OF THIS T RIBUNAL IN ASSESSEE OWN CASE FOR THE ASSESSMENT YEAR 2008-09. 3. WE HAVE HEARD THE LD. DR AS WELL AS THE LD. AR A ND CONSIDERED THE RELEVANT MATERIALS ON RECORD. AT THE OUTSET WE NOTE THAT THIS ISSUE HAS BEEN CONSISTENTLY DEALT WITH BY THIS TRIBUNAL I N ASSESSEES OWN CASE FOR THE A.YS. 2008-09, 2012-13 AND 2014-15. FOR THE ASSESSMENT YEAR 2014-15 THE TRIBUNAL VIDE ORDER DATED 19.03.2018 IN ITA NO. 816/JP/2017 HAS DECIDED THIS ISSUE IN PARAS 6 AND 7 AS UNDER:- 6. GROUND NO. 4 IS REGARDING DISALLOWANCE MADE BY THE AO ON ACCOUNT OF CONTRIBUTION OF ENERGY CONSERVATION FUND WAS DELETED BY THE LD. CIT (A). 7. WE HAVE HEARD LD. D/R AS WELL AS THE LD. A/R AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. AT THE OUTSET, WE NOT E THAT AN IDENTICAL ISSUE HAS BEEN CONSIDERED BY THIS TRIBUNAL IN ASSES SEES OWN CASE FOR THE ASSESSMENT YEAR 2008-09 AS WELL AS FOR THE ASSE SSMENT YEAR 2012- 13 VIDE ORDER DATED 18.8.2017 IN ITA NO. 88/JP/2016 IN PARA 91 TO 94 AS UNDER :- 91. IN RESPECT OF GROUND NO. 7, THE REVENUE HAS CH ALLENGED THE ACTION OF LD CIT(A) IN DELETING DISALLOWANCE OF CONTRIBUTION TO ENERGY CONSERVATION FUND OF RS. 1 CRORE. BRIEF FACT S OF THE CASE ARE THAT THE ASSESSEE CONTRIBUTED RS.1 CRORE TO ST ATE ENERGY CONSERVATION FUND TO BE SPENT ON CONSERVATION OF EN ERGY AS AND WHEN REQUIRED. THE AO HELD THAT THE CONTRIBUTION SO MADE IS NOT WHOLLY & EXCLUSIVELY FOR ASSESSEE BUSINESS OF GENER ATING RENEWABLE ENERGY. HE THEREFORE, DISALLOWED THE SAME . ON APPEAL, THE LD. CIT(A) BY RELYING ON THE DECISION O F COORDINATE BENCH IN ASSESSEES OWN CASE IN ITA NO.983/JP/13 FO R AY 2008- 09 DELETED THE DISALLOWANCE. ITA NO. 485/JP/2018 DCIT V. M/S RAJASTHAN RENEWABLE ENERGY CORPORATION LTD. 4 92. THE LD AR SUBMITTED THAT THE ISSUE IS COVERED B Y THE DECISION OF HONBLE ITAT IN ASSESSEES OWN CASE FOR AY 2008-09. IT WAS FURTHER SUBMITTED THAT THE CONTRIBUTION IS M ADE TO RAJASTHAN STATE ENERGY CONSERVATION FUND CONSTITUTE D AS PER SECTION 16 OF THE ENERGY CONSERVATION ACT, 2001. TH E OBJECT OF THE FUND IS MENTIONED AT PG 11-12 OF THE CIT(A) ORD ER. THE ASSESSEE IS INCORPORATED WITH THE OBJECT OF PROMOTI NG THE NON CONVENTIONAL AND RENEWABLE ENERGY SOURCES AND THERE FORE THE CONTRIBUTION SO MADE IS WHOLLY & EXCLUSIVELY FOR TH E PURPOSE OF BUSINESS. OTHERWISE ALSO, ANY CONTRIBUTION MADE TO A STATUTORY FUND IS ALLOWABLE AS DEDUCTION AS HELD BY SUPREME C OURT IN CASE OF CIT VS. NEW HORIZON SUGAR MILLS PVT. LTD.269 ITR 397 WHERE IT WAS HELD THAT AMOUNT SET APART TOWARDS MOLASSES STORAGE RESERVE FUND IS TO BE EXCLUDED FROM ASSESSEES TOTA L INCOME ON THE PRINCIPLE OF DIVERSION OF INCOME BY OVERRIDING TITLE. IN VIEW OF ABOVE, CIT(A) HAS RIGHTLY DELETED THE DISALLOWANCE AND THUS THE GROUND OF THE DEPARTMENT BE DISMISSED. 93. THE RELEVANT FINDING OF THE LD. CIT(A) ARE REPR ODUCED AS UNDER:- 5.3 I HAVE PERUSED THE FACTS OF THE CASE, THE ASSESSMENT ORDER AND THE SUBMISSIONS OF THE APPELLA NT. THE FACT OF THIS ISSUE IS SIMILAR TO THE FACT IN AS SESSEES OWN CASE FOR THE ASSESSMENT YEAR 2008-09, APPEAL NO . ITA NO. 983/JP/2013. THIS ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE AS FOLLOW:- THIS AMOUNT WAS PAID TOWARDS ENERGY CONVERSATION CONTRIBUTION FUND, WHICH IS STATUTORY LIABILITY AS PER PROVISIONS OF ENERGY CONSERVATION ACT, 2001. THE CA SE LAW RELIED BY THE ASSESSEE OF THE JUDGMENT OF THE H ONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. RA J SHIPPING AND WEAVING MILLS LTD. (SUPRA) IS SQUARELY APPLICABLE IN THE CASE OF THE ASSESSEE WHEREIN IT H AS BEEN HELD THAT CONTRIBUTION TO THE FUND SET UP FOR PRODU CTS WHICH WAS ALSO THE BUSINESS OF THE ASSESSEE HAS DIR ECT NEXUS TO THE ADVANCEMENT OF THE ASSESSEE BUSINESS. ITA NO. 485/JP/2018 DCIT V. M/S RAJASTHAN RENEWABLE ENERGY CORPORATION LTD. 5 FOLLOWING THE ABOVE JUDGMENT, THE DISALLOWANCE ON ACCOUNT OF CONTRIBUTION TO ENERGY CONSERVATION FUND OF RS. 1,00,00,000/- MADE BY THE ASSESSING OFFICER IS DIRECTED TO BE DELETED. THIS GROUND IS ALLOWED. 94. UNDISPUTEDLY, THERE IS NO CHANGE IN THE FACTS A ND CIRCUMSTANCES OF THE CASE OR ANY AUTHORITY WHICH HA S BEEN BROUGHT TO OUR NOTICE SUBSEQUENT TO THE DECISION OF THE COORDINATE BENCH IN ASSESSEES OWN CASE IN AY 2008- 09. RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINA TE BENCH REFERRED SUPRA, WE AFFIRM THE FINDINGS OF THE LD CI T(A) AND THE GROUND TAKEN BY THE REVENUE IS DISMISSED. FOLLOWING THE EARLIER ORDER OF THIS TRIBUNAL IN ASS ESSEES OWN CASE, WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE ORDER OF LD. CIT (A) QUA THIS ISSUE. ACCORDINGLY IN VIEW OF THE DECISION OF THIS TRIBUNA L IN ASSESSEES OWN CASE AND IN THE ABSENCE OF ANY CONTRARY BINDING PRE CEDENT, WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE IMPUGNED ORDER OF THE LD. CIT(A) QUA THIS ISSUE. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 07/06/2018. SD/- SD/- FOE FLAG ;KNO FOT; IKY JKO (VIKRAM SINGH YADAV) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 07/06/2018. ITA NO. 485/JP/2018 DCIT V. M/S RAJASTHAN RENEWABLE ENERGY CORPORATION LTD. 6 * SANTOSH. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- DCIT, CIRCLE-6, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- M/S RAJASTHAN RENEWABLE ENERGY CORPORATION LTD., 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. 485/JP/2018} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR