ITO 6 (3) (4), MUMBAI V. K. P. POWER PVT. LTD., MUMBAI

ITA 5009/MUM/2016

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6961 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 05-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUSHIL KUMAR PODDAR
• Keywords: Opportunity of being heard; Corroborative evidences
• Section: 80IA; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI N.K. PRADHAN, ACCOUNTANT MEMBER ITA NO. 5009 / MUM . /2016 ( ASSESSMENT YEAR : 20 12 13 ) INCOME TAX OFFICER WARD 6(3)(4), MUMBAI . APPELLANT V/S K.P. POWER PVT. LTD. 229/230, ARUN CHAMBERS TARDEO ROAD, MUMBAI 400 034 PAN AABCK9495M . RESPONDENT ASSESSEE BY : SHRI GIRISH DAVE A/W SHRI TANZIL PADVEKAR REVENUE BY : SHRI SUSHIL KUMAR PODDAR DATE OF HEARING 04 . 1 2 .201 8 DATE OF ORDER 01.03.2019 O R D E R PER SAKTIJIT DEY, J.M. A FORESAID APPEAL HA S BEEN FILED BY THE REVENUE CHALLENGING THE ORDER DATED 23 RD MAY 2016 , PASSED BY THE LEARNED COMMISSIONER (APPEALS) 12 , MUMBAI , FOR THE ASSESSMENT YEAR 20 1 2 13 . 2 . IN GROUND NO.1, THE REVENUE HAS CHALLENGED ALLOWANCE OF ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 80IA OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ). 2 K.P. POWER PVT. LTD. 3 . B RIEF FACTS ARE, AS STATED BY THE ASSESSING OFFICER, THE ASSESSEE COMPANY IS ENGAGED IN INFRASTRUCTURE DEVELOPMENT ACTIVITY FOR WINDMILL. FOR THIS PURPOSE, IT TAKES LAND ON LEASE FROM MIDC OR PURCHASES LAND ON ITS OWN AND SUB LEASES THEM TO VARIOUS PARTIES AFTER DIVIDING THEM TO VARIOUS SMALL PLOTS. IT ALSO DEVE LOPS OTHER INFRASTRUCTURE FOR FILLING ROADS, FENCING AND OTHER ACTIVITIES. THE OTHER ACTIVITIES OF THE ASSESS EE ARE LAYING TRANSMISSION LINE/NETWORK OF VARIOUS W INDMILLS TO THE SUB STATION S OF MAHARASHTRA STATE ELECTRICITY BOARD (MSEB). FOR THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSESSEE FILED ITS RETURN OF INCOME ON 30 TH MARCH 2013, DECLARING TOTAL INCOME OF ` 6,45,520, AFTER CLAIMING DEDUCTION UNDER SECTION 80IA OF THE ACT. IN COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER WHILE VERIFYING ASSESSE ES CLAIM OF DEDUCTION UNDER SECTION 80IA OF THE ACT NOTICED THAT THE INCOME CREDITED TO THE PROFIT & LOSS ACCOUNT IS FROM LEASE RENTAL, SERVICE CHARGES, INTEREST, SHORT TERM CAPITAL GAIN, ETC. HE OBSERVED , THOUGH THE ASSESSEE HAD STATED THAT IT IS IN THE BUSINESS OF SUB LEASING OF PLOTS OBTAINED ON LEASE FROM MIDC TO VARIOUS COMPANIES FOR SETTING UP OF W INDMILLS, HOWEVER, THE ASSE SSEE ITSELF WAS NOT SETTING UP WINDMILLS. THEREFORE , THE CONDITIONS OF SECTION 80IA(4)(VI)(B) OF THE ACT ARE NOT SATISFIED. ACCO RDINGLY, RELYING UPON THE ASSESSMENT ORDER PASSED FOR PRECEDING ASSESSMENT YEARS , WHEREIN , SIMILAR DISALLOWANCES WERE MADE, THE ASSESSING OFFICER 3 K.P. POWER PVT. LTD. DISALLOWED ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 80IA OF THE ACT. THE ASSESSEE CHALLENGED THE DISALLOWAN CE BEFORE THE FIRST APPELLATE AUTHORITY. 4 . IN COURSE OF APPEAL HEARING, LEARNED COMMISSIONER (APPEALS) NOTICING THAT SIMILAR DISALLOWANCE MADE BY THE ASSESSING OFFICER IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2002 03, 2006 07 AND 2007 08 WAS DELETED BY TH E FIRST APPELLATE AUTHORITY , ALLOWED ASSESSEES CLAIM OF DEDUCTION. 5 . THE LEARNED DEPARTMENTAL REPRESENTATIVE , THOUGH , SUPPORTED THE OBSERVATIONS OF THE ASSESSING OFFICER, HOWEVER, HE FAIRLY SUBMITTED THAT THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL IN ASSESSMENT YEAR S 2002 03, 2006 07 AND 2007 08, WHILE DECIDING REVENUES APPEAL S . 6 . THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , THE ISSUE STANDS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ASSESSMENT YEAR 2002 03, 2006 07 AND 2007 08. 7 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RE CORD. IT IS EVIDENT , THE ASSESSING OFFICER WHILE DISALLOWING ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 80IA OF THE ACT HAS PRIMARILY RELIED UPON THE ASSESSMENT ORDER PASSED ON IDENTICAL ISSUE IN THE PRECEDING 4 K.P. POWER PVT. LTD. ASSESSMENT YEARS. HOWEVER, LEARNED COMMISSION ER (APPEALS) ALLOWED ASSESSEES CLAIM FOLLOWING THE VIEW TAKEN BY THE LEARNED COMMISSIONER (APPEALS) WHILE DECIDING ASSESSEES APPEALS IN ASSESSMENT YEAR 2002 03, 2006 07 AND 2007 08. NOTABLY, WHILE DECIDING REVENUES APPEAL ON IDENTICAL ISSUE FOR ASSESSME NT YEAR 2002 03, 2006 07 AND 2007 08 IN ITA NO.4518/MUM./2011, ITA NO. 547/MUM./2012, ITA NO.1306/MUM./2012, DATED 31 ST OCTOBER 2018, THE TRIBUNAL HAS UPHELD THE DECISION OF LEARNED COMMISSIONER (APPEALS) IN ALLOWING ASSESSEES CLAIM OF DEDUCTION UNDER SEC TION 80IA OF THE ACT. FACTS BEING IDENTICAL IN THE IMPUGNED ASSESSMENT YEAR, RESPECTFULLY FOLLOWING THE DECISION OF THE CO ORDINATE BENCH IN ASSESSEES OWN CASE AS REFERRED TO ABOVE, WE UPHOLD THE DECISION OF THE LEARNED COMMISSIONER (APPEALS) ON THIS ISSU E. GROUND RAISED IS DISMISSED. 8 . IN GROUND NO.2, THE REVENUE HAS CHALLENGED THE DECISION OF LEARNED COMMISSIONER (APPEALS) IN DELETING THE DISALLOWANCE OF PROJECT EXPENSES AMOUNTING TO ` 10,74,74,321. 9 . BRIEF FACTS ARE, DURING THE ASSESSMENT PROCEEDINGS, TH E ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS CLAIMED PROJECT EXPENSES OF ` 10,74,74,321. ALLEGING THAT THE ASSESSEE DID NOT FURNISH THE COMPLETE DETAILS OF THE PROJECT EXPENSES, THEREFORE, THE GENUINENESS OF SUCH EXPENSES COULD NOT BE VERIFIED, THE AS SESSING OFFICER DISALLOWED THE 5 K.P. POWER PVT. LTD. ENTIRE EXPENDITURE CLAIMED BY THE ASSESSEE . THE ASSESSEE CHALLENGED THE AFORESAID DISALLOWANCE BEFORE THE FIRST APPELLATE AUTHORITY. 10 . AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, LEARNED COMMISSIONER (APPEALS) OBSERVED THAT THE COST OF EXPENSES FOR TRANSMISSION LINE WERE ALLOWED BY THE FIRST APPELLATE AUTHORITY IN ASSESSMENT YEAR 2002 03, 2006 07 AND 2007 08. SHE ALSO OBSERVED , THE ASSESSING OFFICER HAS NOT CLEARLY MENTIONED WHAT DETAILS HE ASKED FOR AND NOT PROVIDED BY THE ASSESSEE. SHE OBSERVED , SINCE THE RECEIPT/ INCOME HAS BEEN ACCEPTED BY THE ASSESSING OFFICER , DIRECT EXPENDITURE CONNECTED TO SUCH INCOME HAS TO BE ALLOWED. ACCORDINGLY, SHE DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. 11 . THE LEARNED DEPARTMENTAL R EPRESENTATIVE SUBMITTED , IN COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE DID NOT FURNISH THE DETAILS OF EXPENDITURE CLAIMED UNDER THE HEAD PROJECT EXPENSES. THEREFORE, IN THE ABSENCE OF THE NATURE AND DETAILS OF EXPENDITURE , THE CLAIM OF T HE ASSESSEE REM AINED UNVERIFIED. HENCE , THE ASSESSING OFFICER DISALLOWED IT. HE SUBMITTED , BEFORE THE FIRST APPELLATE AUTHORITY THE ASSESSEE FURNISHED THE DETAILS/ BIFURCATION OF THE PROJECT EXPENSES FOR THE FIRST TIME. THEREFORE, LEARNED COMMISSIONER (APPEALS) SHOULD HAV E REMANDED THE ISSUE TO THE ASSESSING OFFICER FOR VERIFYING ASSESSEES CLAIM. HE SUBMITTED , WITHOUT PROVIDING AN OPPOR TUNITY TO THE ASSESSING 6 K.P. POWER PVT. LTD. OFFICER TO VERIFY ASSESSEES CLAIM, THE EXPENDITURE SHOULD NOT HAVE BEEN ALLOWED. 12 . THE LEARNED AUTHORISED REPRESEN TATIVE SUBMITTED , SIMILAR EXPENDITURE WAS CLAIMED BY THE ASSESSEE IN ASSESSMENT YEAR 2007 08. HE SUBMITTED , OUT OF THE PROJECT/ SITE DEVELOPMENT EXPENSES CLAIMED OF ` 1,83,83,200 IN ASSESSMENT YEAR 2007 08, THE ASSESSING OFFICER HAD DISALLOWED AN AMOUNT OF ` 41,85,000, FROM COST OF TRANSMISSION LINE AND MISC. EXPENDITURE OF ` 39,36,096. HE SUBMITTED , MATERIAL AND LABOUR EXPENSES RELATING TO CIVIL WORK, FO UNDATION WORK, ROAD DEVELOPMENT AND SITE DEVELOPMENT WERE ALLOWED BY THE ASSESSING OFFICER. THE LEARNED A UTHORISED REPRESENTATIVE SUBMITTED , WHILE DECIDING ASSESSEES APPEAL FOR ASSESSMENT YEAR 2007 08, LEARNED COMMISSIONER (APPEALS) SUSTAINED THE DISALLOWANCE TO THE EXTENT OF 15% OF THE MISC. EXPENSE OF ` 39,36 ,096 ALONE WHICH WAS ALSO UPHELD BY THE TRIBUNAL. THUS, HE SUBMITTED , ALL OTHER EXPENSES WERE ALLOWED. L EARNED AUTHORISED REPRESENTATIVE SUBMITTED , IN TH E IMPUGNED ASSESSMENT YEAR ALSO THE ASSESSEE HAS CLAIMED SIMILAR EXPENDITURE AND THE ASSESSING OFFICER WITHOUT EXAMINING THE NATURE AND DETAILS OF THE EXPENSES AS PER NOTE 15 OF THE AUDITED FINANCIAL ACCOUNTS HAS DISALLOWED THE SAME. THE LEARNED AUTHORISED REPRESENTATIVE, THEREFORE, SUBMITTED THAT THE ISSUE IS COVERED BY THE DECISION OF THE TRIBUNAL. 7 K.P. POWER PVT. LTD. 13 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERU SED MATERIAL ON RECORD. AS COULD BE SEEN FROM THE ASSESSMENT ORDER, THE ASSESSING OFFICER WITHOUT DISCUSSING IN DETAIL THE NATURE AND CHARACTER OF THE EXPENSES CLAIMED HAS DISALLOWED IT BY OBSERVING THAT COMPLETE DETAILS OF THE EXPENSES WERE NOT FURNISHED. WHEREAS , LEARNED COMMISSIONER (APPEALS) RELYING UPON THE SUBMISSIONS MADE BY THE ASSESSEE HAS ALLOWED ASSESSEES CLAIM. IT IS EVIDENT FROM THE RESPECTIVE ORDERS OF THE FIRST APPELLATE AUTHORITY AND THE ASSESSING OFFICER THAT THE NATURE AND DETAILS OF EXPE NDITURE CLAIMED BY THE ASSESSEE WERE NOT FACTUALLY VERIFIED BY EXAMINING THE SUPPORTING DOCUMENTARY EVIDENCES. LEARNED COMMISSIONER (APPEALS) SIMPLY RELYING UPON THE WRITTEN SUBMISSIONS FILED BY THE ASSESSEE AND ALSO THE FACT THAT COST OF EXPENSES OF TRANS MISSION LINE WERE ALLOWED BY THE FIRST APPELLATE AUTHORITY IN THE PRECEDING ASSESSMENT YEAR S HAS DELETED THE DISALLOWANCE. ON A PERUSAL OF THE ASSESSMENT ORDER PASSED FOR THE ASSESSMENT YEAR 2007 08, IT IS NOTICED THAT THE ASSESSING OFFICER HAS NOT ONLY EN QUIRED INTO THE DETAILS OF EXPENDITURE CLAIMED BY THE ASSESSEE BUT THE ASSESSEE HAD ALSO FURNISHED THE NECESSARY DETAILS OF EXPENDITURE CLAIMED WITH OTHER EVIDENCES. WHEREAS, IN THE IMPUGNED ASSESSMENT YEAR, THERE IS A FACTUAL FINDING OF THE ASSESSING OFFI CER THAT THE DETAILS OF EXPENDITURE WERE NOT FURNISHED BY THE ASSESSEE. EVEN , LEARNED COMMISSIONER (APPEALS) EXCEPT RELYING UPON THE WRITTEN SUBMISSIONS 8 K.P. POWER PVT. LTD. FILED BY THE ASSESSEE AND THE ORDER S PASSED BY THE LEARNED COMMISSIONER (APPEALS) IN PRECEDING ASSESSME NT YEARS HAS NOT REFERRED TO ANY OTHER DETAILS OR SUPPORTING EVIDENCES FILED BY THE ASSESSEE WITH REFERENCE TO THE PROJECT EXPENSES. SINCE THE ISSUE RELATING TO CLAIM OF VARIOUS EXPENDITURE UNDER THE HEAD PROJECT EXPENSES IS A PURELY FACTUAL ISSUE AND HAS TO BE DECIDED ON THE BASIS OF FACTS INVOLVED IN EACH ASSESSMENT YEAR AND THE SUPPORTING EVIDENCES FURNISHED BY THE ASSESSEE , IT CANNOT BE ALLOWED WITHOUT FACTUALLY VERIFYING THE CLAIM OF THE ASSESSEE AND BY SIMPLY RELYING UPON THE WRITTEN SUBMISSIONS AND T HE PRECEDING YEARS ORDERS. SINCE , IN OUR CONSIDERED OPINION, THE DEDUCTION CLAIMED BY THE ASSESSEE UNDER THE HEAD PROJECT EXPENSES HAS NOT BEEN FACTUALLY VERIFIED WITH REFERENCE TO THE SUPPORTING EVIDENCES JUSTIFYING SUCH CLAIM , WE ARE INCLINED TO RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR DE NOVO ADJUDICATION AFTER DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND EXAMINING THE SUPPORTING EVIDENCES FURNISHED/TO BE FURNISHED BY THE ASSESSEE . WE MAKE IT CLEAR, IF ON EXAMINATION, THE ASSESSIN G OFFICER FINDS THAT AFORESAID EXPENDITURES ARE SUPPORTED BY EVIDENCE AND SIMILAR EXPENDITURE CLAIMED WAS ALLOWED IN PRECEDING ASSESSMENT YEARS, THEN, THERE CANNOT BE ANY DISALLOWANCE IN THE IMPUGNED ASSESSMENT YEAR . GROUND RAISED IS ALLOWED FOR STATISTICA L PURPOSES. 14 . 9 K.P. POWER PVT. LTD. 15 . IN THE RESULT, REVENUES APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON SD/ N.K. PRADHAN ACCOUNTANT MEMBER SD/ SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (SR. PRIVATE SECRETARY) ITAT, MUMBAI