Daksh Power Infra Pvt. Ltd., Noida V. ACIT, Circle- 1, Noida

ITA 54/DEL/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7057 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 03-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S L ANURAGI
• Keywords: Depreciation
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL , DELHI BENCH SMC, NEW DELHI BEFORE SHRI BHAVNSH SAINI, JUDICIAL MEMBER ITA NO. 54/DEL./2018 ASSESSMENT YEAR : 2014-15 DAKSH POWER INFRA PVT. LTD. A-24, SECTOR -51, NOIDA UTTAR PRADESH, PIN-201301 PAN : AADCD6542Q VS ACIT, CIRCLE-1, NOIDA (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. VED JAIN, ADV. REVENUE BY : SH. S.L.ANURAGI, SR. DR DATE OF HEARING :11.07.2018 DATE OF PRONOUNCEMENT : 13 .07.2018 ORDER PER BHAVNESH SAINI, JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE HAS BEEN DIRECTED AGAI NST THE ORDER OF LD. CIT(A)- 1, NOIDA DATED 25 TH SEPTEMBER, 2017 FOR ASSESSMENT YEAR 2014-15, CHALL ENGING THE ADDITION OF RS. 17,50,030/-. 2. BRIEFLY FACTS OF THE CASE ARE THAT THE ASSE SSEE HAS FILED RETURN DECLARING TAXABLE INCOME OF RS. NIL (CURRENT YEAR LOSS OF RS. 26,55,6 23/-) ON 19 TH SEPTEMBER, 2014. THE CASE WAS SELECTED FOR SCRUTINY. THE ASSESSEE CO MPANY WAS ENGAGED IN THE POWER ITA NO. 54/DEL/2018 2 PROJECT AND OTHER INFRASTRUCTURE DEVELOPMENT. DURIN G THE YEAR UNDER CONSIDERATION, ASSESSEE HAS SHOWN NIL INCOME FROM OPERATION IN THE PROFIT AND LOSS ACCOUNT. FURTHER AS PER NOTE -12 OF OTHER INCOME ASSESSEE HAS SHOWN INCOME FROM DIFIDENDS RS. 10,19,500/-, INCOME FROM INTEREST RS. 71,426/- AND AFTER SETTING OFF NET LOSS FROM LONG TERM CAPITAL GAIN OF RS. 7,96,674/-, NET OTHER INCOME OF RS. 2,94,251/- HAS BEEN CREDITED IN THE PROFIT & LOSS ACCOUNT AND AFTER ADJ USTMENT OF ADMISSIBLE AND INADMISSIBLE EXPENSES NET CURRENT YEAR LOSS OF RS. 7,25,820/- HAS BEEN DECLARED IN THE COMPUTATION OF INCOME. THE BOOKS OF ACCOUNTS AR E AUDITED. ON PERUSAL OF THE PROFIT & LOSS ACCOUNT, BALANCE SHEET AND RELATED S CHEDULE, IT IS NOTICED THAT THERE WAS NO OPENING STOCK, PURCHASE OR SALE DURING THE YEAR UNDER CONSIDERATION. THE ASSESSEE HAS SHOWN ONLY OTHER INCOME OF RS. 2,94,251/- IN TH E PROFIT AND LOSS ACCOUNT. IN SPITE OF NOT DOING ANY BUSINESS ASSESSEE HAS CLAIMED EXPE NSES OF RS. 2,97,000/-, RS. (-) 7,640/-, RS. 9,45,098/- AND RS. 5,15,572/- TOWARDS EMPLOYEE BENEFIT EXPENSES, FINANCIAL COST, DEPRECIATION AND AMORTIZATION EXPEN SES AND OTHER ADMINISTRATIVE EXPENSES RESPECTIVELY, TOTALING TO RS. 17,50,030/-. THE AO NOTED THAT THE EXPENDITURE SHOULD HAVE NEXUS WITH THE BUSINESS. SI NCE THERE WERE NO BUSINESS TRANSACTION IN THE YEAR UNDER CONSIDERATION, THEREF ORE, ENTIRE EXPENSES WERE DISALLOWED AND ADDITION OF RS. 17,50,030/- WAS MADE TO THE RETURN OF INCOME. 3. THE ASSESSEE CHALLENGED THE ADDITION BEFORE LD. CIT(A) AND IT WAS SUBMITTED THAT DURING THE PREVIOUS YEAR, THE PROMOTERS OF THE COMPANY WERE IN THE PROCESS OF ITA NO. 54/DEL/2018 3 PROPER OPPORTUNITY WITH A VIEW OF SUITABLE LOCATION AND INVESTORS WHICH IS THE PART OF BUSINESS OPERATION. THE LD. CIT(A) HOWEVER DISMISSE D THE APPEAL OF ASSESSEE. 4. LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBM ISSIONS MADE BEFORE AUTHORITIES BELOW AND SUBMITTED THAT COMPUTATION DO NE BY THE AO IN THE ASSESSMENT ORDER IS WRONG IN MAKING ADDITION OF RS. 9,45,098/- WHICH WAS ADDED BACK IN THE COMPUTATION OF TOTAL INCOME FILED AT PAGE 2 OF THE PAPER BOOK. PAGE 15 IS PROFIT AND LOSS ACCOUNT WHICH IS ALSO SUPPORTED BY PB 20. IN T HE PB 20 ASSESSEE HAD INCOME FROM DIVIDEND OF RS. 10,19,500/- WHICH IS EXEMPT U/ S 10(38) AND DULY DISCLOSED IN THE COMPUTATION OF INCOME (PB 2). FURTHER ASSESSEE HAS INTEREST INCOME OF RS. 71,426/- ONLY DURING THIS YEAR. THUS, THE INCOME UN DER ANY CIRCUMSTANCES CAN NOT BE MORE THAN THE GROSS INCOME OF RS. 71,426/-. THE AS SESSEE COMPANY IS ENGAGED IN THE BUSINESS OF POWER AND OTHER INFRASTRUCTURAL DEV ELOPMENT PROJECTS. THE COMPANY HAS SET UP ITS BUSINESS AND HAVE RECRUITED THE STA FF WHICH IS CLEAR FROM THE NATURE OF EXPENSES CLAIMED IN THE PROFIT AND LOSS ACCOUNT. TH EREFORE, THERE IS ERROR IN THE COMPUTATION DONE BY THE AO. FURTHER AO HAS SIMPLY D ISALLOWED CARRY FORWARD OF CAPITAL LOSS WITHOUT ANY REASONS. THE LOSS IS OF CURRENT YEAR AND THE RETURN FILED IS IN TIME AND HENCE THE LOSS SHOULD HAVE BEEN CARRY FORW ARD TO NEXT YEAR. THE EXPENDITURE HAVE BEEN INCURRED WHOLLY AND EXCLUSIVE LY FOR THE PURPOSE OF BUSINESS OF THE COMPANY. ONCE COMPANY IS INCORPORATED, BOO KS OF ACCOUNTS ARE REQUIRED TO BE MAINTAINED REGULARLY. THEREFORE, INCURRING OF VA RIOUS EXPENDITURE BY ASSESSEE ARE ITA NO. 54/DEL/2018 4 NECESSARY FOR BUSINESS PURPOSE, IRRESPECTIVE OF THE FACT THAT THERE IS NO SALE AND PURCHASE TRANSACTION. LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT IN PRECEDING ASSESSMENT YEAR 2012-13 ASSESSEE MADE A S IMILAR CLAIM OF DEDUCTION OF THE EXPENDITURE WHICH HAVE BEEN ALLOWED BY AO IN SC RUTINY ASSTT U/S 143(3) DATED 30 TH MARCH, 2015. COPY OF THE ASSESSMENT ORDER IS FILED AT PB 37 AND COPY OF THE PROFIT AND LOSS IS FILED ON PAGE 42 OF THE PAPER BO OK. IT IS SETTLED POSITION OF LAW THAT IT IS NOT NECESSARY THAT THERE SHOULD BE PURCHASE O R SALES FOR THE CLAIMING OF EXPENDITURE. THE ASSESSEE HAS TO KEEP ALIVE AND RET AIN ITS REGISTERED OFFICE AND HOLDS ITS MEETINGS. THE ADDITION IS WHOLLY UNJUSTIFIED AN D THE BUSINESS LOSS SHOULD HAVE BEEN ALLOWED. 5. ON THE OTHER HAND LD. DR RELIED UPON ORDERS OF THE AUTHORITIES BELOW. 6. I HAVE CONSIDERED THE RIVAL SUBMISSION AND PERUS ED THE MATERIAL ON RECORD. THE CONTENTIONS RAISED BY LD. COUNSEL FOR THE ASSES SEE ARE SUPPORTED BY THE DOCUMENTS AND MATERIAL AVAILABLE ON RECORD. THE ASS ESSEE MADE SIMILAR CLAIM OF DEDUCTION OF EXPENDITURE IN PRECEDING ASSESSMENT Y EAR 2012-13 WHICH HAVE BEEN ALLOWED BY AO IN ASSESSMENT U/S 143(3) OF THE IT AC T. IT WOULD PROVE THAT ASSESSEE WAS IN OPERATION OF BUSINESS FROM IN EARLIER YEARS, MAY BE NO SALE AND PURCHASE HAVE BEEN DONE. THEREFORE, THE ASSESSEE INCURRED EXPENSE S WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. THE AO WITHOUT ANY JUSTIFICATI ON SHOULD NOT HAVE DISALLOWED EXPENSES CLAIMED OR LOSS CLAIMED IN RETURN. THE SIM ILAR CLAIM OF EXPENDITURE IS MADE ITA NO. 54/DEL/2018 5 IN ASSESSMENT YEAR UNDER APPEAL. IT MAY BE NOTED HE RE THAT THOUGH THE ASSESSEE CLAIMED DEDUCTION OF EXPENDITURE ON ACCOUNT OF DEPR ECIATION AND AMORTIZATION EXPENSES IN A SUM OF RS. 9,45,098/- IN PROFIT AND L OSS ACCOUNT BUT IT WAS ADDED BACK IN THE COMPUTATION OF INCOME, THEREFORE, THE SAME S HOULD NOT HAVE BEEN ADDED AGAIN TO THE RETURNED INCOME. THUS, THERE WERE NO JUSTIFI CATION FOR THE AUTHORITIES BELOW TO MAKE DISALLOWANCE OF THE EXPENDITURE. FURTHER, THER E WERE NO BASIS TO DISALLOW LOSS TO BE CARRY FORWARD TO THE NEXT YEAR. THE CLAIM OF ASSESSEE IS JUSTIFIED AND ASSESSEE IS ENTITLED FOR THE LOSSES SUFFERED SINCE RETURN OF INCOME IS FILED ON TIME. THERFORE, LOSS OF THE CURRENT YEAR SHALL HAVE TO BE CARRIED F ORWARD AS PER LAW. THE FINDINGS OF THE AUTHORITIES BELOW ARE FACTUALLY INCORRECT. THE CLAIM OF ASSESSEE SHOULD NOT HAVE BEEN DISALLOWED. I HAVE ACCORDINGLY SET ASIDE THE O RDER OF THE AUTHORITIES BELOW AND DELETE THE ENTIRE ADDITION, AO IS ALSO DIRECTED TO GRANT ALL CONSEQUENTIAL BENEFIT TO THE ASSESSEE. 7. IN THE RESULT APPEAL OF ASSESSEE IS ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT.) SD/- (BHAVNESH SAINI) JUDICIAL MEMBER DATED: 13 /07/2018 *BINITA* COPY FORWARDED TO: ITA NO. 54/DEL/2018 6 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR DATE OF DICTATION 11 .0 7 .2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 12 .0 7 .2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER .0 7 .2018 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS 13 .0 7 .2018 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 13 .0 7 .2018 DATE O N WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 13 .0 7 .2018 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER **