USHDEV POWER HOLDINGS PRIVATE LIMITED , MUMBAI V. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1(3)(2), MUMBAI

ITA 6052/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4817 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 27-09-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJIV GUBGOTRA
• Assessee Lawyers: BHUPENDRA KHARKANIS
• Keywords: Depreciation; Earning of tax free income; Revised return
• Section: 32; 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE SHRI C. N. PRASAD, JM AND SHRI O. P. MEENA, A M / I.T.A. NO. 6052 / MUM/ 20 1 7 ( / ASSESSMENT YEAR: 2014 - 15 ) USHDEV POWER HOLDINGS PVT. LTD. 6 TH FLOOR, NEW HARILEELA HOUSE, MINT ROAD, FORT, MUMBAI - 400001 . / VS. DCIT, CIRCLE - 1(3)(2) AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020. ./ PAN NO. : AABCU 1454 A ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING: 12 .0 2 .201 9 /DATE OF PRONOUNCEMENT: 14 .0 2 .2019 / O R D E R PER O. P. MEENA , A M: THIS APPEAL FILED BY THE ASSESSEE HIS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 3 , MUMBAI [HEREINAFTE R REFERRED TO AS THE CIT(A)] DATED 12.07.2017 WHICH IN T URN HAS FROM THE ORDER U/S 143(3) OF THE I.T. ACT, 1961 (HEREINAF TER REFERRED TO AS THE ACT) PASSED BY DCIT - 1(3)(2), MUMBAI (HEREINAFTER REFERRED TO AS AO ) FOR THE A.Y.2014 - 15 . 2 . GROUND NO. 1 IS RELATED T O DISALLOWANCE OF DEPRECIATION OF RS.34,48,510/ - CLAIMED ON WINDMILL INSTALLED AND USED IN BUSINESS AND PROFESSI ON . ASSESSEE BY : SHRI BHUPENDRA KARKHANIS (AR) REVENUE BY: SHRI RAJIV GUBGOTRA (DR ) USHDEV POWER HOLDING PVT. LTD. V. DCIT 1(3)(2) MUMBAI /ITA. NO.6052/M/2017/A.Y. 2014 - 15 PAGE 2 OF 13 3 . BRIEFLY STATED, THE FACTS AS CULLED OUT FROM THE ORDER OF THE LOWER AUTHORITIES ARE THAT THE ASSESSEE HAS CLAIMED THE FULL DEPRECIATION @ 80% ON SECOND HAND WINDMILL PURCHASED D URING THE PREVIOUS YEAR. THE INVOICE FOR THE PURCHASE IS DATED 30.08.201 3. THE BILL FOR INSTALLING THE METER FOR RUNNING THE WINDMILL WAS DATED 26.09.2013. BILLS FOR SALE OF ELECTRICITY TO TIRUNELVELI ELECTRICITY DISTRIBUTION CIRCLE HAS BEEN RAISED BY THE PREVIOUS OWNER I.E. SWASTIK FILAMENTS PVT. LTD. THE ELECTRICITY PRODUCED IS FROM THE PERIOD 03.09.2013. THE ASSESSEE HAS CLAIMED THAT THOUGH PURCHASE OF THE WINDMILL WAS ON 30 .08.2013, THE BILLS WERE R AISED BY SWASTI K FILAMENTS PVT. LTD. UPON THE ELECTRICITY CIRCLE AS THE NAME CHANGE OF THE OWNER OCCURRED LATER. THE ASSESSEE A LSO SUBMITTED THE LEDGER ACCOUNT FOR SALE OF ELECTRICITY WHEREIN IT IS DEBITED SWASTIK FILAMENTS PVT. LTD. FOR TWO SALE BILLS DATED 03.12.2013 AND 09.12.2013. THE ASSESSEE HAS ALSO ACCOUNTED ON SALE TO THE ELECTRICITY BOARD BY INVOICE DATED 09.12.2013. THE SALE OF ELECTRICITY (NET OF CERTAIN REVERSALS) AGGREGATES TO RS.1,68,867/ - FOR THE WHOLE YEAR, THEREFORE, THE AO WAS OF THE VIEW THAT THE ENTIRE INCOME PERTAINS TO GENERATION OF ELECTRICITY FROM THE MONTH OF SEPTEMBER 2013 TO THE MONTH OF DECEMBER 2013. T HEREAFTER, THERE WAS NO SALE OF ELECTRICITY AND IN FACT, THE ASSESSEE HAS REVERSED ELECTRICITY INCOME IN FEBRUARY 2014 AND MARCH 2014 BY RS.2242/ - AND RS.2546 RESPECTIVELY. THE A O FURTHER OBSERVED THAT THE ASSET WAS NOT PUT TO USE AT ALL DURING THIS PERIOD AND THE ASSET WAS NOT ACQUIRED DURING THE PERIOD FROM 01.04.2013 TO 02.09.2013. ON THESE FACTS, THE AO HAS HELD THAT THE ASSET WAS PUT TO USE FOR ONLY ABOUT FOUR M ONTHS DURING THE PREVIOUS YEAR, WHEREAS THE ASSESSEE HAS CLAIMED THE DEPRECIATION FOR THE FU LL YEAR. SINCE THE ASSET WAS PUT TO USE FOR LESS THAN 180 DAYS, THE AO INVOKED THE PROVISION OF SECTION 32 OF THE ACT OF USHDEV POWER HOLDING PVT. LTD. V. DCIT 1(3)(2) MUMBAI /ITA. NO.6052/M/2017/A.Y. 2014 - 15 PAGE 3 OF 13 THE AND RESTRICTED THE DEPRECIATION @ 40% RESULTING IN DISALLOWANCE OF DEPRECIATION OF RS.34,48,510/ - . 4. BEING AGGRIEVED, THE ASSESSE E HAS CARRIED THE MATTER BEFORE THE CIT(A) WHEREIN IT WAS CLAIMED THAT THE ASSET WAS PUT TO USE DURING THE YEAR FOR MORE THAN 180 DAYS, HENCE, DEPRECIATION ON WINDMILL WAS CLAIMED @ 80% IN ACCORDANCE WITH APPENDIX I OF THE I.T. RULES, 1962. IT WAS FURTHER SUBMITTED THAT FROM THE DECEMBER, 2013 ONWARDS DUE TO LESSER WIND FLOW, THERE WAS NOT MUCH ELECTRICITY GENERATION. HOWEVER, IN ORDER TO RUN/START THE WINDMILL, SOME ELECTRICITY IS REQUIRED TO BE CONSUMED FOR WHICH THE CHARGES WERE LEVIED BY TNEB. THUS, THE CHARGES ARE LEVIED BECAUSE OF CONSUMPTION OF ELECTRICITY, WHICH WAS HIGHER THAN THE GENERATION OF ELECTRICITY AND THEREFORE, THE CHARGES SHOWN IN THE SALE OF ELECTRICITY LEDGER ACCOUNT SHOWS INCOME AS NEGATIVE FROM DECEMBER 2013 ONWARDS. HOWEVER, THE CIT( A) WAS OF THE VIEW THAT THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCES TO SUBSTANTIATE THAT THE ASSET IN THE FORM OF WINDMILL WAS IN FACT USE FOR MORE THAN THE 180 DAYS. THE SUBMISSION MADE BY THE APPE LLANT WERE HELD TO BE ACADEMIC IN NATURE WITHOUT ANY SUPPO RTIVE EVIDENCE, THEREFORE, THE FINDING RECORDED BY THE AO WERE CONFIRMED. 5. BEING AGGRIEVED, THE ASSESSEE HAS FILED THIS APPEAL BEFORE THE TRIBUNAL. THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE WINDMILL WAS ACQUIRED BY PURCHASED INVOICE DATED 30 AUG UST 2013 FOR RS.68,97,020/ - . THE DATE OF ASSETS PUT TO USE FOR THE WINDMILL WAS DETERMINED AS 3 SEPTEMBER 2013. IT WAS SUBMITTED THAT THE WINDMILL GENERATION IS NOT UNIFORM THROUGHOUT THE YEAR IN INDIA. THE ENERGY GENERATION DEPENDS UPON THE VARIOUS FACTOR S LIKE LOCATION, MONSOON, ETC. USHDEV POWER HOLDING PVT. LTD. V. DCIT 1(3)(2) MUMBAI /ITA. NO.6052/M/2017/A.Y. 2014 - 15 PAGE 4 OF 13 MOST OF THE WIND ENERGY GENERATION TAKES PLACE DURING THE FIVE MONTHS DURATION I.E. FROM MAY TO SEPTEMBER IN SOUTH WEST REGION IN INDIA . HOWEVER, THE DECEMBER 2013 ONWARDS, DUE TO LESSER WIND FLOW, THERE WAS NOT MUCH ELECTRI CITY GENERATION. HOWEVER, IN ORDER TO RUN/START THE WINDMILL, SOME ELECTRICITY IS REQUIRED TO BE CONSUMED FOR WHICH THE CHARGES WERE LEVIED BY TNEB. THUS , THE CHARGES ARE LEVIED ON ACCOUNT OF CONSUMPTION OF ELECTRICITY, WHICH WAS HIGHER THAN THE GENERATION OF ELECTRICITY AND THEREFORE, THE CHARGES SHOWN IN THE SALE OF ELECTRICITY LEDGER ACCOUNT SHOWS INCOME AS NEGATIVE FROM JANUARY 201 4 ONWARDS. THE LD. COUNSEL REFERRED THE PAPER BOOK PAGE NOS. 17 TO 81 , WHICH ARE THE INVOICES IN STATEMENT SHOWING THE ENER GY GENERATED, THEREFORE, WINDMILL FOR THE MONTH OF DECEMBER, JANUARY 2013 AND TO FEBRUARY 2014 ISSUED BY TNEB WOULD SHOW THAT DURING THE YEAR FROM JANUARY 2014 TO MARCH 2014, THE ELECTRICITY WAS GENERATED. HOWEVER, AS THE ELECTRICITY CONSUMED IN RUNNING AN D OPERATING THE WINDMILL DURING THE PERIOD FROM JANUARY 2014 TO MARCH 2014 W AS HIGHER THAN THE ELECTRICITY GENERATED FROM THE WINDMILL. ACCORDINGLY, THE CHARGES LEVIED BY TNEB PERTAINS TO EXCESS CONSUMPTION OF ENERGY, WHICH ARE NOT IN THE NATURE OF REVERSA LS OF THE EARLIER INCOME ACCOUNTED. THEREFORE, THE ALLEGATION OF THE AO THAT THE WINDMILL WAS OPERATIONAL ONLY FOR A PERIOD OF FOUR MONTHS DURING THE YEAR IS NOT CORRECT . THE ABOVE DOCUMENTARY EVIDENCES SUBMITTED BEFORE THE LD. AO CLEARLY PROVE D THE FACT T HAT THE WINDMILL WAS USED FOR THE ENTIRE PERIOD FROM 3 SEPTEMBER 2013 TILL 31 MARCH 2014 DURING THE YEAR UNDER CONSIDERATION. THE LD. COUNSEL OF THE ASSESSEE FURTHER , WITHOUT PREJUDICE , SUBMITTED THAT THE ONCE AN ASSET ACQUIRED DURING THE YEAR IS PUT TO US E FOR THE BUSINESS PURPOSE OF THE ASSESSEE AND WERE ALSO READY FOR USE OR HAD PASSIVE USE, DEPRECIATION THEREON HAS TO USHDEV POWER HOLDING PVT. LTD. V. DCIT 1(3)(2) MUMBAI /ITA. NO.6052/M/2017/A.Y. 2014 - 15 PAGE 5 OF 13 BE ALLOWED U/S 32 OF THE ACT. THE LD. C OUNSEL ALSO REFERRED AS PAGE NO. 65, WHICH IS COPY OF ELECTRICITY SALE, LEDGER ACCOUNT FOR THE PE R IOD FROM 03.12.2013 TO 31.03.2014 . THE LEARNED COUNSEL FOR THE ASSESSEE AT BAR MADE A STATEMENT THAT THAT THE ELECTRICITY GENERATION WAS ALSO SHOWN BY THE ASSESSEE DURING THE PERIOD FROM APRIL 2014 TO JUNE 2014 IN THE NEXT FINANCIAL YEAR. THE LD. COUNSEL FO R THE ASSESSEE ALSO SUPPORTED HIS VIEW BY PLACING RELIANCE UPON THE JUDGEMENT OF HONBLE MADRAS HIGH COURT IN THE CASE OF SIV INDUSTRIES LTD. VS. DCIT (2008) 306 ITR 114 (MAD) OF WHICH SLP WAS DISMISSED BY HONBLE SUPREME COURT IN CC 9837/2008 DATED 28.07. 2008 WHEREIN THE PARA NO. 7 THE HONBLE HIGH COURT HAS OBSERVED AS UNDER.: - 7 IT IS AN ADMITTED FACT THAT THE ASSETS HAVE BEEN USED ON AND FROM 28.09.1992 VIZ., FOR ONE DAY IN SEPTEMBER, 1992; NINE DAYS IN OCTOBER, 15 DAYS IN NOVEMBER 18 DAYS IN DECEMBER 24 DAYS IN JANUARY, 1993, 16 DAYS IN FEBRUARY AND 28 DAYS IN MARCH 1993. THUS, THE ASSETS WERE PUT TO USE FOR THE PURPOSE OF BUSINESS OR PROFESSION OF THE ASSESSEE IN THE PREVIOUS YEAR IN WHICH IT WAS ACQUIRED RIGHT FROM 28.09.1992 WHICH IS ADMITTED, AS S EEN FROM THE ORDER OF THE TRIBUNAL WHICH IS TO THE EFFECT THAT ADMITTEDLY THE VSF - III UNIT HAD BEEN INSTALLED AND STARTED FUNCTIONING FROM 28.9.1992 TO 31.3.1993, ONLY. THOUGH NOT FOR ALL THE DAYS, IF THE DATE OF THE FIRST USER OF THE MACHINERY I.E. 28.9 .1992 IS TAKEN INTO CONSIDERATION FOR THE PURPOSE OF THIS CASE, TILL 31.3.1993 THE BLOCK OF ASSETS WAS USED FOR MORE THAN 180 DAYS. 6. IT WAS SUBMITTED THAT THE FACTS OF THE ASSESSEE CASE ARE IDENTICAL AS THE FAC TS OF THE ABOVE CASE , THEREFORE, BY APPLYIN G THE RATIO OF ABOVE DECISION, THE ASSESSEE HAS RIGHTLY CLAIMED THE DEPRECIATION @ 80% FOR THE YEAR UNDER CONSIDERATION, AND HENCE , THE SAME MAY BE PLACED ALLOWED TO THE ASSESSEE. USHDEV POWER HOLDING PVT. LTD. V. DCIT 1(3)(2) MUMBAI /ITA. NO.6052/M/2017/A.Y. 2014 - 15 PAGE 6 OF 13 7. PER CONTRA , THE LD. SR. DR REFERRING TO PARA NO. 4 AND 5 OF ASSESSMENT OR DER , SUBMITTED THAT IT IS DISCERNIBLE FROM THE A SSESSMENT ORDER THAT AGGREGATE INCOME OF RS. 1,68,867/ - CLAIMED FOR THE FOUR YEAR IS PERTAINS TO SEPTEMBER 2013 TO DECEMBER 2013 AND ADMITTEDLY THERE WAS NO PRODUCTION OF ELECTRICITY AFTER DECEMBER 2013 TO 31 MARCH 2014, THEREFORE, THE CIT(A) HAS RIGHTLY UPHELD THE FINDING OF THE AO BY OBSERVING THAT NO EVIDENCE WAS PRODUCED TO SUBSTANTIATE THE CLAIM OF THE ASSESSEE. 8. WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS AN AD MITTED FACT THAT THE ASSET BEING WINDMILL WAS PUT TO USE FROM 03.09.2013 AND THE WINDMILL WAS FULLY OPERATIONAL DURING THE PERIOD FROM 03.09.2013 TO 31.12.2013. THE ELECTRICITY BILLS RAISED ON 03.12.2013 AND 09.12.2013 RELATED TO THE AFORESAID PERIOD. IT I S FURTHER NOTICED FROM THE STATEMENT OF POWER GENERATION ISSUED BY T NEB DURING THE PERIOD FROM JANUARY 2014 TO MARCH 2014 THAT THE ELECTRICITY WAS GENERATED BUT IN NEGATIVE . HOWEVER, IN ORDER TO RUN/START THE WINDMILL, SOME ELECTRICITY IS REQUIRED TO BE CO NSUMED FOR WHICH THE CHARGES WERE LEVIED BY TNEB. THUS, THE CHARGES ARE LEVIED ON ACCOUNT OF CONSUMPTION OF ELECTRICITY, WHICH WAS HIGHER THAN THE GENERATION OF ELECTRICITY AND THEREFORE, THE CHARGES SHOWN IN THE SALE OF ELECTRICITY LEDGER ACCOUNT SHOWS TH E INCOME AS NEGATIVE FROM JANUARY 2014 ONWARDS AS REFLECTED FROM THE PAPER BOOK PAGE NOS. 17 TO 81, WHICH ARE THE INVOICES IN STATEMENT SHOWING THE ENERGY GENERATED, SINCE T HE ELECTRICITY CONSUMED IN RUNNING OPERATING THE WINDMILL DURING THE PERIOD FROM JA NUARY 2014 TO MARCH 2014 WAS HIGHER THAN THE ELECTRICITY GENERATED FROM THE WINDMILL. THEREFORE, ELECTRICITY GENERATION FROM WINDMILL WAS SHOWN IN NEGATIVE FIGURE. THEREFORE, CONSIDERING THE FACT USHDEV POWER HOLDING PVT. LTD. V. DCIT 1(3)(2) MUMBAI /ITA. NO.6052/M/2017/A.Y. 2014 - 15 PAGE 7 OF 13 THAT THE ENERGY GE NERATION IS NOT UNIFORM THROUGHOUT THE YEA R IN INDIA DUE TO VARIOUS FAC TORS LIKE LOCATION, MONSOON ETC. AND T HERE WAS SOME TECHNICAL PROBLEM IN WINDMILL HENCE, FULL AMOUNT OF ELECTRICITY WAS NOT GENERATED AFTER JANUARY 2014 TO MARCH 2014 . HOWEVER, THE STATEMENT HAS BEEN FILED BY THE ASSESSEE SHOWS THAT GENERATION OF ENERGY DURING THE MONTH OF JANUARY TO MARCH 2014 AT LESSER FIGURE, WHICH IS LESS THAN THE ELECTRICITY CONSUMPTION CHARGES LEVIED BY THE TNEB HENCE, LEDGER ACCOUNT SHOWS NEGATIVE INCOME WHICH IS NOT REVERSAL OF INCOME . THEREFORE, WE ARE NOT INCLINED TO ACCEPT THE CONTENTION OF THE AO, THAT THE ASSET BEING WINDMILL WAS PUT TO USE FOR LESS THAN 180 DAYS ONLY . WE ARE OF THE VIEW THE EVEN PASSIVE USE OF ASSET PUT TO USE IS ELIGIBLE FOR DEPRECIATION AS THE FACTS IN THIS CASE REVEALS . OUR VIEW IS ALSO SUPPORTED BY THE DECISION OF HONBLE MADRAS HIGH COURT WHICH HAS BEEN UPHELD BY HONBLE SUPREME COURT IN THE CASE OF SIV INDUSTRIES LTD. (SUPRA) WHEREIN THE RELEVANT FINDING HAS BEEN GIVEN IN PARA NO 7 WHICH IS HEREBY REPRODUCED AS UNDER.: - 7 IT IS AN ADMITTED FACT THAT THE ASSETS HAVE BEEN USED ON AND FROM 28.09.1992 VIZ., FOR ONE DAY IN SEPTEMBER, 1992; NINE DAYS IN OCTOBER, 15 DAYS IN NOVEMBER 18 DAYS IN DECEMBER 24 DAYS IN JANUARY, 1993, 16 DAYS IN FEBRUARY AND 28 DAYS IN MARCH 1993. THUS, THE ASSETS WERE PUT TO USE FOR THE PURPOSE OF BUSINESS OR PROFESSION OF THE ASSESSEE IN THE PREVIOUS YEAR IN WHICH IT WAS ACQUIRED RIGHT FROM 28.09.1992 WHICH IS ADMITTED, AS SEEN FROM THE ORDER OF THE TRIBUNAL WHICH IS TO THE EFFECT THAT ADMITTEDLY THE VSF - III UNIT HAD BEEN INSTALLED AND STARTED FUNCTIONING FROM 28.9.1992 TO 31.3.1993, ONLY. THOUGH NOT FOR ALL THE USHDEV POWER HOLDING PVT. LTD. V. DCIT 1(3)(2) MUMBAI /ITA. NO.6052/M/2017/A.Y. 2014 - 15 PAGE 8 OF 13 DAYS, IF THE DATE OF THE FIRST USER OF THE MACHINERY I.E. 28.9.1992 IS TAKEN INTO CONSIDERATION FOR THE PURPOSE OF THIS CASE, TILL 31.3.1993 THE BLOCK OF ASSETS WAS USED FOR MORE THAN 180 DAYS. 9. IN THE CASE OF ASSESSEE ALSO THE FACTS ARE IDENTICAL THAT THE ASSETS HAVE BEEN USED ON AND FROM 03.09.2013 VIZ., FOR 3 RD SEPTEMBER, 1992 TO 31 ST DECEMBER 2013 AND VARIOUS DAYS FOR RUN AND START DURING J ANUARY 2014 TO 31.03.2014 THUS, THE ASSETS WERE PUT TO USE FOR THE PURPOSE OF BUSINESS OR PROFESSION OF THE ASSESSEE IN THE PREVIOUS YEAR IN WHICH IT WAS ACQUIRED RIGHT FROM 03 .09. 2013 WHICH IS AN ADMITTED FACT , AS SEEN FROM THE ORDER OF THE LOWER AUTHORI TIES IS TO THE EFFECT THAT WINDMILL HAD BEEN INSTALLED AND STARTED FUNCTIONING FROM 03 .9. 2013 TO 31.3. 2014 . THOUGH NOT FOR ALL THE DAYS, IF THE DATE OF THE FIRST USER OF THE MACHINERY I.E. 03.09.2013 IS TAKEN INTO CONSIDERATION FOR THE PURPOSE OF THIS CAS E, TILL 2014 THE BLOCK OF ASSETS WAS USED FOR MORE THAN 180 DAYS AND THE ENERGY PRODUCTION D URING THE MONTH FROM JANUARY 2014 TO MARCH 2014 WAS LESS DUE TO POWER CONSUMPTION SUPPLIED BY THE EL ECTRICITY , HENCE, FIGURES OF GENERATION OF POWER ARE NEGATIVE BU T THAT DOES NOT ME AN THAT THAT ASSET WAS NOT PUT TO USE DURING THAT SUBSEQUENT PERIOD ALBEIT MAY BE PASSIVE USE ONLY . ACCORDINGLY, WE ARE OF THE CONSIDERED OPINION THAT THE LOWER AUTHORITY WERE NOT JUSTIFIED IN DISALLOWING THE DEPRECIATION ON THE GROUND TH AT THE ASSET WAS PUT TO USE FOR LESS THAN 180 DAYS DURING THE YEAR UNDER CONSIDERING. IN VIEW OF THE FAC TS AND CIRCUMSTANCES, WE DIRECT THE AO TO ALLOW THE DEPRECIATION CLAIMED BY THE ASSESSEE @ 80%. ACCORDINGLY, GROUND NO. 1 APPEAL OF THE ASSESSEE IS HERE BY ALLOWED. USHDEV POWER HOLDING PVT. LTD. V. DCIT 1(3)(2) MUMBAI /ITA. NO.6052/M/2017/A.Y. 2014 - 15 PAGE 9 OF 13 10. GROUND NO. 2 IS RELATED TO DISALLOWANCE OF RS.3,05,31,422 / - U/S 14A READ WITH RULE 8D OF THE INCOME - TAX RULES, 1962 . THE ASSESSEE HAS CHALLENGED THE CONFIRMATIO N OF DISALLOWANCE OF RS.3,05,31,422 / - U/S 14A OF THE I.T. ACT, 1 961 R.W. RULE 8D OF THE ACT . 11. THE LEARNED COUNSEL FOR THE ASSESSEE HAS ARGUED THAT THE ASSESSEE CONTENDED BEFORE THE LD. AO THAT THE DISALLOWANCE U/S. 14A READ WITH RULE 8D WAS MADE INADVERTENTLY IN THE RETURN OF INCOME. SINCE THE INVESTMENTS ARE MADE IN THE SUBSIDIARY COMPAN IES, WHICH ARE ENGAGED IN THE SAME LINE OF BUSINESS OF POWER GENERATION, NO DISALLOWANCE CAN BE MADE U/S 14A OF THE ACT. FURTHER NO EXEMPT INCOME WAS EARNED DURING THE YEAR UNDER CONSIDERATION, THEREFORE, NO DISALLOWANCE U/S. 14A ARE REQUIRED TO BE MADE. THEREFORE, IT WAS REQUESTED TO THE LD. AO TO GRANT RELIEF TO THE APPELLANT BY WAY OF DELETING THE DISALLOWANCE OF RS.3,05,31,422/ - , HOWEVER, THE AO HAS NOT TAKEN ANY COGNIZANCE OF THE SUBMISSIONS OF THE ASSESSEE. 12. IN APPEAL, THE LD. CIT (A) OBSERVED THAT T HE APPELLANT HAD MADE DISALLOWANCE BY INVOKING SECTION 14A READ WITH RULES 8D(2) OF INCOME - TAX RULES, 1962 AND NOW WANTS RECTIFICATION AT THE APPEAL LATE STAGE. THERE IS NO ACTION OR OMISSION ON THE PART OF THE AO AND THE SAME WAS NOT TAKEN UP BEFORE THE A O IN DUE COURSE OF CLAIM, THE SAME IS NOT CONSIDERED AT THIS STAGE. MOREOVER, THE APEX COURT IN THE CASE OF GOETZE (INDIA) LTD. HELD THAT THE APPELLANT SHOULD MAKE SUCH CLAIM IN ITS REVISED RETURN , WHICH THE APPELLANT HAS FAILED. IN VIEW OF THESE FACTS , TH E LD. CIT (A) DID NOT FIND IT APPROPRIATE TO ADJUDICATE ON THIS ISSUE. 13. BEING, AGGRIEVED THE ASSESSEE FILED THIS APPEAL BEFORE THE TRIBUNAL. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE USHDEV POWER HOLDING PVT. LTD. V. DCIT 1(3)(2) MUMBAI /ITA. NO.6052/M/2017/A.Y. 2014 - 15 PAGE 10 OF 13 REVISED CLAIM WAS NOT ENTERTAINED BY THE AO; HOWEVER, THE AP PELLATE AUTHORITY CAN ADMIT AND ENTERTAINED THAT THE REVISED CLAIM MADE BEFORE HIM. THE LEARNED COUNSEL PLACING RELIANCE IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. V. CIT [1998] 229 ITR 383 (SC) : [1999] 157 CTR 249 (SC) SUBMITTED THAT A LEGAL CLAIM OF THE ASSESSEE CAN BE ENTERTAINED BY THE APPELLATE AUTHORITIES. IT WAS SUBMITTED THAT THE JUDGEMENT OF HONOURABLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. V CIT [2006] 284 ITR 323 (SC) RELIED BY THE LD. CIT(A) RESTRICT THE POWER OF THE AO TO ENTERTA IN A NEW CLAIM EXCEPT AND OTHER WISE CLAIMED BY WAY OF REVISED RETURN. HOWEVER, IT DOES NOT IMPINGE UPON THE POWERS OF THE APPELLATE AUTHORITIES. THERE IS NO BAR IN RAISING SUCH CLAIM FOR THE FIRST TIME EVEN BEFORE THE TRIBUNAL , EVEN IF IT NOT BEEN PLACED BEFORE ANY OF THE AUTHORITIES BELOW. THEREFORE, THE REVISED COMPUTATION OF DISALLOWANCE UNDER SECTION 14A MADE AT NIL BEFORE THE AO WAS TO BE ACCEPTED BY THE LOWER AUTHORITIES. IT WAS SUBMITTED BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE ASSESSEE HAD NOT RECEIVED ANY EXEMPT INCOME DURING THE RELEVANT PREVIOUS YEAR. FURTHER, THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT NO PART OF THE EXPENSES CAN BE ATTRIBUTED TOWARDS EARNING OF EXEMPT INCOME AS NO EXEMPT INCOME WAS EARNED DURING THE YEAR. T HE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT NO DISALLOWANCE UNDER SECTION 14A READ WITH RULE 8D ARE THEREFORE, CALLED FOR. IT IS A FACT THAT IT HAS NOT EARNED ANY EXEMPT INCOME DURING THE RELEVANT ASSESSMENT YEAR UNDER CONSIDERATION . IN SUPPORT OF T HIS CLAIM, THE LEARNED COUNSEL FOR THE ASSESSEE HAS PLACED RELIANCE IN THE CASE OF DECISION OF CO - ORDINATE BENCH OF MUMBAI TRIBUNAL IN ASSESSEE`S OWN CASE IN M/S. USHDEV POWER HOLDINGS PVT. LTD. VS. DCIT IN ITA. NO.4634/M/2017 FOR THE A.Y. 2013 - 14 DATED 26 .12.2018 WHEREIN BY USHDEV POWER HOLDING PVT. LTD. V. DCIT 1(3)(2) MUMBAI /ITA. NO.6052/M/2017/A.Y. 2014 - 15 PAGE 11 OF 13 PLACING RELIANCE IN THE CASE OF CHEMINVEST LTD. V. CIT 378 ITR 33(DELHI) AND THE DECISION OF HON`BLE BOMBAY HIGH COURT IN THE CASE OF PR. CIT V. BALLARPUR INDUSTRIES LTD. [I.T.A.NO. 51 OF 2016 DTD. 13.10.2016] DISALLOWANCE U/S. 14A WERE DELETED AS NO EXEMPT INCOME WAS EARNED BY THE ASSESSEE DURING THE YEAR. 14. ON THE OTHER HAND, T HE LD. SR. D.R. SUBMITTED THAT THE ASSESSEE HAS SUO - MOTO DISALLOWED EXPENDITURE RELATED TO EXEMPT INCOME AS PER PROVISIONS OF SECTION 14 A. HOWEVER, DURING THE COUR SE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS CLAIMED THAT IT HAS NOT EARNED ANY DIVIDEND INCOME. THEREFORE, NO DISALLOWANCE UNDER SECTION 14A ARE CALLED FOR. FURTHER, THE ASSESSEE HAS NOT FILED A REVISED RETURN OF INCOME, THOUGH THERE WAS TIME AVAILABLE TO THE ASSESSEE TO FI LE THE REVISED RETURN OF INCOME. THEREFORE, THE CLAIM WHICH HAS NOT BEEN MADE BY OF FILING A REVISED RETURN OF INCOME IS NOT ADMISSIBLE IN THE LIGHT OF DECISION OF HONOURABLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. V CIT [2006 ] 284 ITR 323 (SC). IN VIEW OF TH ESE FACTS, THE LEARNED CIT (A) HAS RIGHTLY CONFIRMED THE ACTION OF THE AO. 15. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT THAT THE REVISED CLAIM MADE BY THE ASSESSEE BEFORE TH E AO FOR NIL DISALLOWANCE UNDER SECTION 14A READ WITH RULE 8D WAS NOT ENTERTAINED BY THE AO . HOWEVER, W E ARE OF THE VIEW THAT THE APPELLATE AUTHORITY CAN ADMIT AND ENTERTAINED T HE CLAIM AS MADE BEFORE THEM AS HELD BY THE HON`BLE SUPREME COURT IN THE CASE O F NATIONAL THERMAL POWER CO. LTD. V. CIT [1998] 229 ITR 383 (SC ): [1999] 157 CTR 249 (SC) . WE ALSO OBSERVE T HAT THE JUDGEMENT OF HONOURABLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. V CIT [2006] 284 ITR USHDEV POWER HOLDING PVT. LTD. V. DCIT 1(3)(2) MUMBAI /ITA. NO.6052/M/2017/A.Y. 2014 - 15 PAGE 12 OF 13 323 (SC) RELIED BY THE LD. CIT(A) RESTRICT THE POWER OF THE AO TO ENTERTAIN A NEW CLAIM EXCEPT AND OTHER WISE CLAIMED BY WAY OF A REVISED RETURN. HOWEVER, FOLLOWING THE DECISION OF HON`BLE JURISDICTIONAL HIGH COURT OF BOMBAY IN THE CASE OF CIT V. M/S. PRUTHVI BROKERS & SHARHOLDERS PVT. LTD. 349 ITR 33 6 (BOMBAY) WE HELD THAT IT DOES NOT IMPINGE UPON THE POWERS OF THE APPELLATE AUTHORITIES TO ADMIT THE NEW CLAIM MADE BEFORE APPELLATE AUTHORITIES . ACCORDINGLY, THE REVISED CLAIM OF DEDUCTION OF DISALLOWANCE U/S. 14A IS ALLOWED TO BE ADMITTED AS T HERE IS NO BAR IN RAISING SUCH CLAIM FOR THE FIRST TIME EVEN BEFORE THE TRIBUNAL, EVEN IF IT NOT BEEN PLACED BEFORE ANY OF THE AUTHORITIES BELOW. THEREFORE, THE REVISED COMPUTATION OF DISALLOWANCE UNDER SECTION 14 A MADE AT NIL BEFORE THE AO H AS TO BE ACCEPTED BY THE LOWER AUTHORITIES. HENCE, WE ALLOW THE REVISED CLAIM TO BE ADMITTED. WE FIND THAT THE ASSESSEE HAS BEEN CONTENDING THAT IT HAS NOT EARNED ANY EXEMPT INCOME DURING THE YEAR UND ER CONSIDERATION. THEREFORE, NO DISALLOWANCE UNDER SECTION 14 A READ WITH RUL E 8D C AN BE MADE. WE FIND THAT THE COORDINATE BENCH OF MUMBAI TRIBUNAL IN THE ASSESSEES OWN CASE I.E. M/S. USHDEV POWER HOLDINGS PVT. LTD. VS. DCIT IN ITA. NO.4634/M/2017 FOR THE A.Y. 2013 - 14 DATED 26.12.2018 BY PLACING RELIANCE IN THE CASE OF CHEMINVEST LTD. V. CIT 378 ITR 33 (DELHI) OF HON`BLE DELHI HIGH COURT AND THE DECISION OF HON`BLE BOMBAY HIGH COURT IN THE CASE OF PR. CIT V. BALLARPUR INDUSTRIES LTD. [I.T.A.NO. 51 OF 2016 DTD. 13.10.2016] DELETED THE DISALLOWANCE MADE U/S. 14A READ WITH RULE 8D , A S NO EXEMPT INCOME WAS EARNED BY THE ASSESSEE DURING THAT YEAR. SINCE , THE LD. CIT (A) HAS NOT ADJUDICATED ON THIS GROUNDS OF APPEAL, THEREFORE, IN THE INTEREST OF JUSTICE AND FAIR PLAY , THE CIT (A) IS DIRECTED TO ADMIT THE CLAIM OF THE ASSESSEE AND DECID E THE ISSUE IN THE LIGHT OF FACTS WHETHER THE ASSESSEE HAS EARNED USHDEV POWER HOLDING PVT. LTD. V. DCIT 1(3)(2) MUMBAI /ITA. NO.6052/M/2017/A.Y. 2014 - 15 PAGE 13 OF 13 ANY EXEMPT INCOME DURING THE YEAR UNDER CONSIDERATION OR NOT AND QUANTIFICATION THE DISALLOWANCE U/S. 14A READ WITH RULE 8D OF INCOME - TAX RULES, 1962 FOLLOWING THE RATIO LAID DOWN IN JUDICI AL PRONOUNCEMENTS AS DISCUSSED ABOVE. 16. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES . 17. ORDER PRONOUNCED IN THE OPEN COURT ON 14 . 02 .2019 . SD/ - SD/ - ( C. N. PRASAD ) (O. P. MEENA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 14. 02 .2019 . V IJAY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / /(DY./ASS TT. REGISTRAR) , / ITAT, MUMBAI