M/S RAJASTHAN STATE MINES & MINERALS LIMITED, Jaipur V. DEPUTY COMMISSIONER OF INCOME TAX, Jaipur

ITA 704/JPR/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2770 (ITAT-JAIPUR)
• Duration Of Justice: 5 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 22-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Depreciation; Additional depreciation; Difference of opinion; Change of opinion; Reassessment proceedings
• Section: 143(3); 147; 148; 11

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; IKWY 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. 704/JP/2018 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2010-11 M/S RAJASTHAN STATE MINES & MINERALS LTD., C-89-90, LAL KOTHI, JANPATH, JAIPUR CUKE VS. DCIT CIRCLE-6, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAACR7857H VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI P. C. PARWAL (CA) JKTLO DH VKSJ LS @ REVENUE BY : SHRI RAJENDRA JHA LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 06/08/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 05/11/2018 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. CIT (A)- 2, JAIPUR DATED 23.03.2018 FOR ASSESSMENT YEAR 2010-11 WHEREIN THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APP EAL:- 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE NOTICE ISSUED U/S 148 AND CONSEQUENT ORDER PASSED U/S 147 IS ILLEGAL AND BAD IN LAW. 2. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE ACTION OF AO OF REDUCING THE CLAIM OF DEDUCTION U/S 80IA OF RS. 1,47,82,535/- BY APPORTIONING ESTABLISHMENT AND FINANCIAL EXPENSES AT RS. 36,83,29,248/- TO WIND POWER GENERA TION ITA NO. 704/JP/2018 RAJASTHAN STATE MINES AND MINERALS LTD.,VS. DCIT, J AIPUR 2 UNDERTAKINGS ELIGIBLE FOR DEDUCTION U/S 80IA IGNORI NG THAT THE ENTIRE OPERATION AND MAINTENANCE OF WIND PLANTS HAS BEEN GIVEN TO SUZLON ENERGY LTD., AND THEREFORE, THE SAID EXPE NDITURE HAS NO RELATION TO THE UNDERTAKINGS ELIGIBLE FOR DEDUCTION U/S 80IA. 2. IN GROUND NO. 1, THE ASSESSEE HAS CHALLENGED THE ISSUANCE OF NOTICE U/S 148 AND THE CONSEQUENT ORDER PASSED UNDE R SECTION 147 OF THE ACT. IN THIS REGARD, THE LD. AR SUBMITTED THAT THE ASSESSEE HAD FILED ITS RETURN DECLARING INCOME OF RS. 81,41,70,667/- O N 14.10.2010 AFTER CLAIMING DEDUCTION OF RS.14,96,10,989/- U/S 80IA OF THE ACT. THE RETURN OF INCOME WAS SUBSEQUENTLY REVISED ON 23.03.2012 DE CLARING INCOME OF RS.77,61,60,827/-. IT WAS SUBMITTED THAT IN COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE VIDE LETTER DATED 11.05.2 012 FILED THE COPY OF AUDIT REPORT IN FORM NO. 10CCB AS REQUIRED U/S 80IA (7). THEREAFTER, THE THE ASSESSING OFFICER VIDE LETTER DATED 25.09.2012 REQUIRED THE ASSESSEE TO FURNISH THE JUSTIFICATION FOR CLAIMING DEDUCTION U/S 80IA. THE ASSESSEE FILED THE REPLY DATED 08.10.2012 JUSTIFYING THE CLA IM OF DEDUCTION U/S 80IA. THEREAFTER, VIDE LETTER DATED 05.02.2013, THE ASSESSEE EXPLAINED AS TO WHY DEDUCTION U/S 80IA SHOULD BE ALLOWED TO I T WITH REFERENCE TO THE LIQUIDATED DAMAGES RECEIVED FROM M/S SUZLON ENE RGY LIMITED AND SALE OF CERS. 3. IT WAS FURTHER SUBMITTED BY THE LD AR THAT THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S 143(3) ON 27.02.2013 A T INCOME OF RS. 85,17,09,380/- WHERE HE EXAMINED THE CLAIM OF D EDUCTION U/S 80IA AND ALLOWED THE SAME AT RS.11,15,66,435/- BY NOT AL LOWING THE DEDUCTION WITH REFERENCE TO THE LIQUIDATED DAMAGES AND SALES OF CERS. AGAINST THIS, THE ASSESSEE FILED AN APPEAL BEFORE T HE LD. CIT(A) WHO VIDE ORDER DATED 05.12.2013 AFFIRMED THE ORDER OF A O. THE ASSESSEE ITA NO. 704/JP/2018 RAJASTHAN STATE MINES AND MINERALS LTD.,VS. DCIT, J AIPUR 3 FILED APPEAL BEFORE THE HONBLE ITAT WHO VIDE ORDER DATED 12.02.2016 IN ITA NO.144 & 124/JP/14 HAS ALLOWED THE CLAIM OF THE ASSESSEE. 4. IT WAS FURTHER SUBMITTED BY THE LD AR THAT THE AO, AFTER FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, ISSUED NOTICE U/S 148 DATED 31.03.2017 FOR THE REASON THAT WHILE CLAI MING DEDUCTION U/S 80IA, ASSESSEE HAD ONLY CONSIDERED DIRECT OPERATION AND MAINTENANCE EXPENSES FOR WORKING OUT THE DEDUCTION WITHOUT CHAR GING PROPORTIONATE HEAD OFFICE EXPENSES ON TURNOVER RATIO AND THEREFOR E, THE ALLOWANCE OF DEDUCTION TO THE EXTENT OF RS.1,47,82,534/- HAS ESC APED ASSESSMENT WHICH IS ON ACCOUNT OF FAILURE ON PART OF THE ASSES SEE TO DISCLOSE ALL MATERIAL FACTS. 5. IT WAS FURTHER SUBMITTED BY THE LD AR THAT THE ASSESSEE FILED ITS OBJECTION TO THE ISSUANCE OF NOTICE U/S 147 VIDE LE TTER DATED19.06.2017 SPECIFICALLY POINTING OUT THAT IN COURSE OF THE ORI GINAL ASSESSMENT PROCEEDINGS, THE REPORT OF CHARTERED ACCOUNTANT FOR CLAIM OF DEDUCTION U/S 80IA WAS FURNISHED. AFTER EXAMINING THE SAME, T HE AO DISCUSSED THE ALLOWABILITY OF DEDUCTION U/S 80IA AND REDUCED THE CLAIM OF DEDUCTION TO THE EXTENT OF RS.3,80,44,554/-. HOWEVE R, THE AO REJECTED THE OBJECTION OF THE ASSESSEE VIDE LETTER DATED 04. 07.2017. 6. IT WAS FURTHER SUBMITTED BY THE LD AR THAT BEF ORE THE LD. CIT(A), THE ASSESSEE PLEADED THAT REOPENING OF ASSESSMENT A FTER FOUR YEARS WHEN THE ORIGINAL ASSESSMENT IS FRAMED U/S 143(3) A ND THE ISSUE OF DEDUCTION U/S 80IA WAS EXAMINED, IS ILLEGAL AND BAD IN LAW. HOWEVER, THE LD. CIT(A) OBSERVED THAT THOUGH THE ASSESSEE HA S OBJECTED TO THE REOPENING OF ASSESSMENT BUT NO GROUND HAS BEEN TAKE N BEFORE HER. ITA NO. 704/JP/2018 RAJASTHAN STATE MINES AND MINERALS LTD.,VS. DCIT, J AIPUR 4 THEREAFTER, RELYING UPON THE DECISION OF HONBLE GU JARAT HIGH COURT IN CASE OF AJANTA PVT. LTD. VS. ACIT 78 TAXMANN.COM 48 , SHE CONFIRMED THE VALIDITY OF THE ORDER PASSED U/S 147 OF THE ACT. 7. IN LIGHT OF ABOVE FACTUAL MATRIX, IT WAS FURTHE R SUBMITTED BEFORE US THAT THE ORIGINAL ASSESSMENT IN THIS CASE WAS CO MPLETED U/S 143(3). THE ASSESSMENT IS REOPENED AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF RELEVANT AY. HENCE, THE ASSESSEES CASE FALLS IN PROVISO TO SECTION 147 WHEREIN THE ASSESSMENT CANNOT BE REOPENED AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF RELEVANT AY UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF FAILURE ON THE PART OF ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT FOR THAT ASSESSMENT YEAR. IT MAY BE NOTED THAT IN COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS, ASSESSEE FILED DETAILED WORKING OF CLAIM OF DEDUCTION U/S 80IA ALO NG WITH AUDIT REPORT IN FORM NO. 10CCB AS REQUIRED U/S 80IA(7). AFTER CO NSIDERING THE SAME, THE AO DISALLOWED THE CLAIM OF DEDUCTION TO THE EXT ENT OF RS.3,80,44,554/- IN RESPECT OF LIQUIDATED DAMAGES R ECEIVED FROM M/S SUZLON ENERGY LIMITED AND SALE OF CERS. THUS, ALL T HE MATERIAL FACTS NECESSARY FOR CLAIM OF DEDUCTION U/S 80IA WAS DISCL OSED FULLY AND TRULY BY THE ASSESSEE. THEREFORE, IT IS INCORRECT ON PART OF THE LOWER AUTHORITIES TO HOLD THAT ASSESSEE HAS NOT DISCLOSED FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT ON THE ISSUE OF ALLOWANCE OF DEDUCTION U/S 80IA OF THE ACT. HENCE, REOPENING OF ASSESSMENT AFTER THE EXPIRY OF FOUR YEARS, ONLY ON CHANGE OF OPINION IS ILLEGAL AND BAD IN LAW. ITA NO. 704/JP/2018 RAJASTHAN STATE MINES AND MINERALS LTD.,VS. DCIT, J AIPUR 5 8. IN SUPPORT OF HIS CONTENTIONS, THE LD AR REFERRE D TO THE DECISION OF THE HONBLE SUPREME COURT IN CASE OF ITO VS. TECHSP AN INDIA PVT. LTD.& ANR. (2018) 404 ITR 10 (SC), THE DECISION OF THE HO NBLE GUJARAT HIGH COURT IN CASE OF AJANTA PVT. LTD. VS. DCIT & ANR. ( 2018) 402 ITR 0072 (GUJ) (HC), THE DECISION OF THE HONBLE RAJASTHAN H IGH COURT IN CASE OF CIT VS. HINDUSTAN ZINC LTD. (2016) 241 TAXMAN 392 ( RAJ), THE DECISION OF THE HONBLE DELHI HIGH COURT IN CASE OF PCIT VS. TUPPERWARE INDIA PVT. LTD. (2015) 127 DTR 161 (DEL.) AND THE DECISIO N OF THE COORDINATE BENCH IN CASE OF RIICO VS. ACIT IN ITA NO. 334/JP/2 016 & CO NO. 4/JP/2016 ORDER DATED 07.12.2017. 9. REGARDING THE DECISION OF THE HONBLE GUJARAT HI GH COURT IN CASE OF AJANTA PVT. LTD. VS. ACIT 78 TAXMANN.COM 48 RELI ED UPON BY THE LD CIT(A) WHERE THE ASSESSMENT FOR AY 2008-09 WAS REOP ENED FOR THE REASON THAT ASSESSEE HAS NOT ALLOCATED THE COMMON E XPENDITURE TOWARDS ITS WINDMILL DIVISION IN CLAIMING DEDUCTION U/S 80IA AND THE REOPENING WAS UPHELD BY THE HONBLE HIGH COURT, IT WAS SUBMITTED BY THE LD AR THAT IN THE SUBSEQUENT DECISION BY THE HO NBLE GUJARAT HIGH COURT (REFERRED SUPRA) IN CASE OF THE SAME ASSESSEE FOR AY 2011-12, THE REOPENING OF THE ASSESSMENT FRAMED U/S 143(3) FOR T HE REASON OF NON- ALLOCATION OF COMMON EXPENDITURE WAS HELD INVALID. THEREFORE, THIS BEING THE SUBSEQUENT DECISION, IT WOULD PREVAIL OVE R THE EARLIER DECISION. IN VIEW OF ABOVE, IT WAS SUBMITTED BY THE LD AR THA T THE ASSESSMENT FRAMED BY THE AO U/S 147 IS ILLEGAL AND BAD IN LAW AND THE SAME BE QUASHED. ITA NO. 704/JP/2018 RAJASTHAN STATE MINES AND MINERALS LTD.,VS. DCIT, J AIPUR 6 10. PER CONTRA, THE LD DR VEHEMENTLY ARGUED THE MA TTER AND RELIED UPON THE FINDINGS OF THE LOWER AUTHORITIES. IT WAS SUBMITTED BY THE LD DR THAT THERE WAS A CLEAR FAILURE ON PART OF THE AS SESSEE ON NOT CHARGING THE PROPORTIONATE HEAD OFFICE EXPENSES ON ACCOUNT OF ESTABLISHMENT & FINANCIAL EXPENSES ON WINDMILLS AND THESE ARE MATERIAL FACTS FOR THE PURPOSES OF COMPUTATION OF DEDUCTION U/S 80IA AND HENCE, THE AO HAS RIGHTLY EXERCISED HIS JURISDICTION IN IN VOKING THE PROVISIONS OF SECTION 147 OF THE ACT BY ISSUANCE OF NOTICE U/S 14 8 OF THE ACT. THE LD DR FURTHER PLACED RELIANCE ON THE DECISION OF THE H ONBLE GUJARAT HIGH COURT IN CASE OF AJANTA PVT. LTD. VS. ACIT 78 TAXMA NN.COM 48. 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND PURUSE D THE MATERIAL AVAILABLE ON RECORD. UNDISPUTEDLY, THE ASSESSMENT WAS INITIALLY COMPLETED U/S 143(3) VIDE ORDER DATED 27.02.2013 AN D THE SAME WAS REOPENED BY ISSUANCE OF NOTICE U/S 148 DATED 31.03. 2017 AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT A SSESSMENT YEAR 2010-11. THE PROVISO TO SECTION 147 IS THUS CLEARLY ATTRACTED AND IT THEREFORE NEEDS TO BE EXAMINED WHETHER THE INCOME W HICH IS SOUGHT TO BE BROUGHT TO TAX BY THE ASSESSING OFFICER AND WHIC H HAS THUS ESCAPED ASSESSMENT IS ON ACCOUNT OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR COMPLETION OF ASSESSMENT. 12. IN THIS REGARD, FIRSTLY, WE REFER TO THE REASO NS RECORDED BY THE AO BEFORE ISSUANCE OF NOTICE U/S 148 WHICH READS AS UN DER: ITA NO. 704/JP/2018 RAJASTHAN STATE MINES AND MINERALS LTD.,VS. DCIT, J AIPUR 7 THE ASSESSEE FILED ITS RETURN OF INCOME FOR AY 201 0-11 ON 14.10.2010 DECLARING TOTAL INCOME OF RS. 81,41,70,667/- WHICH WAS ASSESSED U/S 143(3) AT THE TOTAL INCOME OF RS. 85,17,09,380/- ON 27.02.2013. ON GOING THROUGH THE RECORDS, IT WAS NOTICED THAT A SSESSEE HAD NOT CHARGED PROPORTIONATE HEAD OFFICE EXPENSES ON A CCOUNT OF ESTABLISHMENT & FINANCIAL EXPENSES ON WIND MILLS FO R THE PURPOSE OF COMPUTATION OF DEDUCTION U/S 80IA. AS PER PROVISIONS OF SECTION 80IA OF THE ACT, THE E XPENSES RELATABLE TO ELIGIBLE BUSINESS EITHER DIRECTLY OR I NDIRECTLY HAVE TO BE CONSIDERED FOR COMPUTATION OF PROFIT AND GAINS OF A N ELIGIBLE BUSINESS. BUT THE ASSESSEE HAD CONSIDERED ONLY DIRECT OPERATI ON AND MAINTENANCE HEAD OFFICE EXPENSES ON TURNOVER RATIO. IN VIEW OF THE ABOVE FACTS, I HAVE REASONS TO BELIE VE THAT ALLOWANCE OF DEDUCTION UNDER SECTION 80IA WITHOUT APPORTIONMENT OF HEAD OFFICE EXPENSES AMOUNTING TO RS. 1,47,82,534/- HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF PROVISIONS OF SECTION 147 OF THE IT ACT, 1961 FOR THE ASSTT. YEAR 2010-11. THE ESCAPEMENT WAS ON ACCO UNT OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE ALL MATERIAL F ACTS. 13. AS PER THE ASSESSING OFFICER, THE MATERIAL FAC TS THEREFORE RELATES TO NOT CHARGING THE PROPORTIONATE HEAD OFFICE EXPEN SES ON ACCOUNT OF ESTABLISHMENT & FINANCIAL EXPENSES ON WINDMILLS FOR THE PURPOSES OF COMPUTATION OF DEDUCTION U/S 80IA OF THE ACT. AS P ER ASSESSING OFFICER, THERE IS A FAILURE ON PART OF THE ASSESSEE TO DISCL OSE FULLY AND TRULY SUCH MATERIAL FACTS WHICH HAS RESULTED IN ESCAPEMENT OF INCOME WHEREBY THE CLAIM OF DEDUCTION U/S 80IA HAS BEEN ALLOWED AT A H IGHER FIGURE AS AGAINST THE FIGURE WHICH WOULD HAVE BEEN ARRIVED AT AFTER APPORTIONMENT OF HEAD OFFICE EXPENSES. ITA NO. 704/JP/2018 RAJASTHAN STATE MINES AND MINERALS LTD.,VS. DCIT, J AIPUR 8 14. AS PER THE LD AR, DURING THE COURSE OF ASSESSM ENT PROCEEDINGS, THE ASSESSEE VIDE LETTER DATED 11.05.2012 FILED A C OPY OF AUDIT REPORT IN FORM NO. 10CCB AS REQUIRED U/S 80IA(7). THEREAFTER, THE ASSESSING OFFICER VIDE LETTER DATED 25.09.2012 REQUIRED THE A SSESSEE TO FURNISH THE JUSTIFICATION FOR CLAIMING DEDUCTION U/S 80IA. THE ASSESSEE FILED THE REPLY DATED 08.10.2012 JUSTIFYING THE CLAIM OF DEDU CTION U/S 80IA. THEREAFTER, VIDE LETTER DATED 05.02.2013, THE ASSES SEE EXPLAINED AS TO WHY DEDUCTION U/S 80IA SHOULD BE ALLOWED TO IT WITH REFERENCE TO THE LIQUIDATED DAMAGES RECEIVED FROM M/S SUZLON ENERGY LIMITED AND SALE OF CERS. 15. WE HAVE GONE THROUGH THE AUDIT REPORT IN FORM N O. 10CCB AS WELL AS OTHER SUBMISSIONS FILED BY THE ASSESSEE DUR ING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS COMPLETED U/S 143(3 ) OF THE ACT AND FIND THAT THERE IS NO DISCLOSURE OR DISCUSSION REGA RDING THE APPORTIONMENT OF ANY HEAD OFFICE EXPENSES WHILE COM PUTING THE DEDUCTION U/S 80IA OF THE ACT. IT IS A FACT THAT T HE ASSESSEE HAS WIND POWER GENERATING UNDERTAKINGS WHICH ARE ELIGIBLE FO R CLAIM UNDER SECTION 80IA AND VARIOUS MINING UNITS WHICH ARE NOT ELIGIBLE FOR SUCH TAX HOLIDAY. IT IS ALSO A FACT THAT THERE ARE HEAD OFFI CE ESTABLISHMENT AND FINANCIAL EXPENSES. IT IS THEREFORE REASONABLE ON P ART OF THE ASSESSING OFFICER TO HOLD A PRIMA FACIE BELIEF THAT SUCH HEAD OFFICE EXPENSES INCURRED AT THE ENTITY LEVEL SHOULD BE ALLOCATED BE TWEEN THE TWO SET OF ACTIVITIES THE ACTIVITIES WHICH ARE ELIGIBLE FOR TAX HOLIDAY AND THOSE WHICH ARE NOT ELIGIBLE FOR TAX HOLIDAY. AT THE SAM E TIME, IT COULD BE POSITION OF THE ASSESSEE THAT CERTAIN EXPENSES THOU GH INCURRED AT THE HEAD OFFICE LEVEL ARE NOT INCURRED IN RELATION TO O R HAVE NO NEXUS WITH ITA NO. 704/JP/2018 RAJASTHAN STATE MINES AND MINERALS LTD.,VS. DCIT, J AIPUR 9 TAX HOLIDAY UNITS THEREFORE, THERE WAS NO NECESSITY TO ALLOCATE THESE EXPENSES AT THE FIRST PLACE. ALTERNATIVELY, THE ASS ESSEE MAY PLEAD THAT ALL EXPENSES INCURRED IN RELATION TO TAX HOLIDAY UN ITS HAVE ALREADY BEEN ACCOUNTED FOR SEPARATELY AND THERE IS THUS NO NECES SITY FOR ANY ALLOCATION OF HEAD OFFICE EXPENSES. THE QUESTION I S WHETHER SUCH A POSITION OF THE ASSESSEE AND THE RELATED FACTS ARE MANIFEST CLEARLY ON THE FACE OF THE FINANCIAL STATEMENTS, THE DOCUMENTA TION IN FORMS OF TAX AUDIT REPORT, THE TAX COMPUTATION OR OTHER DOCUMENT ATION/SUBMISSIONS FILED EITHER AS PART OF THE RETURN OF INCOME OR DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS. IF THE ANSWER TO THE SAME IS IN AFFIRMATIVE, THEN CLEARLY, IT CAN BE SAID THAT THERE IS NO FAILU RE ON PART OF THE ASSESSEE TO DISCLOSE TRULY AND FULLY ALL MATERIAL F ACTS AND THE REASSESSMENT PROCEEDINGS WOULD THEN BE VITIATED AND CAN BE HELD BAD IN LAW. HOWEVER, IN THE PRESENT CASE, WE FIND THAT THERE IS NOTHING ON RECORD AT THE TIME OF COMPLETION OF ORIGINAL ASSESS MENT PROCEEDINGS DISCLOSING THE SAID FACTUAL POSITION ON PART OF THE ASSESSEE. THE FACT REMAINS THAT THERE ARE EXPENSES INCURRED AT THE HEA D OFFICE LEVEL AND THERE ARE TAX HOLIDAY ELIGIBLE UNITS AND NON-TAX HO LIDAY UNITS/UNDERTAKINGS. UNLESS AND UNTIL, THE ASSESSEE MAKES ITS POSITION CLEAR AND MAKE A COMPLETE FACTUAL DISCLOSURE THEREO F, IT IS CLEARLY A CASE OF FAILURE ON PART OF THE ASSESSEE TO DISCLOSE FULL AND TRULY ALL MATERIAL FACTS RELATING TO THE COMPUTATION OF DEDUCTION UNDE R SECTION 80IA AND IN TURN, FOR THE PURPOSES OF THE COMPLETION OF ASSESSM ENT PROCEEDINGS. 16. WE HAVE ALSO GONE THROUGH THE VARIOUS DECISION S RELIED UPON BY THE LD AR AND FIND THAT THOSE DECISIONS HAVE BEEN R ENDERED IN PECULIAR FACTS AND CIRCUMSTANCES OF THE RELEVANT CASE AND AR E THUS DISTINGUISHABLE AND DOESNT SUPPORT THE CASE OF THE ASSESSEE. IN CASE ITA NO. 704/JP/2018 RAJASTHAN STATE MINES AND MINERALS LTD.,VS. DCIT, J AIPUR 10 OF TECHSPAN INDIA, THE ISSUE REGARDING ALLOCATION O F COMMON EXPENSES BETWEEN SOFTWARE DEVELOPMENT AND HUMAN RESOURCE DEV ELOPMENT DIVISIONS WAS DULY CONTESTED AND DECIDED IN THE ORI GINAL ASSESSMENT PROCEEDINGS AND IN THOSE FACTS, THE HONBLE SUPREME COURT HELD THAT IT IS A CASE OF CHANGE OF OPINION ON THE SAME FACTS AN D CIRCUMSTANCES WHICH WERE ALREADY IN KNOWLEDGE OF THE AO EVEN DURI NG THE ORIGINAL ASSESSMENT PROCEEDINGS. HOWEVER, IN THE PRESENT CA SE, THE ISSUE OF ALLOCATION OF HEAD OFFICE EXPENSE WAS ADMITTEDLY NO T EXAMINED AT ALL DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDING S, THE EXAMINATION WAS LIMITED TO MATTER RELATING TO LIQUIDATED DAMAGE S AND SALE OF CERS AND THUS, THE QUESTION OF CHANGE OF OPINION DOESNT ARISE REGARDING ALLOCATION OF HEAD OFFICE EXPENSES. SIMILARLY, IN CASE OF AJANTA PVT LTD, THE MATTER RELATING TO CLAIM OF DEDUCTION WAS HELD TO BE MINUTELY EXAMINED BY THE AO DURING THE ORIGINAL ASSESSMENT P ROCEEDINGS AND IN THAT CONTEXT, IT WAS HELD THAT MERELY BECAUSE THE A SSESSEE HAS NOT MAINTAINED SEPARATE PROFIT/LOSS ACCOUNT AND BALANCE SHEET FOR THE TWO BUSINESSES, THE SAME CANNOT BE A GROUND FOR REOPENI NG. SIMILARLY, IN CASE OF HINDUSTAN ZINC, THERE WAS COMPLETE DISCLOSU RE REGARDING ADDITIONAL DEPRECIATION ON CAPTIVE POWER PLANT AND THE REASSESSMENT PROCEEDINGS WERE THUS HELD INVALID. WE HAVE ALSO G ONE THROUGH THE OTHER DECISIONS RELIED UPON BY THE LD AR AND FIND T HAT THE SAME DOESNT SUPPORT THE CASE OF THE ASSESSEE. THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN CASE OF AJANTA PVT. LTD. (SUPRA) RATH ER SUPPORTS THE CASE OF THE REVENUE. 17. IN LIGHT OF ABOVE DISCUSSIONS AND IN THE ENTIR ETY OF FACTS AND CIRCUMSTANCES OF THE CASE, WE DOESNT SEE ANY INFIR MITY IN AOS EXERCISING HIS JURISDICTION UNDER SECTION 147 OF TH E ACT BY ISSUANCE OF ITA NO. 704/JP/2018 RAJASTHAN STATE MINES AND MINERALS LTD.,VS. DCIT, J AIPUR 11 NOTICE U/S 148 OF THE ACT. IN THE RESULT, THE GROU ND OF APPEAL IS DISMISSED. 18. IN GROUND NO. 2, THE ASSESSEE HAS CHALLENGED TH E CONFIRMATION OF THE ACTION OF THE AO OF REDUCING THE CLAIM OF DEDUC TION U/S 80IA OF RS. 1,47,82,535/- BY APPORTIONING ESTABLISHMENT AND FINANCIAL EXPENSES AT RS. 36,83,29,248/- TO WIND POWER GENERATION UNDE RTAKINGS ELIGIBLE FOR DEDUCTION U/S 80IA IGNORING THAT THE ENTIRE OPE RATION AND MAINTENANCE OF WIND PLANTS HAS BEEN GIVEN TO SUZLON ENERGIES LTD. AND THEREFORE, THE SAID EXPENDITURE HAS NO RELATION TO THE UNDERTAKINGS ELIGIBLE FOR DEDUCTION U/S 80IA. 19. IN THIS REGARD, THE LD. AR SUBMITTED THAT THE A O OBSERVED THAT IN WORKING OUT THE CLAIM OF DEDUCTION U/S 80IA, ASSESS EE HAS NOT APPORTIONED THE HEAD OFFICE EXPENSES & OTHER DAY-TO -DAY MANAGEMENT AND SUPERVISION CHARGES AMONGST THE UNITS ELIGIBLE FOR DEDUCTION U/S 80IA. THE ASSESSEE HAS ONLY CONSIDERED THE DIRECT O PERATION AND MAINTENANCE EXPENSES FOR WORKING OUT THE PROFITS OF WIND POWER PROJECTS AS IF THESE PROJECTS WERE AUTOMATICALLY SE T UP AND WERE RUNNING WITHOUT ANY STRATEGIC PLANNING, MANAGEMENT, DIRECTI ONS, ETC. ACCORDINGLY, THE AO ALLOCATED THE INDIRECT EXPENSE CLAIMED UNDER THE HEAD ESTABLISHMENT AND FINANCIAL EXPENSES PROPORTIO NATELY TO ALL UNITS AND THEREBY, DISALLOWED THE CLAIM OF DEDUCTION U/S 80IA AT RS.1,47,82,535/-. 20. IT WAS FURTHER SUBMITTED BY THE LD AR THAT THE LD. CIT(A) HELD THAT ON PERUSAL OF THE AGREEMENT WITH M/S SUZLON EN ERGY LTD., IT CAN BE NOTED THAT ONLY THE OPERATIONAL PART IS BEING HANDL ED BY M/S SUZLON ITA NO. 704/JP/2018 RAJASTHAN STATE MINES AND MINERALS LTD.,VS. DCIT, J AIPUR 12 ENERGY LTD. THUS, EVEN THE MONITORING OF THESE AGRE EMENTS AND FACILITATING THE TERMS AND CONDITIONS OF THE AGREEM ENT AND MONITORING OF THE OPERATIONS WOULD REQUIRE MANAGEMENT, DIRECTION, SUPERVISION AND CONTROL. ACCORDINGLY, SHE CONFIRMED THE ALLOCATION OF ESTABLISHMENT AND FINANCIAL EXPENSES TO WIND POWER UNITS MADE BY THE AO. 21. IT WAS FURTHER SUBMITTED BY THE LD AR THAT THE AO HAS CONSIDERED THE EMPLOYEES BENEFIT AND ESTABLISHMENT AND FINANCI AL EXPENSES AND OTHER MISCELLANEOUS EXPENSES FOR PROPORTIONATE ALLO CATION AGAINST THE WIND POWER PLANT. THIS IS INCORRECT FOR THE REASON THAT WHATEVER EXPENDITURE IS RELATABLE TO THE INCOME FROM THE SAI D INDUSTRIAL UNDERTAKING HAS BEEN DEBITED FOR WORKING OUT THE IN COME OF THE SAID UNITS. THE LOWER AUTHORITIES HAVE NOT CONSIDERED TH IS FACTUAL ASPECT. IN FACT, THE ASSESSEE MAINTAINS THE UNIT WISE DETAILS OF THE EXPENDITURE OF THE HEAD OFFICE AND VARIOUS MINING UNITS. THEREFORE , THE EXPENDITURE INCURRED ON ADMINISTRATION AT THESE MINING UNITS CA NNOT BE ALLOCATED TOWARDS THE POWER GENERATING UNITS. 22. IT WAS SUBMITTED BY THE LD AR THAT THE TOTAL E XPENDITURE CONSIDERED BY THE AO FOR ALLOCATION IS RS.46,57,18, 479/- AND OUT OF IT, THE EXPENDITURE EXCLUSIVELY IN RELATION TO MINING U NITS IS RS.23,10,05,852/-. THEREFORE, THIS EXPENDITURE CANN OT BE ALLOCATED TO THE POWER GENERATING UNITS. THE EXPENDITURE AT THE CORPORATE OFFICE IS RS. 23,47,12,627/-. OUT OF IT, THE AO HIMSELF HAS C ONSIDERED DONATION OF RS. 5,12,84,990/- AND BUSINESS PROMOTION EXPENSES O F RS.51,63,000/- DEBITED IN CORPORATE OFFICE AS NOT RELATING TO POWE R GENERATING UNITS. AFTER EXCLUDING THE SAME, THE REMAINING EXPENDITURE AT CORPORATE OFFICE IS RS.17,82,64,637/-. IT MAY BE NOTED THAT NONE OF THESE EXPENSES ITA NO. 704/JP/2018 RAJASTHAN STATE MINES AND MINERALS LTD.,VS. DCIT, J AIPUR 13 PERTAIN TO THE 80IA UNDERTAKINGS IN AS MUCH AS THE ENTIRE OPERATION AND MAINTENANCE OF THE PLANT HAS BEEN GIVEN TO SUZLON E NERGIES LTD. THEREFORE, ASSESSEE HAS NOT TO INCUR ANY EXPENDITUR E ON SALARY/ EMPLOYEES BENEFIT, TRAVELLING, CONVEYANCE AND OTHER EXPENSES DEBITED UNDER THE VARIOUS HEADS OF EXPENSES IN CORPORATE OF FICE/ HEAD OFFICE. NO STRATEGIC PLANNING, DAY TO DAY MANAGEMENT AND SU PERVISION, FINANCIAL MANAGEMENT, MARKETING MANAGEMENT, TENDERI NG, WORK ALLOCATION, CONTRACT AWARDING, CONTROL ETC. IS REQU IRED FOR OPERATING THESE POWER PLANTS BY THE CORPORATE OFFICE/ HEAD OF FICE. THEREFORE, NO PART OF THESE EXPENSES MORE PARTICULARLY EXPENSES O N REPAIRS, RATES AND TAXES, LAND TAX, INSURANCE, TRAVELLING, CONVEYANCE, FINANCIAL EXPENSES, CONSULTANCY CHARGES, ETC. CAN BE ALLOCATED TO THE I NCOME DERIVED FROM THESE POWER GENERATING UNITS. HENCE, WITHDRAWAL OF DEDUCTION U/S 80IA TO THE EXTENT OF RS. 1,47,82,535/- ON THIS ACCOUNT IS GROSSLY UNJUSTIFIED. 23. IT WAS FURTHER SUBMITTED BY THE LD AR THAT SIM ILAR DISALLOWANCE WAS MADE IN AY 2006-07 TO 2009-10 & 2011-12 TO 2013 -14 WHEREIN THE CO-ORDINATE BENCH OF THE TRIBUNAL VIDE ORDER DATED 30.05.2017 SET ASIDE THE ORDER TO THE FILES OF THE AO TO VERIFY TH E CLAIM OF THE ASSESSEE THAT THE ENTIRE EXPENDITURE RELATED TO OPERATION & MAINTENANCE WAS BORN BY SUZLON ENERGIES LTD. IT MAY BE NOTED THAT T HE ASSESSEE HAS FILED THE RELEVANT EXTRACT OF THE TERMS AND CONDITI ONS ON WHICH THE INSTALLATION OF WIND POWER GENERATING UNITS WAS GIV EN TO M/S SUZLON ENERGY LIMITED. AS PER THE SCOPE OF WORK, THE OPERA TION AND MAINTENANCE OF THE WIND FARM FOR 20 YEARS FROM THE DATE OF ACCEPTANCE OF THE WIND POWER PROJECT IS AWARDED TO M/S SUZLON ENERGY LIMITED FOR WHICH IT IS TO BE PAID AT THE RATE OF RS.0.40/KWH I N THE FIRST YEAR AND THEREAFTER, WITH ESCALATIONS AS PER PARA 5 OF THE A GREEMENT (PB 14). ITA NO. 704/JP/2018 RAJASTHAN STATE MINES AND MINERALS LTD.,VS. DCIT, J AIPUR 14 THUS, IT IS ON RECORD THAT THE ENTIRE EXPENDITURE R ELATING TO OPERATION AND MAINTENANCE IS BORNE BY M/S SUZLON ENERGY LIMIT ED. ON THIS ACCOUNT FOR THE YEAR UNDER CONSIDERATION, THE ASSES SEE HAS INCURRED EXPENDITURE OF RS.1,68,28,131/- IN RESPECT OF THE W IND POWER GENERATING UNITS ON WHICH DEDUCTION U/S 80IA IS CLA IMED. THUS, WHEN THE ENTIRE DETAILS ARE AVAILABLE ON RECORD, EVEN ON MERIT, THE ALLOCATION OF EXPENDITURE TO THE EXTENT OF RS.1,47,82,535/- TO THE POWER GENERATING UNITS IS INCORRECT AND THE CORRESPONDING REDUCTION IN THE CLAIM OF DEDUCTION U/S 80IA IS UNJUSTIFIED AND UNCA LLED FOR. IN VIEW OF THE ABOVE, THE DISALLOWANCE OUT OF CLAIM U/S 80IA C ONFIRMED BY THE LD. CIT(A) BE DIRECTED TO BE DELETED. 24. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. REGARDING THE FIRST CONTENTIO N OF THE LD AR THAT NONE OF THE EXPENSES AT THE CORPORATE OFFICE PERTAI N TO THE 80IA UNDERTAKINGS IN AS MUCH AS THE ENTIRE OPERATION AND MAINTENANCE OF THE PLANT HAS BEEN GIVEN TO SUZLON ENERGIES LTD. IT IS NO DOUBT TRUE THAT THE OPERATION AND MAINTENANCE ACTIVITIES ARE HANDLED BY SUZLON ENERGY AND THE LD CIT(A) HAS RETURNED A FINDING WHICH HAS NOT BEEN DISPUTED BY THE REVENUE. HOWEVER, THE FACT REMAINS THAT THE ASSESS EE ACTIVITIES ARE STILL GUIDED TOWARDS OVERALL SUPERVISION AND MANAGE MENT OF THESE ACTIVITIES AT THE STRATEGIC AND MANAGERIAL LEVEL AN D TO SAFEGUARD THE INTEREST OF THE SHAREHOLDERS AND THE ASSESSEE STILL REMAINS RESPONSIBLE FOR THE ACTIVITIES OF THESE ELIGIBLE UNDERTAKINGS T O THE OUTSIDE WORLD EVEN THOUGH AT THE OPERATIONAL LEVEL, THE WHOLE OF ITS A CTIVITIES HAVE BEEN OUTSOURCED TO SUZLON ENERGIES LTD. THEREFORE, THE C ONTENTION OF THE LD AR CANNOT BE ACCEPTED THAT NO EXPENSES IN FURTHERAN CE AND SUPPORT OF WHAT WE HAVE STATED ABOVE HAS BEEN INCURRED BY THE ASSESSEE AND ITA NO. 704/JP/2018 RAJASTHAN STATE MINES AND MINERALS LTD.,VS. DCIT, J AIPUR 15 WHICH HAS NO NEXUS WITH THE ELIGIBLE UNDERTAKINGS. TO OUR MIND, THESE ACTIVITIES AT THE STRATEGIC, MANAGERIAL, REGULATORY AND OVERALL OVERSIGHT LEVEL DEFINITELY HAVE A NEXUS WITH THE ELIGIBLE UND ERTAKINGS AND THE EXPENSES INCURRED IN RELATION THERETO NEEDS TO BE A LLOCATED TO THE ELIGIBLE UNDERTAKINGS. 25. NOW, COMING TO THE SPECIFICS OF THE EXPENDITUR E INCURRED AT THE CORPORATE LEVEL, ON PERUSAL OF THE DETAILS AVAILABL E AT THE APB 15-16, WE FIND THAT THE ESTABLISHMENT EXPENSES AT THE CORPORA TE OFFICE HAS BEEN SHOWN AS RS 23,47,12,627. THE AO HAS HOWEVER WRONG LY TOOK THE TOTAL ESTABLISHMENT EXPENDITURE AT THE ENTITY LEVEL AT RS .46,57,18,479/- WHICH INCLUDES ESTABLISHMENT EXPENDITURE INCURRED IN RELA TING TO VARIOUS MINING ACTIVITIES. WHAT THEREFORE HAS TO BE CONSID ERED IS THE ESTABLISHMENT EXPENDITURE AT THE CORPORATE OFFICE L EVEL WHICH COMES TO RS 23,47,12,627. FURTHER, ON PERUSAL OF THE SAID E XPENDITURE, WE FIND THAT EXPENDITURE ON RATES AND TAXES, LAND TAX, INSU RANCE, INTEREST ON DEBENTURES, BUSINESS PROMOTION EXPENSES AND ADVERTI SEMENT EXPENSES CANNOT BE SAID TO HAVE ANY NEXUS WITH THE ELIGIBLE UNDERTAKINGS ENGAGED IN GENERATION OF ENERGY AND THUS, THESE EXP ENSES NEEDS TO BE EXCLUDED. FURTHER, THE AO HAS HIMSELF EXCLUDES THE DONATIONS WHILE WORKING OUT THE ELIGIBLE DEDUCTIONS. THE REMAINING EXPENSES IN THE NATURE OF EMPLOYEE COSTS AND OTHER ESTABLISHMENT EX PENSES ETC THEREFORE NEEDS TO BE ALLOCATED IN THE RATIO OF TUR NOVER FOR THE PURPOSES OF DETERMINING THE ELIGIBLE PROFITS UNDER SECTION 8 0IA OF THE ACT. THE MATTER IS ACCORDINGLY SET-ASIDE TO THE FILE OF THE AO TO VERIFY THESE FIGURES AND RECALCULATE THE ELIGIBLE PROFITS FOR TH E PURPOSES OF SECTION 80IA OF THE ACT. IN THE RESULT, THE GROUND IS PART LY ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 704/JP/2018 RAJASTHAN STATE MINES AND MINERALS LTD.,VS. DCIT, J AIPUR 16 THE APPEAL OF THE ASSESSEE IS THUS DISPOSED OFF IN LIGHT OF ABOVE DIRECTIONS. ORDER PRONOUNCED IN THE OPEN COURT ON 05/11/2018 . SD/- SD/- FOT; IKWY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 05/11/2018 * GANESH KR. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S RAJASTHAN STATE MINES & MINERALS LTD., JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- DCIT, CIRCLE-06, 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. 704/JP/2018} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR