RAJASTHAN RENEWAL ENERGY CORPORATION LIMITED, Jaipur V. DCIT, Jaipur

ITA 983/JPR/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99337 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 9 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 16-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P BHATEJA CIT DHK
• Assessee Lawyers: MUKESH GOYAL
• Keywords: Opportunity of being heard

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VH-VKJ-EHUK] YS[KK LNL; ,OA JH YFYR DQEKJ] U;KF; D LNL; DS LE{K BEFORE: SHRI T.R.MEENA, AM & SHRI LALIET KUMAR, JM VK;DJ VIHY LA -@ ITA NO. 983/JP/2013 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2008-09. RAJASTHAN RENEWABLE ENERGY CORPORATION LIMITED, E-166, YUDISTER MARG, C-SCHEME, JAIPUR. CUKE VS. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-6, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AAACL 3171 C VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI MUKESH GOYAL (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI O.P. BHATEJA (ADDL.CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 24/09/2015. MN?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 30/09/2015. VKNS'K@ ORDER PER T.R. MEENA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 04/09/2013 OF THE LEARNED C.I.T.(A)-II, JAIPUR FOR A .Y. 2008-09. THE SOLE GROUND OF APPEAL IS AGAINST CONFIRMING THE DIS ALLOWANCE OF RS. 5,00,000/- BY TREATING THE PAYMENT TOWARDS ENERGY CO NSERVATION CONTRIBUTION EXPENSES IS NOT INCIDENTAL TO THE BUSI NESS OF THE ASSESSEE. 2 ITA NO. 983/JP/2013 RAJASTHAN RENEWAL ENERGY VS. DCIT 2. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS O F GENERATION AND TRANSMISSION OF RENEWAL POWER/ENERGY THROUGH WIND MILLS. THE ASSESSEE COMPANY FILED ITS RETURN ON 29/09/2008 DEC LARING TOTAL INCOME OF RS. 39,73,280/-. THE CASE WAS SCRUTINIZED U/S 143( 3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). THE LD ASSESSING O FFICER OBSERVED THAT THE ASSESSEE HAD DEBITED RS. 5 LACS IN P&L ACCOUNT TOWARDS ENERGY CONSERVATION CONTRIBUTION EXPENSES. THE ASSESSING OF FICER GAVE REASONABLE OPPORTUNITY OF BEING HEARD ON THIS ISSUE . THE ASSESSEE SUBMITTED BEFORE THE ASSESSING OFFICER THAT AS PER THE DIRECTIONS OF THE STATE GOVERNMENT (ENERGY DEPARTMENT) VIDE ITS ORDER NO. F20(6) ENERGY/98 DATED 01/06/2007, IT WAS DIRECTED TO CONST ITUTE A RAJASTHAN ENERGY CONSERVATION FUND FOR THE PROMOTION OF EFFIC IENT USE TO ENERGY AND ITS CONSERVATION WITHIN THE STATE. RREC WAS DIREC TED, WITH THE CONCURRENCE OF THE FINANCE DEPARTMENT ID NO. 241 DA TED 26/05/2007, TO TRANSFER AMOUNT TO THIS FUND AND HENCE A SUM OF RS. 5,00,000/- HAS BEEN TRANSFERRED BY CHARGING TO PROFIT & LOSS ACCOU NT. COPY OF RELEVANT ORDER OF THE STATE GOVERNMENT IS ENCLOSED HEREWITH F OR YOUR READY REFERENCE. AFTER CONSIDERING THE ASSESSEES REPLY, IT HAS BEEN HELD THAT CONTRIBUTION MADE BY THE ASSESSEE CANNOT BE SAID TO BE INCIDENTAL TO THE 3 ITA NO. 983/JP/2013 RAJASTHAN RENEWAL ENERGY VS. DCIT BUSINESS OF THE ASSESSEE. THESE EXPENSES CAN ALSO NO T SAID TO BE INCURRED WHOLLY AND EXCLUSIVELY FOR THE BUSINESS PU RPOSE OF THE ASSESSEE. ACCORDINGLY, HE MADE ADDITION OF RS. 5 LA CS IN THE INCOME OF THE ASSESSEE. 3. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OF FICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD CIT(A), WHO HAD SUSTAINED THE ORDER BY OBSERVING AS UNDER:- I HAVE CONSIDERED THE FACTS OF THE CASE AND THE SU BMISSION MADE. THE SUBMISSION FILED BY THE A/R FOR THE APPELL ANT IS NOT TENABLE. THE A/R COULD NOT CONTROVERT THE FINDIN GS OF THE A.O. THE SAID CONTRIBUTION MADE BY THE ASSESSEE CANN OT BE SAID TO BE INCIDENTAL TO THE BUSINESS OF THE ASSESS EE. THESE EXPENSES CAN ALSO NOT SAID TO BE INCURRED WHOLLY AND EXCLUSIVELY FOR THE BUSINESS PURPOSE OF THE ASSESSE E. HENCE, CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES OF T HE CASE THE ADDITION MADE BY THE A.O. IS FAIR AND REASONABL E AND THE SAME IS SUSTAINED. THE APPELLANT FAILS ON THIS GROU ND. 4. NOW THE ASSESSEE IS APPEAL BEFORE US. THE LD AR OF THE ASSESSEE HAS SUBMITTED THAT THE COMPANY IS STATE NODAL AGENC Y OF MINISTRY OF NEW & RENEWABLE ENERGY (MNRE) FOR DEVELOPMENT AND PRO MOTION OF RENEWABLE SOURCES OF ENERGY IN THE STATE OF RAJASTHA N. THE COMPANY IS NOMINATED AS A STATE DESIGNATED AGENCY (SDA) OF BUR EAU OF ENERGY 4 ITA NO. 983/JP/2013 RAJASTHAN RENEWAL ENERGY VS. DCIT EFFICIENCY (BEE) MINISTRY OF POWER, GOVERNMENT OF IN DIA ON MARCH, 2003 FOR PROMOTE EFFICIENT USE OF ENERGY AND ITS CONSERV ATION AND ALSO ENFORCE THE PROVISION OF ENERGY CONSERVATION ACT, 2001. THE ENERGY DEPARTMENT HAS CONSTITUTED RAJASTHAN STATE ENERGY CONSERVATIO N FUND (RSECF) VIDE ORDER DATED 01/06/2006 AS PER SECTION 16 OF EN ERGY CONSERVATION ACT, 2001 WITH THE FOLLOWING OBJECTS WHERE IN THE FUND SHALL BE APPLIED. I. TO MEET THE EXPENDITURE INCURRED BY THE STATE DE SIGNATED AGENCY TO TAKE ALL MEASURES TO CREATE AWARENESS AND DISSEMINATE INFORMATION FOR EFFICIENT USE OF ENERGY AND ITS CONSERVATION AND FOR UNDERTAKING AWARENESS PROGRAMME FOR CONSUMERS, INDUSTRIAL AND COMMERCIAL SECTORS, EDUCA TIONAL INSTITUTIONS, FARMERS AND OTHERS; II TO MEET THE EXPENDITURE INCURRED BY THE STATE DE SIGNATED AGENCY FOR TRAINING OF PERSONNEL AND SPECIALISTS FO R EFFICIENT USE OF ENERGY AND ITS CONSERVATION. III FOR PROMOTION OF RESEARCH AND DEVELOPMENT IN TH E FIELD OF ENERGY CONSERVATION. IV TO DEVELOP TESTING AND CERTIFICATION PROCEDURE, IN CREATION OF TESTING FACILITIES FOR CERTIFICATION VERIFICATION A ND TESTING OF ENERGY CONSUMPTION OF EQUIPMENTS AND APPLIANCES. V TO FORMULATE AND FACILITATE IMPLEMENTATION OF PIL OT AND DEMONSTRATION PROJECTS FOR PROMOTION OF EFFICIENT U SE OF ENERGY AND ITS CONSERVATION OR TO PROVIDE MATCHING CONTRIBUTION FOR SUCH PROJECTS TAKEN UP BY BUREAU O F ENERGY EFFICIENCY. 5 ITA NO. 983/JP/2013 RAJASTHAN RENEWAL ENERGY VS. DCIT VI TO PROMOTE THE USE OF ENERGY EFFICIENT PROCESSES FOR THE EQUIPMENTS, DEVICES AND SYSTEMS. VII TO MEET THE MATCHING GRANT TO THE CENTRALLY SPO NSORED SCHEMES AND SCHEMES OF BUREAU OF ENERGY EFFICIENCY IMPLEMENTED IN THE STATE OF RAJASTHAN. VIII TO PROVIDE SUBSIDY FOR USE OF ANY ENERGY EFFIC IENT OR ENERGY CONSERVATION DEVICE OR MACHINERY NOTIFIED BY THE ST ATE GOVERNMENT. IX TO MEET THE EXPENSES INCURRED BY THE STATE DESIG NATED AGENCY FOR IMPLEMENTING THE PROVISIONS OF THE ACT A ND X TO MEET THE EXPENSES INCURRED BY THE STATE DESIGN ATED AGENCY ON STAFF FOR DEDICATED ENERGY CONSERVATION C ELL. THE LD AR FURTHER SUBMITTED THAT THE COMPANY WAS INCO RPORATED WITHIN THE FOLLOWING MAIN OBJECTS: (I) TO PLAN, PROMOTE AND ORGANIZE INTEGRATED AND EF FICIENT DEVELOPMENT OF THERMAL/HYDRO ELECTRIC POWER, GAS HSD AND OTHER PETROLEUM FUEL BASED POWER, SOLAR, WIND, BIOMAS S AND OTHER NON CONVENTIONAL AND RENEWAL ENERGY USED POWER (INCLUDING THOSE BASED ON BIO-MASSS, BIO-GAS) AND POWER TRANSMISSION SYSTEMS IN ALL ITS ASPECTS INCLUDING P LANNING INVESTIGATION RESEARCH DESIGN ENGINEERING AND PREPA RATION OF PRELIMINARY FEASIBILITY AND DEFINE PROJECT REPOR TS, CONSTRUCTION, GENERATION OPERATION AND MAINTENANCE OF POWER STATIONS AND PROJECTS AND SALE OF POWER GENERAT ED IN ACCORDANCE WITH THE STATE POLICY AND BROAD ECONOMIC CONSIDERATION. 6 ITA NO. 983/JP/2013 RAJASTHAN RENEWAL ENERGY VS. DCIT (II) TO PROMOTE, SUPPORT ASSIST, SPONSOR THE USE OF NON- CONVENTIONAL ENERGY SOURCES IN THE COUNTRY OR ABROA D AND DISSEMINATE USEFUL KNOWLEDGE AND UNDERSTANDING IN TH E VARIOUS FIELDS OF NON-CONVENTIONAL ENERGY AMONG MAS S. HE PLACED RELIANCE ON THE FOLLOWING CASE LAWS:- (I) CIT VS. RAJ SHIPPING AND WEAVING MILLS LTD. (200 5) 272 ITR 487 (RAJ.). (II) CIT VS. UPPER GANGES SUGAR MILLS LTD. (1994) 20 6 ITR 215 (CAL.) (III) KRISHNA SAHAKARI KARKHANA LTD. VS. CIT (1998) 229 ITR 577 (BOM). THEREFORE, HE PRAYED TO DELETE THE ADDITION. 5. AT THE OUTSET, THE LD SR. DR HAS VEHEMENTLY SUPP ORTED THE ORDER OF THE LOWER AUTHORITIES AND PRAYED TO UPHOLD THE OR DER OF THE LD CIT(A). 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE AS SESSEE COMPANY HAS NOMINATED AS A STATE DESIGNATED AGENCY OF BUREAU OF ENERGY EFFICIENCY, MINISTRY OF POWER, GOVERNMENT OF INDIA ON MARCH, 200 3 FOR PROMOTE EFFICIENT USE OF ENERGY AND ITS CONSERVATION AND AL SO ENFORCE THE PROVISIONS OF ENERGY CONSERVATION ACT, 2001. THE ENE RGY DEPARTMENT HAS CONSTITUTED RAJASTHAN STATE ENERGY CONSERVATIO N FUND (RSECF) VIDE ORDER DATED 01/06/2006 AS PER SECTION 16 OF EN ERGY CONSERVATION ACT, 2001 TO ACHIEVE THE OBJECT PRESCRIBED IN THE A CT. THE COMPANY WAS 7 ITA NO. 983/JP/2013 RAJASTHAN RENEWAL ENERGY VS. DCIT INCORPORATED TO PLAN, PROMOTE AND ORGANIZE INTEGRAT ED AND EFFICIENT DEVELOPMENT OF THERMAL/HYDRO ELECTRIC POWER, GAS HSD AND OTHER PETROLEUM FUEL BASED POWER, SOLAR, WIND, BIOMASS AND OTHER NON CONVENTIONAL AND RENEWAL ENERGY USED POWER (INCLUDING THOSE BASED ON BIO-MASSS, BIO-GAS) AND POWER TRANSMISSION SYSTEMS IN ALL ITS ASPECTS INCLUDING PLANNING INVESTIGATION RESEARCH DESIGN EN GINEERING AND PREPARATION OF PRELIMINARY FEASIBILITY AND DEFINE P ROJECT REPORTS, CONSTRUCTION, GENERATION OPERATION AND MAINTENANCE OF POWER STATIONS AND PROJECTS AND SALE OF POWER GENERATED IN ACCORDAN CE WITH THE STATE POLICY AND BROAD ECONOMIC CONSIDERATION. TO PROMOTE, SUPPORT ASSIST, SPONSOR THE USE OF NON-CONVENTIONAL ENERGY SOURCES IN THE COUNTRY OR ABROAD AND DISSEMINATE USEFUL KNOWLEDGE AND UNDERSTA NDING IN THE VARIOUS FIELDS OF NON-CONVENTIONAL ENERGY AMONG MAS S. THE ASSESSEE PAID RS. 5 LACS TO PERFORM THE OBJECT OF THE COMPAN Y. THIS AMOUNT WAS PAID TOWARDS ENERGY CONSERVATION CONTRIBUTION FUND, WHICH IS STATUTORY LIABILITY AS PER PROVISIONS OF ENERGY CONSERVATION ACT, 2001. THE CASE LAW RELIED BY THE ASSESSEE OF THE JUDGMENT OF THE HO NBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. RAJ SHIPPING AND W EAVING MILLS LTD. (SUPRA) IS SQUARELY APPLICABLE IN THE CASE OF THE A SSESSEE WHEREIN IT HAS 8 ITA NO. 983/JP/2013 RAJASTHAN RENEWAL ENERGY VS. DCIT BEEN HELD THAT CONTRIBUTION TO THE FUND SET UP FOR PRODUCTS WHICH WAS ALSO THE BUSINESS OF THE ASSESSEE HAS DIRECT NEXUS TO THE ADVANCEMENT OF THE ASSESSEE BUSINESS. THE OBJECT OF THE FUND WAS NOT CONFINED TO THE ASSESSEE BUT WAS OPEN TO ALL WHO WANTED TO PARTICIPATE COULD NOT ALTER THE CHARACTER OF EXPENSES INCURRED BY WAY OF CONTRI BUTION TO SUCH FUND BY THE ASSESSEE FROM HIS BENEFIT TO OTHER BENEFITS. BY RESPECTFULLY FOLLOWING THE HONBLE RAJASTHAN HIGH COURT DECISION, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE HAS INCURRED EXPEN SES WHOLLY AND EXCLUSIVELY FOR BUSINESS PURPOSES. ACCORDINGLY, WE R EVERSE THE ORDER OF THE LD CIT(A). 7. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30/09/2015. SD/- SD/- YFYR DQEKJ VH-VKJ-EHUK (LALIET KUMAR) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 30 TH SEPTEMBER, 2015 RANJAN* VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- RAJASTHAN RENEWABLE ENERGY CORPORATION LIMITED, JAIPUR. 9 ITA NO. 983/JP/2013 RAJASTHAN RENEWAL ENERGY VS. DCIT 2. IZR;FKHZ @ THE RESPONDENT- THE DCIT, CIRCLE-6, JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO.983/JP/2013) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR