PR COMMISSIONER OF INCOME TAX-II V. RAJASTHAN STATE MINES andMINERALS LTD

ITA/317/2017

AI Insights

The case involves multiple appeals by the Principal Commissioner of Income Tax-II against Rajasthan State Mines & Minerals Ltd., concerning the disallowance of deductions under section 80IA of the Income Tax Act. The primary legal question was whether the liquidated damages received for shortfall in minimum guaranteed power generation could be considered as income derived from the power generation business. The tribunal had partly allowed the assessee's appeals, which the Income Tax Department challenged in the High Court. The High Court, referencing a previous decision in ITA No.146/2016, ruled that such liquidated damages are not to be considered as income from the power generation business, thus dismissing the appeals.

• Counselvise Citation: [2017] 140 COUNSELVISE.COM (IT) 727900 (HC-RAJASTHAN)
• Appeal Type: Others
• Pronouncement Date: 13-12-2017
• Assessment Year: misc
• Other Referred Cases: ITA No.146/2016
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: SANJAY JHANWAR; ARCHANA
• Assessee Lawyers: ANUROOP SINGHI; ADITYA VIJAY
• Keywords: Income tax appeal; Liquidated Damages; Power generation; Windmills
• Section: 80IA

Judgement Text

"HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 317 / 2017 Principal Commissioner of Income Tax-II, New Central Revenue Building, Statue Circle, Jaipur (Raj.) ----Appellant Versus Rajasthan State Mines & Minerals Ltd., C-89-90, Lal Kothi Scheme, Jaipur. ----Respondent Connected With D.B. Income Tax Appeal No. 318 / 2017 Principal Commissioner of Income Tax-II, New Central Revenue Building, Statue Circle, Jaipur (raj.) ----Appellant Versus Rajasthan State Mines & Minerals Ltd., C-89-90, Lal Kothi Scheme, Jaipur ----Respondent D.B. Income Tax Appeal No. 314 / 2017 Principal Commissioner of Income Tax-II, New Central Revenue Building, Statue Circle, Jaipur (Raj.) ----Appellant Versus Rajasthan State Mines & Minerals Ltd., C-89-90, Lal Kothi Scheme, Jaipur. ----Respondent D.B. Income Tax Appeal No. 316 / 2017 Principal Commissioner of Income Tax-II, New Central Revenue Building, Statue Circle, Jaipur (Raj.) ----Appellant Versus Rajasthan State Mines & Minerals Ltd., C-89-90, Lal Kothi Scheme, Jaipur. (2 of 4) [ITA-317/2017] ----Respondent _____________________________________________________ For Appellant(s) : Mr. Anuroop Singhi with Mr. Aditya Vijay For Respondent(s) : Mr. Sanjay Jhanwar with Ms. Archana _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYAS Judgment 13/12/2017 1. In all these appeals common question of law and facts are involved hence they are decided by this common judgment. 2. By way of these appeals, the appellant has assailed the judgment and order of the tribunal whereby tribunal has partly allowed the appeals of the assessee. 3. This court while admitting the appeals framed following substantial questions of law:- 3.1 In appeal No.314/2017 admitted on 28.11.2017 (i) Whether on the facts and circumstances of the case and in law, the Tribunal is justified in deleting the addition of Rs.5,91,46,480/- made on account of disallowance of deduction u/s 80IA ignoring the fact that liquidated damages received on account of shortfall in the minimum guaranteed generation of power units is not an income derived from the Power Generation business of windmills? 3.2 In appeal No.316/2017 admitted on 28.11.2017 (3 of 4) [ITA-317/2017] (i) Whether on the facts and circumstances of the case and in law, the Tribunal is justified in deleting the addition of Rs.3,92,20,020/- made on account of disallowance of deduction u/s 80IA ignoring the fact that liquidated damages received on account of shortfall in the minimum guaranteed generation of power units is not an income derived from the Power Generation business of windmills? 3.3 In appeal No.317/2017 admitted on 28.11.2017 (i) Whether on the facts and circumstances of the case and in law, the Tribunal is justified in deleting the addition of Rs.2,71,43,220/- made on account of disallowance of deduction u/s 80IA ignoring the fact that liquidated damages received on account of shortfall in the minimum guaranteed generation of power units is not an income derived from the Power Generation business of windmills? 3.4 In appeal No.318/2017 admitted on 28.11.2017 (i) Whether on the facts and circumstances of the case and in law, the Tribunal is justified in deleting the addition of Rs.1,68,53,256/- made on account of disallowance of deduction u/s 80IA ignoring the fact that liquidated damages received on account of shortfall in the minimum guaranteed generation of power units is not an income derived from the Power Generation business of windmills? (4 of 4) [ITA-317/2017] 4. Now, the issue is covered by the decision taken today in ITA No.146/2016 in the case of same assessee wherein it has been held as under:- “17. On issue no.4 regarding liquidated damages which are given are business losses which the undertaking ought to have done, if the mines which are given to the assessee would have performed very well, therefore, damages which were given under loss of business which was guaranteed by the supplier in view of Madhya Pradesh High Court judgment will not apply. This is not damages for compensation for business loss. In that view of the matter, this issue is also answered in favour of the assessee and against the department.” 5. In that view of the matter, the issue is answered in favour of the assessee and against the department. 6. The appeals stand dismissed. (VIJAY KUMAR VYAS) J. (K.S. JHAVERI)J. Bmg 159-160, 101 & 103 "