STAR WIRE (INDIA) VIDYUT PVT LTD,DELHI V. DCIT,CIRCLE-22(2), DELHI

SA 342/DEL/2025

AI Insights

The case involves Star Wire (India) Vidyut Private Limited, which filed a stay application against an outstanding demand of Rs. 1,44,36,174 for the assessment year 2023-24. The demand arose from an assessment order that disallowed a deduction under Section 80IA due to a belated filing of an audit report. The assessee argued that the requirement to file the audit report before the specified date for tax-audit was directory, not mandatory, and cited several precedents supporting this view. Additionally, the assessee contested disallowances made on business promotion and traveling expenses, which were deemed necessary for compliance and operations with the Haryana Power Purchase Centre. The Tribunal, after considering the submissions and precedents, granted a conditional stay on the recovery of the outstanding demand.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 708371 (ITAT-DELHI)
• Appeal Type: Stay Application
• Pronouncement Date: 18-07-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Assessment Year: 2023-2024
• Other Referred Cases: CIT v. G.M. Knitting Industries Private Limited (2015) 376 ITR 456(SC), Shree Bhawani Power Projects Private Limited v. ITO (2025) 475 ITR 155(Del), ACIT v. Hi Tech Systems and Services Limited (ITA no. 1318/Kol/2024), Universal Biomass Energy Private Limited v. NFAC, Delhi (ITA No. 267/Asr/2024), Canadian Specialty Vinyls v. ITO (ITA No. 7612/Del/2019), Sanjay Kukreja v. ACIT (2024 SCC Online ITAT 3175)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: REVENUE; THEN
• Keywords: Application of stay
• Section: 143(3); 6; 10; 2

Judgement Text

"1 SA No. 342/Del/2025 Arising out of ITA No. 4259/Del/2025 A.Y. 2023-24 Star Wire(India) Vidyut Private Limited 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “A”: NEW DELHI BEFORE SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER AND SHRI VIMAL KUMAR, JUDICIAL MEMBER S.A. Nos. 342/Del/2025 ( In ITA Nos. 4259/DEL/2025) Asstt Yr: 2023-24 Star Wire (India) Vidyut Private Limited 8C/6, WEA, 3RD Floor, Abdul Aziz Road, Karol Bagh, Delhi- 110005AACCP9042J PAN: v. Deputy Commissioner of Income Tax, Circle 22(2), Civic Centre, New Delhi/ NFAC, Delhi APPLICANT RESPONDENT Assessee represented by Shri Sachit Jolly, Senior Advocate & Shri Abhiuday Shankar Bajpayee,AR Department represented by Shri Dheeraj Kumar Jain, Sr. DR Date of hearing 18.07.2025 Date of pronouncement 18.07.2025 O R D E R PER RAMIT KOCHAR, AM: The assessee has filed this stay application bearing S.A. no. 342/Del/2025 which has arisen from ITA no. 4259/Del/2025 for assessment year 2023-24 , seeking stay on recovery of outstanding demand towards income-tax and interest, aggregating to Rs. 1,44,36,174/- raised by the Revenue vide notice of demand u/s 156 and computation sheet dated 11.03.2025( Demand Identification 2 SA No. 342/Del/2025 Arising out of ITA No. 4259/Del/2025 A.Y. 2023-24 Star Wire(India) Vidyut Private Limited 2 No.2024202337354289632C), which has arisen from assessment order dated 11.03.2025(DIN:ITBA/AST/S/143(3)/2024-25/1074363000(1)) passed by the learned Assessing Officer u/s 143(3) read with Section 144B of the Income-tax Act, 1961. The appeal filed by the assessee against the said assessment order stood dismissed by learned CIT(A) , NFAC, New Delhi vide appellate order dated 02.06.2025 passed by ld. CIT(A) u/s 250 of the 1961 Act(DIN & Order No. ITBA/NFAC/S/250/2025-26/1076620102(1)) . Aggrieved by appellate order passed by learned CIT(A) , the assessee has filed an appeal with the Income Tax Appellate Tribunal, Delhi Benches, New Delhi, which is listed as ITA no. 4259/Del/2025 for assessment year 2023-24. 2. It was submitted by Ld. Sr. Advocate appearing for the assessee that the assessee is engaged in the business of power generation. It was submitted that the assessee had set up Bio-Mass Plant at Jerpur, Mandola Road, Village Khurwata, Mahindergarh, Haryana in the year 2013 . The commercial production started on 3rd May, 2013. The assessee has entered into ‘Power Purchase Agreement’ dated 22.06.2022 with Haryana Power Purchase Centre(HPPC). The assessee is selling power to ‘Haryana Power Purchase Centre’. There is no other activity carried out by the assessee, since 2013. The assessee filed its return of income for the 3 SA No. 342/Del/2025 Arising out of ITA No. 4259/Del/2025 A.Y. 2023-24 Star Wire(India) Vidyut Private Limited 3 impugned assessment year on 24.10.2023 declaring Nil Income, after claiming deduction u/s 80IA to the tune of Rs. 4,40,03,570/-. The due date for filing return of income u/s 139(1) was 31.10.2023. It was submitted by ld. Sr. Advocate that the said deduction u/s 80IA was allowed by Revenue while processing return of income u/s 143(1) . The case of the assessee was selected for framing scrutiny assessment. Statutory notices were issued by the AO. The assessee participated in the assessment proceedings. It was submitted by ld. Sr. Advocate that the ld. AO disallowed the claim of the assessee for deduction u/s 80IA on the ground that the audit report in Form No. 10CCB was filed belatedly on 23.10.2023, while the due date of filing the said audit report as per Section 80IA(7) was 30.09.2023. It was submitted that even ld. CIT(A) disallowed the said deduction u/s 80IA(4)(iv) by invoking amended provisions of Section 80IA(7). The ld. Sr. Advocate submitted that there was amendment in Section 80IA(7) by Finance Act, 2020 w.e.f. 01.04.2020, and the requirement is that the accounts of the undertaking is to be audited by an accountant as defined u/s 288(2) before the specified date referred to in Section 44AB , and the assessee furnishes before the specified date referred to in Section 44AB , the report of such audit in the prescribed form duly signed and verified by such accountant. It was submitted that this requirement of filing audit report in Form No. 10CCB before the specified date for tax-audit u/s 44AB i.e. is 4 SA No. 342/Del/2025 Arising out of ITA No. 4259/Del/2025 A.Y. 2023-24 Star Wire(India) Vidyut Private Limited 4 30.09.2023, is directory in nature and not mandatory. The assessee duly filed the audit report in form No. 10CCB on 23.10.2023 with the Revenue, while return of income was filed on 24.10.2023 i.e. before the due date u/s 139(1) viz. 31.10.2023. It was submitted that in the preceding years , claim of deduction u/s 80IA was allowed by the department. The ld. Sr. Advocate relied upon following judgments/orders: 1. CIT v. G.M. Knitting Industries Private Limited (2015) 376 ITR 456(SC) 2. Shree Bhawani Power Projects Private Limited v. ITO (2025) 475 ITR 155(Del) 3. ACIT v. Hi Tech Systems and Services Limited (ITA no. 1318/Kol/2024) 4. Universal Biomass Energy Private Limited v. NFAC , Delhi (ITA No. 267/Asr/2024) 5. Canadian Specialty Vinyls v. ITO (ITA No. 7612/Del/2019) 6. Sanjay Kukreja v. ACIT (2024 SCC Online ITAT 3175) 2.1.2 It was submitted that in large number of cases, it was held by the Courts/Tribunal that filing of Form No. 10CCB is directory in nature and not mandatory, and in case the same was filed on 23.10.2023 before the due date of filing of return of income u/s 139(1) which was 31.10.2023, although beyond the time stipulated u/s 80IA(7) i.e. before the due date of filing of tax-audit report u/s 44AB which was 30.09.2023. It was submitted that the Kolkatta Tribunal gave 5 SA No. 342/Del/2025 Arising out of ITA No. 4259/Del/2025 A.Y. 2023-24 Star Wire(India) Vidyut Private Limited 5 relief to the assessee even after considering the amended provisions in Hi-Tech Systems(supra) which was for assessment year 2022-23 2.2 Regarding second issue of additions to the tune of Rs. 91,41,533/- which is towards additions made by disallowance of Business Promotion Expenses and Travelling expenses , it was submitted by ld. Sr. Advocate that the assessee is engaged in the business of generating power and has established/installed Bio- Mass plant at Jerpur Mandola Road, Village Khurawata, Mahendergarh, Haryana in the year 2013. The entire sale being of Rs. 38,60,10,905/- has been made to the Haryana Power Purchase Centre(HPPC), Shakti Bhawan , Sector-6, Panchkula, Haryana(Department of Haryana State Government). It was submitted that in connection with the sale made to State Government, the assessee has to follow lot of procedures, so as to satisfy the various officers of the department as to correctness of the bills submitted and to obtain payments of the bills so submitted.The assessee has also to satisfy the officers of the State Government as to the consumption of the fuel as per procedure laid down and also mentioned in the Power Purchase Agreement. Thus,the assessee has to incur lot of expenses to obtain the payments from State Government as it has to convene meetings with the officers of the State Government and to convince them on the various compliances 6 SA No. 342/Del/2025 Arising out of ITA No. 4259/Del/2025 A.Y. 2023-24 Star Wire(India) Vidyut Private Limited 6 to be made. It was submitted that the AO and ld. CIT(A) failed to appreciate the same, and the expenses incurred towards Business Promotion to the tune of Rs. 24,35,784/- were disallowed. With respect to disallowance of Travelling Expenses to the tune of Rs. 67,05,749/- , it was submitted that the assessee has set up power generating plant with finance’s raised from associated companies based at Kolkatta , and also that it has to maintain liaison with State Government officials at Chandigarh , and in connection therewith Managing Director of the Company has to meet Senior State Government Functionary at Chandigarh. It was also submitted that there are certain litigations which are going on in Chandigarh with respect to the assessee, and the assessee’s Managing Director has to travel. It was submitted that since there are no other male members in the family, the family consisting of Managing Director , his wife and one child has to travel together. This facility has been given by the assessee company. The assessee has furnished the complete details. The authorities below rejected the contentions of the assessee, as the assessee could not demonstrate the business exigency for incurring said expenditure apart from the expenses also being incurred for family members. The ld. Sr. Advocate prayed that the stay on recovery of the outstanding demand be granted and the appeal of the assessee in ITA No. 4259/Del/2025 be fixed for hearing, so that the appeal could be adjudicated by the Tribunal at the earliest. It 7 SA No. 342/Del/2025 Arising out of ITA No. 4259/Del/2025 A.Y. 2023-24 Star Wire(India) Vidyut Private Limited 7 was further submitted that as per computation sheet issued by the department , dated 11.03.2025, it is mentioned at S.No. 55 that the assessee has been issued refund of Rs. 69,04,670/- , but it was submitted by ld. Sr. Advocate that the assessee has not yet received any such refund order from the department. 3. The ld. Sr. DR prayed that the assessee be asked to deposit the entire outstanding demand. 4. After hearing both the parties and perusing the material on record, and without commenting on the merits of the issues in the appeal, we are of the considered view that the assessee has made out a prima-facie case for grant of stay on recovery of the outstanding demand so far as demand which has arisen from the disallowance of deduction u/s 80IA(4) of the 1961 Act on the grounds that the assessee has filed audit report in Form No. 10CCB on 23.10.2023 which was belatedly filed and was required to be filed on or before 30.09.2023 i.e. the due date for getting the tax-audit u/s 44AB, while return of income was duly filed on 24.10.2023 which was within the due date prescribed for filing of return of income u/s 139(1) of the 1961 Act. The assessee has relied upon certain case laws which are reproduced in the preceding para’s of this order. Needless to say that while adjudicating appeal of the assessee on merits, the Tribunal will delve into facts as 8 SA No. 342/Del/2025 Arising out of ITA No. 4259/Del/2025 A.Y. 2023-24 Star Wire(India) Vidyut Private Limited 8 well law in details including meeting various conditions by the assessee for claiming deduction u/s 80IA(4) as are stipulated in the 1961 Act , inter-alia, including the amendments made by Finance Act, 2020 w.e.f. 01.04.2020 to Section 80IA(7). So far as second addition of Rs. 91,41,533/- towards disallowance of Business Promotion and Travelling Expenses are concerned, without commenting on the merits of the issues and based on the factual matrix narrated before us , we direct the assessee to deposit Rs. 35,00,000/- (Rs. Thirty Five Lacs Only) with Government Treasury as pre-condition for grant of stay on the remaining outstanding demand. It is claimed by the assessee that the department has shown in computation sheet dated 11.03.2025 (S.No. 55) that an refund of Rs. 69,04,670/- was granted to the assessee , but statement has been made at Bar by ld. Sr. Advocate before the Bench that the aforesaid refund was not received by the assessee. The AO is directed to verify from the records the aforesaid contention of the assessee within three weeks from now , and intimate to the assessee as to the outcome of the same i.e. factual position wrt aforesaid refund . The assessee is directed to co-operate with department and submit all details if so called by the AO. In case the aforesaid refund has not been granted to the assessee as of now, the AO shall adjust an amount of Rs. 35,00,000/- (Rs. Thirty Five Lacs) against the same. But, If the afore-said refund was granted to the assessee by Revenue, then 9 SA No. 342/Del/2025 Arising out of ITA No. 4259/Del/2025 A.Y. 2023-24 Star Wire(India) Vidyut Private Limited 9 the assessee shall within one week from the intimation by the AO shall deposit the aforesaid pre-deposit amount of Rs. 35,00,000/- i.e. on or before 4 weeks from now, as directed by us in this order which is a pre-condition for grant of stay on the remaining outstanding demand. The stay will become operational and effective on the compliance of aforesaid directions as mentioned in this order towards deposit of Rs. 35,00,000/- with Government Treasury as pre-condition for stay on remaining outstanding demand, and , thereafter, shall be valid for a period of 180 days or disposal of the appeal which ever is earlier. We clarify and reiterate that we have not commented on the merits of the issues in this appeal. The appeal is now directed to be listed for hearing before the Division Bench on 03.09.2025. The date was announced in the open court, which is noted by both the parties. Issue of notice is dispensed with.We Order accordingly. 5. The stay petition is partly allowed in the manner as indicated above. Order pronounced in open court on 18.07.2025. Sd/- Sd/- (VIMAL KUMAR ) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 21.07.2025. 10 SA No. 342/Del/2025 Arising out of ITA No. 4259/Del/2025 A.Y. 2023-24 Star Wire(India) Vidyut Private Limited 10 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI "