TMI Blog2010 (4) TMI 907X X X X Extracts X X X X X X X X Extracts X X X X ..... , which contains the report of the Assessing Officer to the learned Commissioner of Income-tax-Departmental representative (I), Income-tax Appellate Tribunal. It was the submission that the assessee had, while filing its return of income claimed depreciation for an amount of Rs. 3,22,42,546 representing the depreciation for the relevant assessment year on 80 percent share in the windmill purchased by the assessee from M/s. Surana Industries Ltd. It was the submission that M/s. Surana Industries Ltd. had purchased eight windmills at a cost of Rs. 80,99, 84,744 of which 80 percent of one of the windmills was sold to the assessee for a consideration of Rs. 8.10 crores. It was the submission that the memorandum of understanding, which had been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on January 10, 2005 and necessary resolution under the Companies Act has also been passed for modifying its objects to include the activity of operating the windmill on March 18, 2005 and this resolution was also registered with the Registrar of Companies on April 11, 2005. It was the submission that it was only after this, the assessee had proceeded with the purchase of the windmill from M/s. Surana Industries Ltd. and the sale agreement had been entered into on March 27, 2006. It was the submission that the assessee had also paid the consideration of Rs. 2.43 crores towards initial money and the balance of Rs. 5.67 crores had been taken on loan on account of the assessee. It was the submission that during the financial year 2006-07 relati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that if there was any doubt of the ownership of the windmill, nobody would be willing to finance Rs. 5.67 crores on account of the ownership of the windmill. It was the submission that the income generated by the assessee from its share of the ownership of the windmill had also been offered to tax and it had also been accepted. It was the submission that the order of the learned Commissioner of Income-tax (Appeals) is liable to be upheld. In reply, the learned Departmental representative submitted that for the assessment year 2007-08, the income had been accepted only by treating the income as the financial charges received by the assessee. We have considered the rival submissions. At the outset, a perusal of the assessment order for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng that the assessee is able to get the benefit of depreciation at 100 per cent., which would result in the reduction of the income of the assessee in the present case over a period of two years by Rs. 8.10 crores. It would be of no benefit to the assessee in so far as when the windmill is sold at any point of time the windmill will be depreciated asset and the income would be tax able as a short-term capital gain due to applicability of section 50 of the Income-tax Act. Further, the existence of the windmill is not in dispute by the Revenue. The payment by M/s. Surana Industries Ltd. to the assessee in regard to the quantum and the method of computation of quantum is also not in dispute. As per the sale agreement, the assessee is entitled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... noticed that it is a doubt and a doubt cannot be a foundation for assessment. In fact, M/s. Surana Industries Ltd. has specifically reported to the Assessing Officer that there has been no search on the premises of M/s. Surana Industries Ltd. by the CBCID nor was there any search on the premises of M/s. Vinayaka Vyapar Ltd. by the CB-CID. M/s. Surana Industries Ltd. as on October 15, 2009 has also written to the assessee again confirming that it has sold 80 percent share in one of the windmills and the assessee has taken finance for purchasing 80 percent share and the income pertaining to the windmill co-owned by the assessee of M/s. Surana Industries Ltd. has been paid to the assessee and M/s. Surana Industries Ltd. has not claimed deprec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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