TMI Blog2015 (11) TMI 998X X X X Extracts X X X X X X X X Extracts X X X X ..... t addition to income based solely on report of DVO is not valid in absence of any evidence of understatement of consideration. Further, the contention of the assessee before the AO as well as the CIT(A) that the agreements for purchase of lands were entered in the year 1996 and 2002 and the possession was also taken prior to 2004- 05 could not be controverted by the Ld. Departmental Representative. Under these circumstances, we find merit in the submission of the Ld. Counsel for the assessee that the DVO has erred in taking the sale instances of the year 2005 instead of taking comparable sale instances of 1996 and 2002. There is also nothing on record to indicate that land was undervalued. Under these circumstances we do not find any infirmity in the order of the CIT(A) deleting the addition made by the AO u/s.69B of the I.T. Act. - Decided in favour of assessee. Depreciation on windmill and MEDA charges - Held that:- the issue stands decided against the assessee by the decision of the Tribunal in the case of J-Sons Foundry Pvt. Ltd. [2015 (11) TMI 922 - ITAT PUNE] allowing higher depreciation @80% on civil work foundation and related labour cost of windmill. - Decided in favour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A) allowed the claim of the assessee on the ground that an amount of ₹ 21.92 crores has already been considered in the hands of Mahalaxmi Infraprojects Ltd. on account of Ghodzari project which includes the amount of ₹ 1.4735 crores (Not ₹ 1.50 crores). Therefore, making addition of this amount in the hands of the assessee will amount to double taxation. We do not find any infirmity in the order of the CIT(A). The assessing authority is denuded of its authority to verify the correctness and completeness of the return, which authority it has while framing a regular assessment. It must accept the return as furnished and shall not in any event raise a demand for payment of further taxes. Accepting the income as disclosed in the return of income furnished by the assessee, it must refund to the assessee any tax paid in excess of the liability incurred by him on the basis of income disclosed. Even if the tax paid is found to be less than that payable, no further demand can be made for recovery of the balance amount since a fresh assessment is barred. However, if the assessee has paid more tax then the income that was returned then the excess tax to be refunded. We t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.Y. Amount of Expenses Spent in excess of ₹ 20,000/- in cash Disallowance u/s.40A(3) of the I.T. Act 2005-06 213941 42788 2006-07 361069 72214 2007-08 317566 63513 2008-09 609305 609305 2009-10 184068 69384 2010-11 80499 NIL 5. So far as addition of ₹ 2,35,117/- is concerned the AO noted during the course of assessment proceedings that the assessee company has shown huge amount outstanding in the names of sub-contractors and labour contractors. From the various details furnished by the assessee the AO noted that certain creditors are outstanding for more than 3 years and certain creditors are even outstanding for more than 10 years. He, therefore, asked the assessee to shortlist the names of creditors who are outstanding for more than 3 years and since when they have remained unpaid. The AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill be made on the basis of incriminating material, i.e. the books of account and other documents found during the search but not produced during the course of original assessment and undisclosed income or property discovered in the course of search. It was accordingly argued that no addition is warranted either u/s.40A(3) or u/s.41(1) of the I.T. Act, 1961. 8. So far as disallowance u/s.40A(3) is concerned the Ld.CIT(A) confirmed the addition for all the years in absence of any examination by the AO during the first round of assessment proceedings and in absence of the assessee to show that the expenses made in excess of ₹ 20,000/- were incorrect due to circumstances beyond the control of the assessee. 9. So far as disallowance u/s.41(1) is concerned the Ld.CIT(A) deleted the addition holding that the AO in the order passed u.s,143(3) which was completed prior to the search, had verified the issue of outstanding creditors and no incriminating documents were found as a result of search. He accordingly deleted the addition. 10. Aggrieved with such order of the CIT(A) the Revenue is in appeal before us with the following grounds : 1. Whether on the facts and in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the search or proceedings u/s.153A. He submitted that merely because creditors were outstanding for some years it did not mean that the liability has ceased in the hands of the assessee. Referring to the decision of Hon ble Supreme Court in the case of CIT Vs. Sugauli Sugar Works Pvt. Ltd. reported in 236 ITR 518 he submitted that the Hon ble Supreme Court in the said decision has held that the mere fact that the assessee has made an entry of transfer in his accounts unilaterally will not enable the department to say that section 41(1) is applied and the amount should be included in the total income of the assessee. Thus, even when the assessee has credited such amount to its profit and loss account still provisions of section 41(1) are not applicable in view of the above decision. Therefore, when the assessee in the instant case is still showing the creditors in its balance sheet, therefore, there is no question of making the addition u/s.41(1). Referring to the decision of the Pune Bench of the Tribunal in the case of Hrishikesh L. Joshi vide ITA No.702/PN/2007 he submitted that the Tribunal in the said decision has held that simply because the liability is unpaid for more ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of cessation of liability u/s.41(1) of the I.T. Act has observed as under: The respondent-assessee is a private limited company. In the proceedings for assessment of tax for the year ending 30.6.1964 relevant to the Assessment year 1965-66, the assessee transferred a sum of ₹ 3,45,000 out of the suspense account running from 1946-47 to 1948-49 to the capital reserve account. The Income Tax Officer found that an amount of ₹ 1,29,.000 was with reference to the deposits and advances which had been paid back and he included a sum of ₹ 2,56,529 under Section 41 of the Income Tax Act in the total income of the assessee. The assessee went on appeal before the Appellate Assistant Commissioner and the order of the I.T.O. was confirmed. The assessee carried the matter to the Tribunal. The Tribunal accepted the contention of the assessee and held that its unilateral entry in the accounts transferring the amount to the capital reserve account would not bring the matter within the scope of Section 41 of the Income Tax Act and consequently held in favour of the assessee. The decision of the Tribunal was challenged before the High Court. The High Court observed : T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r whatsoever any amount in respect of such loss or expenditure or some benefit in respect of such trading liability by way of remission or cessation thereof, the amount obtained by him . Thus, the section Contemplates the obtaining by the assessee of an amount either in cash or in any other manner whatsoever or a benefit by way of remission or cessation and it should be of a particular amount obtained by him. Thus, the obtaining by the assessee of a benefit by virtue of remission or cessation is sine qua non for the application of this Section. The mere fact that the assess has made an entry of transfer in his accounts unilaterally will not enable the Depart-ment to say that Section 41 would apply and the amount should be included in the total income of the assessee. The reasoning of the High Court is correct and we are in agreement with the same. 4. Learned counsel for the appellant draws our attention to the judgment of the Calcutta High Court in Commissioner of Income Tax v. General Industrial Society Ltd., (1994) 207 ITR 169. The Division Bench of the Calcutta High Court has taken care to set out the two important factors in that case which weighed with them to come to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing it as his income, he could not be permitted to turn round when the question of inclusion of such amount in his income under Section 41(1) of the Act arose. The Bench distinguished the judgment in Kohinoor Mills Co. Ltd. v. CIT, (1963) 49 ITR 578, by observing that there was no cessation of liability in that case despite the expiry of period of limitation to enforce the same. The Bench said that the assessee could not get rid of his liability when called upon to meet either by the employees under the Industrial Disputes Act or by the Government under the Bombay Welfare Fund Act on account of the special provisions of those Acts. We are unable to accept the reasoning of the Bombay High Court in that case. Just because an assessee makes an entry in his books of accounts unilaterally, he cannot get rid of his liability. The question whether the liability is actually barred by limitation is not a matter which can be decided by considering the assessee's case alone but it is a matter which has to be decided only if the creditor is before the concerned authority. In the absence of the creditor, it is not possible for the authority to come to a conclusion that the debt is barred an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h loss or expenditure in the past . As rightly observed by the Division Bench in the context in which these words occur, no other meaning is possible. we are in agreement with the said reasoning. 8. There is another judgment of the Bombay High Court which was rendered much earlier in J.K. Chemicals Ltd. v. Commissioner of Income-Tax, Bombay City II, (1966) 62 ITR 34. The Bench observed : ........The transfer of an entry is a unilateral act of the assessee, who is a debtor to its employees. We fail to see how a debtor, by his own unilateral act, can bring about the cessation or remission of his liability. Remission has to be granted by the creditor. It is not in dispute, and it indeed cannot be disputed, that it is not a case or remission of liability. Similarly, a unilateral act on the part of the debtor cannot bring about a cessation of his liability. The cessation of the liability may occur either by reason of the opera-tion of law, i.e., on the liability becoming unenforceable at law by the creditor and the debtor declaring unequivocally his intention not to honour his liability when payment is demanded by the creditor, or a contract between the parties or by disch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dition during the year under consideration. Further, we find the judgments in the cases of DSE Engineers (30 SOT 31) (Mum), Sugaoli Sugar Works P Ltd (236 ITR 518) holds that the liabilities do not cease to exists merely by efflux of time. Considering the above settled principles on the issue, we find that the finding of the CIT(A) has to be reversed on this issue. Accordingly, the relevant ground of the assessee are allowed. Further, the grounds of the revenue are dismissed. 13.4 Following the above precedents we hold that the CIT(A) was fully justified in deleting the addition of ₹ 2,35,117/-. Accordingly, the grounds raised by the Revenue are dismissed. ITA No.378/PN/2013 (By Revenue) (A.Y. 2005-06) : 14. Grounds of appeal No.1 and 2 by the Revenue read as under: 1. Whether on the facts and in the circumstances of the case the CIT(A) is justified in deleting the addition of ₹ 1,03,230/- made on account of creditors outstanding stating that the issue of outstanding creditors was already subject to scrutiny during original assessment and the Assessing Officer cannot re-assess the income u/s.153A? 2. On the facts and in the circumstances of the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It was submitted by the assessee that the difference between the investment shown by the assessee and the value determined by the DVO is due to the sudden increase in price by more than 60% to 70%. Further, the DVO has not considered the fact that one of the properties, i.e. Plot No.22/1 at Bavdhan was agreed to be purchased in 2002 and Plot No.21/1 at Bavdhan was agreed to be purchased in 1996. The DVO has not considered the above fact and has considered the fair market value of properties on the date of purchase. The fair market value on the date of first payment, i.e. 2002 and 1996 should have been considered by the AO. However, the AO did not accept the arguments advanced by the assessee and made the addition of ₹ 22,04,250/- being the difference between the cost arrived at by the DVO and shown by the assessee u/s.69B of the I.T. Act. 19. Before CIT(A) it was submitted that the stamp duty registration charges are accounted for in its books at the time of purchase deed. Relying on the decision of Hon ble Delhi High Court in the case of CIT Vs. Puneet Sabharwal reported in 338 ITR 485 it was submitted that the Hon ble High Court in the said decision has held that additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is also not the case of the assessing officer that incriminating documents indicating cash dealing in land purchase were discovered during the course of search and seizure. Under these circumstances, the assessing officer has incorrectly assumed jurisdiction over this item and made the addition of ₹ 15.90 lakhs in assessment year 2006-07 and ₹ 22.40 lakhs in assessment year 2005- 06. 21. Even on merits, there is no case for an addition because the DVO has taken comparable sales instance of the year 2005 whereas he was supposed to take the comparable sales instance of the year 1996 and 2002. There is nothing on record to indicate that land was undervalued while making the purchases m these two years. Therefore, the additions made are deleted. 21. Aggrieved with such order of the CIT(A) the Revenue is in appeal before us. 22. The Ld. Departmental Representative heavily relied on the order of the AO. 23. Ld. Counsel for the assessee on the other hand while supporting the order of the CIT(A) submitted that no incriminating evidence whatsoever was found during the course of search that the assessee has made any unaccounted investment or unaccounted payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f ₹ 1,94,223/- made on account of creditors outstanding stating that the issue of outstanding creditors was already subject to scrutiny during original assessment and the Assessing Officer cannot re-assess the income u/s.153A? 2. On the facts and in the circumstances of the case and in law, whether the Ld.CIT(A) is justified in holding that the original assessment made u/s.143(3) had reached finality and the same could not be agitated during the course of assessment proceedings u/s.143(3) r.w.s. 153A of the Act in the absence of incriminating material found during the search. 27. After hearing both the sides, we find the above grounds are identical to grounds of appeal No.1 and 2 in ITA No.377/PN/2013. We have already decided the issue and the grounds raised by the Revenue have been dismissed. Following the same reasoning, the above grounds by the Revenue are dismissed. 28. Ground of appeal No.3 by the Revenue reads as under : 3. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in deleting addition of ₹ 15,90,000/- u/s.69B of the Act stating that the Assessing Officer has incorrectly assumed jurisdiction over this ite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lready been looked into during the course of original assessment u/s.143(3) and an opinion was formed that depreciation is allowable on foundation of windmill at the rates applicable to WTGS and MEDA charges were an allowable business expenditures. Hence, it is not possible for the Assessing Officer in the absence of any material found during the course of search to make the disallowance as the same tantamount to a change of opinion which is not permitted in the course of assessment u/s.153A. 34. Facts of the case, in brief, are that the AO during the course of assessment proceedings noted that the assessee during the impugned assessment year has installed new windmills. From the various details furnished by the assessee the AO noted that the assessee had claimed depreciation on the entire expenditure including purchase and installation of the windmill. He, therefore, asked the assessee to substantiate its claim made on the assets other than windmill. 35. The assessee submitted that there was no civil work involved for erection of the wind turbine as parts like control panels and display meters were housed within the tower itself. It was submitted that the civil work done ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovided details vide letter dated 11/01/2008 vide item no. 17 of the answer and had provided the bills etc. showing the addition of fixed assets. This bill given by M/s Enercon Ltd. clearly shows that an amount of ₹ 25 lakhs was billed towards earth work and foundation, including approach and internal roads and construction of the DP structure post. The details also show that further sum of ₹ 10 lakhs was charged towards erection and commissioning of the windmill. Applying the principles for assessment as above in the foregoing paragraphs, I hold that these issues were already looked into during the course of original assessment and an opinion was formed that depreciation is allowable on foundation of the windmill at the rates applicable to WTGS and that MEDA charges were an allowable business expense. Hence, it was not possible for the assessing officer, in the absence of any material found during the course of search to make the aforesaid disallowance as the same tantamount to a change of opinion which is not permitted in the course of reassessment u/s.153A. The appeal on this ground is allowed for A.Y. 2006-07. 38. Aggrieved with such order of the CIT(A) the Rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confirmed the addition following the decision of Hon ble Supreme Court in the case of CIT Vs. T.V. Sundaram Iyenger and Sons Ltd. reported in 222 ITR 344. 45. Aggrieved with such order of CIT(A) the assessee is in appeal before us. 46. The Ld. Counsel for the assessee submitted that merely because the creditors were outstanding for a period of 3 years it does not mean that the liability has ceased in the hands of the assessee. He referred to the decision of Hon ble Supreme Court in the case of Sugauli Sugar Works Pvt. Ltd. (Supra) and the decision of the Pune Bench of the Tribunal in the case of Hrishikesh L. Joshi vide ITA No.702/PN/2007 order dated 13-08-2010 for A.Y. 2003-04 and submitted that the Tribunal following various other decisions has deleted similar addition made by the AO and upheld by the CIT(A). He accordingly submitted that the addition made by the AO and upheld by the CIT(A) should be deleted. 47. The Ld. Departmental Representative on the other hand heavily relied on the order of the CIT(A). 48. We have considered the rival arguments made by both the sides, perused the orders of the AO and CIT(A) and the paper book filed on behalf of the assessee. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d hence, the said compensation was a capital receipt which was to be reduced from the cost of the asset. 51. Facts of the case, in brief, are that the AO during the course of assessment proceedings noted that the assessee has received 2 credit notes aggregating ₹ 40 lakhs given by M/s. Suzlon Energy Ltd. It was explained before the AO that the credit notes in respect of compensation were received from M/s. Suzlon Energy Ltd. for delay in completion of windmill project within the stipulated time limit. It was further explained that these credit notes were received for the period before the asset was put to use and was treated as capital receipts and deducted from the invoice of the value of the windmill purchased. However, the AO rejected the above contention of the assessee that these were capital receipts and accordingly brought to tax the sum of ₹ 40 lakhs as income from other sources. 52. Before CIT(A) the assessee reiterated the same submissions as made before the AO. It was submitted that the compensation receipt of ₹ 40 lakhs was taxed as revenue receipt in A.Y. 2006-07 and while working out depreciation in A.Y. 2007-08, the cost of the windmill was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of your proposed wind power of 600 KW project to be installed in Dhalgaon, Maharashtra. As discussed we would like to offer following : Enclosed drafts of revised purchase orders to be placed on us along with detailed working. We also request you to complete the advance payment as per PO drafts. The proposed project will be completed on or before 30th September 2006 at Dhule/Nandurbar, Maharashtra. Rs.22.5 Lacs as compensation for delay caused in completion of project payable on receipt of revised purchased order and completion of advance. We request for your kind acceptance of the above and would like to assure you of your best endeavours to strengthen business relations with your group. Thanking you, With best regards, Sd/- Anjali Lothe (Sr. Manager-Marketing) 57. Similarly, vide letter dated 02-11-2006 another letter has been addressed by M/s. Suzlon Energy Ltd. to the assessee agreeing to pay another ₹ 17.50 lakhs as compensation towards the said delay. 58. We find the Hon ble Supreme Court in the case of Saurashtra Cement Ltd. (Supra) while deciding an identical issue had an occasion to consider the natu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aching a decision on the issue : Where on a consideration of the circumstances, payment is made to compensate a person for cancellation of a contract which does not affect the trading structure of his business, nor deprive him of what in substance is his source of income, termination of the contract being a normal incident of the business, and such cancellation leaves him free to carry on his trade (freed from the contract terminated) the receipt is revenue : Where by the cancellation of an agency the trading structure of the assessee is impaired, or such cancellation results in loss of what may be regarded as the source of the assessee's income, the payment made to compensate for cancellation of the agency agreement is normally a capital receipt. 13. We have considered the matter in the light of the afore- noted broad principle. It is clear from clause No.6 of the agreement dated 1st September 1967, extracted above, that the liquidated damages were to be calculated at 0.5% of the price of the respective machinery and equipment to which the items were delivered late, for each month of delay in delivery completion, without proof of the actual damages the assessee w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red in directing to apportion the other misc. expenses between windmill cost and infrastructure cost without appreciating that all the expenses incurred by the assessee were relating to windmill and therefore, all such misc. expenses should have been allowed depreciation at the rate applicable to windmill. 7. The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal. 61. The Ld. Counsel for the assessee at the outset submitted that the above grounds are decided against the assessee by various decisions of the Tribunal. In view of the same, the grounds raised by the assessee are dismissed. ITA No.380/PN/2013 (By Revenue) (A.Y. 2007-08) : 62. The only effective ground raised by the Revenue reads as under : 1. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in allowing additional depreciation of ₹ 92,32,906/- at higher rate of 80% for civil work foundation and related labour cost of the windmill. 63. Facts of the case, in brief, are that the AO in the assessment order has noted that the assessee has invested in windmills at ₹ 3,80,00,000/- which includes investment of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d) Registration fees e) Substation charges f) Franking charges g) MEDA or equivalent charges 65. He had accordingly directed the AO to re-compute the depreciation allowance according to the following : i) Cost of new windmill will be inclusive of all items mentioned at 1 to 5 above. ii) Cost of power evacuation facility and infrastructure will be apportioned between the rates applicable to building/roads and windmill in 60 : 40 ratio. iii) Cost of other miscellaneous expenses will be apportioned on prorata basis between windmill and infrastructure facilities. 66. The following observation of Ld.CIT(A) is also relevant : 43. It was submitted by the appellant that the details of separate cost of foundation were not available with them in respect of WTGS supplied by Enercon. They have provided me with copies of tax invoices for supply of tower including wind turbine generating system, component and accessories, civil work for foundation and allied work, electrical items, installation and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the order of the Ld. CIT(A) to the extent of allocation of the expenditure and rate of depreciation on foundation, erection and commissioning expenditure. Ground Nos. 1 2 are dismissed. 71. In view of the decision of the Tribunal in the case of J-Sons Foundry Pvt. Ltd. (Supra) we find no infirmity in the order of the CIT(A) allowing higher depreciation @80% on civil work foundation and related labour cost of windmill. Ground raised by the Revenue is accordingly dismissed. ITA No.2579/PN/2012 (By Assessee) (A.Y. 2008-09) : 72. Ground of appeal No.1 by the assessee reads as under : 1. The learned CIT(A) erred in confirming the various additions made by the learned A.O. without appreciating that the various additions made were not based on any incriminating material and hence, such additions were not warranted in the assts. completed u/s 153A. 73. The Ld. Counsel for the assessee at the outset submitted that this ground is against the assessee by various decisions of the Tribunal. The Ld. Departmental Representative has no objection. Accordingly, this ground by the assessee is dismissed. 74. Ground of appeal No.2 was not pressed by the Ld. Counsel for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red in holding that 60% of the cost of Power Evacuation facility and infrastructure cost would be entitled to depreciation at the rate applicable to building and not at the rate applicable to windmill. 3.1 The learned CIT(A) failed to appreciate that the expenditure on Power Evacuation facility and infrastructure cost was part and parcel of windmill and hence, the entire expenditure was entitled to depreciation at a higher rate which was available to windmill. 4. The learned CIT(A) erred in directing to apportion the other misc. expenses between windmill cost and infrastructure cost without appreciating that all the expenses incurred by the assessee were relating to windmill and therefore, all such misc. expenses should have been allowed depreciation at the rate applicable to windmill. 81. The Ld. Counsel for the assessee at the outset submitted that the above grounds are decided against the assessee by various decision of the Coordinate Benches of the Tribunal. In view of the above, the above grounds by the assessee are dismissed. 82. Ground of appeal No.5 by the assessee reads as under : 5. The learned CIT(A) erred in holding that the interest u/s 234A w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A filed his return of income on 21-07-2010. He submitted that after the search the assessee is required to file return u/s.153A only. Hence, there is no question of filing any return u/s.139(1). Therefore, there is no delay in filing the return and therefore levy of interest u/s.234A is not justified at all. He submitted that as per the provisions of sub-section (3) of section 234A the interest can be levied for the default in not filing the return u/s.153A within the time limit prescribed in the section. Therefore, when the notice u/s.153A was served on the assessee on 24-06-2010 asking the assessee to furnish the return of income within 30 days from the receipt of notice and when the assessee has filed its return of income on 21-07-2010, i.e. within the prescribed period of 30 days, therefore, there is no justification for levy of interest u/s.234A. 87. The Ld. Departmental Representative on the other hand heavily relied on the order of the AO and CIT(A). 88. We have considered the rival arguments made by both the sides, perused the orders of the AO and CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ery month or part of a month comprised in the period commencing on the day immediately following the expiry of the time allowed as aforesaid, and,- (a) where the return is furnished after the expiry of the time aforesaid, ending on the date of furnishing the return; or (b) where no return has been furnished, ending on the date of completion of the re-assessment or re- computation under section 147[ or reassessment under section 153A], on the amount by which the tax on the total income determined on the basis of such re-assessment or re-computation exceeds the tax on the total income determined [under sub- section (1) of section 143 or] on the basis of the earlier assessment aforesaid. 91. We further find the Hon ble Bombay High Court in the case of CIT Vs. Continental Warehousing Corporation reported in (2015) 93 CCH 0048 (Mumbai HC) at para 22 of the order has observed as under : 22. A bare perusal thereof would indicate as to how a non obstante clause has been inserted and with a defined intent. One would find that in section 139 of the IT Act, the return of income is contemplated. These provisions fall in Chapter XIV entitled Procedure For Assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment in such cases is then issued. That is mandated by sub-section (1) of section 153A. It is not only the issuance of the notice but assessment or reassessment of total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition has to be made. 92. A combined reading of the above provisions as well as the decision cited (Supra) indicates that a non-obstante clause has been inserted and with a defined intent. In our opinion, once the search takes place on a person and the due date for filing of the return u/s.139(1) has not expired he can file the return only after the issue of notice u/s.153A. He is not required to file the return u/s.139(1). Therefore, the authorities below are not justified in levying interest u/s.234A of the I.T. Act for a period from 31-10-2009 to 20-07-2010. The ground raised by the assessee is accordingly allowed. 93. Ground of appeal No.6 by the assessee reads as under : 6. The learned CIT(A) erred in holding that the cash seized of ₹ 1,14,60,500/- should be appropriated towards the tax liability of the assessee from 30.03.2010, i.e. the date o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chandra Vs. ACIT reported in (2013) 37 CCH 127 submitted that the Tribunal in the said decision has held that section 132B(1)(i) does not prohibit utilization of the amount seized during the course of search towards advance tax payable on the amount of undisclosed income declared during the course of search. Referring to page 169 of the paper book the Ld. Counsel for the assessee drew the attention of the Bench to the letter addressed on 30-03- 2010 to the AO requesting the adjustment of seized cash against the assessment of tax for A.Y. 2009-10. He accordingly requested that appropriate direction may be given. 99. The Ld. Departmental Representative on the other hand heavily relied on the order of the CIT(A). 100. We have considered the rival arguments made by both the sides, perused the orders of the AO and CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find in the instant case cash amounting to ₹ 1,14,00,000/- was seized from the residence and office premises of the director of the assessee company. We find the assessee vide letter dated 30-03-2010 addressed to the AO had requested to adju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application of undisclosed expenses of Ghodzari Project pertains to the sister concerns M/s. Mahalaxmi Infraprojects Ltd. Thus, the unaccounted expenditure pertains to the sister concerns M/s. Mahalaxmi Infraprojects Ltd. and it does not belong to the asessee. He therefore held that telescoping adjustment against declaration made on the basis of sources in the hands of the assessee cannot be given for the unaccounted expenses of the sister concerns. He noted that in the case of M/s. Mahalaxmi Infraprojects Ltd. declaration has been made on account of application basis whereas in the case of the assessee declaration has been made on source basis. He therefore held that shifting of application on undisclosed fund pertaining to the sister concern M/s. Mahalaxmi Infraprojects Ltd. does not have any impact on the undisclosed income of the assesse. 105. Before CIT(A) the assessee challenged the action of the AO in rejecting the claim made for reducing ₹ 1.50 crores surrendered as income on account of unexplained business expenses in respect of Ghodzari Project stating it to be on source basis. It was submitted that the source based income as per SMS cash receipts is ₹ 4,35 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Cash) 2,05,00,000 -- Total 21,91,82,000 21,91,82,000 47. In assessment proceedings, it was noted that the appellant had declared an amount of ₹ 5.83 crores as undisclosed income of assessment year 2009-10 which included ₹ 1.50 crores on account of unexplained business expense in respect of Ghodzari project. The assessing officer noted that the declaration is made on application basis in the case of Mahalaxmi Infraprojects Ltd. and on source basis in the case of the appellant. Hence, he did not allow the shifting of ₹ 1.50 crores on application basis to Mahalaxmi Infraprojects Ltd. There is no confusion in respect of the amount of ₹ 5.83 crores made in the hands of the appellant by Shri R D Shinde in the statement made under section 132(4). It is the appellant's contention that out of this ₹ 5.83 crores, a sum of ₹ 4.3665 crores was on account of kickback from contractors i.e. on source basis. The balance amount of ₹ 1.4735 crores was on account of expenses incurred by the appellant. The appellant has provided a copy of the details of cash rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant has given a source and application statement of additional income for the financial years 2008-09 and 2009-10. This statement clearly shows that as against application of ₹ 2,96,38,338/-, the appellant had a surplus of ₹ 77,20,872/- which was sufficient to cover the balance of ₹ 62 lakhs. The appellant has also demonstrated that this amount will be available with it even if the amount of ₹ 1.4735 crores is reduced from the declaration of ₹ 5.83 crores. 48. In my opinion, given the facts in paragraph 46 (supra) the contention of the appellant deserves to be accepted. There is no doubt about the fact that the total quantum of declaration on account of unexplained expenses on Ghodzhari project cannot exceed ₹ 21.9182 crores. The appellant had declared it as income in the hands of Mahalaxmi Infraprojects Ltd. and the appellant in the previous year relevant to assessment years 2008-09 to 2010-11. While making the assessment of Mahalaxmi Infraprojects Ltd., the assessing officer has treated the entire sum of ₹ 21.9182 crores being the amount of unexplained expenses Ghodzhari project in the case of Mahalaxmi Infraprojects Ltd. du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ects Ltd. and ₹ 6.29 crores pertains to the assessee firm. Similarly out of total declaration of ₹ 31 crores ₹ 21.91 crores pertain to Ghodzari Project. The break-up of ₹ 21.91 crores in different assessment years both by the assessee as well as by the Department was also considered by the CIT(A). He submitted that the AO has made addition of ₹ 21.92 crores in M/s. Mahalaxmi Infraprojects Ltd. and M/s. Mahalaxmi Infraprojects Ltd. has not disputed the same. Referring to the assessment order of M/s. Mahalaxmi Infraprojects Ltd. for A.Y. 2009-10 at para 28 page 9 he drew the attention of the Bench to the following observation : 9. Evidences of kick backs from sub-contractors : Bundle No.1 seized from the residence of Shri R.D. Shinde, Managing Director of assessee company contains details of receipt of kick back from various sub-contractors. The seized documents are SMS s of amounts received from sub-contractors by Shri R.D. Shinde from his accountant. Amount is paid through cheque to the subcontractors and same is received back in cash. Evidences are found for ₹ 4,35,65,000/-. This amount was admitted by the assessee group as additional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xercised by the Central Board of Direct Taxes by issuing the circular and, therefore, the order of the Assessing Officer was without jurisdiction. The court had to exercise its jurisdiction under article 226. The order of the Assessing Officer to the extent it stated that the total income would be the returned income, was to be set aside, with a direction to the Assessing Officer to make assessment without keeping in mind the Central Board of Direct Taxes circular dated October 31, 1989. 112. Referring to the decision of Hon ble Bombay High Court in the case of CIT Vs. Pruthvi Brokers and Shareholders Pvt. Ltd. reported in 349 ITR 336 he submitted that the CIT(A) has power to consider the claim not made in the return. 113. As regards the decision relied on by the Ld. Departmental Representative in the case of Shelly Products (Supra) is concerned he submitted that the said decision is distinguishable and not applicable to the facts of the present case. In that case the respondent assessee after having paid the advance tax and self assessment tax filed his return for the relevant assessment year. The AO framed assessment u/s.143(3) r.w.s. 144B. CIT(A) partly allowed the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... find the AO during the course of assessment proceedings rejected the claim of the assessee to reduce ₹ 1.50 crores by giving telescoping effect which was surrendered as income on account of unexplained business expenses in respect of Ghodzari Project source basis. The relevant observation of the AO at para 9 of the order read as under : 9. The assessee has declared an amount of ₹ 5,83,00,000/- as its undisclosed income, which includes ₹ 1.50 croes on account of unexplained business expenses in respect of Ghodzari Project, which are claimed against the sources in the hands of assessee. It is seen that the application of undisclosed expenses of Ghodzari Project is pertains to the sister concerns M/s. Mahalaxmi Infraproject Ltd. Thus, the unaccounted expenditure pertains to the sister concerns M/s. Mahalaxmi Infraproject Ltd. and not belongs to the assessee. A Telescopic adjustment against declaration made on the basis of source in the hands of the assessee cannot be given for the unaccounted expenses of the sister concerns. In the case of M/s. Malaxaxmi Infraproject Ltd. declaration is made on account of application basis, whereas, in the case of assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jection of the Ld. Departmental Representative that CIT(A) has admitted additional evidence, we find the same is without any basis. The AO has discussed the evidence seized from the residence of the director of RDS Construction Company in the hands of Mahalaxmi Infraprojects Ltd. at para 28 of page 9. However, the AO chose not to discuss the same in the body of the assessment order of the assessee. Therefore, we find no force in the submission of the Ld. Departmental Representative that the Ld. CIT(A) has accepted any additional evidence. 118. As regards the objection of the Ld. Departmental Representative that the assessee did not make any submission before the AO on this issue, we find force in the argument of the Ld. Counsel for the assessee that the assessee came to know only after the assessment was completed in the case of Mahalaxmi Infraprojects Ltd. Since it has been added in the hands of Mahalaxmi Infraprojects Ltd., therefore, addition of the amount in the hands of the assessee will amount to double taxation. 119. As regards the objection of the Ld. Departmental Representative that the assessed income cannot go below the returned income if the contention of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which authority it has while framing a regular assessment. It must accept the return as furnished and shall not in any event raise a demand for payment of further taxes. Accepting the income as disclosed in the return of income furnished by the assessee, it must refund to the assessee any tax paid in excess of the liability incurred by him on the basis of income disclosed. Even if the tax paid is found to be less than that payable, no further demand can be made for recovery of the balance amount since a fresh assessment is barred. However, if the assessee has paid more tax then the income that was returned then the excess tax to be refunded. We therefore, are of the considered opinion that the said decision is distinguishable and not applicable to the facts of the present case. The various other decisions relied on by the Ld. Departmental Representative are also not applicable to the facts of the present case. Therefore, this argument of the Ld. Departmental Representative is also without any force. In this view of the matter the ground raised by the Revenue is dismissed. 121. Grounds of appeal No.3 4 by the Revenue being general in nature are dismissed. ITA No.2581/PN/201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he other misc. expenses between windmill cost and infrastructure cost without appreciating that all the expenses incurred by the assessee were relating to windmill and therefore, all such misc. expenses should have been allowed depreciation at the rate applicable to windmill. 126. The Ld. Counsel for the assessee fairly conceded that the above grounds are decided against the assessee by various decisions of the Tribunal. In view of the above, the above grounds are dismissed. 127. Ground of appeal No.5 being general in nature is dismissed. ITA No.383/PN/2013 (By Revenue) (A.Y. 2010-11) : 128. Ground of appeal No.1 by the Revenue reads as under : 1. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in allowing additional depreciation of ₹ 8,14,920/- at higher rate of 80% for civil work foundation and related labour cost of the windmill. 129. After hearing both the sides, we find the above ground is identical to ground of appeal in ITA No.380/PN/2013. We have already decided the issue and the ground raised by the Revenue has been dismissed. Following the same ratio, this ground by the Revenue is dismissed. 130. Ground of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iction of notional carry forward of losses under section 80IA(5) does exist but operates only from initial assessment year i.e. the first year of claim and thereafter and is not applicable from earlier years. The decision of Hon ble Madras High Court in the case of Velayudhaswamy Spinning Mills Pvt. Ltd. Vs. ACIT reported in 38 DTR 57 and the decision of the Pune Bench of the Tribunal in the case of Poonawalla Estate Stud Agro Farm Pvt. Ltd. Vs. ACIT reported in 136 TTJ 236 were brought to the notice of the CIT(A). 133. Based on the arguments advanced by the assessee the Ld.CIT(A) allowed the claim of the assessee by observing as under : 52. I have given careful consideration to the contentions of the appellant. A similar issue had come up in appeal before me in the case of M/s Preetam Enterprises wherein the decision of the Honourable ITAT, Pune Bench 'A', Pune in ITA No. 544, 545 and 613/PN/2009 dated 29/04/2011 in its case for assessment years 2004-05, 2005-06 and 2006-07, allowing the claim of deduction under section 80IA(4)(iv)(a) was considered. The relevant portion of the ITAT's order is reproduced below- 2.1 We also find that in the case of Velay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riods as specified in sub-s. (2) and thereafter, twenty-five per cent of the profits and gains for further five assessment years : Provided that where the assessee is a company, the provisions of this sub-section shall have effect as if for the words twenty-five per cent ; the words thirty per cent had been substituted. (2) The deduction specified in sub-s. (1) may, at the option of the assessee, be claimed by him for any ten consecutive assessment years out of fifteen years beginning from the year in which the undertaking or the enterprise develops and begins to operate any infrastructure facility or starts providing telecommunication service or develops an industrial park or generates power or commences transmission or distribution of power : Provided that where the assessee begins operating and maintaining any infrastructure facility referred to in cl. (b) of Explanation to cl. (i) of sub-s. (4), the provisions of this sub-section shall have effect as if for the words fifteen years , the words twenty years had been substituted............... 14. From the above provisions of sub-s. (2) of s. 80-IA of the Act, it is evident that the assessee is grant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g that the initial assessment year for the purposes of s. 80-IA(2) r/w s. 80-IA(5) was the year in which the assessee started generating the electricity. Therefore, the order of the CIT(A) has to be reversed on this issue. It is clear that the initial assessment year for the above purposes was the first year in which the assessee claimed the deduction under s. 80-IA(1) after exercising his option as per the provisions of s. 80-IA(2) of the Act. Consequently, the assessee is entitled to claim the deduction of ₹ 25,44,326 under s. 80-IA in respect of the profits from the windmill activity. Accordingly, the clarificatory ground raised is allowed. In the result, adjudication of the grounds 3 and 4 raised in the appeal is mere academic and hence they are dismissed as infructuous. 16. In the result, the appeal of the assessee is allowed. 136. Respectfully following the decision of the Coordinate Bench of the Tribunal cited (Supra) and in absence of any contrary material brought to our notice we hold that the provisions of section 80IA(5) are applicable only from the initial assessment year, i.e. the assessment year in which deduction u/s.80IA(4) was first claimed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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