TMI Blog2009 (10) TMI 896X X X X Extracts X X X X X X X X Extracts X X X X ..... of the facts and submissions filed as well as evidences available on record and the legal position, the appellant's claim for depreciation of ₹ 2,40,00,000/- on windmill requires to be granted. 2. The learned CIT(A) has erred in law and on farts in confirming the addition of Rs/ 2,77,476/- on account disallowance of Repairs and Service charges of windmill. In view of the farts and submissions filed, more particularly the fart that the appellant is the real owner of the windmill, the impugned addition requires to be deleted. 3. The learned CIT(A) has erred in law and on farts in confirming the addition on account of disallowance of interest expenses of ₹ 60,892/-. In view of farts and submissions filed as well as legal position, the impugned addition requires to be deleted. 4. The learned CIT(A) has erred in law and on farts in confirming the addition on account of disallowance of ₹ 1,72,780/- u/s. 40A(3) of the Art being 20% of the payments in cash aggregating to ₹ 8,63,903/-. In view of the facts and submissions filed and the fact that the payments are covered by the exceptions laid down in rule 6DDJ of I. T. Rules, 1962, the impugned addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f and that such receipts were shown at ₹ 9,44,745/-. The A.O. noticed that there was nothing on record or in possession of the assessee was in respect of payment of ₹ 2.40 crores to M/s. Pearl Energy Infrastructure by way of MOU. Before the A.O, the assessee could not furnish the Government approval/ ownership of the windmill, therefore, the A.O. disallowed the entire claim of depreciation of ₹ 2.40 crores relying on the decision of the Hon'ble Supreme Court in the case of R.B. Jodha Mal Kuthiala vs.- CIT reported in (1971) 82 ITR 570. 6. On appeal, before the Learned Commissioner of Income Tax(Appeals) it was contended that 12 windmills were purchased by the assessee and it was entitled to earn income from the said windmills in its own right. Whatever income had earned, the assessee has disclosed in its account, which has been not only accepted but included by the A.O. in the course of assessment proceedings. It was claimed that the assessee is entitled to depreciation in view of the judgment of the Hon'ble Supreme Court in the case of Mysore Minerals Ltd. vs.- CIT reported in (1999) 156 CTR (SC) 1. 7. After considering the submission of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (SC). In that case the Hon'ble Supreme Court was concerned with ownership for the purpose of Section 22 in respect of house property income. The assessee in that case ha purchased four flats, paid purchase consideration in full, took possession of the fiats and let them out. The assessee contented that as the flats had not been conveyed to the Co-opt. Society which was formed by purchaser of the flats, the rental income therefrom should be assessed u/s. 56 and not as income from house property u/s. 22. After review of several decisions and restoring to contextual and purposive interpretation, the Hon'ble Supreme Court held that the income was chargeable to tax u/s.22 of the Act. 3.5 It can be seen that the facts of the judgment relied upon by the appellant at distinguishable from the facts in the appellant's case. The appellant has not been able to prove that the assets in question had ever been transferred to it by the previous owner. Therefore having regard to the above said facts and circumstances of the case and in view the discussion made as above, I hold that the appellant has not proved the ownership of the asset in question. The Assessing Officer's action ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f ₹ 2,40,00,000/- from Pearl Energy and Infrastructure on 31/03/2000 but put to use In April, 2000 and thus claimed depreciation In A.Y.2001-02. The said purchase has been held to be mere advancement of funds in absence of any evidence to prove the genuineness of the ownership of the windmills. Hence, the depreciation of ₹ 2,40,00,000/- claimed on such purchase stood disallowed In A.Y. 2001-02. It is also seen from the copy of accounts that during the year under consideration I.e. on 16/05/2001, the appellant has given back the said windmills to the same party from whom it was claimed as purchased and have received back the amount of ₹ 2,40,00,000/-advanced in earlier year i.e. the same amount for which it was claimed to have been purchased. That \since the A.O. and my predecessor in A.Y. 2001-02 have categorically held that the payment towards so-called purchase of windmill was mere advancement of funds and not purchase and since the /depreciation claimed on such asset have been disallowed in A.Y.2001-02, the amount of ₹ 2,40,00,000/- in my considered opinion cannot be held to be sale consideration but mere receipt of funds given to the said party and accor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsel of the assessee submitted that in the assessment year 2002-03 the windmill was sold, the A.O. taxed the entire sale consideration of ₹ 2.40 crores under the head capital gain . In case purchase of windmill was not accepted, in that event the order of Learned Commissioner of Income Tax(Appeals) in the assessment year 2002-03 be upheld and in the assessment year 2001-02, the A.O. be directed to exclude energy charges from the income amounting to ₹ 9,44,745/- because it belonged to the owner of windmill, i.e. M/s. Pearl Energy Infrastructure and not to the assessee. Alternatively, A.O. be directed to allow the expenses of ₹ 2,77,476/-. 13. On the other hand, Shri B.S. Gehlot, ld. Departmental Representative contended that the windmill in question cannot be transferred without the permission of Government. In the Memorandum of Understanding, it was clearly mentioned that the assessee will obtain the permission within 90 days from the appropriate authorities, but the assessee failed to obtain the permission. Therefore, it never becomes the owner of the windmill in question in the previous year relevant to the assessment year 2001-02. Therefore, the depreciat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner of the 13 mills in 1972 and upheld the denial of depreciation and development rebate [1997] (228 ITR 399). On appeal to the Hon'ble Supreme Court, it was held that affirming the decision of the High Court, that on the facts found, it was not possible to reach the conclusion that the assessee had acquired dominion over the mills in question . In the case before us also, the assessee-company never acquired dominion over the Wind Mills, therefore, it is not entitled to depreciation @ 100% as claimed in the assessment year 2001-02. With regard to contention of the assessee to exclude energy charges received amounting to ₹ 9,44,745/-, it is pertinent to note that this income has earned by the assessee in lieu of ₹ 2.40 crores, which was given to M/s. Pearl Energy Infrastructure. Whatever may be the nature of the income, the real income is taxable in the hands of assessee. In view of this, the Learned Commissioner of Income Tax(Appeals) is legally and factually correct in upholding the action of A.O. disallowing the depreciation. Ground No. 1 of assessee s appeal in ITA No. 502/Ahd./2005 for the assessment year 2001-02 is dismissed. 15. In the assessment year 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the A.O. by giving the facts and figures of investment and availability of fund, etc. Therefore, the addition to the extent of ₹ 60,892/- upheld by Learned Commissioner of Income Tax(Appeals) be confirmed. 20. We have given our careful consideration to the rival submissions made before us and have perused the orders of authorities below. Undoubtedly, the assessee has proved the nexus. Therefore, the Learned Commissioner of Income Tax(Appeals) has given cogent reasoning for confirming the disallowance of interest to the extent of ₹ 60,892/-. Therefore, this ground of assessee s appeal in ITA No. 502/Ahd./2005 is accordingly rejected. 21. With regard to the Ground No. 2 of Revenue s appeal in ITA No. 2689/Ahd./2005 for the assessment year 2002-03, the A.O. in this year disallowed ₹ 20,000/- under section 14A. On appeal, in the impugned order the Learned Commissioner of Income Tax(Appeals) deleted the same on the ground that in the absence of any claim of exempt income or incurrence of any expenditure relating to such income, no disallowance under section 14A can be made. He accordingly deleted the disallowance. The ld. Departmental Representative appeared befo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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