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TMI Blog2016 (4) TMI 457X X X X Extracts X X X X X X X X Extracts X X X X ..... llow deprecation @100% on Wind Turbine Generators (WTG) as against 50% relying on the evidence filed by the assessee and Assessing Officer was denied opportunity to verify and examine the evidence. 3. The Brief facts of the case, the assessee is a registered partnership firm is in the business of Consultancy Services filed return of income on 31.12.2008 with total income of A4,97,51,952/- and the return of income was processed u/s.143(1) of the Act. Subsequently the case was selected for scrutiny and due to change of jurisdiction fresh notice was issued. In compliance to notice, the ld. Authorised Representative of the assessee appeared and filed power of attorney and filed details from time to time and produced books of accounts, bank statements, and written submissions and the ld. Assessing Officer completed assessment. The assessee is providing project management consultancy services and as per tax audit report u/s.44AB of the Act the assessee is following mercantile system of accounting. The main source of income being assignment fee received from three parties on assigning of its share in the IT Park were assessee firm has entered into builders agreement on 14.04.2006 for two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me should be offered to tax and relied on the Tribunal decision as the assignment fee received by the assessee is deposited in the escrow account and performance guarantee provided by the assessee due to some uncertainty of completion of the project determined. But the Assessing Officer considered vested right on transfer of A16.25 crores through RTGS deposited in the escrow account on 14.11.2007. The Assessing Officer called for the escrow account and found A7,40,88,005/- and A8,84,87,260/- was transferred to account no.CD1830 and the amount has been withdrawn by the assessee firm. The ld. Assessing Officer also examined the ledger accounts and found A8,84,84,260/- was shown as liability towards HTMT Global received in Escrow Account. On verifying the source and usage of funds, the ld. Assessing Officer is of the opinion that the amounts were utilized by the assessee firm and the issue of furnishing bank guarantee for specific performance is no way connected to the of money or in accordance with the agreement. The ld. Authorised Representative explained that income of the fourth assignee will be admitted only after completion of the project and relied on the jurisdictional decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0.10.2010 referred at para no.3 of page no.4 of Commissioner of Income Tax (Appeals) as under:- ''The assessee before the undersigned, vide its submissions dated 10.10.2010 stated that the assignment of rights to M/s. HTMT Global Solutions P Ltd was only a conditional agreement. In this agreement it was clearly stated that the assignment is subject to the assessee/ VHPL obtaining necessary plan approvals etc. from the competent authorities for the construction of the said property. Further, as the amount was deposited by HTMT Global Solutions Ltd in an Escrow account with the bank, in case of any failure to get the project through (i.e. failure to obtain necessary approval), the buyer (i.e. HTMT Global Solutions P Ltd) can withdraw the amount from the bank (from the escrow account) straight away and the assessee has no right to stop it. The assessee also explained that these conditions were not insisted by the first mentioned three buyers and the amounts are directly received. Hence the first three assignments have become final and accordingly the said receipts from the first three parties have been recognized as income during the financial year 2007-08. Subsequently, the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot materialize and the l.d Authorised Representative explained that there are differences in terms and conditions entered with three assignees and the fourth assignee (HTML Global Solutions Pvt. Ltd) in respect of first three assignees assignment is full fledged and there is no preconditions and fee was offered to tax. Where in respect of fourth assignee, the agreement entered is totally conditional and is subject to assessee /builder obtaining necessary approvals for the project. The ld. Commissioner of Income Tax (Appeals) found taxation rates applicable for the assessment year 2008-09 and 2009-2010 are same and there is no loss of Revenue to the Department if income is offered in next year. The assignment transaction with HTML Global Solutions Pvt. Ltd is totally conditional and different from three assignees. The assessee has not received any money from the assignee instead received the consideration from Escrow account in the bank on furnishing of 100% bank guarantee as per requisite stipulated conditions of the agreement. The ld. Authorised Representative submitted that the assessee firm has obtained necessary permissions from the concerned authorities on 01.08.2008. Based on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the fresh evidence and the date of approval and necessary permissions obtained on 01.08.2008 and whereas this information is entirely on a new dimension which the Assessing Officer could not verify and prayed for setting aside order of the Commissioner of Income Tax (Appeals). 6. Contra, the ld. Authorised Representative relied on the order of the Commissioner of Income Tax (Appeals) and judicial decisions and agreement entered with the assignee and filed paper book on the agreements, guarantees and also permission letters to substantiate their claim and argued that there is no suppression of income and assignment fee was offered to tax in the assessment year 2009- 2010. 7. We heard the rival submissions, perused the material on record and judicial decisions cited. The contention of the ld. Departmental Representative that the Assessing Officer has made a elaborate examination of records with information submitted in assessment proceedings and passed assessment order based on the facts of the case. The assignment fees is accounted on Mercantile System of Accounting by the assessee firm whereas the assessee has considered income of three assignees in the books of accounts and offe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned that it has acquired five units of Wind Turbine Generators (WTG) with manufacturing capacity of 250KW from M/s. Pioneer Wincon Private Limited each costing A1,18,00,000/-. The ld. Assessing Officer found on verification of invoice dated 30.09.2007 assessee claimed 100% depreciation on Wind Turbine Generators, the ld. Authorised Representative submitted letters from supplier of the Turbines and also commissioning certificate from Tamil Nadu Electricity Board (TNEB). As per letters Wind Turbine Generators are commissioned at Veerasigamani site on 28.09.2007 and come into generation mode within two to three days after trial runs. As per the general practice, the invoice by the seller raised will be after Wind Turbine Generators comes into generation mode. On perusal of the Commissioning certificate issued by TNEB three Wind Turbine Generators are commenced on 28.09.2007 and two Turbine commissioned on 30.09.2007 and also generated three units from 28.09.2007 to 15.10.2007 and two units between 30.09.2007 to 15.10.2007. The Assessing Officer relied on the invoices collected from M/s. Pioneer Wincon Private Limited bearing no.30 to 37 and delivery challans dated 18.09.2007, 20.09.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceedings and also argued the grounds on the claim of depreciation. The invoice are generally raised after WTG y comes into generation mode and delivery of WTG was advanced and made fully operational as per the terms and conditions entered with the supplier M/s. Pioneer Wincon P. Ltd. The seller shall supply machinery, erect, install and operate. And invoice will be raised only after completion of erection and commissioning of WTGs. The ld. Authorised Representative submitted details alongwith judicial decisions on the ground of usage of machinery for more than 180 days and Commissioner of Income Tax (Appeals) referred at page no.15 to 18 of his order. The ld. Commissioner of Income Tax (Appeals) on perusing the material information and invoices and commissioning certificate and also meter reading and travel distance gave elaborate findings at page no. 18 as under:- ''In any case, all the above observations or opinions of the Assessing Officer are purely on presumptions and surmises. The documents furnished by the assessee, on the other hand, clearly shows that three of the WTGs are commissioned on 28.09.2007 and the remaining two WTGs are commissioned on 30.09.2007. The document ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The depreciation @100% has to be allowed on the machinery used for more than 180 days. The assessee could not submit any information to substantiate the claim that machinery was put to use for more than 180 days in the assessment proceedings. Further considering the certificate produced by the assessee firm confirming the machinery was used prior to 30.09.2007 and the said submissions are in the nature of fresh evidence which Assessing Officer could not examine and pleaded that the order of the Commissioner of Income Tax (Appeals) to be set aside. 12. Contra, the ld. Authorised Representative relied on the findings of the Commissioner of Income Tax (Appeals) and to substantiated his submissions with commissioning certificates of TNEB at page nos.66 to 70 of paper book and also the bills raised in respect of initial reading and argued that WTG are commissioned before 30.09.2007 and the assessee has rightly claimed 100% depreciation as per law. 13. We heard the rival submissions of both the parties and perused the material on record. The ld. Departmental Representative vehemently argued that the Assessing Officer made a detailed working in respect of allowance of depreciation on W ..... X X X X Extracts X X X X X X X X Extracts X X X X
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