ACIT., Circle-16(2), Hyderabad, Hyderabad v. M/s Markdata Power and Energy Limited, Nagpur

ITA 1678/HYD/2014 | 2009-2010
Pronouncement Date: 30-09-2016 | Result: Dismissed

Appeal Details

RSA Number 167822514 RSA 2014
Assessee PAN AABCM3690C
Bench Hyderabad
Appeal Number ITA 1678/HYD/2014
Duration Of Justice 1 year(s) 10 month(s) 27 day(s)
Appellant ACIT., Circle-16(2), Hyderabad, Hyderabad
Respondent M/s Markdata Power and Energy Limited, Nagpur
Appeal Type Income Tax Appeal
Pronouncement Date 30-09-2016
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 30-09-2016
Date Of Final Hearing 14-09-2016
Next Hearing Date 14-09-2016
Assessment Year 2009-2010
Appeal Filed On 03-11-2014
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SHRI D. MANMOHAN VICE PRESIDENT AND SHRI S. RIFAUR RAHMAN ACCOUNTANT MEMBER ITA.NO.1678/HYD/2014 ASSESSMENT YEAR 2009-2010 ASST. COMMISSIONER OF INCOME TAX CIRCLE-16(2) HYDERABAD. VS. M/S. MARKDATA POWER & ENERGY LTD. HYDERABAD. PAN AABCM3690C (APPELLANT) (RESPONDENT) CROSS OBJECTION NO.4/HYD/2015 ARISING OUT OF ITA.NO.1678/HYD/2014 - ASSESSMENT YEAR 2009-2010 M/S. MARKDATA POWER & ENERGY LTD. HYDERABAD. PAN AABCM3690C VS. ASST. COMMISSIONER OF INCOME TAX CIRCLE-16(2) HYDERABAD. (APPELLANT) (RESPONDENT) FOR REVENUE : MR. A. SITARAMA RAO FOR ASSESSEE : MR. A. SRINIVAS DATE OF HEARING : 14.09.2016 DATE OF PRONOUNCEMENT : 30.09.2016 ORDER PER S. RIFAUR RAHMAN A.M. THESE CROSS-APPEALS PERTAIN TO THE A.Y. 2009-2010 AND THEY ARE DIRECTED AGAINST THE ORDER PASSED BY CIT( A)-V HYDERABAD. 2. THE ASSESSEE-COMPANY IS ENGAGED IN THE BUSINESS OF WIND POWER GENERATION. THE COMPANY PURCHASED WIND TU RBINE GENERATOR (HEREINAFTER REFERRED TO AS WTG) FOR A TOTA L CONSIDERATION OF RS.1 CRORE. THE SAID WTG WAS INITIA LLY TAKEN ON 2 ITA.NO.1678/H/2014 & CO.NO.04/HYD/2015 M/S. MARKDATA POWER & ENERGY LTD. HYDERABAD. LEASE DURING THE A.Y. 2005-06 FROM M/S. SUZLON DEVE LOPERS P. LTD. ASSESSEE CLAIMED DEPRECIATION ON WTG BY TAKING IN TO CONSIDERATION THE PURCHASE CONSIDERATION PAID TO M/S. S UZLON DEVELOPERS P. LTD. THE ASSESSMENT WAS ORIGINALLY COMP LETED UNDER SECTION 143(3) OF THE ACT BY ALLOWING DEPRECIATI ON BUT AT A LATER STAGE THE ASSESSING OFFICER SOUGHT TO REOPEN THE A SSESSMENT UNDER SECTION 147 OF THE ACT ON THE GROUND THAT THE VALUE OF THE WTG CANNOT BE TAKEN AS RS. 1 CRORE SINCE THE WDV IN THE HANDS OF M/S. SUZLON DEVELOPERS P. LTD. FOR THE A.Y. 2008- 09 WAS MUCH LESS. HE ACCORDINGLY COMPLETED THE RE-ASSESSMENT PROC EEDINGS BY REVISING THE DEPRECIATION ALLOWABLE. 2.1. AGGRIEVED ASSESSEE CHALLENGED THE ORDER OF THE ASSESSING OFFICER ON TWO GROUNDS I.E. (A) REOPENIN G OF ASSESSMENT IS BAD IN LAW INASMUCH AS THERE IS NO OMISSION OR FA ILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL M ATERIAL FACTS NECESSARY FOR ASSESSMENT AND THERE WERE NO NEW FACTS/F RESH MATERIAL BROUGHT ON RECORD BY THE ASSESSING OFFICER TO FORM A REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ES CAPED ASSESSMENT AND (B) EVEN ON MERITS THE ASSESSEE IS ENTI TLED TO DEPRECIATION ON THE AMOUNT PAID BY THE ASSESSEE TOWARD S PURCHASE CONSIDERATION AND THE WDV REFLECTED IN THE B OOKS OF SUZLON SHOULD NOT BE TAKEN AS THE BASIS FOR COMPUTING T HE ALLOWABLE DEPRECIATION. 2.2. THE LD. CIT(A) QUASHED THE ORDER PASSED BY THE ASSESSING OFFICER ON THE GROUND THAT REOPENING OF ASSE SSMENT IS BAD IN LAW AND IN THIS REGARD HE MAINLY RELIED UPO N THE DECISIONS OF THE APEX COURT IN THE CASE OF KELVINATOR LIMITED 320 ITR 561 AND IN THE CASE OF CIT VS. FORAMER FRANCE REPORTED I N (2003) 264 3 ITA.NO.1678/H/2014 & CO.NO.04/HYD/2015 M/S. MARKDATA POWER & ENERGY LTD. HYDERABAD. ITR 566. IN ADDITION THERETO FOR THE SAKE OF COMPLETE NESS THE LD. CIT(A) ADJUDICATED THE MATTER ON MERITS ALSO BY OBSERVI NG THAT EXPLANATION-3 TO SECTION 43(1) IS NOT APPLICABLE IN THE CIRCUMSTANCES OF THE CASE AND HENCE THE ASSESSEE IS EL IGIBLE FOR DEPRECIATION ON THE PURCHASE PRICE I.E. PAYMENT OF R S.1 CRORE MADE TO M/S. SUZLON DEVELOPERS P. LTD. HE THUS ALLOWE D THE APPEAL FILED BY THE ASSESSEE. 2.3. THOUGH THE RE-ASSESSMENT PROCEEDINGS WERE QUAS HED ON THE GROUND THAT THE REOPENING IS BAD IN LAW THE REV ENUE DID NOT PREFER AN APPEAL ON THE SAID ISSUE AND IT MERELY FILED AN APPEAL BY RAISING THE FOLLOWING GROUNDS : 1. THE ORDER OF CIT(A) IS ERRONEOUS IN LAW AND FACTS OF THE CASE. 2. THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE TOWARDS THE DISALLOWANCE OF EXCESS DEPRECIATION CLA IMED ON WINDMILL. 3. THE LD. CIT(A) OUGHT TO HAVE CONSIDERED THAT THE AS SET LEASED BY M/S. SUZLON DEVELOPERS P. LTD. (LESSOR) HAD RIGHTS OF CLAIMING DEPRECIATION BEFORE THE ASSESSEE COMPANY BECAME THE SOLE OWNER OF THE SAID ASSET. 4. ANY OTHER GROUND(S) THAT MAY BE URGED AT THE TIME O F HEARING. 3. AS IS THE USUAL PRACTICE OFF-LATE FOLLOWED BY TH E REVENUE THE AUTHORISATION ISSUED BY THE COMMISSIONER OF INCOME TAX-IV HYDERABAD IS VAGUE AND GENERAL WHERE IN THE ASSESSING OFFICER HAS BEEN GIVEN THE LIBERTY TO FILE AN APPEAL WITHOUT MENTIONING AS TO WHAT SHOULD BE THE GROUNDS THAT ARE TO BE RAISED. SINCE THE ASSESSING OFFICER OR THE LD. D. R. HAS NOT COME FORWARD TO POINT OUT AS TO WHAT WERE THE GROUNDS TH AT WERE 4 ITA.NO.1678/H/2014 & CO.NO.04/HYD/2015 M/S. MARKDATA POWER & ENERGY LTD. HYDERABAD. VETTED BY THE COMMISSIONER EITHER BY SHOWING THE GROU NDS AUTHORISED BY THE COMMISSIONER OR ATLEAST BY FILING ADD ITIONAL GROUNDS WE ASSUME THAT THE DIRECTION ISSUED BY THE COMMISSIONER IS ONLY WITH REFERENCE TO CORRECTNESS OF THE DECISION TAKEN BY THE LD. CIT(A) VIS--VIS THE DELETION OF THE ADDITION MADE REFERABLE TO EXCESS DEPRECIATION CLAIMED ON WIND MILL. SINCE LD. CIT(A) FOLLOWED THE BINDING DECISIO N OF THE APEX COURT WHILE HOLDING THAT RE-ASSESSMENT PROCEEDING S ARE BAD IN LAW THE CIT-IV HYDERABAD MIGHT NOT HAVE GIVEN AP PROVAL FOR PREFERRING AN APPEAL WITH REGARD TO CORRECTNESS OF RE OPENING OF THE ASSESSMENT BUT AT THE SAME TIME HE APPEARS TO HAVE OVERLOOKED THE FACT THAT WITHOUT CHALLENGING THE REOPENI NG OF THE ASSESSMENT THE ISSUE URGED BEFORE US IS OF ACADEMIC I MPORTANCE WHICH WOULD NOT SERVE ANY PURPOSE EXCEPT WASTING THE J UDICIAL TIME OF THE TRIBUNAL. 4. IN THE CROSS-OBJECTION FILED THE ASSESSEE S TRONGLY SUPPORTED THE ORDER PASSED BY THE LD. CIT(A) BY CONTEND ING THAT ASSESSEE CANNOT BE SAID TO HAVE PURCHASED THE ASSET AT A N ENHANCED PRICE SINCE THERE WAS NO RELATION BETWEEN THE ASSESSEE AND M/S. SUZLON DEVELOPERS P. LTD. UNDER THESE CIRCUM STANCES IT WAS CONTENDED THAT THE CIT(A) WAS JUSTIFIED IN HOLDING THAT THERE WAS NO PURPOSE OF REDUCTION OF TAX LIABILITY WITH IN THE MEANING OF EXPLANATION-3 TO SECTION 43(1) SO AS TO TAK E INTO CONSIDERATION THE WDV OF THE SELLER FOR THE PURPOSE OF COMPUTING THE DEPRECIATION ALLOWABLE TO THE ASSESSEE. 5. WE HAVE HEARD THE LD. D.R. AS WELL AS THE L EARNED COUNSEL FOR THE ASSESSEE IN THIS REGARD. NO MATERIAL W AS PLACED 5 ITA.NO.1678/H/2014 & CO.NO.04/HYD/2015 M/S. MARKDATA POWER & ENERGY LTD. HYDERABAD. BEFORE US BY THE REVENUE TO SHOW THAT THERE WAS ANY MO TIVE ON THE PART OF THE ASSESSEE TO SHOW THAT THE ASSESSEE HAS PA ID EXCESS CONSIDERATION WITH AN INTENTION TO CLAIM EXCE SS DEPRECIATION. IT IS ALSO NOT THE CASE OF THE REVENUE TH AT THERE WAS ANY RELATIONSHIP BETWEEN THE ASSESSEE AND M/S. SUZLON DEVELOPERS P. LTD. IN THE MATTER OF PURCHASE OF WTG. IN FACT NO MATERIAL WAS PLACED BEFORE US BY THE REVENUE TO SHOW THAT THE ASSESSEE HAD TAKEN UNDUE BENEFIT BY CLAIMING DEPRECIA TION AT AN ENHANCED COST. AT ANY RATE HAVING NOT PREFERRING ANY A PPEAL ON THE DECISION TAKEN BY THE LD. CIT(A) WITH REGARD TO VAL IDITY OF THE REOPENING OF THE ASSESSMENT THE GROUNDS URGED BEFORE US BY THE REVENUE ARE OF ACADEMIC IMPORTANCE AND THEREFORE THE APPEAL FILED BY THE REVENUE AS WELL AS THE CROSS-OBJECTION FI LED BY THE ASSESSEE DESERVES TO BE DISMISSED AS INFRUCTUOUS INAS MUCH AS THE ORDER PASSED UNDER SECTION 143(3) READ WITH SECTION 147 HAVING HELD TO BE BAD IN LAW THE QUESTION OF GOING INT O THE MERITS OF ADDITION DO NOT ARISE. 6. IN THE RESULT APPEAL OF THE REVENUE AND CR OSS OBJECTION FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.09.2 016 SD/- SD/- (D.MANMOHAN) (S. RIFAUR RAHMAN) VICE PRESIDENT ACCOUNTAN T MEMBER HYDERABAD DATED 30 TH SEPTEMBER 2016 VBP/- 6 ITA.NO.1678/H/2014 & CO.NO.04/HYD/2015 M/S. MARKDATA POWER & ENERGY LTD. HYDERABAD. COPY TO 1. ASST. COMMISSIONER OF INCOME TAX CIRCLE-16(2) 7 TH FLOOR AAYAKAR BHAVAN BASHEERBAGH HYDERABAD. 2. M/S. MARKADATA POWER & ENERGY LTD. 678 HAZARE HOU SE KANEWAR HOUSE SITABULDI NAGPUR. 3. CIT(A)-V HYDERABAD. 4. CIT-IV HYDERABAD 5. D.R. ITAT A BENCH HYDERABAD. 6. GUARD FILE