The ACIT, Circle-3,, JAMNAGAR v. Khushbu Auto Finance Ltd.,, JAMNAGAR

ITA 884/RJT/2010 | 2005-2006
Pronouncement Date: 25-11-2014 | Result: Allowed

Appeal Details

RSA Number 88424914 RSA 2010
Assessee PAN EMBER2004A
Bench Rajkot
Appeal Number ITA 884/RJT/2010
Duration Of Justice 4 year(s) 6 month(s) 27 day(s)
Appellant The ACIT, Circle-3,, JAMNAGAR
Respondent Khushbu Auto Finance Ltd.,, JAMNAGAR
Appeal Type Income Tax Appeal
Pronouncement Date 25-11-2014
Appeal Filed By Department
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 25-11-2014
Date Of Final Hearing 24-11-2014
Next Hearing Date 24-11-2014
Assessment Year 2005-2006
Appeal Filed On 28-04-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AT RAJKOT .. !'# $% & ' ( ) *+ ) * # BEFORE S/SHRI G.C. GUPTA VICE-PRESIDENT AND ANIL CHATURVEDI ACCOUNTANT MEMBER) ITA NO.884/RJT/2010 [ASSTT.YEAR : 2005-2006] ACIT CIR.3 JAMNAGAR. /VS. KHUSHBU AUTO FINANCE LTD. C/O. NEW CHANDRA MOTOR CYCLE HOUSE OPP: TOWN HALL JAMNAGAR. ( ./ / APPELLANT) ( 01./ / RESPONDENT) REVENUE BY : SHRI AVINESH KUMAR DR ASSESSEE BY : SHRI P.M. MAHARSHI DATE OF HEARING : 24 TH NOVEMBER 2014 DATE OF PRONOUNCEMENT : 25/11/2014 O R D E R PER ANIL CHATURVEDI ACCOUNTANT MEMBER: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A) JAMNAGAR DATED 5.2.2010 FOR A.Y.2005-06. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI AL ARE AS UNDER: THE ASSESSEE IS A NON-BANKING COMPANY REGISTERED W ITH RESERVE BANK OF INDIA AND IS ENGAGED IN THE BUSINESS OF FIN ANCING OF VEHICLES. THE ASSESSEE FILED ITS RETURN OF INCOME FOR A.Y.2005-06 ON 31.5.2005 DECLARING TOTAL LOSS OF RS.1 39 92 809/-. THE CASE WAS SELEC TED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED UNDER SECTION 143(3) OF THE ACT VIDE ORDER DATED 31.12.2007 AND TOTAL INCOME WAS DETERMI NED AT RS.80 45 820. ITA NO.884/RJT/2010 -2- AGGRIEVED BY THE ORDER OF THE CIT(A) THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A) WHO VIDE HIS ORDER DATED 5.2.201 0 GRANTED SUBSTANTIAL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE AFORESAID ORDER OF THE CIT(A) THE REVENUE IS NOW IN APPEAL BEFORE US RAISING THE FOL LOWING EFFECTIVE GROUND: 1. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.2 20 10 209/- MADE ON ACCOUNT OF DIS ALLOWANCE OF DEPRECIATION. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTICED THAT THE ASSESSEE HAD PURCHASED A WIND-MILL FROM M/S.SUZ LON ENERGY LTD. AND ITS ERECTION/INSTALLATION HAS BEEN MADE AT VILLAGE SODA IN THE JAISALMER DISTRICT OF RAJASTHAN. THE AO FURTHER NOTICED THA T AS PER THE INVOICE OF M/S.SUZLON ENERGY LTD. THE WIND-MILL WAS TO BE DIS PATCHED BY ROAD FROM DAMAN FACTORY TO THE SAID VILLAGE IN RAJASTHAN. H E ALSO NOTICED THAT IT WAS THE SUBMISSION OF THE ASSESSEE THAT THE WIND-MI LL WAS TESTED AND COMMISSIONED ON 30/09/2004 FOR WHICH THE ASSESSEE HAS PRODUCED A CERTIFICATE ISSUED BY THE EXECUTIVE ENGINEER OF ELE CTRICITY DEPARTMENT. THE ASSESSEE HAS ALSO SUBMITTED A REPORT RECEIVED F ROM SUZLON ENERGY LTD. WHEREBY THE MONTHLY SUMMARY OF POWER GENERATION REP ORT FOR THE MONTH OF SEPTEMBER 2004 WAS SHOWN. THE SUBMISSION OF TH E ASSESSEE THAT THE WINDMILL WAS INSTALLED AND COMMISSIONED ON 30 TH SEPT. 2004 WAS NOT ACCEPTABLE TO THE AO FOR THE REASON THAT POWER PURC HASE AGREEMENT WAS EXECUTED BY THE ASSESSEE ON 24/12/2004 INSURANCE F OR THE WIND MILL WAS PURCHASED ONLY ON 28/12/2004 AND THE SUB-LEASE DEED FOR THE LAND WAS EXECUTED ON 17/3/2005. THE AO ALSO NOTED THAT IN SURVEY UNDER SECTION 133A OF THE ACT CARRIED OUT IN THE CASE OF M/S.SUZL ON ENERGY LTD. ON 5/4/2006 IT WAS OBSERVED BY THE SURVEY PARTY THAT EITHER THE CERTIFICATES OF COMMISSIONING OF MACHINES/POWER ARE ISSUED BY THE E NGINEERS OF THE RESPECTIVE DEPARTMENTS AND THE COMPANY IN ROUTINE M ANNER WITHOUT ITA NO.884/RJT/2010 -3- KEEPING IN VIEW THE ACTUAL DATE OF COMMISSIONING OF DIFFERENT MACHINES/PARTS OF POWER GENERATION OR WITHOUT PHYSI CAL VERIFICATION OF SITES. HE WAS THEREFORE OF THE VIEW THAT CONTE NTIONS OF THE ASSESSEE THAT THE WIND-MILL WAS INSTALLED ON OR BEFORE THE 30 TH SEPT. 2004 WAS NOT ACCEPTABLE. HE THEREFORE RESTRICTED THE DEPRECI ATION TO HALF OF THE RATE OF DEPRECIATION I.E. AT 40% AND ACCORDINGLY THE CLAI M OF DEPRECIATION ON THE WIND-MILL WAS RESTRICTED TO RS.2 20 10 209 INSTEAD OF RS.4 40 20.418/- AS CLAIMED BY THE ASSESSEE. 5. AGGRIEVED BY THE ORDER OF THE AO THE ASSESSEE C ARRIED THE MATTER BEFORE THE CIT(A) WHO DELETED THE ADDITION BY HOLD ING AS UNDER: 6. I FIND THAT THE APPELLANT PURCHASED WINDMILL FR OM M/S SUZLON ENERGY LTD IN RAJASTHAN AND SAME WAS COMMISSIONED O N 30TH SEPTEMBER 2004 AS EVIDENT FROM WIND PROJECT COMMIS SIONING CERTIFICATE BEARING REFERENCE NO. RRVPNL/XEN- IH/TCC/IV/BMR/D-622 DATED 4TH OCTOBER 2004 ISSUED BY EXECUTIVE ENGINEER -III (TCC-IV) BARMER. ACCORDING TO THAT C OMMISSIONING CERTIFICATE IT IS CERTIFIED THAT APPELLANT HAS COM MISSIONED ONE NUMBER 1.25 MW SUZLON MAKE WIND ELECTRIC GENERATOR ON 30TH SEPTEMBER 2004 AT VILLAGE SODAMADA DISTRICT JAISAL MER AT LOCATION NUMBER E269 IN RAJASTHAN. IT IS FURTHER CERTIFIED THAT THIS WIND ELECTRIC GENERATOR IS INTERCONNECTED TO 132KV JAISA LMER GSS THROUGH 132 KV MADA SUBSTATIONS VIA AMERSAGAR 132 K V BAY. APPELLANT HAS ALSO SUBMITTED MONTHLY ELECTRICITY GE NERATION RECORD FOR THE MONTH OF SEPTEMBER 2004 WHERE JOINT METER READING HAS BEEN TAKEN ON 01/10/2004 WHERE 3000 KWH HAS BEEN DE LIVERED AT COMMON DELIVERY POINT OUT OF WHICH APPELLANT'S WIND MILL HAS EXPORTED 402 KWH IN THE MONTH OF SEPTEMBER 2004 AN D THE SAME HAS BEEN EXPORTED TO COMMON ENERGY DELIVERY POINT A T 132 KV SUBSTATION AT SODAMADA JAISALMER. APPELLANT ALSO P RODUCED COPY OF LETTER DATED 29TH SEPTEMBER 2004 FROM. SUPERINTEND ING ENGINEERING RAJASTHAN RAJYA VIDHUT PRASARAN NIGAM LTD. ADDRESSED TO THE MANAGING DIRECTOR RAJASTHAN RENEW ABLE ENERGY CORPORATION LIMITED JAIPUR INTIMATING THAT AMONGST OTHERS THE WIND POWER PROJECT OF THE APPELLANT IS READY TO BE COMMI SSIONED FOR INJECTION OF POWER INTO RVPN/DISCOMS GRID AND FURTH ER IT IS ITA NO.884/RJT/2010 -4- CONVEYED THAT THIS WIND POWER PROJECT WOULD BE COMM ISSIONED BY 30TH SEPTEMBER 2004 AND THEY ARE BEING ALLOWED TO INJECT THE POWER INTO THE GRID. IT IS FURTHER STATED THAT AS SIGNING OF POWER PURCHASE AGREEMENT AND OTHER COMMERCIAL ARRANGEMENTS ARE PEN DING THEREFORE THESE WIND POWER PRODUCERS SHALL BE SUPPL YING THE POWER FREE OF COST TILL POWER PURCHASE AGREEMENTS. ARE EX ECUTED. BY THIS LETTER IT WAS REQUESTED TO DEPUTE RESPECTIVE OFFICE RS OF VARIOUS CORPORATIONS TO WITNESS PARALLEL OPERATIONS OF COMM ISSIONING OF WIND POWER PLANTS WITH THE GRID OF RAJASTHAN RAJYA VIDUT PRASARAN NIGAM LIMITED ON 30TH SEPTEMBER 2004. IN RESPONSE TO THIS SEVERAL OFFICERS ATTENDED MEETING ON 30TH ' SEPTEMBER 2004 AND MINUTES OF WHICH IS SIGNED BY 1) EXECUTIVE ENGINEER -IH (TCC-I V) 2) EXECUTIVE ENGINEER JODHPUR VIDYUT VITRAN NIGAM LTD. JODHPUR 3) PROJECT OFFICER- RAJASTHAN RENEWAL ENERGY CORPORATION LTD. 4) TWO REPRESENTATIVES OF MLS SUZLON ENERGY PVT. LTD. IN T HIS MEETING ALL THESE OFFICER HAVE WITNESSED THE COMMISSIONING OF W IND POWER PROJECT INCLUDING THAT OF APPELLANT CONNECTED WITH NEWLY COMMISSIONED METERING SYSTEM TO SEGREGATE SUCH ENER GY FROM BILLED ENERGY OF EXISTING WIND POWER PLANT AS THE ENERGY I NJECTED BY THESE PLANTS ARE NOT CHARGEABLE. THEY ALSO SIGNED JOINT I NSPECTION REPORTS OF METERING SYSTEMS. THIS INSPECTION REPORT SHOWS C OMMISSIONING OF 33 KV AND OF 220 KV PRESENTLY CHARGED ON 132 KV MAD A SUBSTATION AND TAPPING POINT OF 33 KV DEVA-POHARA FEEDERS AT B ARAMSAR. IN THIS JOINT INSPECTION REPORT ELEVEN WINDMILLS ARE C OMMISSIONED AND THE NAME OF THE APPELLANT APPEARS AT S. NO.4. THERE FORE IT SHOWS THAT IN PRESENCE OF RESPECTIVE INSPECTING OFFICIALS OF V ARIOUS COMPANIES PROJECT OF WIND POWER OF THE APPELLANT HAS BEEN COM MISSIONED ON 30TH SEPTEMBER 2004. APPELLANT HAS ALSO STATED THA T ON 24 DECEMBER 2004 APPELLANT HAS ENTERED INTO A POWER PURCHASE AGREEMENT WITH JODHPUR VIDYUT VITRAN NIGAM LTD FOR SUPPLY OF POWER. AS PER THIS AGREEMENT IT HAS BEEN CONFORMED THAT POWER PLANT HAS BEEN COMMISSIONED IN THE MONTH OF SEPTEMB ER 2004. HOWEVER CHARGEABILITY OF THE POWER WOULD BE APPLICA BLE FROM THE COMMERCIAL OPERATION DATE WHEN PERFORMANCE ACCEPTAN CE TEST IS COMPLETED. TILL THEN IT WAS AGREED THAT POWER WOULD BE SUPPLIED FREE OF COST BY THESE UNITS. LD AO HAS STATED THAT INFAC T THE WINDMILL POWER PROJECT OF THE APPELLANT HAS BEEN COMMISSIONE D ONLY ON 4TH NOVEMBER 2004. FOR THIS HE RECEIVED REPORT PREPARE D BY ADIT(INVESTIGATION) REGARDING SURVEY U/S 133A CARRI ED ON IN CASE OF MLS SUZLON ENERGY PVT. LTD. ON 5TH AUGUST 2006. AC CORDING TO THIS IT HAS BEEN OBSERVED BY THE SURVEY PARTY THAT EITHE R THE CERTIFICATE OF COMMISSIONING OF MACHINE POWER ARE ISSUED BY THE E NGINEER OF ITA NO.884/RJT/2010 -5- RESPECTIVE DEPARTMENT AND COMPANY IN ROUTINE MANNER WITHOUT KEEPING IN VIEW THE ACTUAL DATE OF COMMISSIONING OF DIFFERENT MACHINES OR WITHOUT PHYSICAL VERIFICATION OF SITES. A STATEMENT PREPARED BY SHRI AVINASH KUMAR WHO WAS MACHINE OPER ATOR AND CHECKED AND VERIFIED BY ONE SHRI RAJIEV SHARMA WHO WAS OPERATION AND MAINTENANCE MANGER OF SUZLON SHOWED THAT IN THA T STATEMENT AT SERIAL NO. 185 THE DATE OF INSTALLATION OF WINDMILL OF APPELLANT IS MENTIONED AT 5TH NOVEMBER 2004. ON THIS ISOLATED S TATEMENT HE RESTRICTED THE CLAIM OF DEPRECIATION AT 40% INSTEAD OF 80% AS ACCORDING TO HIM THE WINDMILL BECOME OPERATIONAL IN THE LATTER HALF OF THE YEAR. AO WAS ALSO NOT CLEAR THAT ON WHICH D ATE WINDMILL IS COMMISSIONED AS IN SHOW CAUSE NOTICE HE HAS MENTION ED DATE OF COMMISSION AS 4/11/2004 WHEREAS IN ASSESSMENT ORDER IT IS MENTIONED AS 5TH NOVEMBER 2004. IN MY OPINION TO AO .HAS ALLEGED WITHOUT ANY EVIDENCE THAT THE CERTIFICATE OF COMMIS SIONING HAS BEEN ISSUED BY THE RESPECTIVE CORPORATION'S OFFICIAL IN CASUAL MANNER OR WITHOUT ANY EVIDENCE. AGAINST THIS APPELLANT HAS PR ODUCED CONCLUSIVE EVIDENCES IN THE FORM OF COMMISSIONING C ERTIFICATE ENERGY GENERATION REPORT OF THE MONTH OF SEPTEMBER 2004 JOINT INSPECTION REPORT OF VARIOUS OFFICIALS COPY OF POW ER PURCHASE AGREEMENT AND DATE WISE SALE OF ELECTRICITY FROM TH E DATE OF COMMERCIAL OPERATION. APPELLANT'S EXPLANATION REGAR DING INSURANCE AS WELL AS THE DATE OF SALE OF ELECTRICITY WAS ALSO FOUND CORRECT IN VIEW OF THE FACT THAT IT WAS A PRECONDITION TO SUPP LY POWER FREE OF COST TILL THE COMMERCIAL OPERATING DATE. IN VIEW OF ABOVE I AM OF THE OPINION THAT WINDMILL OF THE APPELLANT WAS INSTALLE D AND COMMISSIONED ON 30TH SEPTEMBER 2004 AS CERTIFIED B Y ELECTRICITY BOARD AND OTHER RESPECTIVE ORGANIZATIONS THEREFORE APPELLANT IS ENTITLED TO DEPRECIATION @ 80% ON COST OF RS 5 50 2 5 522/- INSTEAD OF @ 40% GRANTED BY AO. HENCE DISALLOWANCE OF RS 2 20 10 209/- ON ACCOUNT OF DEPRECIATION ON WINDMILL IS DELETED. 6. AGGRIEVED BY THE ORDER OF THE CIT(A) THE REVENU E IS NOW IN APPEAL BEFORE US. 7. BEFORE US THE LEARNED DR POINTED OUT TO THE FIN DINGS AND OBSERVATIONS MADE BY THE AO AND FURTHER SUBMITTED T HAT THE WIND-MILL WAS TO BE TRANSPORTED FROM DAMAN TO THE VILLAGE SODA IN RAJASTHAN AND DISTANCE BETWEEN THE TWO PLACES IS APPROXIMATELY 80 0 KMS. HE FURTHER ITA NO.884/RJT/2010 -6- SUBMITTED THAT IT WAS NOT POSSIBLE TO TRANSPORT IN STALL AND COMMISSION THE WIND-MILL IN SUCH SHORT PERIOD I.E. ON OR BEFORE 30 TH SEPTEMBER 2004. HE FURTHER SUBMITTED THAT THE ASSESSEE HAS NOT PLACED ANY MATERIAL ON RECORD TO PROVE THAT THE WIND-MILL WAS INDEED TRANSPORTED FRO M DAMAN TO THE VILLAGE SODA IN RAJASTHAN AND THE COMMISSIONING TH EREOF WAS ALSO COMPLETED BEFORE 30 TH SEPTEMBER 2014. HE THUS SUPPORTED THE ORDER OF THE AO. 8. THE LEARNED AR ON THE OTHER HAND REITERATED THE SUBMISSIONS MADE BEFORE THE AO AND THE CIT(A). HE FURTHER POINTED O UT TO THE COMMISSIONING CERTIFICATE ISSUED BY THE OFFICE OF E XECUTIVE ENGINEER RRVPNL BARMER DATED 4.10.2004 WHICH IS PLACED AT PAGE NO.15 OF THE PAPER BOOK WHEREIN IT IS CERTIFIED THAT WIND ELECT RIC GENERATOR WAS COMMISSIONED ON 30.9.2004. THE LEARNED AR FURTHER SUBMITTED THAT SIGNING OF POWER AGREEMENT WAS TO BE DECIDED SEPARA TELY. HE ALSO POINTED OUT TO PAGE NO.18 OF THE PAPER BOOK TO SUPPORT THIS CONTENTION THAT WIND WILL PROJECT WAS INDEED COMMISSION BY 30 TH SEPTEMBER 2004. HE FURTHER POINTED OUT TO THE POWER AGREEMENT DATED 24.12.2004 AND POINTED OUT TO THE DEFINITION THEREIN OF COMMERCIAL OPERATION DAT E. THE LEARNED AR FURTHER SUBMITTED THAT IT IS MERELY AN ALLEGATION O F THE AO ABOUT NON- COMMISSIONING OF WINDMILL PROJECT BY 30 TH SEPTEMBER 2004 WITHOUT ANY EVIDENCE. HE FURTHER PLACED RELIANCE ON VARIOUS DE CISIONS. THE BENCH ENQUIRED TO THE AO AS TO WHETHER ANY INQUIRY ABOUT TRANSPORTATION OF WIND- MILL FROM DAMAN TO THE VILLAGE SODA IN RAJASTHAN HA S BEEN MADE BY THE AO OR BY ANY OTHER AUTHORITY TO THIS THE LEARNED AR SUBMITTED THAT NO SUCH INQUIRY HAS BEEN MADE BY ANY AUTHORITY. 9. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO CO MMISSIONING OF WINDMILL ITA NO.884/RJT/2010 -7- PROJECT. IT IS THE ASSESSEES CONTENTION THAT THE WINDMILL WAS COMMISSIONED ON 30.9.2004 WHEREAS ON THE OTHER HAND THE REVENUES CONTENTION IS THAT THE SAME WAS NOT COMMISSIONED ON 30.9.2004 BUT WAS COMMISSIONED SUBSEQUENTLY. FROM THE COPIES OF INVOI CES OF M/S.SUZLON ENERGY DTD. 25.9.2004 PLACED AT PAGE NO.39 IN THE P APER BOOK IT IS SEEN THAT MODE OF DISPATCH OF WINDMILL TURBINE GENERATOR IS STATED TO BE BY ROAD AND FROM DAMAN TO TAL. VILLAGE SODA TAL. FATEHGARH DISTRICT JAISALMER RAJASTHAN. FURTHER AS PER THE INVOICE SUPPLY OF MACHINE IS EX-WORKS DAMAN. BEFORE US NO MATERIAL IN THE FORM OF LORRY RECEIPTS OCTROI RECEIPTS OR ANY OTHER PROOF OF TRANSPORTATION OF GOODS WHIC H WOULD EVIDENCE THAT THE MACHINERY WAS INDEED TRANSPORTED FROM DAMAN TO THE VILLAGE SODA AND HAD REACHED THE SITE AND COMMISSIONED HAS BEEN PLACED ON RECORD. NOR THERE IS ANY FINDINGS OF THE CIT(A) TO THE AFOR ESAID. FURTHER AS PER THE INVOICE PLACED AT PAGE NO.39 THE INSURANCE WAS TO BE ARRANGED BY THE SUZLON ENERGY LTD. UPTO THE SITE. NO EVIDENCE HAS BEEN PLACED ON RECORD BY THE ASSESSEE TO DEMONSTRATE THAT THE INSURANCE W AS INDEED TAKEN FOR TRANSPORTATION OF THE MACHINERY. IN VIEW OF THE AF ORESAID FACTS WE ARE OF THE VIEW THAT IN THE ABSENCE OF ANY MATERIAL ON REC ORD WHICH COULD PROVE THAT THE MACHINERY WAS IN FACT TRANSPORTED FROM DAM AN TO THE VILLAGE SODA AND HAD REACHED VILLAGE SODA BEFORE 30.9.2004 AND W AS COMMISSIONED BEFORE 30.9.2004 THE AO WAS JUSTIFIED IN RESTRICTI NG THE DISALLOWANCE TO 50% OF THE PRESCRIBED RATE SINCE THE MACHINERY WAS NOT INSTALLED BEFORE 30 TH SEPTEMBER 2014. THUS THIS GROUND OF THE REVENUE IS ALLOWED. 10. IN THE RESULT APPEAL OF THE REVENUE IS ALLOWED . ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( . . /G.C. GUPTA) !'# /VICE-PRESIDENT ( & ' ( ) / ANIL CHATURVEDI) *+ ) /ACCOUNTANT MEMBER ITA NO.884/RJT/2010 -8- C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR ITAT. BY ORDER AR ITAT RAJKOT