ECO RRB INFRA P.LTD,NEW DELHI vs. ACIT, CIRCLE-8(1), NEW DELHI

Brief facts of the case are that the assessee is a company engaged in the business of developing, operating, maintaining the infrastructure facility in the power sector. For the assessment years 2013-14, 2014-15 and 2015- 16, the Assessing Officer disallowed the claim of the assessee for deduction u/s. 80IA of the Income-tax Act (“the Act”) on the ground that the assessee had wrongly claimed expenses and depreciation related to power generation against non-taxable consultancy income and that if the direct expenses are allocated towards the income generated from power generation, the income from power generation will result into loss and therefore, there would not be any income to claim deduction u/s. 80IA of the Act.

In the assessment year 2014-15, the assessee also claimed bad debt of Rs.7,49,106/- in the profit and loss account by stating that they had shown the rental income under the head “income from house property” in assessment year 2013-14 and since the same was not realised it was claimed as bad debt against the business income. The Assessing Officer disallowed the same.

Challenging the disallowance of claim u/s. 80IA for all the three years and also the disallowance of claim for bad debt for assessment year 2014- 15, the assessee preferred appeals before the ld. CIT(A). Ld. CIT(A) after considering the facts of the case noticed that identical question had arisen in assessee’s own case under identical facts for assessment years 2009-10, 2011-12 and 2012-13 and in appeals, the CIT(A) had taken a view against the assessee and therefore, the claim of the assessee cannot be allowed in respect of deduction u/s. 80IA of the Act. So also in respect of assessment year 2014-15 on the aspect of disallowance of bad debt, the ld. CIT(A) held that u/s. 36(1)(vii) of the Act, only the bad debts which were considered as income under the head “profits and gains of business” can be allowed as deduction and as much as the claim of deduction of Rs.7,49,106/- by the assessee does not have any nexus with the business activities of the assessee, it cannot be related to business income and such a claim cannot be allowed. He, therefore, dismissed that ground also. The assessee is, therefore, before us in these appeals.

At the outset, it is the submission of the ld. AR that as rightly observed by ld. CIT(A), the facts involved in these three years are identical to the facts involved for earlier assessment years 2009-10, 2011-12 and 2012-13. He further submitted that this issue was dealt with by coordinate Bench of this Tribunal in and 6149/Del/2012 for the assessment years 2006-07 and 2007-08 and placed reliance on the observations of Hon’ble Delhi High Court in the case of RRB Consultants, 14 TTJ 794 (Delhi). He submitted that by order dated 06.01.2020 in ITA No. 4633/Del/2017 for assessment year 2012-13, the issue relating to deduction under section 80IA was remanded to the file of Assessing Officer to adjudicate it afresh in tune with the direction given in ITA No. 400/Del/2011 and 6149/Del/2012 by order dated 27.09.2013 and ITA Nos. 700 and 701/Del/2013 for assessment year 2008-09 and 2009-10 respectively by order dated 16.10.2014. He, therefore, prayed that similar course may be followed in this year also.

There is no denial from the Revenue that the facts involved in these years are identical to the facts involved for the assessment years 2009-10, 2011-12 and 2012-13 as observed by the ld. CIT(A). The direction given by the Tribunal in for the assessment year 2012-13 by order dated 06.01.2020 is also not controverted.

In earlier years, it was held that deduction u/s. 80IA has to be computed after setting off the depreciation relating to wind mill against income earned out of electricity generated, which qualified for deduction u/s. 80IA of the Act. In this factual and legal situation, we deem it just and proper to follow the view taken by the Tribunal in assessee’s own case consistently over a period of time from 2000-01. We, therefore, set aside the impugned order on this aspect and remand the matter to the Assessing Officer to adjudicate afresh in tune with the directions in and 6149/Del/2012 by order dated 27/9/2013 and in ITA Nos. 700 and 701 /Del/ 2013 for the assessment years 2008-09 and 2009-10 respectively by order dated 16/10/2014. Grounds of appeal are answered accordingly.

Now coming to the second ground of appeal for assessment year 2014-15 relating to disallowance of bad debt claimed by the assessee, the assessee pleaded that they have declared the said income in the computation of income for assessment year 2013-14, but an amount to the tune of Rs.7,49,106/- could not be realized and therefore, in this assessment year, it was written off and claimed as bad debt.

In the result, all these appeals are allowed for statistical purposes. Order pronounced in the open court on 28th February, 2020.