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Income Tax Appellate Tribunal, ‘G’ BENCH, MUMBAI
Before: SHRI MANOJ KUMAR AGGARWAL, AM & SHRI RAVISH SOOD,JM
आदेश / O R D E R PER BENCH : The present appeals filed by the abovementioned assesses are directed against the respective orders passed by the CIT(Appeals)-51, Mumbai, dated 20.07.2018, which in turn arises from the orders
Dy. CIT Vs. Wind World Wind Resources Development Pvt. Ltd. – A.Y 2012-13 2 Dy. CIT Vs. J.N Investment & Trading Co. Pvt. Ltd. – – A.Y 2011-12 passed by the A.O under Sec. 143(3) r.w.s 153A r.w.s 263 of the Income-tax Act, 1961 (for short „Act‟) in the case of the captioned assesses, both dated 01.09.2017. As a common issue is involved in the aforesaid appeals, therefore, the same are being taken up and disposed off by way of a consolidated order. We shall first advert to the appeal of the revenue in the case of Wind World Wind Resources Development Pvt. Ltd viz. . The revenue has assailed the impugned order on the following grounds of appeal before us : “1. Whether on the facts and circumstances of the case the Ld. CIT was correct in law in deleting the disallowance on account of depreciation of Rs. 24,32,66,380/- made u/s 143(3)/153A/263 by the Assessing Officer on the ground that the order of Pr. CIT u/s 263 has not been upheld by the Hon‟ble ITAT vide order datd 27.09.2017 in when the appeal against the aforesaid order of the ITAT is pending before the Hon‟ble Bombay High Court (ITXAL No. 1051/2018).
2. Whether on the facts and circumstances of the case the Ld. CIT was correct in law in deleting the disallowance on account of depreciation of Rs. 24,32,66,380/- made u/s 143(3)/153A/263 on technical ground and not on merit.”
Briefly stated, the assessee company is engaged in the business of setting of infrastructure facilities for evacuation of power generator through power projects. Search and seizure action u/s. 132 of the Act was carried out on 14.03.2013 at the premises of M/s. Enercon India Ltd. (EIL) and its groups companies. The assessee company being one of the group entity of M/s. Enercon India Ltd. was covered in the aforesaid search proceedings.
In compliance to notice issued under Sec 153A of the Act, the assessee filed its return of income on 24.03.2015, declaring Nil income under the normal provisions of the Act. Further, „book profit‟ under Sec. 115JB was shown at Rs. 17,81,67,919/-. Income of the assessee was thereafter assessed by the A.O vide his order passed under Sec. 153A r.w.s. 143(3), dated 30.03.2015, accepting the returned income. 4. After the culmination of the assessment proceedings, the Pr. CIT called for the records of the assessee in exercise of his powers under Sec. 263 of the Act. It was observed by the Pr. CIT that the assessment framed by the A.O was erroneous, insofar it was prejudicial to the interest of the revenue on three grounds viz. (i). that, though the assessee had during the year made an addition of “Wind Energy Converters” of a value of Rs. 48,65,32,759/- which were put to use in the second half of the year, however, the A.O had failed to examine the admissibility of the claim of the assessee in respect of 100% depreciation on the said fixed assets; (ii). that, as per the provisions of Sec. 32(1)(iia) additional deprecation @20% of actual cost of plant and machinery acquired and installed after 31.03.2005 was only allowable to an assessee who was engaged in the business of manufacture or production of any Dy. CIT Vs. Wind World Wind Resources Development Pvt. Ltd. – A.Y 2012-13 3 Dy. CIT Vs. J.N Investment & Trading Co. Pvt. Ltd. – – A.Y 2011-12 article or thing; and (iii). that, as Sec. 32(1)(iia) was amended by the Finance Act, 2012 to allow additional depreciation to the assesses who were engaged in the business of generation and distribution of power w.e.f. April, 2013 i.e. from A.Y. 2013-14, therefore, the same was not allowable to an assesses involved in the aforesaid business prior to A.Y. 2013-14. On the basis of his aforesaid observations, the Pr. CIT held a conviction that the assessee was not eligible for additional depreciation on “Wind Energy Converters” during the year under consideration, viz. A.Y. 2012-13. Observing, that for the aforesaid reasons the order of the A.O was rendered as erroneous, insofar it was prejudicial to the interest of the revenue, the Pr. CIT vide his order passed under Sec. 263 of the Act, dated 23.03.2017 „set aside‟ the assessment and directed the A.O to examine the claim of the assessee towards additional depreciation and initial depreciation afresh and complete the assessment as per law.
Aggrieved, the assessee assailed the order passed by the Pr. CIT under Sec. 263 of the Act before the Tribunal. The Tribunal vide its order passed in Wind World Wind Resource Development Pvt. Ltd. Vs. Principal CIT(C)-2, Mumbai [ITA No. 2372/Mum/2107; dated 27.09.2017], therein „set aside‟ the order passed by the Pr. CIT under Sec. 263, dated 23.03.2017 and restored the order passed by the A.O under Sec 143(3) r.w.s 153A, dated 30.03.2015.
As is discernible from the records, the A.O prior to the order of the Tribunal in dated 27.09.2017, had given effect to the directions of the Pr. CIT in his order passed under Sec. 263, dated 23.03.2017 and had passed the consequential assessment order under Sec. 153A r.w.s 143(3) r.w.s 263 of the Act, dated 01.09.2017.
On appeal, the CIT(A) taking cognizance of the fact that the order passed by the Pr. CIT under Sec. 263 had been vacated by the Tribunal, vide its order dated 27.09.2017, therefore, concluded that the consequential assessment order passed by the A.O under Sec. 143(3) r.w.s 153A r.w.s 263, dated 01.09.2017 could not be sustained. Resultantly, the CIT(A) allowed the appeal of the assessee.
The revenue being aggrieved with the order of the CIT() has carried the matter in appeal before us. On a perusal of the grounds of appeal, we find that the sole grievance of the revenue is that as the order of the Tribunal quashing the order passed by the Pr. CIT under Sec. 263 of the Act, dated 23.03.2017, has been assailed before the Hon‟ble High Court and is pending adjudication as on date, therefore, the CIT(A) was in error in deleting the disallowances made by the A.O, vide his order passed under Sec. 153A r.w.s 143(3) r.w.s 263, dated 01.09.2017.
Dy. CIT Vs. Wind World Wind Resources Development Pvt. Ltd. – A.Y 2012-13 4 Dy. CIT Vs. J.N Investment & Trading Co. Pvt. Ltd. – – A.Y 2011-12
The ld. Departmental representative (for short „D.R‟) submitted that as the quashing by the Tribunal of the order passed by the Pr. CIT under Sec. 263 has been assailed by the revenue by way of an appeal before the Hon‟ble High Court, which had been numbered as ITXAL/105/2018 and is pending adjudication as on date, therefore, the present appeal has been filed for the sake of keeping the issue alive.
Per contra, the ld. Authorised representative (for short „A.R‟) for the assessee relied on the order of the CIT(A). It was submitted by the ld. A.R that as the order passed by the Pr. CIT under Sec. 263 had been vacated by the Tribunal, vide its order passed in dated 27.09.2017, therefore, the consequential order passed by the A.O under Sec. 153A r.w.s 143(3) r.w.s 263, dated 01.09.2017 could not be sustained.
We have heard the authorised representatives for both the parties, perused the orders of the lower authorities and the material available on record, as well as the order passed by the Tribunal in dated 27.09.2017 for the year under consideration. Admittedly, the order passed by the Pr. CIT under Sec. 263 of the Act, dated 24.03.2017 had been vacated by the Tribunal, vide its order passed in ITA No. 2372/Mum/2017, dated 27.09.2017. We are persuaded to subscribe to the contention of the ld. A.R, that now when the order passed by the Pr. CIT under Sec. 263, dated 23.03.2017 had been quashed by the Tribunal, therefore, the consequential assessment framed by the A.O under Sec. 153A r.w.s 143(3) r.w.s 263, dated 01.09.2017 cannot be allowed to exist on a standalone basis and has to meet the same fate. As for the fact, that the revenue has assailed the order of the Tribunal before the Hon‟ble High Court, we are afraid that the same would not suffice for dislodging the binding effect of the order of Tribunal. On a specific query by the bench, it was stated by the ld. D.R that the matter was at the pre-admission stage before the Hon‟ble High Court. In our considered view, as the order of the Tribunal had neither been dislodged or stayed by the Hon‟ble High Court, therefore, we are not inclined to accept the claim of the ld. D.R that the CIT(A) was in error in vacating the assessment framed by the A.O under Sec. 153A r.w.s 143(3) r.w.s 263, dated 01.09.2017, for the reason, that the order passed by Tribunal quashing the order of the Pr. CIT under Sec. 263, dated 23.03.2017 had been assailed by the revenue before the Hon‟bl High Court and is pending adjudication. As such, finding no infirmity in the order of the CIT(A), we uphold the same.
Resultantly, the appeal of the revenue is dismissed.
Dy. CIT Vs. Wind World Wind Resources Development Pvt. Ltd. – A.Y 2012-13 5 Dy. CIT Vs. J.N Investment & Trading Co. Pvt. Ltd. – – A.Y 2011-12 A.Y 2011-12 13. We shall now advert to the appeal of the revenue in the case of J.N Investment and Trading Co. P. Ltd for A.Y 2011-12 in ITA No. 5703/Mum/2018. The revenue has assailed the impugned order on the following grounds of appeal before us :
“1. Whether on the facts and circumstances of the case the Ld. CIT was correct in law in deleting the disallowance on account of depreciation of Rs. 8,80,00,000/- made u/s 143(3)/153A/263 by the Assessing Officer on the ground that the order of Pr. CIT u/s 263 has not been upheld by the Hon‟ble ITAT vide order dated 27.09.2017 in when the appeal against the aforesaid order of the ITAT is pending before the Hon‟ble Bombay High Court (ITXAL No. 1051/2018).
2. Whether on the facts and circumstances of the case the Ld. CIT was correct in law in deleting the disallowance on account of depreciation of Rs. 24,32,66,380/- made u/s 143(3)/153A/263 on technical ground and not on merit.”
Briefly stated, the assessee company is engaged in the business of generating of power. Search and seizure action u/s. 132 of the Act was carried out on 14.03.2013 at the premises of M/s. Enercon India Ltd. (EIL) and its groups companies. The assessee company being one of the group company of M/s. Enercon India Ltd. was covered in the aforesaid search proceedings.
The assessee in compliance to notice issued under Sec 153A of the Act, had filed its return of income on 27.02.2014, declaring its income at Rs. 2,82,47,480/-. Further, „book profit‟ under Sec. 115JB was shown at Rs. 18,62,53,155/-. Income of the assessee was thereafter assessed by the A.O, vide his order passed under Sec. 153A r.w.s. 143(3), dated 24.03.2015, accepting the returned income.
After the culmination of the assessment proceedings, the Pr. CIT called for the records of the assessee in exercise of his powers under Sec. 263 of the Act. On a perusal of the records, it was observed by the Pr.CIT that the assessment framed by the A.O was erroneous insofar it was prejudicial to the interest on the revenue on three grounds viz. (i). that, the claim of the assessee that it had put to use a “Wind Turbine Generator” of a value of Rs. 17,60,00,000/- that was acquired during the year for a period of more than 180 days required to be verified; (ii). that, as per the provisions of Sec. 32(1)(iia) additional deprecation @20% of actual cost of plant and machinery acquired and installed after 31.03.2005 was only allowable to an assessee who was engaged in the business of manufacture or production of any article or thing; and (iii). that, as Sec. 32(1)(iia) was amended by the Finance Act, 2012, therefore, the additional depreciation was to be allowed to the assesses who were engaged in the business of generation or generation and distribution of power w.e.f. April, 2013 i.e. from A.Y. 2013-
Dy. CIT Vs. Wind World Wind Resources Development Pvt. Ltd. – A.Y 2012-13 6 Dy. CIT Vs. J.N Investment & Trading Co. Pvt. Ltd. – – A.Y 2011-12 14, and the same was not allowable to an assessee involved in the aforesaid business prior to A.Y. 2013-14. Observing, that for the aforesaid reasons the order of the A.O was rendered as erroneous, insofar it was prejudicial to the interest of the revenue, the Pr. CIT vide his order passed under Sec. 263 of the Act, dated 24.03.2017 „set aside‟ the assessment and directed the A.O to examine the claim of the assessee towards additional depreciation and initial depreciation afresh and complete the assessment as per law.
Aggrieved, the assessee assailed the order passed by the Pr. CIT under Sec. 263 of the Act before the Tribunal. The Tribunal vide its order passed in J.N Investment & Trading Co. Pvt. Ltd. Vs. Principal CIT(C)-2, Mumbai [ITA No. 2373/Mum/2107; dated 27.09.2017] for A.Y 20101-11, therein „set aside‟ the order passed by the Pr. CIT under Sec. 263, dated 24.03.2017 and restored the order passed by the A.O under Sec 143(3) r.w.s 153A, dated 24.03.2015.
As is discernible from the records, the A.O prior to the order of the Tribunal in dated 27.09.2017, had given effect to the directions given by the Pr. CIT in his order passed under Sec. 263, dated 24.03.2017 and had passed the consequential assessment order under Sec. 153A r.w.s 143(3) r.w.s 263 of the Act, dated 01.09.2017.
On appeal, the CIT(A) taking cognizance of the fact that the order passed by the Pr. CIT under Sec. 263 had been vacated by the Tribunal, vide its order dated 27.09.2017, therefore, concluded that the consequential assessment order passed by the A.O under Sec. 143(3) r.w.s 153A r.w.s 263, dated 01.09.2017 could not be sustained. Resultantly, the CIT(A) allowed the appeal of the assessee.
The revenue being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. As the facts and the issue involved in the present appeal remains the same as were there before us in the appeal of the revenue in the case of the „sister concern‟ of the assessee viz. Wind World Wind Resource Development Pvt. Ltd. Vs. Principal CIT(C)-2, Mumbai [ITA No. 2372/Mum/2107; dated 27.09.2017], therefore, our observations and the order therein passed shall apply mutatis mutandis for the disposal of the present appeal of the revenue viz. J.N Investment & Trading Co. Pvt. Ltd. Vs. Principal CIT(C)-2, Mumbai [ITA No. 2373/Mum/2107; dated 27.09.2017]. As such, on the same terms the appeal of the revenue is dismissed.
Resultantly, the appeal of the revenue is dismissed.
Dy. CIT Vs. Wind World Wind Resources Development Pvt. Ltd. – A.Y 2012-13 7 Dy. CIT Vs. J.N Investment & Trading Co. Pvt. Ltd. – – A.Y 2011-12
The captioned appeals of the revenue viz. (i). Wind World Wind Resource Development Pvt. Ltd. Vs. Principal CIT(C)-2, Mumbai [ITA No. 2372/Mum/2107; dated 27.09.2017]; and (ii). J.N Investment & Trading Co. Pvt. Ltd. Vs. Principal CIT(C)-2, Mumbai [ITA No. 2373/Mum/2107; dated 27.09.2017, are dismissed in term of our aforesaid observations.