RRB ENERGY LTD.,NEW DELHI vs. ITO, NEW DELHI

Brief facts of the case are as under: • The assessment under section 143(3) was completed on 31/12/2008 wherein the deduction under section 80IA of the Income Tax Act,1961 was examined and an amount of Rs. 40,000/- per annum for each wing electrical generator was disallowed amounting to an amount of Rs. 4,00,000/- in total. • The matter travelled up to Ld. CIT(A) wherein said addition made by the A.O. on account of probable expenditure on the wing electrical generator was deleted vide order dt. 02/09/2009. • Notice under section 148 was issued on 30/03/2011 by the Assessing Officer to reassess the income for the A.Y. 2006-07. • The operative part of the reasons recorded are as under: i. The assessee has claimed deduction under section 80IA on Rs. 1,20,02,794/- pertaining to income generated from the units installed in the assessment years 1997-98, 1998-99, 2002-03, 2005-06 and 2006-07. The gross income of these WEGs is Rs. 1,32,72,473/-. The assessee has deducted “notional maintenance charges” amounting to Rs. 4,80,000/- leaving a net income of Rs. 1,20,02,794/- which have been claimed to be eligible by the assessee. ii. The ten consecutive years of the assessee lapse in A.Y. 2005-06. Thus in the case of the assessee the period of taking deduction under section 80IA has lapsed and therefore deduction is not available for this year under consideration. iii. The claim of the assessee is on the basis of the WEGs subsequently installed in the A.Y. 1997-98, 1998-99, 2002-03, 2005-06 and 2006-07. The assessee is trying claim 80IA deduction for each WEG installed by it for the next ten consecutive assessment year. This will imply that as long as the section 80IA deduction is there the company shall keep on enjoying the deduction. The deduction is not intended to be made available on rotational basis. It is amply clear that it is available for an enterprise and then beginning from first year of claim continues for ten consecutive years. The period of claim of deduction of the assessee has lapsed and assessee’s claim of deduction under section 10A amounting to Rs. 1,20,02,794/- is not eligible.

The Ld. CIT(A) upheld the issue of notice on the grounds that the assessee has claimed deduction under section 80IA without accounting for any depreciation or any other expenses of any sought. In the original assessment order framed under section 143(3) only the issue of notional maintenance charges of Rs. 40,000/- was under consideration and the application of the provisions of section 80IA(5) have not been raised then.

Before us, it was argued by the Ld. AR that each wind mill should be treated as an independent unit and the claim has to be examined in relation to the each units eligibility. Notwithstanding this fact, he argued that there was no new material before the Assessing Officer to issue notice under section 148 as all the relevant material stands submitted before the Assessing Officer in the original proceedings. There was no new evidence found out or brought by the Assessing Officer before issue of the notice.

On the other hand the Ld. DR argued that the assessee has not claimed depreciation. He argued that the profits have to be computed as provided under the head Business Income from section 28 to Section 43D and that includes depreciation. The assessee ought to have claim depreciation, expenses on power generation and give effect to unabsorbed depreciation. Hence the reopening is rightly valid. He further argued that since this is the eleventh year of claiming of exemption the assessee is no more eligible for such exemption as per the provisions of Section 80IA.

We have heard the argument of both the parties and gone through the reasons recorded by the Assessing Officer. The similar matter has been examined in the case of RRB Energy Ltd. in by the Hon’ble Delhi High Court wherein the reopening of the assessment was quashed which was based on merely change of opinion and reviewed the earlier assessment passed in the regular assessment proceedings. The similar matter was also examined by the Coordinate Bench of this Tribunal in the case of the assessee in the A.Y. 2004-05 and held that the reopening was not valid. On perusal of the records, we find that the Ld. CIT(A)’s order dt. 02/09/2009 (para 6.1) has reference pertaining to the installation of 13 wind electric generators and also the disallowances claimed and after examination the same the deduction was duly allowed. Under such circumstance it cannot be said that the Assessing Officer restricted his scrutiny only to the extent of disallowing off expenses and choose not to examine the issue of deduction under section 80IA.Tyhe Assessing Officer has examined the issue diligently and formed an opinion on allowability of the deduction and allowed subsequently in the assessment. Thus having allowed in the earlier proceedings under 143(3), it cannot be said that there is escapement of income on the same head. This amounts to only change of opinion

Further, on perusal of the facts of the case we find that all the material facts relevant for the completion of the assessment were before the Assessing Officer and the Assessing Officer has taken a conscious decision to allow the deduction. The Form 10CCD was before the Assessing Officer at the time of completion of original assessment. All the material facts were before the Assessing Officer no new material was bought by the Assessing Officer while issuing the notice under section 148. The Assessing Officer has the powers of reassessment after having reason to believe that the income has escaped assessment but it does not confer powers upon him to reopen the assessment on mere change of opinion. The Assessing Officer has powers to reopen an assessment only on the basis of tangible material sufficient to hold that there has been escapement of income from the assessment. But in the case at hand, the Assessing Officer has apparently exercised the powers to review under the grab of reopening of the issue as to the deduction under section 80-Income Tax Act,1961 of the Act already decided by him in the original assessment order passed under section 143(3), which is not permissible under section 147 of the Act.

As a result the appeal of the assessee is hereby allowed.