SANGRAM PRATAPRAO PATIL,,PUNE vs. INCOME TAX OFFICER,, PUNE

The assessee has raised the following grounds of appeal:- 1. The learned ClT(A)-3, Pune; erred in law and on facts in sustaining addition of Rs.10,00,000/- made by the learned AO, for excess claim of

The first issue raised in the present appeal is against the addition of Rs.10 lakhs for excess claim of depreciation on wind mill during past years. The assessee has challenged the order of Assessing Officer in not appreciating that the subsidy received from MEDA was not for setting up of wind mill but was received as incentive for generation of power with the aid of wind and as such a capital receipt. By way of ground of appeal No. 2 on without prejudice to ground of appeal No. 1, the assessee has raised the issue that the depreciation on wind mill was claimed in assessment years 2002-03 and 2003-04 and as such, if any adjustment, has to be made then the same has to be made in those years and not in assessment year 2010-11. The ld. AR for the assessee pointed out that the issue which needs adjudication is ground of appeal No. 2.

Briefly, in the facts of the case, the assessee was engaged in the business of generation and sale of electricity through wind mill and was also engaged in the construction business. The Assessing Officer noted that the assessee had claimed deduction u/s. 80IA(4) of the Act of Rs.70,294/- in

The Commissioner of Income Tax (Appeals) has confirmed the said adding back of capital subsidy but allowed deduction u/s. 80IA(4) of the Act, against which Revenue is not in appeal. The Commissioner of Income Tax (Appeals) on the other hand upheld the addition made of Rs.10 lakhs being excess deduction claimed by the assessee in the earlier years.

The assessee is aggrieved by the orders of the authorities below. The ld. AR for the assessee has pointed out that adjustment, if any, on account of excess subsidy, if any, availed by the assessee or adjustment, if any, on account of the cost of wind mill relates to assessment years 2002-03 and 2003- 04 and does not relates to the year under consideration. He thus, pointed out that no addition can be made on this account in the year under appeal. He

The learned Departmental Representative for the Revenue placed reliance on the orders of authorities below.

On perusal of record and after hearing both the learned Authorized Representatives, the issue which arises in the present appeal is in connection with the subsidy received by the assessee against the wind mill. The said facility was established by the assessee in assessment years 2002-03 and 2003-04. Under the scheme of State Government the assessee was entitled to receive subsidy of Rs.20 lakhs i.e. Rs.10 lakhs on account of cash consideration and Rs.10 lakhs on account of adjustment of the electricity power bills. There is no dispute that the assessee was entitled to the said subsidy which was capital receipt in the hands of the assessee. In the captioned assessment year, MSEDL adjusted sum of Rs.10 lakhs. The assessee had claimed the same as expenditure by debiting it to the profit and loss account. However, the authorities below held the same to be income of the assessee but deduction u/s. 80IA(4) was allowed on the enhanced income. The Assessing Officer was of the view that in such circumstances the assessee was only entitled to receive subsidy of Rs.10 lakhs and the balance sum of Rs.10 lakhs was thus held to be income of the assessee in the instant assessment year. The plea of the assessee on the other hand was that since subsidy was claimed in assessment years 2002-03 and 2003-04 i.e. the year of installation of wind mill, adjustment if any, if warranted under law is to be made in the said year and not in the instant assessment year i.e. assessment year 2010-11. There is merit in the plea of the assessee that adjustment, if any, has to be

The grounds of appeal No. 2 and 3 would become academic in view of allowing ground of appeal No.1. Hence the same are dismissed.

In the result, appeal of assessee is partly allowed.