Case Law Details
Brief of the Case
ITAT Pune held In the case of ACIT vs. RDS Construction Pvt. Ltd. that on the matter of adjustment of seized cash with the self assessment tax, we find no infirmity in the order of the CIT(A) since the assessee vide letter dated 30-03-2010 had requested the AO adjust such seized cash as self assessment tax. Until and unless the assessee makes a specific request, the AO is not duty bound to appropriate such tax either towards advance tax or towards self assessment tax. He can only adjust such seized cash from the tax determined after completion of assessment.
Facts of the Case
ITA No.377/PN/2013 (By Revenue)
The assessee is a company engaged in the business of civil construction. It filed its original return of income for the year under consideration on 01-11-2004 declaring total income of Rs.72,07,240/-.A search u/s.132 of the I.T. Act was carried out on 23-09-2009 in the group of cases. In response to notice u/s.153A the assessee filed its return of income on 20-07-2010 declaring total income of Rs.78,14,980/-. The AO completed the assessment u/s.153A r.w.s. 143(3) for the impugned assessment year on a total income of Rs.80,54,157/- by making the additions on account of disallowance u/s 40A(3) and bogus claim of expenses in the name of labour contractors.
ITA No.378/PN/2013 (By Revenue)
AO during the course of assessment proceedings noted that the assessee has acquired properties during A.Y. 2005-06. The total value of the above properties acquired are Rs.41,95,750/-.To know the investment in the said properties the AO made a reference to the DVO u/s.142A of the I.T. Act to determine the cost of the properties in the hands of the assessee as on the date of acquisition. The DVO valued the properties at Rs.64,00,000/-. The AO, therefore, asked the assessee to explain as to why the difference of Rs.22,04,250/- shall not be added u/s.69B of the I.T. Act. It was submitted by the assessee that the difference between the investment shown by the assessee and the value determined by the DVO is due to the sudden increase in price by more than 60% to 70%. However, the AO did not accept the arguments advanced by the assessee and made the addition of Rs.22,04,250/- being the difference between the cost arrived at by the DVO and shown by the assessee u/s.69B of the I.T. Act.
ITA No.379/PN/2013 (By Revenue)
The AO during the course of assessment proceedings noted that the assessee has acquired land at Sy.No.21/1 (Part) Bavdhan (Budruk), Tal Mulshi, Dist. Pune for Rs.22,50,000/- as per purchase deed as on 12-04-2005. He made a reference to the DVO u/s.142A to determine the cost of the property in the hands of the assessee as on the date of acquisition. The DVO valued the value of the property at Rs.38,40,000/ Rejecting the various explanations given by the assessee the AO made addition of Rs.15,90,000/- u/s.69B.
Further AO during the courseof assessment proceedings noted that the assessee during the impugned assessment year has installed new windmills. From the various details furnished by the assessee the AO noted that the assessee had claimed depreciation on the entire expenditure including purchase and installation of the windmill. He, therefore, asked the assessee to substantiate its claim made on the assets other than windmill. The AO held that the assessee was not entitled for depreciation on civil work and payment towards MEDA charges. For the above proposition, he relied on the decision of the Pune Bench of the Tribunal in the case of Poonawala Finwest & Agro Pvt. Ltd. vs. ACIT reported in 118 TTJ 68 (Pune).
ITA No.2578/PN/2012 (By Assessee)
The AO made addition of Rs.3,12,515/- from the outstanding sundry creditors on the ground that the some of the trade creditors are outstanding for few year and the liability has ceased to exist.
Further the AO during the course of assessment proceedings noted that the assessee has received 2 credit notes aggregating Rs. 40 lakhs given by M/s. Suzlon Energy Ltd. It was explained before the AO that the credit notes in respect of compensation were received from M/s. Suzlon Energy Ltd. for delay in completion of windmill project within the stipulated time limit. It was further explained that these credit notes were received for the period before the asset was put to use and was treated as capital receipts and deducted from the invoice of the value of the windmill purchased. However, the AO rejected the above contention of the assessee that these were capital receipts and accordingly brought to tax the sum of Rs. 40 lakhs as income from other sources.
ITA No.380/PN/2013 (By Revenue)
The AO in the assessment order has noted that the assessee has invested in windmills at Rs.3,80,00,000/- which includes investment of Rs.25 lakhs towards Earth Work Foundation, i.e. civil works and internal road etc. which is not entitled for higher rate of depreciation. He observed that though the foundation is part of windmill eligible for higher rate of depreciation in view of the decision of Madras Cement Company, however from the total bill raised towards civil construction including roads etc. cannot be separated. He noted that the depreciation has been claimed on entire expenditure of Rs.3,80,00,000/- at the higher rate, i.e. 80% of the above assets excluding the land. He noted that the depreciation on the civil work, payment towards MEDA charges etc. does not constitute windmill. Therefore, the claim of depreciation at higher rate to that extent is wrong. He accordingly disallowed Rs.92,32,906/- being excess depreciation claimed by the assessee.
ITA No.2580/PN/2012 (By Assessee)
The assessee during appeal proceedings before the CIT (A) challenged levy of interest u/s.234A for the period from 31-10-2009 on 20-07-2010. It was submitted that the search action was conducted on 23-09-2009 and as on the date of search, the due date for filing the return for A.Y. 2009-10 u/s.139(1) did not expire. Further, the assessee had filed its return of income in response to notice u/s.153A on 20-07- 2010. It was argued that as per provisions of section 153A(1)(a) a return filed in response to notice u/s.153A is to be treated as return filed u/s.139(1) and that the due date of filing return u/s.139(1) gets shifted to the date prescribed in the notice u/s.153A.
Further the assessee during the course of appeal proceedings before the CIT (A) raised a ground disputing the charging of interest u/s.234B and 234C on cash seized on Rs.1,14,60,500/- from the residence of Shri R.D. Shinde. It was submitted that the AO had not taken cognizance of the assessee’s letter dated 30-03-2010 requesting to adjust the seized cash against self-assessment tax for the year under consideration. The cash so seized was adjusted against tax liability in the month of March and interest u/s.234B was charged from the date of seizure of cash to March 2011.
ITA No.382/PN/2013 (By Revenue)
The AO during the course of assessment proceedings noted that the assessee has declared an amount of Rs.5,83,00,000/- as its undisclosed income which includes Rs.1.50 crores on account of unexplained business expenses in respect of Ghodzari project, which are claimed against the sources in the hands of the assessee. The AO noted that the application of undisclosed expenses of Ghodzari Project pertains to the sister concerns M/s. Mahalaxmi Infraprojects Ltd. Thus, the unaccounted expenditure pertains to the sister concerns M/s. Mahalaxmi Infraprojects Ltd. and it does not belong to the assessee. He therefore held that shifting of application on undisclosed fund pertaining to the sister concern M/s. Mahalaxmi Infraprojects Ltd. does not have any impact on the undisclosed income of the assessee.
ITA No.383/PN/2013 (By Revenue)
The AO in his order rejected the claim of deduction u/s.80IA (4)(iv). While doing so the AO observed that while making the claim of deduction under section 80IA (4)(iv), the assessee had ignored the provisions of 80IA(5) which provided that the profit and gain of eligible business should be computed as if such eligible business were the only source of income of the assessee during the previous year relevant to the initial assessment year and to every subsequent assessment year upto and including the assessment year for which the determination is to be made.
The AO observed that the assessee is in the business of civil construction and in the year of installation of wind mill the unabsorbed depreciation of windmill was claimed and allowed against profit of such other business. Further the assessee had shown profit from windmill for subsequent years. The assessing officer reworked the manufacturing and profit and loss account in respect of windmill as per provisions of section 80IA(5).He observed that as per this working even at the end of the assessment year under consideration, there was unabsorbed depreciation of Rs.4,64,79,412/-. Based on the above observation, the claim of deduction u/a. 80IA (4) was rejected and the sum of Rs. 74,26,459/- was brought to tax.
Contention of the Assessee
ITA No.377/PN/2013 (By Revenue
The Ld. Counsel for the assessee submitted that no incriminating evidence was found as a result of search u/s.132 or during the assessment proceedings u/s.153A. Therefore, no addition could have been made. Referring to the decision of the Special Bench of the Tribunal in the case of All Cargo Global Logistics Ltd.(Supra) he submitted that the Tribunal in the said decision has already considered this issue. Further, the Hon’ble Bombay High Court in the case of Continental Warehousing Corporation vide ITA No.523 of 2013 and 1969 of 2013 order dated 21-04-2015 after considering the decision of Hon’ble Karnataka High Court in the case of Canara Housing (Supra) has held that the scope of enquiry u/s.153A is to be confined only to the undisclosed income unearthed during the search or proceedings u/s.153A.
He submitted that merely because creditors were outstanding for some years it did not mean that the liability has ceased in the hands of the assessee. Referring to the decision of Hon’ble Supreme Court in the case of CIT Vs. Sugauli Sugar Works Pvt. Ltd. reported in 236 ITR 518 he submitted that the Hon’ble Supreme Court in the said decision has held that the mere fact that the assessee has made an entry of transfer in his accounts unilaterally will not enable the department to say that section 41(1) is applied and the amount should be included in the total income of the assessee. Thus, even when the assessee has credited such amount to its profit and loss account still provisions of section 41(1) are not applicable in view of the above decision. Therefore, when the assessee in the instant case is still showing the creditors in its balance sheet, therefore, there is no question of making the addition u/s. 41(1). Referring to the decision of the Pune Bench of the Tribunal in the case of Hrishikesh L. Joshi vide ITA No.702/PN/2007 he submitted that the Tribunal in the said decision has held that simply because the liability is unpaid for more than 3 years it cannot be taxed as cessation of liability u/s. 41(1).He accordingly submitted that no addition could have been made.
ITA No.378/PN/2013 (By Revenue)
The ld counsel of the assessee while supporting the order of the CIT(A) submitted that no incriminating evidence whatsoever was found during the course of search that the assessee has made any unaccounted investment or unaccounted payment. The assessments were completed u/s. 143(3) prior to the date of search. The agreements for purchases were entered into in the year 1996 and 2002 and the possession of the said lands were also taken prior to 2004-05. The DVO instead of taking comparable sale instances in the year 1996 to 2002 when the agreements were made had taken comparable sale instances of 2005. Therefore, the CIT (A) was fully justified in deleting the addition.
ITA No.2578/PN/2012 (By Assessee)
The Ld. Counsel for the assessee submitted that merely because the creditors were outstanding for a period of 3 years it does not mean that the liability has ceased in the hands of the assessee. He referred to the decision of Hon’ble Supreme Court in the case of Sugauli Sugar Works Pvt. Ltd. [236 ITR 518] and the decision of the Pune Bench of the Tribunal in the case of Hrishikesh L. Joshi vide ITA No.702/PN/2007 order dated 13-08-2010 for A.Y. 2003-04 and submitted that the Tribunal following various other decisions has deleted similar addition made by the AO and upheld by the CIT (A).
On the matter of credit notes, the ld counsel of the assessee submitted that Rs.22.54 lakhs has been offered by them as compensation for delay caused in completion of 600 KW project at Dhalgaon. Referring to page 121 of the paper book he drew the attention of the Bench to the letter written by M/s. Suzlon Energy Ltd. according to which an amount of Rs.17.5 lakhs has been given as compensation towards delay in completion of the project. Referring to the decision of Hon’ble Supreme Court in the case of CIT Vs. Saurashtra Cement Ltd. reported in 325 ITR 422 he submitted that such compensation is capital in nature.
ITA No.380/PN/2013 (By Revenue)
The Ld. Counsel for the assessee on the other hand referring to the decision of the Tribunal in the case of DCIT Vs. J-Sons Foundry Pvt. Ltd. vide ITA No.2349/PN/2012 order dated 28-01- 2014 submitted that under identical facts and circumstances the directions given by the CIT (A) for computing the depreciation on windmill has been upheld and the grounds raised by the Revenue have been dismissed. He accordingly submitted that the grounds raised by the Revenue should be dismissed.
ITA No.2580/PN/2012 (By Assessee)
The Ld. Counsel for the assessee submitted that when the search took place on 23-09-2009 the due date for filing of the return u/s.139 (1) had not expired. The assessee in response to notice u/s.153A filed his return of income on 21-07-2010. He submitted that after the search the assessee is required to file return u/s.153A only. Hence, there is no question of filing any return u/s139 (1). Therefore, there is no delay in filing the return and therefore levy of interest u/s.234A is not justified at all.
On the matter of adjustment of seized cash with self assessment tax, The Ld. Counsel for the assessee referring to the decision of the Pune Bench of the Tribunal in the case of Pushphendra Subash Chandra Vs. ACIT reported in (2013) 37 CCH 127 submitted that the Tribunal in the said decision has held that section 132B(1)(i) does not prohibit utilization of the amount seized during the course of search towards advance tax payable on the amount of undisclosed income declared during the course of search. Referring to page 169 of the paper book the Ld. Counsel for the assessee drew the attention of the Bench to the letter addressed on 30-03- 2010 to the AO requesting the adjustment of seized cash against the assessment of tax for A.Y. 2009-10. He accordingly requested that appropriate direction may be given.
ITA No.382/PN/2013 (By Revenue)
The Ld. Counsel for the assessee on the other hand heavilyrelied on the order of the CIT (A). He submitted that the CIT (A) at para 46 of the order had given a categorical finding that the director of the assessee company Shri R.D. Shinde, who is also the director of another sister concern M/s. Mahalaxmi Infraprojects Ltd. had made a total declaration of Rs.31 crores out of which Rs.24.71 crores pertain to M/s. Mahalaxmi Infraprojects Ltd. and Rs.6.29 crores pertains to the assessee firm. Similarly out of total declaration of Rs.31 crores Rs.21.91 crores pertain to Ghodzari Project. The break-up of Rs.21.91 crores in different assessment years both by the assessee as well as by the Department was also considered by the CIT (A). He submitted that the AO has made addition of Rs.21.92 crores in M/s. Mahalaxmi Infraprojects Ltd. and M/s. Mahalaxmi Infraprojects Ltd. has not disputed the same.
Referring to the decision of Hon’ble Bombay High Court in the case of CIT Vs. Pruthvi Brokers and Shareholders Pvt. Ltd. reported in 349 ITR 336 he submitted that the CIT (A) has power to consider the claim not made in the return.
Contention of the Revenue
ITA No.377/PN/2013 (By Revenue
The Ld. Departmental Representative strongly opposed the order of the CIT (A). She submitted that the Ld.CIT(A) was not justified in deleting the addition made by the AO amounting to Rs.2,35,117/- made on account of sundry creditors outstanding for more than 3 years. She also relied on the decision of Honb’le
Karnataka High Court in the case of Canara Housing Development Company Vs. DCIT vide ITA No.38/2014 order dated 25-07-2014 to the proposition that the AO has power to re-assess the income u/s.153A even in case of a completed assessment, the order of which was passed u/s.143(3).
ITA No.2578/PN/2012 (By Assessee)
The ld counsel of the revenue supported the order of AO.
ITA No.382/PN/2013 (By Revenue)
The Ld. Departmental Representative strongly opposed the order of the CIT(A). She submitted that the statement given u/s.132 (4) legally stands and it was never retracted. Nothing prevented the assessee not to present the above table before the AO. Only after the assessment was completed it was brought before the CIT (A). If the orders passed by the CIT (A) giving telescoping benefit is accepted, then the assessed income becomes below the returned income. Relying on various decisions she submitted that the assessed income cannot go below the returned income.
Held by CIT (A)
ITA No.377/PN/2013 (By Revenue
So far as disallowance u/s 40A (3) is concerned the CIT (A) confirmed the addition for all the years in absence of any examination by the AO during the first round of assessment proceedings and in absence of the assessee to show that the expenses made in excess of Rs.20,000/- were incorrect due to circumstances beyond the control of the assessee.
So far as disallowance u/s.41(1) is concerned the Ld.CIT(A) deleted the addition holding that the AO in the order passed u.s,143(3) which was completed prior to the search, had verified the issue of outstanding creditors and no incriminating documents were found as a result of search.
ITA No.378/PN/2013 (By Revenue)
Based on the arguments advanced by the assessee the CIT (A) deleted the addition. It was held that assessing officer was not entitled to revisit the same issues which were already concluded in an assessment proceeding completed under section 143(3). It is also not the case of the assessing officer that incriminating documents indicating cash dealing in land purchase were discovered during the course of search and seizure. Under these circumstances, the assessing officer has incorrectly assumed jurisdiction over this item and made the addition of Rs.15.90 lakhs in assessment year 2006-07 and Rs.22.40 lakhs in assessment year 2005-06.
ITA No.379/PN/2013 (By Revenue)
CIT (A) deleted the addition. On the matter of depreciation on wind mills, CIT (A) allowed the claim of excess depreciation on windmill. It was held that these issues were already looked into during the course of original assessment and an opinion was formed that depreciation is allowable on foundation of the windmill at the rates applicable to WTGS and that MEDA charges were an allowable business expense. Hence, it was not possible for the assessing officer, in the absence of any material found during the course of search to make the aforesaid disallowance as the same tantamount to a change of opinion which is not permitted in the course of reassessment u/s.153A.
ITA No.2578/PN/2012 (By Assessee)
CIT (A) confirmed the addition following the decision of Hon’ble Supreme Court in the case of CIT Vs. T.V. Sundaram Iyenger and Sons Ltd. reported in 222 ITR 344.
On the matter of credit notes, CIT (A) was not satisfied with the explanation given by the assessee and held that the same is revenue in nature.
ITA No.380/PN/2013 (By Revenue)
CIT (A) following his decision in the case of Chappalkar Brothers for A.Y. 2008-09 directed the AO to recomputed the depreciation on the basis of the guidelines given therein.
ITA No.2580/PN/2012 (By Assessee)
The CIT (A) was not convinced with the arguments advanced by the assessee. He observed that there is nothing in section 153A or 139 which allows the AO to extend the time limit for filing of income-tax returns during the regular course. According to the CIT( A), if the contention of the assessee is accepted, then even if the assessee did not file the return of income for any of the 6 years contemplated u/s.153A or 153C, the time limit for filing of return of income for all those years would be automatically extended and the same would have to be considered as return filed u/s.139 and therefore all natural consequences under the act including the provisions of carry forward and set off of various types of losses and computation of interest payable u/s.234A, 234B, 234C and 234D would become applicable.
On the matter of adjustment of seized cash with self assessment tax, the CIT (A) was not impressed by the arguments advanced by the assessee. According to him the AO has charged interest u/s.234B correctly. As regards the contention of the assessee that the seized cash would have been considered as self assessment tax for the year under consideration since the same was seized on 13-10-2009 he held that credit cannot be given from the date of seizure of the cash. According to the CIT (A) until and unless the quantum of tax payable is determined and the assessee specifically requests the department to appropriate the cash seized towards meeting of such income tax liability it cannot be said that the cash was available with the department for appropriation towards taxes due.
ITA No.382/PN/2013 (By Revenue)
CIT (A) allowed the claim of the assessee. It was held that there is no doubt about the fact that the total quantum of declaration on account of unexplained expenses on Ghodzhari project cannot exceed Rs.21.9182 crores. The appellant had declared it as income in the hands of Mahalaxmi Infraprojects Ltd. and the appellant in the previous year relevant to assessment years 2008-09 to 2010-11. While making the assessment of Mahalaxmi Infraprojects Ltd., the assessing officer has treated the entire sum of Rs. 21.9182 crores being the amount of unexplained expenses Ghodzhari project in the case of Mahalaxmi Infraprojects Ltd. during the previous year relevant to assessment years 2007-08 to 2009-10. The assessing officer also admits that the amount of Rs.1.50 crores (it should be Rs.1.4735 crores) pertains to Ghodzhari project declared in the hands of the appellant. Now, if the entire amount of Rs.21.9182 crores is considered in the hands of Mahalaxmi Infraprojects Ltd. then, there is no scope for treating any amount over and above this amount as unexplained expenses in the hands of the appellant. It is also clear that the entire declaration of Rs.5.83 crores was not on account of source only. A part of it pertained to application as well. Finally, there were sufficient funds available in the hands of the appellant to cover up for any eventual discrepancies such as this. Hence, credit for Rs.1.4735 crores has to be given to the appellant and the assessing officer is directed to do so accordingly.
ITA No.383/PN/2013 (By Revenue)
CIT (A) allowed the claim of the assessee. It was held tha in the case of Velayudhaswamy Spinning Mills (P) Ltd., Vs ACIT (2010) 231 CTR (Mad) 368 Hon’ble Madras High Court has held that losses and depreciation of the years earlier to the initial assessment year which have already been absorbed against the profits of other business cannot be notionally brought forward and set off against the profits of the eligible business for computing the deduction under section 80 IA. Following this judgment of Honble Madras High Court, this issue is decided in favour of the assessee. The assessee is entitled to claim for deduction u/s 80IA (4)(iv)(a) of the Act.
Held by ITAT
ITA No.377/PN/2013 (By Revenue)
We find the AO made addition of Rs.2,35,117/- u/s.41(1) on the ground that the liability appearing in the balance sheet on account of creditors has ceased to exist. We find the Ld.CIT(A) deleted the addition on the ground that the assessment for the impugned assessment year was completed u/s.143(3) prior to the date of search and no incriminating material/evidence was unearthed during the course of search and therefore no addition u/s.41(1) could have been made.
We find the Hon’ble Bombay High Court in the case of Continental Warehousing Corporation ITA No.523 of 2013 and 1969 of 2013 order dated 21-04-2015 after considering the decision of Hon’ble Karnatak High Court in the case of Canara Housing Development Company ITA No.38/2014 order dated 25-07-2014 has held that the AO while passing the independent assessment order u/s.153A r.w.s. 143(3) could not have disturbed the assessment/re-assessment order which has attained finality unless the materials gathered in the course of search or the proceedings u/s.153A establish that the reliefs granted in the finalized assessment/reassessment were contrary to the facts unearthed during the course of 153A proceedings. Since in the instant case, there is nothing on record to suggest that any material was unearthed during the search or in 153A proceeding which would show that non disallowance u/s.41(1) was erroneous, therefore, we do not find any infirmity in the order of the CIT(A) deleting the addition made by the AO.
Even on merit also, we find the issue stands covered in favour of the assessee by the decision of the Hon’ble Supreme Court in the case of Sugauli Sugar Works Pvt. Ltd. 236 ITR 518 in which it was held that the principle that expiry of period of limitation prescribed under the Limitation Act could not extinguish the debt but it would only prevent the creditor from enforcing the debt, has been well settled. It is enough to refer to the decision of Court in Bombay Dyeing & Manufacturing Co. Ltd. v. The State of Bombay and Others, [1958] SCR 1122, If that principle is applied, it is clear that mere entry in the books of accounts of the debtor made unilaterally without any act on the part of the creditor will not enable the debtor to say that the liability has come to an end.. We also find that the Pune Bench of the Tribunal in the case of Hrishikesh L. Joshi ITA No.702/PN/2007 decided that simply because the liability is unpaid for more than 3 years it cannot be taxed as cessation of liability u/s.41(1).
Following the above precedents we hold that the CIT (A) was fully justified in deleting the addition of Rs.2,35,117/-. Accordingly appeal of the revenue dismissed.
ITA No.378/PN/2013 (By Revenue)
There is no dispute to the fact that the assessment in the instant case was completed u/s 143(3) prior to the date of search and the investment in purchase of lands were already declared in such return. No incriminating material whatsoever was found during the course of search to substantiate that unaccounted investment has been made by the assessee towards purchase of the lands. The addition was mainly based on the valuation report of the DVO. The Hon’ble Delhi High Court in the case of Puneet Sabharwal 338 ITR 485 has held that addition to income based solely on report of DVO is not valid in absence of any evidence of understatement of consideration. Further, the contention of the assessee before the AO as well as the CIT(A) that the agreements for purchase of lands were entered in the year 1996 and 2002 and the possession was also taken prior to 200405 could not be controverted by the Ld. Departmental Representative. Under these circumstances, we find merit in the submission of the Ld. Counsel for the assessee that the DVO has erred in taking the sale instances of the year 2005 instead of taking comparable sale instances of 1996 and 2002. There is also nothing on record to indicate that land was undervalued. Under these circumstances we do not find any infirmity in the order of the CIT (A) deleting the addition made by the AO u/s.69B. Ground raised by the Revenue is accordingly dismissed.
ITA No.379/PN/2013 (By Revenue)
We find the above ground is identical to ground of appeal No.3 in ITA No.378/PN/2013. We have already decided the issue and the ground raised by the Revenue has been dismissed. Since in the instant case also, the assessment was completed prior to the date of search and no incriminating material whatsoever was found to substantiated that any unaccounted investment has been made, therefore, we find no infirmity in the order of the CIT (A). The decision of Hon’ble Delhi High Court in the case of Puneet Sabharwal 338 ITR 485 is squarely applicable to the facts of the case according to which addition cannot be made solely on the basis of the report of the DVO in absence of any evidence of understatement of consideration.
On the matter of depreciation on windmills, We find the issue stands decided against the assessee by the decision of the Tribunal in the case of J-Sons Foundry Pvt. Ltd. vide ITA No.2349/PN/2012. In subsequent years also the Ld. Counsel for the assessee has conceded on this issue. Accordingly, the order of CIT (A) on this issue is reversed and the ground raised by the Revenue is allowed.
ITA No.2578/PN/2012 (By Assessee)
It is the submission of the Ld. Counsel for the assessee that in view of the subsequent decision of Hon’ble Supreme Court in the case of Sugali Sugar Works Pvt. Ltd. 236 ITR 518, there is no reason to hold that the liability has ceased in the hands of the assessee and such amount of old creditors constitute income u/s. 41(1). We find the Hon’ble Supreme Court in this case has decided the issue of cessation of liability u/s.41(1) of the I.T. Act. The decision of the Pune Bench of the Tribunal in the case of Hrishikesh L. Joshi has also been reproduced while deciding the grounds of appeal No.1 to 3 in ITA No.377/PN/2013 for A.Y. 2004- 05. Since facts are identical, therefore, following the same reasonings, the grounds raised by the assessee are allowed.
On the matter of credit notes, we find the Hon’ble Supreme Court in the case of Saurashtra Cement Ltd. 194 ITR 659 while deciding an identical issue had an occasion to consider the nature of such receipt and held such type of receipt as capital in nature. Since the compensation of Rs.40 lakhs received by the assessee from M/s. Suzlon Energy Ltd. was for delay in executing the project, therefore, respectfully following the decision of Hon’ble Supreme Court, we hold that the amount of Rs. 40 lakhs received by the assessee is capital in nature.
ITA No.380/PN/2013 (By Revenue)
We find in the case of J-Sons Foundry Pvt. Ltd. ITA No.2349/PN/2012 the CIT (A) following his decision in the case of M/s. Chaphalkar Brothers had given identical direction to the AO for computation of depreciation of various components of windmill wherein higher rate of depreciation at 80% was allowed on the cost of foundation as well as cost incurred on erection of the windmill. In view of the decision of the Tribunal in the case of J-Sons.Foundry Pvt. Ltd. ITA No.2349/PN/2012 we find no infirmity in the order of the CIT (A) allowing higher depreciation @80% on civil work foundation and related labour cost of windmill. Ground raised by the Revenue is accordingly dismissed.
ITA No.2580/PN/2012 (By Assessee)
A combined reading of the provisions as well as the decision of Hon’ble Bombay High Court in the case of CIT Vs. Continental Warehousing Corporation reported in (2015) 93 CCH 0048 (Mumbai HC) indicates that a non-obstante clause has been inserted and with a defined intent. In our opinion, once the search takes place on a person and the due date for filing of the return u/s.139(1) has not expired he can file the return only after the issue of notice u/s.153A. He is not required to file the return u/s.139 (1). Therefore, the authorities below are not justified in levying interest u/s.234A for a period from 31-10-2009 to 20-07-2010. The ground raised by the assessee is accordingly allowed.
On the matter of adjustment of seized cash with the self assessment tax, We find no infirmity in the order of the CIT(A) since the assessee vide letter dated 30-03-2010 had requested the AO adjust such seized cash as self assessment tax. Until and unless the assessee makes a specific request, the AO is not duty bound to appropriate such tax either towards advance tax or towards self assessment tax. He can only adjust such seized cash from the tax determined after completion of assessment. Since in the instant case, the assessee vide letter dated 30-03-2010 only has requested the AO to adjust such seized cash towards self assessment tax for A.Y. 2009-10 and since the CIT (A) has accepted this plea of the assessee, therefore, we find there should not be any grievance on the part of the assessee. Accordingly, this ground by the assessee is dismissed.
ITA No.382/PN/2013 (By Revenue)
We do not find any infirmity in the order of the CIT (A). The finding of the CIT (A) that while making the assessment of Mahalaxmi Infraprojects Ltd. the AO treated the entire sum of Rs.21.9182 crores being the amount of unexplained expenses of Ghodzari Project in the case of Mahalaxmi Infraprojects Ltd. itself during the previous year relevant to assessment years 2007-08 and 2009-10 could not be controverted by the Ld. Departmental Representative. Therefore, we find merit in the observation given by the CIT (A) that if the entire amount of Rs.21.9182 crores is considered in the hands of Mahalaxmi Infraprojects Ltd., then there is no scope of treating any amount over and above this amount as unexplained expenses in the hands of the assessee.
So far as objection of the Ld. Departmental Representative that CIT (A) has admitted additional evidence, we find the same is without any basis. The AO has discussed the evidence seized from the residence of the director of RDS Construction Company in the hands of Mahalaxmi Infraprojects Ltd. at para 28 of page 9. However, the AO chose not to discuss the same in the body of the assessment order of the assessee. Therefore, we find no force in the submission of the Ld. Departmental Representative that the CIT (A) has accepted any additional evidence.
ITA No.383/PN/2013 (By Revenue)
We find the issue as to whether initial assessment year u/s. 80IA (5) means year of installation of windmill or year in which the claim of deduction u/s.80IA is first made has been decided in favour of the assessee by the decision of the Pune Bench of the Tribunal in the case of Poonawalla Estate Stud & Agro Farm Pvt. Ltd..(Supra) wherein it has been held, It is clear that the ‘initial assessment year’ for the above purposes was the first year in which the assessee claimed the deduction under s. 80-IA(1) after exercising his option as per the provisions of s. 80-IA(2) of the Act. Consequently, the assessee is entitled to claim the deduction of Rs. 25,44,326 u/s 80-IA in respect of the profits from the windmill activity.
Respectfully following the decision of the Coordinate Bench of the Tribunal cited (Supra) and in absence of any contrary material brought to our notice we hold that the provisions of section 80IA (5) are applicable only from the initial assessment year, i.e. the assessment year in which deduction u/s 80IA (4) was first claimed by the assessee after exercising its option as per the provisions of section 80IA (2) of the Act. The order of CIT (A) is accordingly upheld and the ground raised by the Revenue is accordingly dismissed.
In the result, all the appeals filed by the assessee are partly allowed and all the appeals filed by the Revenue are dismissed
