Apraava Renewable Energy Private Limited Vs ACIT (ITAT Ahmedabad)
The ITAT Ahmedabad allowed the assessee’s appeal relating to disallowance of expenditure on an abandoned wind power project, amortization of forward premium expenses, and depreciation on self-propelled vehicles for AY 2017-18.
The assessee, engaged in generation and sale of electricity, had planned a new wind power project at Yermala, Maharashtra, with a capacity of 148.80 MW through Wind World India Limited (WWIL) on an EPC basis. The project was later abandoned and capital work in progress (CWIP) amounting to ₹60.26 crore was written off as “assets written off.” The assessee claimed that the expenditure comprised finance charges, interest, professional fees, and employee costs, all of which were revenue in nature and did not create any enduring asset.
The Tribunal observed that the abandoned project was in the same line of business already carried on by the assessee and no new business or enduring asset had come into existence. Relying on various High Court decisions, the Tribunal held that the expenditure was revenue in nature and allowable under Section 37. However, the Tribunal noted that the assessee had not adequately produced supporting evidence regarding the genuineness of the expenditure, including details relating to WWIL, loan documents, and reasons for abandonment of the project. Accordingly, the matter was restored to the AO for verification and fresh adjudication.
