2015 (4) TMI 1179 - AT - Income Tax

Tribunal Upholds CIT(A) Decisions on Revenue's Appeal, Citing Consistency & No Factual Variances

The Tribunal dismissed the Revenue's appeal, upholding the decisions of the CIT(A) based on consistency in treatment across various issues and previous ... Addition on account of depreciation of Iraqi assets - Held that:- As per the Tribunal order brought on record by Learned A.R. of the assessee, it was held by Tribunal in earlier years that the compensation received by the assessee is to be brought to the concerned block of assets and the said bock of assets is to be reduced accordingly. This finding of the Tribunal is in line with the provisions of the Act and therefore, we decline to interfere in the order of CIT(A) on this issue. Ground No. 1 is rejected. Addition on account of depreciation on temporary erections - Held that:- We find that CIT(A) has given a clear finding that the issue in dispute is squarely covered in favour of the assessee by the Tribunal order in earlier years in assessee’s own case. He has also given a finding that there is no change in the facts of the present year. Learned D.R. of the Revenue could not point out any difference in facts in the present year. As per the Tribunal decision available on record also, we find that in assessment years 2001-02 and 2002-03, the Tribunal has followed earlier Tribunal decision for assessment year 94-95 and 96-97. Hence, it is seen that this issue has consistently been decided in favour of the assessee and no difference in facts could be pointed out by Learned D.R. of the Revenue. Hence, we do not find any reason to take a contrary view. Retention money - Held that:- No difference in facts could be pointed out by Learned D.R. of the Revenue. Moreover, during the present year, the assessee has reduced an amount of ₹ 1,455.17 lacs from its income on account of retention money but the assessee has offered a larger amount of ₹ 8,039.29 lacs to tax being retention money not offered to tax in earlier years but offer to tax in present year on account of expiry of deferred liability period. Hence, it is seen that if the present year is considered in isolation, the amount offered to tax is more than the amount of income reduced from the income on account of retention money. This is also very important that at the end of the financial year 2010 – 11, the entire amount of retention money was offered to tax and considering these facts that no difference in facts could be pointed out by Learned D.R. of the Revenue, we do not find any reason to take a contrary view. Accordingly, ground No. 4 is also rejected. Addition on account of manufacturing expenses being 7.5% of the total expenditure incurred on repair to building - Held that:- We find that this issue was also decided by learned CIT(A) as per Tribunal decision in assessee’s own case in earlier years. No difference in facts could be pointed out by Learned D.R. of the Revenue on this issue also. Therefore, we do not find any reason to take a contrary view in the present year on this issue also. exemption U/s 80IA - absence of accounts and balance sheet of the assessee at the time of commencement of business, it is not possible to ascertain the investment made by the assessee initially and thus quantify the magnitude of capital introduced - Held that:- In the absence of accounts of the assessee for the initial years, it is reaffirmed that all the three Captive Power Plants (CPPs) i.e. 25 MW Plant Rewa, 25 MW Plant Bela Plant and 38.5 MW plant were initially were integral part of same unit to whom power was to be supplied and later, these CPPs were formed by splitting the existing business. The third objection was that the CPPs in question are not completely separate from that of the principal unit to which the concerned CPPs were supplying power. These objections of the Assessing Officer are to be examined and decided for allowing deduction for the first time but having allowed the deduction for the same three CPPs in assessment year 2007-08 as per assessment order passed by the Assessing Officer on 13/12/2009 u/s 143(3), the Assessing Officer cannot reject the claim of the assessee for deduction u/s 80IA in respect of same 3 CPPs in a subsequent year i.e. assessment year 2009-10 on the basis that initial capital is not known or that it is formed by splitting/reconstruction of the existing business etc. Hence, in view of the principle of consistency, we are of the considered opinion that there is no infirmity in the order of CIT(A) on this issue in view of the fact that in assessment year 2007-08, the Assessing Officer has himself allowed deduction to the assessee u/s 80IA in respect of the same 3 CPPs. Issues:1. Deletion of addition of depreciation of Iraqi assets.2. Deletion of addition of depreciation on temporary erections.3. Deletion of addition of interest on overdue bills of Iraq work.4. Holding that retention money did not accrue to the assessee.5. Deletion of addition of manufacturing expenses.6. Deletion of addition of miscellaneous expenses.7. Disallowance of claim for deduction u/s 80-1A of the Income Tax Act, 1961.Issue 1 - Depreciation of Iraqi Assets:The Revenue appealed against the deletion of the addition of depreciation of Iraqi assets. The Tribunal upheld the decision of the CIT(A) based on previous Tribunal orders in the assessee's case for various assessment years. The Tribunal found no change in facts for the present year and declined to interfere, stating that the compensation received should be brought to the block of assets. Ground No. 1 was rejected.Issue 2 - Depreciation on Temporary Erections:The Revenue challenged the deletion of the addition of depreciation on temporary erections. The Tribunal, following previous decisions, ruled in favor of the assessee, noting consistency in the treatment of such structures in earlier years. No factual differences were identified for the present year, leading to the rejection of Ground No. 2.Issue 3 - Interest on Overdue Bills:The dispute over the addition of interest on overdue bills of Iraq work was resolved in favor of the assessee. The Tribunal found that the CIT(A) correctly followed previous Tribunal decisions, and no factual variances were highlighted for the current year. Ground No. 3 was rejected.Issue 4 - Retention Money Accrual:Regarding the retention money accrual, the Tribunal upheld the CIT(A)'s decision, emphasizing the consistency in treatment across years. Despite the Revenue's objections, the Tribunal noted that the assessee had offered more to tax in the present year than previously, leading to the rejection of Ground No. 4.Issue 5 - Manufacturing Expenses:The Tribunal dismissed the Revenue's appeal against the deletion of manufacturing expenses addition. Citing past decisions, the Tribunal found no factual distinctions for the current year, resulting in the rejection of Ground No. 5.Issue 6 - Miscellaneous Expenses:The Tribunal upheld the deletion of the addition of miscellaneous expenses, following previous decisions in the assessee's favor. No factual discrepancies were identified, leading to the rejection of Ground No. 6.Issue 7 - Claim for Deduction u/s 80-1A:The Tribunal addressed the disallowance of the claim for deduction u/s 80-1A of the Income Tax Act, 1961. It noted the Assessing Officer's objections but emphasized the principle of consistency, as the deduction had been allowed for the same assets in a prior year. Consequently, the Tribunal rejected Ground No. 7, leading to the dismissal of the Revenue's appeal.In conclusion, the Tribunal dismissed the Revenue's appeal, upholding the decisions of the CIT(A) based on consistency in treatment across various issues and previous years.