Tribunal directs reevaluation of share capital & grants full-year depreciation for windmills, limits purchase disallowance to 2%.

The tribunal partially allowed the appeal by directing the AO to reevaluate the share capital addition based on the evidence provided and to grant full-year depreciation for the windmills. The disallowance of purchases was limited to 2% to address potential revenue leakage. The tribunal emphasized the insufficiency of relying solely on statements recorded under section 133A for making additions, citing judicial precedents to support its decision.

---

---

Issues Involved:
1. Addition based on statement recorded under section 133A.
2. Addition on account of share capital.
3. Disallowance of purchases.
4. Claim of depreciation on windmills.

Detailed Analysis:

1. Addition Based on Statement Recorded Under Section 133A:
The assessee argued that additions cannot be made solely on the basis of statements recorded under section 133A, as they lack corroborative evidence. The assessee cited several judicial pronouncements, including the Bombay High Court's decision in Uttamchand Jain and the ITAT Delhi Bench's decision in Satish Builders, to support this contention. The tribunal noted that the statement recorded under section 133A has no evidentiary value, as per the Supreme Court's decision in S. Kadar Khan & Sons, and cannot be the sole basis for additions.

2. Addition on Account of Share Capital:
The assessee contended that the share capital addition was unjustified, as all necessary documents such as confirmations, board resolutions, audited accounts, and bank statements were provided. Despite this, the AO made the addition because the shareholders did not appear in person. The tribunal emphasized that the assessee's responsibility is limited to proving the identity, genuineness, and creditworthiness of the shareholders. The tribunal cited various judicial precedents, including the Supreme Court's decision in CIT v. Lovely Exports (P) Ltd., which held that once these elements are proven, no addition can be made. The tribunal restored the matter to the AO for fresh consideration, directing the AO to evaluate the evidences provided by the assessee.

3. Disallowance of Purchases:
The AO disallowed purchases amounting to Rs. 4,86,22,753 based on the sales tax department's finding that the suppliers were non-genuine. The assessee argued that the purchases were genuine and supported by quantitative details, consumption records, and certificates from MMRDA. The tribunal observed that while the suppliers were not found at the given addresses, the materials were indeed used for construction purposes. The tribunal referred to judicial precedents, including the Bombay High Court's decision in Nikunj Exim, which supports the view that genuine purchases cannot be disallowed merely because the suppliers were non-existent. The tribunal restricted the disallowance to 2% of the total purchases to cover any potential revenue leakage.

4. Claim of Depreciation on Windmills:
The assessee claimed full-year depreciation at 80% for windmills installed and operational before 30-09-2009. The AO allowed only 40% depreciation, treating it as half-year. The tribunal found that the windmills were indeed operational for more than 180 days, supported by certificates from the Superintendent of Engineer Jodhpur and Suzlon Engineering. Consequently, the tribunal directed the AO to allow full-year depreciation at 80%.

Conclusion:
The tribunal allowed the appeal in part, directing the AO to reconsider the share capital addition with the provided evidence and to allow full-year depreciation for the windmills. The disallowance of purchases was restricted to 2% to account for potential revenue leakage. The tribunal emphasized the lack of evidentiary value in statements recorded under section 133A for making additions.

---