Tribunal upholds CIT(A)'s decisions on depreciation, commission, purchases, and sales tax disallowance.

The Tribunal dismissed all grounds raised by the Revenue in both appeals, affirming the CIT(A)'s decisions on all issues, including depreciation on windmills, disallowance of directors' commission, disallowance for purchases from a sister concern, and disallowance for sales tax payment. The judgments were pronounced on 27-08-2014.

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Issues Involved:
1. Depreciation on Windmills
2. Disallowance under Section 40A(2)(b) for Directors' Commission
3. Disallowance under Section 40A(2)(a) for Purchases from Sister Concern
4. Disallowance under Section 43B for Sales Tax Payment

Issue-wise Detailed Analysis:

1. Depreciation on Windmills:
The Revenue challenged the CIT(A)'s direction to reconsider the addition made on account of depreciation of windmills. The CIT(A) had directed the Assessing Officer (AO) to re-compute the depreciation by including various components such as the cost of the wind turbine generator, electrical items, foundation work, and other related costs. The CIT(A) followed the decision of the ITAT Pune in the case of Poonawalla Finvest (I) Pvt. Ltd., which allowed depreciation at 80% for certain components integral to the windmill. The Tribunal found no infirmity in the CIT(A)'s order, noting it was in line with the precedent and dismissed the Revenue's grounds.

2. Disallowance under Section 40A(2)(b) for Directors' Commission:
The AO disallowed the commission paid to directors amounting to Rs. 57,82,634/- under Section 40A(2)(a), arguing the payment was not justified as the directors had not rendered new services. The CIT(A) deleted this addition, citing that both the payer and payee were in the same tax bracket, making the transaction revenue-neutral. The Tribunal upheld the CIT(A)'s decision, referencing the Bombay High Court's ruling in CIT Vs. Indo Saudi Services (Travel) P. Ltd. that no disallowance is required where there is no attempt to evade tax.

3. Disallowance under Section 40A(2)(a) for Purchases from Sister Concern:
The AO disallowed Rs. 23,67,789/- paid to M/s. Saroj Castings Pvt. Ltd., a sister concern, under Section 40A(2)(a), citing a lack of justification for rate differences. The CIT(A) deleted the disallowance, accepting the assessee's explanation that the rate difference was due to increased raw material prices approved by Cummins India Ltd. The Tribunal found the CIT(A)'s reasoning sound and dismissed the Revenue's appeal, noting that the payment included statutory dues like Excise Duty and VAT, which ruled out tax evasion.

4. Disallowance under Section 43B for Sales Tax Payment:
The AO disallowed a claim of Rs. 13,00,408/- for sales tax paid in earlier years, as it was not claimed through a revised return. The CIT(A) admitted the additional ground, noting the AO did not respond to the opportunity given to comment on the admissibility. The CIT(A) allowed the deduction under Section 43B, stating the sales tax payment was genuine and allowable. The Tribunal upheld the CIT(A)'s decision, finding no infirmity in the reasoning and dismissed the Revenue's ground.

Conclusion:
The Tribunal dismissed all grounds raised by the Revenue in both appeals, affirming the CIT(A)'s decisions on all issues. The judgments were pronounced in the open court on 27-08-2014.

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