TaxTMI 
TaxTMI 
2013 (9) TMI 601
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.... year 2002-03 being C.O. No.166/M/2011. In all the appeals filed by the Department, the facts and most of the grounds are same and interconnected. Therefore, these appeals were heard together and are disposed of by this common order for the sake of convenience and brevity. It is relevant to state that in the case of Karma Energy Ltd., appeal for the assessment year 2002-03 is arising out of assessment order under section 143(3)/147 of the Act and whereas other appeals from the assessment years 2003-04 to 2006-07 are arising out of the assessment orders under section 143(3) of the Act. Further, in the case of M/s. Weizmann Ltd., both appeals, i.e., for the assessment years 2001-02 and 2002-03 are arising out of the assessment order passed under section 143(3)/147 of the Act. In respect of cross-objection(s) for the assessment year 2002-03 in the case of Karma Energy Ltd., and in the case of M/s. Weizmann Ltd., for the assessment years 2001-02 and 2002-03, the assessees have disputed the initiation of reassessment proceedings by the Assessing Officer. At the time of hearing, the learned authorised representative submitted that the crossobjections taken by the assessee are....
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.... The Assessing Officer has stated that "NEGMIPL" has shown following expenses relating to sale of windmill to Weizmann group : (a) On account of commission at 8 per cent. of sale payable to M/s. Samrat Spinners Ltd., for introducing customers (Windia, Weizmann and Karma), participation in negotiations and conclusions of contract. (b) On account of project management fees at 7 per cent. of project cost payable to M/s. Kakatiya Industries Ltd., for services rendered in assisting the setting up of 12 wind farms (Karma). Total expenditure incurred towards commission and project management fees on the sale to Karma Energy is as under: Financial year 2001-02 Samrat Spinners Rs. 1.15 crores Kakatiya Industries Rs. 4.53 crores (Rs. 3.03 crores under the head "fees" Rs. 1.51 crores under the head "direct expenses") The Assessing Officer has stated that during the course of investigation, "NEGMIPL" was unable to furnish any corroborative evidence for rendering of services by these parties, except giving some particulars, viz, names of persons representing the respective companies, places of meeting, etc, despite repeated questioning. He has further stated....
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....ya Holdings Ltd., and is reflected in the balancesheet as unsecured loans (liability). The Assessing Officer has stated that in the entire camouflaged transactions, no real tax was paid by any of the entities of Weizmann group. He has stated that M/s. Om Mitra Securities Ltd., Dilshad Consultancy Services Ltd., and Chanakya Holdings Ltd. are in the business of share trading and incurred huge losses and on the other hand Weizmann group and the assessee-company claimed 100 per cent. depreciation on the inflated purchase price of windmills. Thus, money from M/s. Samrat Spinners and M/s. Kakatiya Industries Ltd., was remitted to various proprietary concern of the promoters of Weizmann group in the guise of payment for services rendered by them. He has stated that during the course of survey operation on August 9, 2004 at Weizmann group, no details, documentary evidences substantiating the claim of rendering services by the above concerns could be produced other than certain debit notes. The Assessing Officer stated that M/s. Sharan Enterprise, a proprietary concern of Shri Chetan D. Mehra, who is also managing director of M/s. Weizmann Ltd., raised certain debit notes for rendering ....
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....manufacture of equipment, installation and commissioning of the equipments depends primarily on the scope of work. Hence a simple comparison of cost between one windmill to another windmill is misleading. The scope of work in this case included total supply of all components, civil foundations, manufacture and assembly of components of WEG's, erection of towers, start up and commissioning of all items synchronization of project with MSEB grid, one year warranty, additional warranty for five years for gear boxes, life time availability of spares and bank guarantee for performance and WEG's in line with the standard power curve. (ii) As per the affidavit filed by Renewable Energy Developers Association of Maharashtra (REDAM), the project cost on an average varies between Rs. 5 crores to Rs. 6.60 crores per MW. (iii) The Maharashtra Electricity Regulatory Commission (MERC) has, as per tariff order dated November 24, 2003 determined the average cost at Rs. 5.36 cores per MW. The Maharashtra Energy Development Agency (MEDA) fixed the project cost at Rs. 5 crore per MW for their further analysis and working and determining the power tariff. (iv) On verification with M/s. ....
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....re the learned Commissioner of Income-tax (Appeals). On behalf of the assessee, it was contended that the cost of acquisition of 12 windmills should have been taken at Rs. 50,72,18,688 as shown for the purpose of calculating depreciation by the assessee. The disallowance of depreciation of Rs. 9 crores on 12 windmills on the ground that cost of windmill was inflated at Rs. one crore per windmill is not in accordance with the provisions of the Act. It was contended that the cost of acquisition could not be altered as per the provisions of Explanation 3 to section 43(1) of the Act, is not attracted in the case of the assessee. The assessee during the assessment year 2002-03 had purchased 12 windmills having capacity of 750 KW each (9 MW aggregate capacity for a total consideration of Rs. 4327.80 lakhs) from "NEGMIPL" and the average cost per windmill worked out to Rs. 360.65 lakhs. The assessee claimed depreciation at 100 per cent. in respect of 6 windmills and at 50 per cent. in respect of balance 6 windmills in the assessment year 2002-03 as the same were used less than 180 days. The assessee filed the depreciation chart for the assessment year 2002-03 and the same has been stat....
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....ective assessments and not relevant to the assessee's case. Therefore, the Assessing Officer's contention was purely based on assumptions and presumptions and it had no evidential value so far as the assessment of the assessee was concerned. It was further contended that findings of the survey at "NEGMIPL" revealed that bogus purchase bills of Rs. 15.31 crores were obtained by it "against payment of which it had received cash back" has no relevance to the assessee as it is purely an internal matter of "NEGMIPL". The Assessing Officer has never stated that the said amount has been received by the assessee or group entities of the assessee and by commenting upon such observation in the assessment order, has given a misleading picture as if said money was received back by the assessee. On the other hand, NEGMIPL had received actual cost of windmills from the assessee-company and the above presumptions of the Assessing Officer could not affect the actual cost to the assessee-company and as such, it has claimed depreciation. It was contended that submissions were made before the Assessing Officer during the course of assessment proceedings justifying the cost per windmill ....
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....cial terms in the purchase order placed by the assessee on NEGMIPL vis-a-vis certain selected customers and submitted that there is a vast difference between the terms of the purchase relating to the purchases made by the assessee and that of the other parties, namely, Precot Mills Ltd., Rajasthan State Power Corporation Ltd., and Non-Conventional Energy Development Corporation of Andhra Pradesh Ltd. (NEDCAP). The learned Commissioner of Income-tax (Appeals) has given comparison chart stating scope of work and commercial terms at pages 7 and 8 of the impugned order as under: A : Comparison of contract with Precot Mills Ltd. Particulars Precot Mills Ltd. Karma Supply 1 No. WEG of 750 KW 12 Nos. WEGs of 750 KW each Contract value Rs. 258 lakhs Rs.4327.77 lakhs i.e., Rs. 360.64 lakhs per WEG Height of tower 45 mts. 55 mts. Tower painting No special epoxy Special epoxy Gridlines 11 KV 33 KV internal lines to be laid is for large areas plus distance from substation to the wind farm is more than 35kms. ....
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....anteed but no bank guarantee Bank guarantee both for advance as well as for performance Maximum liability for penalty, damages, etc. Rs. 12.90 lakhs Rs. 26.25 lakhs per WEG aggregating to Rs. 157.50 lakhs C : Comparison of contract with NEDCAP Particulars Non-conventional Energy Development Corpn. Of Andhra Pradesh Ltd (NEDCAP) Karma Supply 3 Nos. WEGs of 750/48 12 Nos. WEGs of 750KW each Contract value Rs. 825.00 lakhs i.e. Rs. 275 lakhs per WEG Rs. 4327.77 lakhs i.e., Rs. 360.64 lakhs per WEG Height of tower 50 mts. 55 mts. Tower painting No special epoxy Yes Centralised monitoring and control system (CMCS) with optic fibre cables No Yes Site Not earthquake prone Site is earthquake prone being near Koyna Dam and is in zone 1 which obviously would cost more Site Terrain N.A. Hilly area making it more difficult to install WEGs and also calling for better infrastructure Supply of spares 5 years Gear bo....
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....ntractor to arrange and liaison for land for setting wind farm. Land arranged by Weizmann Windmasts Not available Installation of windmast to verify the performance of the WEGs. It was submitted that the assessee had not paid any inflated price for purchase of windmill as the same cost had been paid by Savita Chemicals Ltd. The assessee also filed a copy of affidavit filed by the Renewable Developers Association of Maharashtra (REDAM), wherein, it was confirmed that the project cost of such windmill on average basis varied between Rs. 5 crores to Rs. 6.6 crores. That Maharashtra Electricity Regulatory Commission (MERC) has, as per tariff order dated November 24, 2003 determined the average cost at Rs. 5.36 crores per MW. It was further contended that during the assessment proceedings, the assessee furnished statement showing 72 comparable cases, wherein the Energy Developers Association of Maharashtra (REDAM) member's purchases of windmill were given and which included the purchases made by the assessee and Weizmann Ltd. at Sr. Nos. 45, 46 and 47. Therefore, the explanation given by the assessee during the assessment proceedings m....
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....d at 50 per cent. in respect of another six windmills which were used for less than 180 days. Therefore, disallowance of depreciation of Rs. 9 crores by the Assessing Officer is not justified. The learned Commissioner of Income-tax (Appeals) after considering the above submissions of the assessee vide paragraphs 2.9 to 2.11 deleted said disallowance of Rs. 9 crores, which read as under : "2.9 I have considered the submissions of the appellant carefully and gone through assessment order. I have also perused the paper books filed by the authorised representative before me. The appellant is a company engaged in wind farm development and generating power from 18 MW wind farm set-up in Satara District, Maharashtra. The appellant purchased 12 windmills having capacity of 750 KW each (9 MW aggregate capacity for a total consideration of Rs. 4327.80 lakhs). The average cost per windmill works out to Rs. 360.65 lakhs. The depreciation at the prescribed rates was claimed by the appellant in the assessment years 2002-03 and 2003-04. The Assessing Officer alleged that there is inflation by Rs. one crore for each windmill on the purchase price and thus, in view of the Assessing Officer, t....
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....in the assessment order. Thus comparison made by the Assessing Officer has therefore not lead to the conclusion that the appellant had actually inflated the cost of windmills by Rs. one crore each. 2.10 Another observation made by the Assessing Officer in the assessment order and relied upon by him is that the NEC Micon had inflated its purchases by Rs. 15.31 crores by making bogus purchases and therefore, the Assessing Officer held that cash so generated had been passed on to the group companies of the appellant. In this regard, I feel that the appellant had nothing to do with the bogus purchases booked by NEG Micon in its accounts. In case something wrong had been done by NEC Micon, it is for that party to face the music and not a third party. The Assessing Officer has nowhere proved that the bogus purchase booked by NEG Micon had any bearing worth the name on the appellant's case. The survey operation at the premises of the appellant gave no clue of the appellant's complicity in such transactions. The appellant had made the payment through crossed accounts payee cheques at market price and the seller of the windmill had accounted such receipts in its accounts. During surv....
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....se companies NEG Micon remitted Rs. 4.18 crores to Sohami Traders who in turn passed on these amounts to the other group companies. The other companies had fully disclosed the said receipts in their respective returns of income and offered them for taxation. In my view, these were independent transactions entered into between the other group companies and companies belonging to Sujana group. These transactions, therefore, cannot be held as circuitous transactions so as to say that alleged inflated cost had been received back. There is nothing on record to prove that the said transactions had not taken place. For services rendered debit notes had been issued. Therefore, the said transaction cannot be a basis for holding that inflation in purchase price had taken place. I have also noted that during survey and search at NEG Micon (India) P. Ltd., no evidence had been gathered to show that the appellant had purchased windmill at an inflated price. During the survey at the appellant's business premises, no evidence was gathered about the inflation in the purchase price of the windmill. Nobody ever admitted that invoices for purchases of windmills had been inflated. The several inst....
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.... original cost was. The learned Departmental representative submitted that the hon'ble Supreme Court in the case of Guzdar Kajora Coal Mines Ltd. v. CIT [1972] 85 ITR 599 (SC) has held that the Department was competent to go behind the deed of conveyance and fixed valuation of assets on its own. The learned Departmental representative referred to page 9 of the order of the learned Commissioner of Income-tax (Appeals) and submitted that the comparison of cost of windmill purchased by Savita Chemicals Ltd. could not be made with the assessee as in that case it was one of the part of the contract of replacement of parts at free of cost if generation at 85 per cent. of the power curve is not achieved unlike such stipulation in the case of the contract of the assessee. Therefore, both contracts are not comparable. He submitted that the Assessing Officer rightly compared the contract of Rajasthan State Power Corporation Ltd., (RSPC) with the assessee and found that the value per windmill in the case of RSPC was Rs. 281.22 lakhs as compared to Rs. 360.64 lakhs per windmill in the case of the assessee in spite of the fact that the warranty period in the case of RSPC was 24 months as ag....
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....truction No. 5 of 2008 dated May 15, 2008 in paragraph 4 as under : "For this purpose, 'tax effect' means the difference between the tax on the total income assessed and the tax that would have been chargeable had such total income been reduced by the amount of income in respect of the issue against which appeal is intended to be filed (hereinafter referred to as 'disputed issues'). However, the tax will not include any interest thereon. Similarly, in loss cases notional tax effect should be taken into account. In the cases of penalty order, the tax effect will mean quantum of penalty deleted or reduced in the order to be appealed against." The learned authorised representative submitted that in respect of appeals for the assessment years 2002-03 and 2003-04 being I.T.A. Nos. 3330 and 3331/M/2007 were filed on June 6, 2007 and whereas appeal for the assessment year 2004-05 being I.T.A. No. 7670/M/07 was filed on December 28, 2007 and, therefore, instruction of the Central Board of Direct Taxes No. 2 of 2005 dated October 24, 2005 would be applicable and not Central Board of Direct Taxes Instruction No. 5 of 2008 dated May 15, 2008. He submitted that the appeal....
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.... effect has to be taken into account while computing the monetary ceiling in respect of appeals filed prior to the issue of instruction of May 15, 2008, the learned authorised representative submitted that the above decisions are binding to co-ordinate Benches and, therefore, the appeals of the Department for these three assessment years, i.e., 2002-03, 2003-04 and 2004-05 be dismissed as not maintainable in view of the monetary tax limit as per the Central Board of Direct Taxes instruction No. 2 of 2005 dated October 24, 2005. Without prejudice to the above, the learned authorised representative also made his submissions on merits to justify the order of the learned Commissioner of Income-tax (Appeals). The learned authorised representative made his submissions at length on merits on the lines of submissions made before the learned Commissioner of Income-tax (Appeals), relevant part of which has been mentioned hereinabove. The learned authorised representative submitted that the assessee purchased 12 windmills in the assessment year 2002-03 on its own besides taking 12 windmills of identical specifications on lease which were purchased by the assessee's group company M/s. W....
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....that the assessee also filed a comparative statement of contract of Savita Chemicals Ltd., and cost price per windmill of that concern is Rs. 405 lakhs as compared to Rs. 360.64 lakhs of the assessee. He submitted that the windmills of both parties, i.e., M/s. Savita Chemicals Ltd., and of the assessee are on identical model situated at the same site and having most of the parameters matching. He submitted that the Assessing Officer placed reliance of comparison of three other parties who had installed windmills in different States and concluded the price by comparing one or two parameters of windmill of those three parties vis-a-vis the assessee. He submitted that the Assessing Officer did not consider main characteristic and scope of work and, therefore, the Assessing Officer was not justified to conclude that the cost of windmills of the other parties were at lesser price vis-a-vis the assessee. The learned authorised representative further referred to pages 7 and 8 of the order of the learned Commissioner of Income-tax (Appeals) which contain a comparative statement of the contract of three parties (details also mentioned hereinabove in paragraph 10.5) to point out the differen....
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....the dismissal of appeals of the Department for the assessment year 2002A-03 to 2004-05 as the tax effect is below Rs. 2 lakhs, placed reliance of the Central Board of Direct Taxes instruction No. 2 of 2005 dated October 24, 2005 and submitted that the Central Board of Direct Taxes vide its instruction No. 5 of 2008 dated May 15, 2008 clarified the tax effect that in loss cases, notional tax effect should be taken into account. He submitted that said paragraph 4 of Instruction No. 5 of 2008 is clarificatory in nature and should be effective retrospectively. Since, the tax effect involved in these appeals is more than the limit prescribed in the said circular, all the appeals should be considered on merits. We have considered submissions of the learned representatives of parties and orders of authorities below. We have also considered the cases cited before us as well as relevant pages of paper book relied upon by both parties. In respect of preliminary objection taken by the learned authorised representative that the appeals of the Department for the assessment years 2002-03 to 2004-05 are not maintainable and are to be dismissed in limine as the tax effect in each of the appe....
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....394 (Delhi), have held that though for the purpose of monetary limit, circular issued by the Central Board of Direct Taxes prescribing a particular limit would apply to all pending appeals but the notional tax effect as prescribed in the Instruction dated May 15, 2008 would be prospective and would not apply to pending appeals. Following the said judgment, the Delhi Bench of the Tribunal in the case of ITO v. Speciality Coatings and Lamination Ltd. [2012] 144 TTJ (Delhi) 532, has held that the real tax effect and not the notional tax effect has to be taken into account while computing the monetary ceiling in respect of appeals filed prior to the issue of Instruction of May 15, 2008. The case of the assessee is identical. We have therefore to follow the decision of co-ordinate Bench of the Tribunal (supra), and respectively following the same, we dismiss both appeals filed by the Revenue as non-maintainable." Hence, the appeals of the Department for the assessment years 2002-03 to 2004-05 are liable to be dismissed in limine, but we observe that the facts and the issue involved in the appeals for the assessment years 200203 and 2003-04 are inter-linked with the appeals for the su....
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....uent assessment year, i.e., the assessment year 2003-04, disallowed balance amount of Rs. 3 crores as depreciation. We observe that the Assessing Officer has made the said disallowance of depreciation of Rs. 9 crores considering the cost of per windmill as inflated by Rs. one crore considering the cost of per windmill of other buyers. On the other hand, we observe that the assessee has stated that the cost price of other three buyers considered by the Assessing Officer, namely, Precot Mills Ltd., RSPC Ltd., and NEDCAP is not comparable as there was a vast difference between the scope of work to be compared in the case of those parties and in the case of the assessee. The learned Departmental representative has not disputed the fact that the terms of contract for supply of windmills to other parties (supra) are not identical to the terms of contract for supply of windmills to the assessee, details of which have also been given by the learned Commissioner of Income-tax (Appeals) at pages 7 and 8 of the impugned order for the assessment year 2002-03 and have also been referred hereinabove in paragraph 10.5. During the course of hearing before the learned Commissioner of Income-tax ....
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.... surmises. As for the observation made by the Assessing Officer to the effect that NEGMIPL obtained fictitious purchase bill to the extent of Rs. 15.31 crores from M/s. Sambhav Steel Distributors, a proprietary concern of Shri. Abhay Mohnot of Chennai, who had admitted having given accommodation entries to "NEGMIPL", we agree with learned Commissioner of Income-tax (Appeals) that same has no relevance to the transactions under consideration as it is not the finding of the Assessing Officer that the said amount has been received by the assessee or the assessee's group entities. In regard to the contention of the learned Departmental representative that the Assessing Officer can change the purchase price if the circumstances show that they are not actual cost, we agree with the learned Departmental representative's above submission but it is a question of fact that if the Assessing Officer wants to change the cost price, the onus is on the Assessing Officer to bring on record the relevant documents that price as shown by the assessee is not the actual price. However, in the case before us, we observe that the Assessing Officer has not brought any evidence on record that th....
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....,80,51,788. The Assessing Officer asked the assessee to justify the reasonableness of the lease rent paid under section 40A(2)(b) of the Income-tax Act, 1961. The assessee filed copies of the lease agreements and submitted that 9 MW wind farm had been financed by IREDA. That the lease rents payable to M/s. Weizmann Ltd., have been structured taking into consideration the instalments of principal and interest payable to IREDA by M/s. Weizmann Ltd. Therefore, lease rents are based on lending rates of the financial institutions, namely, IREDA. However, the Assessing Officer stated that purchase price of windmill has been inflated by M/s. Weizmann group by an amount of Rs. one crore per windmill. Therefore, to that extent the lease rents paid to M/s. Weizmann Ltd., were held to be non-reasonable and excessive and not in terms of the legitimate needs of the business of the assessee. The Assessing Officer worked out the lease rents of Rs. 3,83,23,400 and disallowed the balance lease rents of Rs. 1,97,28,388 (Rs. 5,80,51,788 ƒ_" Rs. 3,83,23,400) and added to the total income of the assessee. Being aggrieved, the assessee filed appeal before the learned Commissioner of Income-tax (....
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....d No. 1 of appeal, we have held that the findings of the Assessing Officer that cost price of windmill has been inflated by Rs. one crore is not based on cogent material but is based on assumption and presumptions. Accordingly, the said finding of the Assessing Officer has not been accepted while dealing with ground No. 1 of appeal. For the reasons, we hold that the observation of the Assessing Officer that cost of windmill which has been taken on lease by the assessee are inflated by Rs.one crore is not justified. Moreover, IREDA had financed the said project and the lease rents payable by the assessee to M/s. Weizmann Ltd., has been structured taking into consideration the instalment of principal and interest payable to IREDA by M/s. Weizmann Ltd. The said facts have not been disputed by the Department. Therefore, lease rents paid by the assessee is based on lending rates of the financial institution, namely, IREDA. The Department has not also disputed the fact that the assessee had made payment of lease rent by account payee cheque to the lessor, i.e., M/s. Weizmann Ltd which had accounted for the same in its books of account. Considering the above facts, we hold that the learne....
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....e up appeal for the assessment year 2004-05 being I.T.A. No. 7670/M/2007. Grounds of appeal raised by the Department are as under : "1. On the facts and circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) erred in deleting the additions made on account of claim of depreciation by the assessee on windmills purchased by the assessee, the cost of which were inflated. 2. On the facts and circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) erred in allowing the disallowances made on account of lease rentals on the basis of inflated cost of windmills installation." In respect of ground No. 1 of appeal, the Assessing Officer disallowed depreciation of Rs. 48,00,000 on 12 windmills for the reasons as mentioned in the preceding assessment year 2002-03 and the learned Commissioner of Income-tax (Appeals) deleted the same. At the time of hearing, the learned representatives of parties submitted that the facts are identical to the assessment year 2002-03. Since we have considered this issue in paragraphs 8 to 15 and for the reasons mentioned hereinabove in paragraphs 19 to 23, we uphold the order of the learne....
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....sidered this issue in paragraphs 9 to 37 and for the reasons mentioned hereinabove in paragraphs 41 to 45, we uphold the order of the learned Commissioner of Income-tax (Appeals) and reject ground No. 1 of appeal taken by the Department for the assessment year 2005-06. In respect of ground No. 2 of appeal, the Assessing Officer disallowed Rs. 1,13,70,695 out of actual lease rental of Rs. 5,79,90,158 paid by the assessee on lease of 12 windmills. The facts and the reasons given by the Assessing Officer to make the said disallowance are similar to the assessment year 2002-03. For the reasons mentioned by us hereinabove in paragraph 52 while dealing with ground No. 2 of the appeal for the assessment year 2002-03, we uphold the order of the learned Commissioner of Income-tax (Appeals) and reject ground No. 2 of appeal taken by the Department for the assessment year 2005-06. In respect of ground No. 3 of appeal, the relevant facts are that the assessee reimbursed Rs. 27,71,243 to its holding company M/s. Weizmann Corporate Services Ltd. (WCSL) under a contract. The assessee-company shares common personnel, common utilities, for which, the assessee reimbursed, the aggregate amou....
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....n the facts and circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) erred in allowing the lease rent of Rs. 1,66,85,940 of windmills on the basis of inflated cost of windmills. 3. (i) On the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) erred in deleting the addition of Rs. 29,80,087 made under section 40(a)(ia) without appreciating the fact that the Assessing Officer in the assessment order has clearly brought out that these services were covered by the provisions of section 194C. (ii) On the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) erred in admitting additional evidence in the form of debit note in violation of rule 46A of the Income-tax Rules, 1962." In respect of ground No. 1 of appeal, the Assessing Officer disallowed depreciation of Rs. 1,92,000 on 12 windmills for the reasons as mentioned in the preceding assessment year 2002-03 and the learned Commissioner of Income-tax (Appeals) deleted the same. At the time of hearing, the learned representatives of parties submitted that the facts are identical to the asse....
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.... the assessment year 2006-07. M/s. Weizmann Ltd. Now we take up appeals filed by the Department in respect of the assessee-M/s. Weizmann Ltd., for the assessment years 2001-02 and 2002-03. In both appeals filed by the Department, there are common grounds of appeal based on similar facts. It is relevant to state that the assessee is a limited company and is engaged in the business of manufacturer of textile products, financial services like lease financing, money lending and borrowings, bill discounting, etc and is also engaged in wind power generation. For the assessment year 2001-02, the assessee filed the return of income declaring a loss of Rs. 20,30,82,050 and book profits under section 115JB at Rs. 18,50,866 on October 31, 2001. Along with return of income, audited annual accounts, income-tax audit reports under section 44AB of the Act and computation of total income, etc., were filed. The assessment was completed under section 143(3) on February 22, 2004 at (-) Rs. 18,18,72,511. Subsequently, reassessment proceedings were initiated by issuing notice under section 148 of the Act dated March 29, 2006. The assessment under section 143(3) read with section 147 was mad....
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....come-tax (Appeals) in the appeals filed by the assessee, i.e., M/s. Weizmann deleted the aforesaid disallowances made by the Assessing Officer for both assessment years giving same reasonings as stated in the case of M/s. Karma Energy Ltd.,which we have also discussed hereinabove. Hence, these appeals by the Department. The learned representatives of both parties in respect of ground No. 1 of both appeals, submitted that the submissions made in the case of M/s. Karma Energy Ltd., be also considered as submissions made in the case of this assessee, viz., M/s. Weizmann Ltd. In view of the above submissions of the learned representatives and also the reasons as stated hereinabove (vide paragraphs 19 to 23) while disposing of the appeals in the case of M/s. Karma Energy Ltd., we, following for the same reasons uphold the orders of the learned Commissioner of Income-tax (Appeals) dated May 15, 2008 for the assessment year 2001-02 and dated June 6, 2008 for the assessment year 2002-03. Hence, ground No. 1 of both appeals taken by the Department in the case of M/s. Weizmann Ltd., for both assessment years are rejected. In regard to ground No. 2 of both appeals, the Assessing Offi....
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....ssions of the assessee vide paragraph 7.7 of the impugned order for the assessment year 2001-02 deleted the said addition, which reads as under: "I have considered the submissions of the appellant carefully. I have also gone through the assessment order. It is noticed that the Assessing Officer has added a sum of Rs. 31,68,000 to the appellant's book profit on account of depreciation. The issue has not been discussed by the Assessing Officer in the assessment order. It is a settled law that the book profit can be altered only within the framework of the provision of sub-section (2) of section 115JB in respect of items which are mentioned therein. The adjustment of depreciation is not covered under the said items mentioned in sub-section (2) of section 115JB. The decision of the hon'ble Supreme Court in the case of Apollo Tyres Ltd. v. CIT [2002] 255 ITR 273 (SC) relied upon by the appellant is directly on this point and in favour of the appellant. Considering these facts and the law in vogue, I find that the disallowance of depreciation of Rs. 31,68,000 and adding the same in the book profit is incorrect. Accordingly, the disallowance of depreciation of Rs. 31,68,000 is ....