TaxTMI 
TaxTMI 
2013 (9) TMI 601
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....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 not pressed for. Hence, the crossobjectio....
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.... 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 that no such huge commission payments had been made on the sale of other wind....
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....ty). 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 alleged services of consultancy and liasoning to the following parties of Hyderabad ....
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....ope 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. Suhami Traders, it is found that they are in the business of borrowing and lending since many years. Under ind....
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.... 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 stated by the learned Commissioner of Income-tax (Appeals) at page 2 of the impugned order as under: Nature of assets ....
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....indings 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 paid by the assessee. It was contended that the cost of the project primarily depend on the scope of work to be executed while installing the said windmills. Such scope of work would vary from project to project. That the windmills are not standard off the shelf commodities and based o....
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....er 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. Centralised monitoring and control system (CMCS) with optic fibre cables No Yes Windmast No supply and installation of windmast for monitoring the performance of the windmill Supply and installation of 2 windmasts for monitoring the performance of the windmill Site Site is not earthquake prone Site is earthquake prone being near Koyna Dam....
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....60.64 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 box guaranteed for 5 years life-time supply of spares assured. Life time supply of spares Not guaranteed Guaranteed It was contended that the comparisons made by the Assessing Officer in the assessment order has no relevance at all to point out that the assessee had inflated price for purchase of each windmill at alleged cost of Rs. one crore each. That NEGMIPL was required to render much more services/ component, etc., and installation of windmill was on a hilly site, the cost per windmill had to be more than cost to the said entities. The assessee also submitted statement giving comparison of the cost of windmill of the same make and same c....
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....ended 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 made it amply clear that the payments made by the assessee for purchase of windmills were justified. That the purchase price paid by the assessee for windmill thus stood proved as comparable with other transactions of purchases of windmills of similar make. It was contended that the conclusions of the Assessing Officer that NEGMIPL could not furnish any evidence to services rendered for which it made payments on account of commission, project management fees, to parties at Hyderabad in relation to setting up of wind farms had no relevance to the assessee's case, as the assessee could not be held as responsible for the conduct of NEGMIPL. It was also contended that setting-up of wind farms is very specialised job. The observations of the Assessing Officer that NEGMIPL paid commission....
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....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, there is excess claim of depreciation on 12 windmills totalling to Rs. 12 crores. The Assessing Officer disallowed the claim of depreciation of Rs. 3 crores in the assessment year 2003-04 and Rs. 9 crores in the assessment year 2002-03. As regards merits of the case, the Assessing Officer compared the purchase price of the appellant vis-a-vis the purchase price paid by other entities. The perusal of the comparison made by the Assessing Officer in the assessment order reveals that the comparison in the purchase price relied upon by the Assessing Officer has not led to a conclusion that the appellant has paid more purchase price by Rs. one crore per each windmill. It is noted that there is a vast difference of scope of work as well as commercial terms in the purchase orders placed by the appellant with....
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....us 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 survey at NEG Micon (India) P. Ltd., nothing was found to suggest that the said company had passed on any cash to the appellant. The Assessing Officer's another observation in the assessment order that commission had been paid by the seller, i.e., NEG Micon only in respect to sales to the Weizmann group and not to other concerns who had made purchases from it, it is to be noted that the appellant did not pay any commission to anybody. If NEG Micon had debited commission, etc., in the name of third parties that was between NEG Micon and the other parties and it would have no bearing on the appellant. Moreover, the Assessing Officer has not brought any evidence on record to show that NEG Micon was paying commission on the sales to Weizimann group only. It is not known as to how the Assessing Officer cou....
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....y 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 instances and observations noted by the Assessing Officer in the assessment order also did not prove that the appellant had purchased the windmill at inflated price. Therefore, the disallowance of the depreciation of Rs. 9 crores on the presumptuous ground that there was inflation in the purchase price was not justified. Such an action on the basis of assumptions, surmises and guesswork and without any concrete evidence cannot be sustained. Accordingly, the disallowance of Rs. 9 crores is deleted." Hence, this appeal by the Department. On behalf of the Revenue, it was contended that during the course of survey at the premises of NEGMIPL, from whom the assessee had purchased 12 windmills it was found that the normal price of windmill was of Rs. 2.25 crores to Rs. 2.50 crores to other buyers and whereas sal....
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....rable. 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 against 12 months in the case of the assessee. He further submitted that even if the terms of contract of NEDCAP are compared with the assessee, the purchase price per windmill is Rs. 275 lakhs as against Rs. 360.64 lakhs and there is no material difference in other terms and conditions except that site in the case of the assessee is earthquake prone. The learned Departmental representative submitted that the learned Commissioner of Income-tax (Appeals) has not considered fully all the evidence as discussed by the Assessing Officer and, therefore, he was not justified to delete the disallowance of depreciation of Rs. 9 crores made by the Assessing Officer. He submitted that the order of the learned Commissioner of Income-tax (Appeals) be reversed and the action of the Assessing Officer should be confirmed. O....
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..../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 appeals of the Department for these three assessment years should be dismissed in limine as the net income was a loss. In this respect, the learned authorised representative submitted that the return of income for the assessment year 2003-04 is a loss of Rs. 1.41 crores before considering brought forward loss and post addition made by the Assessing Officer of Rs. 4.01 crores, the net income before setting off of brought forward loss is Rs. 2.60 crores and post brought forward set off of brought forward loss, the income would be nil. Similarly for the assessment year 200405, return of income before setting off of brought forward loss is Rs. 7.73 crores and after additions of Rs. 1.57 crore by the Assessing Officer, the net income before setting off of brought forward loss is Rs. 9.31 crores and post setting off of broug....
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....de 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. Weizmann Ltd. He submitted that windmills purchased by the assessee were brand new and had never been put to use prior to its sales to the assessee. Therefore, Explanation 3 to section 43(1) is not attracted. The learned authorised representative submitted that if the cost of windmills is inflated and the suppliers of windmills namely NEGMIPL had paid 15 per cent. commission and management fee to M/s. Samrat Spinner and M/s. Kakatiya Industries, the assessee is not concerned for it. Further NEGMIPL had the written authorisation of the said two entities M/s. Samrat Spinner and M/s. Kakatiya Industries to remit the amount to M/s. Suhami Traders as they had certain obligation to discharge to certain group entities of the assessee. He submitted that the said payment of commission and project management fees by NEGMIPL c....
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....e 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 difference between the terms of the purchase of those parties with the assessee. The learned authorised representative submitted that windmills installed by the assessee are in a hilly area and which is also earthquake prone area and, therefore, the foundation is required to be of specific design and much stronger and on the other hand the windmills installed by other parties are not in earthquake prone area. He further submitted that the height of the tower in the case of the assessee is 55 metres unlike in the case of other parties. The learned authorised representative further submitted that the learned Commissioner of Income-tax (Appeals) has rightly considered the difference in the contract of the assessee with other parties to hold that windmill price of the said parties cannot be comparable with that of the assessee....
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....e 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 appeal is less than Rs. 2 lakhs on account of loss return filed and the assessed income was also a loss, we observe that as the very same issue has been considered recently by the Income-tax Appellate Tribunal, Mumbai in the case of Essar Steel Ltd. [2012] 19 ITR (Trib) 373 (Mumbai). The said order has been passed after considering the decision of the hon'ble Delhi High court in the case of Continental Construction Ltd. [2011] 336 ITR 394 (Delhi) and also the decision of the Income-tax Appellate Tribunal, Delhi in the case of Speciality Coatings and Lamination Ltd. [2012] 144 TTJ (Delhi) 532. We consider it necessary to state paragraph 4 of the order in the case of Essar Steel Ltd. [2012] 19 ITR (Trib) 373 (Mumbai) which reads as under (page 376) : "4. We have perused the records and considered the rival contentions car....
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.... 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 subsequent assessment years, viz., the assessment year 2005-06 and the assessment year 2006-07. Therefore, it is necessary to decide the issue involved in the appeals for the assessment year 2002-03 as well on merits instead of dismissing the appeal in limine. Now coming to the merits, we observe that the assessee in the assessment year 2002A-03 purchased 12 windmills at cost of Rs. 50,72,18,688, as shown for the purpose of calculating depreciation. The Assessing Officer doubted the cost of acquisition per windmill on the ground that during the course of survey under section 133A at the premises of supplier of windmills namely NEGMIPL at Chennai, it was found that the said company debited commission at 8 per cent. payable to M/s. Samrat Spinners for introducing the customer, i.e., inter alia, the assessee and also debited at ....
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.... 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 (Appeals) as well as before us, the assessee relied upon an affidavit filed by REDAM before MERC stating that the cost of per windmill varied between Rs. 5 crores to Rs. 6.60 crores, copy of affidavit is placed at pages 57 to 62 of the paper book along with annexure and the said MERC in their tariff order dated November 24, 2003 determined the average cost at Rs. 5.36 crores per windmill. It is relevant to state that the name of the assessee is also appearing in the annexure of affidavit at serial No. 45 stating the project cost. We also observe that the assessee filed another statement giving comparative cost of windmill of the same make and same capacity purchased by M/s. Savita Chemicals Ltd., details placed at page 63 of the paper book, which was also installed at the same area where the assessee had installed windmills and ....
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....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 the price per windmill paid by the assessee is not the actual price and it is less than it. As mentioned hereinabove, the Assessing Officer has only gone on presumption that the assessee has inflated the cost price at Rs. one crore per windmill only for the reason that NEGMIPL paid commission and project management fees to M/s. Samrat Spinners and M/s. Kakatiya Industries at Rs. 115 crores and Rs. 303 crores respectively but nowhere it has been proved with any documentary evidence that the said money has come back to the assessee from those concerns. On the other hand as per section 43(1) of the Act, "actual cost" means the actual cost of the assets to the assessee and reduced by that portion of the cost that has been met directly or indirectly by any other person or authority. Further, there is no dispute to the fact that third pa....
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....te 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 (Appeals). It was contended that the assessee paid lease rentals as per the market lending rates ; there was no excessive or unreasonable payment. It was also contended that there is no inflation of the purchase price of windmill and, therefore, the Assessing Officer was not justified in reducing the value of equipments. The learned Commissioner of Income-tax (Appeals) considered the submissions of the assessee and vide paragraph 3.2 of the impugned order held that the Assessing Officer was not justified in disallowing the proportionate lease rent to the tune of Rs. 1,97,28,388 and deleted the same. Hence, this appeal by the Department. At the time of hearing, the learned Departmental representative submitted that the Assessing Officer reduced the lease rents payable by the assessee to windmills on account of inflation of cost price of win....
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.... 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 learned Commissioner of Income-tax (Appeals) is justified to hold that there is nothing on record to prove that there was excessive payment of lease rents by the assessee. Hence, we uphold the order of the learned Commissioner of Income-tax (Appeals) to delete the disallowance of proportionate lease rental worked out by the Assessing Officer at Rs. 1,97,28,388 by rejecting ground No. 2 of appeal taken by the Department. Now we take up appeal for the assessment year 2003-04 being I.T.A. No. 4331/M/2007. The Department has filed this appeal taking the following grounds : "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....
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....ls) 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 learned Commissioner of Income-tax (Appeals) and reject ground No. 1 of appeal taken by the Department for the assessment year 2004-05. In respect of ground No. 2 of appeal, the Assessing Officer disallowed Rs. 1,08,85,566 out of lease rental of Rs. 5,28,50,404 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 30 while dealing with ground No. 2 of 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 2004-05. Now, we take up appeal for the assessment year 2005-06 being I.T.A. No. 3684/M/2010. Grounds of appeal raised by the Department are as under : "1. On ....
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....nd 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 amount of Rs. 27,71,243 of actual expenses as agreed to. The Assessing Officer disallowed the said claim on the ground that the assessee did not deduct TDS on the said payment. Being aggrieved, the assessee filed appeal before the learned Commissioner of Income-tax (Appeals). The learned Commissioner of Income-tax (Appeals) deleted the said disallowance after accepting the contention of the assessee that the provisions of section 194C relating to TDS are not applicable on payment of reimbursement. The learned Commissioner of Income-tax (Appeals) has stated that WCSL raised bills for reimbursement of actual expenses for use of common utilities by the assessee and, therefore, there is no element of income and, accordingly, TDS is not deductible. Hence, this appeal by the Department. At the time of hearing, the learned Departmental representative relied on the order of the Assessing Officer. On the ot....
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....indmills 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 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 2006-07. In respect of ground No. 2 of appeal, the Assessing Officer disallowed Rs. 1,66,85,940 out of lease rentals of Rs. 6,79,61,657 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 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 2006-07. In respect of ground ....
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....tion 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 made on December 21, 2006 determining the income at (ƒ_") Rs. 12,80,72,511 under the normal provisions of the Act and book profit was computed under section 115JB at Rs. 2,37,54,175. While computing the income under the normal provisions of the Act, the Assessing Officer added Rs. 6 crores disallowing depreciation on 12 windmills on the ground that the assessee had inflated the cost of each windmill by Rs. one crore. It is relevant to state that for the assessment year 2002-03 also, reassessment proceedings were initiated by issue of notice under section 148 of the Act dated December 7, 2006. In the said assessment year, the assessee filed the return of income declaring total loss at Rs. 18,16,10,897 on January 9, 2007. The Assessing Officer made the assessment under section 143(3) read with section 147 of the Act on December 10, 2007 computing the income under the normal provisions of the Act at a loss of Rs. 13,98,70,643 and book profi....
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....8 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 Officer made addition of Rs. 31,68,000 while computing book profit under section 115JB of the Act on the ground that the assessee has inflated price of windmills at Rs. 6 crores in each of the assessment year under consideration, viz., assessment years 2001-02 and 2002-03. Being aggrieved, the assessee filed appeals before the first appellate authority. On behalf of the assessee, it was contended that the Assessing Officer has not discussed the fact in the assessment orders while making the disallowance and to add the amount of Rs. 31,68,000 while computing the book profits under section 115B of the Act. It was also contended that it was beyond comprehension as to how the said disallowance has been worked out by the Assessing Officer and to make the addition to the book profit. It was also contended that the provisions of section 115JB of the Act is in itself is a self-contained code. The said provisions lay down as to how the audited accounts are to be pre....
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....sidering 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 deleted from the computation of book profit." For the assessment year 2002-03, the learned Commissioner of Incometax (Appeals) following his order for the assessment year 2001-02 also deleted the addition made by the Assessing Officer. Hence, these appeals by the Department. At the time of hearing, the learned Departmental representative relied on orders of the Assessing Officer and whereas the learned authorised representative supported the orders of the learned Commissioner of Incometax (Appeals) and placed reliance on the decision of the hon'ble Supreme Court in the case of Apollo Tyres Ltd. v. CIT [2002] 255 ITR 273 (SC). He submitted that book profit cannot be recomputed by the Assessing Officer. We have heard the learned representatives of parties and considered orders of authorities below. We agree that the learned Commissioner of Income-tax (Appeals) has rightly held that the Assessing Officer has not discussed in the assessment order the is....