2015 (4) TMI 444

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....he Tribunal was right in allowing the assessee company is the actual price and noted inflated price as held by the Assessing Officer despite there being clear evidence to the contrary ? B. Whether on the facts and in the circumstances of the case and in law, the Tribunal was right in allowing depreciation on the inflated cost of windmills purchased by the assessee? C. Whether on the facts and in the circumstances of the case and in law, the Tribunal was right in allowing excess lease rentals on the basis of inflated cost of windmills ? 2. These three identical questions pertain to assessment years 2002-03, 2003-04, 2004-05, 2005-06 and 2006-07. In Income Tax Appeal No.1515/13 and 1713/13, these three questions are common. There is ....

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....e per windmill. The Assessing Officer also noticed that the assessee had taken a 9MW windfarm on lease from M/s.Weizmann Ltd. and has paid lease rent of Rs. 5,80,51,788/-. The assessee claimed reliefs under Section 40(2)(b) of the Income Tax Act, 1961 (the Act). 5. The Commissioner of Income Tax (Appeals) deleted the additions made by the Assessing Officer stating that during the search and seizure of the business premises, no evidence of the assessee's complicity in the transactions with NEG Micon was gathered. It was also noticed that the assessment order did not indicate that the assessee had paid a higher price for the purchase of windmills. Apropos, the lease rentals, the Commissioner of Income Tax (Appeals) deleted the disallow....

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.... value of equipment was inflated and, therefore, the provisions of section 40A(2)(b) of the IT Act would apply in this case. 8. Mr.Mistri on the other hand submitted that the case of the Revenue is completely consistent with the record which will show that the Assessing Officer had proceeded merely on the basis of conjecture without any evidence as the assessee causing the costs to be inflated in order to enable the group company to benefit. According to Mr.Mistri, the contention of the revenue is that subsequent transactions have been put into place all of which enure to benefit of the Weizmann group is incorrect. It is the revenue's contention that the commission involved in the deal has been indirectly handed back to the Weizmann ....

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.... Officer, the commission paid by NEG Micon to Suhami was thus received by a Weizmann group company. Therefore, the excess money paid for the windmills was routed back to Weizmann Group, while the assessee, also a Weizmann group company claimed 100% depreciation. The collusion between NEG Micon and Weizmann group it is alleged was in order to deprive the Revenue. 12. A comparative chart has been prepared of the transactions entered into by the Respondent as well as Precot Mills Ltd. claiming difference in prices of windmills pegged at about Rs. 98 lacs. However, comparison with companies like Rajasthan State Power Corporation Ltd. reveals that the price is easily justifiable given the difference in specifications. It is necessary to menti....

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.... of Rs. 5,51,788/- to Weizmann group Ltd. on account of the windmills taken on lease and the contention of the Assessing Officer that lease rents were unreasonable was not based on any cogent material but only based on assumption and presumption. In fact, the lease rents were fixed in accordance with the formula provided by Indian Renewable Energy Development, a Government of India Company which provided support to Electricity Project. 15. The Tribunal found that the Commissioner of Income Tax (Appeals) was justified in holding that there is nothing on record to prove the excessive amount of lease rent was paid. The said issue is identical in all appeals and the appeals came to be rejected while upholding the orders of the Commissioner o....