TaxTMI 
TaxTMI 
2021 (9) TMI 978
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....which pertains to FY 2007-08, relevant to Ay 2008-09,, i.e., the year under consideration and accordingly the impugned receipt has to be taxed in the current year in full. 2.3 The ld CIT(A) failed to note that it was the contention of the assessee that unless the conditions imposed in the Escrow Account are fulfilled, the assessee cannot use the money advanced / deposited into the Escrow Account. There are several withdrawals from the Escrow Account during the FY 2007-08, relevant to Ay 2008-09, which shows that the conditions of the Escrow Account have been fulfilled and accordingly money from this account has been allowed to be withdrawn by the assessee during the current year and accordingly the receipts from HTMT accrued to the assessee in AY 2oo8-09 itself and has to be taxed in the current year only and not in AY 2Oo9- 10, since the assessee is following mercantile system of accounting. 3.1 The ld CIT(A) erred in deleting the disallowance of deprecation on Wind Turbine Generators to the tune of Rs. 2,29,54,319 /-. 3.2 The ld CIT(A) ought to have noted that the invoices were dated 30-09-2007 and as evident from the certificate issued by supplier viz., M/s Poineer Wincon ....
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....ble on record. The ld.CIT(A) had also deleted addition made by the AO towards assignment fee received from M/s. HTMT Global Solutions Ltd., by considering the distinctive features in the assignment agreement entered into between said company and other agreements entered into by the assessee with third parties by holding that assignment with M/s. HTMT Global Solutions Ltd., is conditional and conditions of assignment agreement are satisfied during assessment year 2009-10 and thus, income from assignment is taxable for assessment year 2009-10. The Revenue has challenged the order of ld.CIT(A) before the ITAT. The ITAT vide its order dated 04.03.2016 has set aside the appeal to the file of the AO after considering relevant material placed by the Revenue on the violation of Rule 46A of Income Tax Rules, 1962 and directed the AO to examine the facts and decide the issue in accordance with law. In the effect giving order dated 22.02.2017 passed u/s.143(3) r.w.s. 254 of the Act, the AO has assessed assignment fee received from M/s. HTMT Global Solutions Ltd., for the assessment year on two counts, one as much as the bank guarantee, as per agreement entered into was provided in the previou....
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....for the month of October 2007 issued by the office of the Superintending Engineer also reveal that the initial meter reading was taken on 28.09.2007 and up to the date of 13.10.2007 in the case of 2 WTGs and with regard to the remaining 3 WTGs, the initial meter reading was taken on 30.09.2007 and up to the period of 13.10.2007. The above facts clearly support the case of the assessee that said WTGs were commissioned and started generating power in the month of September itself. Therefore, it is amply clear that WTGs were put to use in the business for more than 182 days and thus, entitled for full depreciation as claimed by the assessee. Aggrieved by the CIT(A) order, the Revenue is in appeal before us. 5. The first issue that came up for our consideration from Ground Nos.2.1 to 2.3 of Revenue appeal is deletion of additions made towards receipt of assignment fee to the tune of Rs. 14,74,78,764/- as not assessable for the impugned assessment year. 6. The facts with regard to impugned dispute are that the assessee had entered into an assignment / nomination agreement with M/s. HTMT Global Solutions Ltd., and M/s. Vishranthi Homes Pvt. Ltd., for assignment of certain properties in....
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....be recognized only when the conditions of the Escrow agreement are fulfilled, a reading of the Escrow agreement shows that the basic requirement to be fulfilled was to give a bank guarantee and the assessee has given bank guarantee on 28.11.2007 itself and hence, the conditions for Escrow agreement was fulfilled during the financial year 2007-08 relevant to assessment year 2008-09. Secondly, the Escrow account shows several withdrawals. The assessee on the one hand has contended that it would not be able to use the money till the conditions of Escrow agreement are fulfilled but, on the other hand Escrow account shows numerous withdrawals in the financial year relevant to assessment year 2008-09. Therefore, he opined that assignment fee received from M/s. HTMT Global Solutions Ltd., is taxable for assessment year 2008-09 and thus, made addition of Rs. 14,74,78,764/-. 8. The ld.DR submitted that the ld.CIT(A) has erred in deleting addition made by the AO towards receipt of assignment fee without appreciating the terms of Escrow agreement as per which, the only condition for utilization of Escrow account is to furnish a bank guarantee and further as per agreement, the assessee has gi....
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....through orders of the authorities below. The facts borne out from record indicate that assignment agreement with M/s. HTMT Global Solutions Ltd., dated 29.10.2007 was conditional, as per said agreement, assignor and assignee have agreed to park the consideration in Escrow account till such time, the builder has obtained planning permission from concerned authorities. We further noted that as per said agreement, the assessee has received partial agreed consideration of Rs. 8,84,87,260/- on the date of signing agreement subject to a condition that the assessee shall furnish bank guarantee equivalent to the amount given by the assignee having a validity period up to the date on which developer obtains necessary planning permit for the proposed building from the competent authority. The agreement further states that remaining amount shall be paid after the developer obtaining the planning permit, from the competent authorities for their proposed building. According to the assessee, the builder has obtained planning permit from Chennai Metropolitan Development Authority on 01.08.2008 and thus, as per the agreement between the parties, the assignment agreement is completed only when the ....
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....2007. 10.2 Another reason, the AO has assessed assignment fee for the impugned assessment year is withdrawal from Escrow account. According to the AO, the assessee has withdrawn amount from Escrow account and utilized for its business purpose and therefore, he opined that assignment is complete and fees received is taxable for the assessment year 2008-09. We do not agree with the AO for the simple reason that once assessee has furnished bank guarantee equivalent to the value of amount paid by the assignee in pursuant to assignment agreement, then the rights of assignee is protected and the money received from assignee can be utilized as wished by the assessee. In this case, the assessee has furnished bank guarantee to the assignee and such bank guarantee is irrevocable and unconditional. Therefore, merely for the reason that money has been withdrawn from Escrow account, it does not mean that assignment is complete in all aspects and fees received from assignment agreement is accrued for the assessee in assessment year 2008-09. Moreover, it is not a case of the AO that amount received under assignment agreement is not offered to tax at all. In fact, the assessee itself had admitted....
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....n after commissioning and thus, it is impossible to say that windmills were put to use in the business for more than 182 days. 14. The ld.AR for the assessee on the other hand strongly supporting order of the CIT(A) submitted that the WTGs were put to use for more than 182 days, which is evidenced from the fact that supplier has delivered and installed windmills on 18.09.2007, 20.09.2007 and 22.09.2007 respectively. The invoices were raised by the supplier after installation and commissioning as per agreed terms. Further, the TamilNadu Electricity Board had confirmed issuing commissioning certificate for the relevant WTGs on 28.09.2007 & 30.09.2007. The CIT(A) after considering these facts, has rightly held that the assessee is entitled for full depreciation and thus, there is no error in the order of the CIT(A) to delete addition made by the AO and his order should be upheld. 15. We have heard both the parties, perused materials available on record and gone through orders of the authorities below. We find that the ld.CIT(A) had recorded categorical finding in light of various evidences filed by the assessee including delivery note for transportation of WTGs, invoices issued by t....