2023 (7) TMI 1424 - AT - Income Tax

Addition of the interest income earned on the Fixed Deposit - HELD THAT - It is admitted fact that on identical issue, the Tribunal in assessee s own case for AY 2014-15 2020 (5) TMI 745 - ITAT BANGALORE had deleted the addition of the interest income earned on the Fixed Deposit. Respectfully following the Co-ordinate Bench s order of the Tribunal in assessee s own case, we dismiss grounds raised by the Revenue. Disallowance as business expenses - AO had disallowed these expenses on the ground that as per the head of expenses debited, such expenses were claimed out of earmarked schemes and there cannot be any expenses towards which no income is declared - HELD THAT - On identical issue, the Bangalore Bench of the Tribunal in assessee s own case for Assessment Year 2014-15 2020 (5) TMI 745 - ITAT BANGALORE had decided the issue in favour of the assessee and had deleted the disallowance made. In light of the Bangalore Bench of the Tribunal s decision in assessee s own case for AY 2014-15 (supra), we affirm the CIT (A) s order on the deletion of disallowance. Nature of expenses - expenditure of towards propagation of renewable energy programmes and expenses for inauguration of Solar Park at Pavagada - Revenue or capital expenditure - HELD THAT - It is an admitted fact that the assessee is into the core activity of propagating renewable energy programmes since March, 1996, and is a nodal agency of Government of Karnataka. In propagation of renewable energy, the assessee had incurred expenditure for publishing advertisement in newspaper for popularization of renewable energy. CIT (A), after going through the Board s approval for incurring the expenditure and also the ledger account, bills, etc., had allowed the claim of the expenditure as revenue in nature. CIT (A) has also found the inauguration function of 600MW capacity at Pavagada Solar Park is an expenditure incurred which is in the revenue field. The above finding of the CIT (A) is factual in nature which was not controverted by the Revenue. Accordingly, we affirm the order of the CIT (A) on this issue.

Summary

Issues Involved:
1. Addition of interest income received on Fixed Deposits (FDs).
2. Disallowance of business expenses related to solar and renewable energy projects.
3. Disallowance of expenses categorized as capital expenditure.

Detailed Analysis:

1. Addition of Interest Income Received on Fixed Deposits (FDs):

The primary issue was whether the interest income earned on Fixed Deposits (FDs) made out of grants received from the Government of Karnataka (GOK) should be taxed as income. The Assessing Officer (AO) included the interest income as taxable, arguing that the interest on FDs does not become part of the grants themselves. The CIT (A) provided relief to the assessee by deleting the addition, relying on the Tribunal's previous order in the assessee's own case for the Assessment Year 2014-15. The Tribunal upheld the CIT (A)'s decision, dismissing the Revenue's grounds, by referencing the consistent judicial precedent in the assessee's favor.

2. Disallowance of Business Expenses Related to Solar and Renewable Energy Projects:

The assessee claimed expenses towards solar demo projects and other renewable devices, which the AO disallowed, arguing that such expenses were claimed out of earmarked schemes and no corresponding income was declared. The CIT (A) deleted the disallowance, again relying on the Tribunal's order in the assessee's own case for the Assessment Year 2014-15. The Tribunal affirmed the CIT (A)'s decision, noting the consistent judicial precedent that such expenses are allowable as business expenses.

3. Disallowance of Expenses Categorized as Capital Expenditure:

The AO disallowed expenses claimed for the propagation of renewable energy programs and the inauguration of a Solar Park, considering them capital in nature. The CIT (A) allowed these expenses as revenue expenditure, concluding that they were incurred for business purposes, including publishing advertisements and organizing inaugural functions. The Tribunal upheld the CIT (A)'s decision, emphasizing the factual nature of the CIT (A)'s findings and the lack of contrary evidence from the Revenue.

Conclusion:

The Tribunal dismissed the Revenue's appeals for the Assessment Years 2015-16, 2017-18, and 2018-19, consistently upholding the CIT (A)'s decisions across all issues. The Tribunal relied heavily on previous orders in the assessee's own cases, reinforcing the principle of judicial consistency. The Tribunal's judgment underscores the importance of adhering to established judicial precedents and the factual findings of lower authorities in tax disputes.