9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (9) TMI 978 - AT - Income TaxAddition made towards receipt Assignment of Fee - Whether not assessable for the current assessment year? - HELD THAT - As per assignment agreement, the assignee shall pay part of agreed consideration on the date of signing the agreement, but subject to furnishing bank guarantee equivalent to the amount given by the assignee till date the builder obtains planning permission from concerned authorities. We further noted that as per the Escrow agreement, the bank guarantee given by the assignee is irrevocable and unconditional and shall have a validity period of 180 days or till such time, the builder obtains planning permission from CMDA. The said bank guarantee has been extended from time to time and upto 28.07.2008 - builder has obtained planning permission from CMDA on 12.08.2008. From the above, it is very clear that the assignment agreement with M/s. HTMT Global Solutions Ltd., is complete in all aspects in the financial year relevant to assessment year 2009-10 after fulfilling the conditions imposed upon the assessee and hence, we are of the opinion that the AO was incorrect in coming to the conclusion that the assignment agreement would be complete when the assessee has given bank guarantee on 28.11.2007. Assessee has withdrawn amount from Escrow account and utilized for its business purpose and therefore, he opined that assignment is complete and fees received is taxable for the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 Therefore, merely for the reason that money has been withdrawn from Escrow account, it does not mean that assignment is complete in all aspects and fees received from assignment agreement is accrued for the assessee in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. 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 assignment fee in the assessment year 2009-10 and paid relevant taxes. Although, there is a timing difference between assessment year 2008-09 and 2009-10, but because there is no change in rate of tax, there is no loss to the Revenue by deferring recognition of income to assessment year 2009-10. It is also a matter of fact that the assessee has not claimed any set-off of loss against said income in the subsequent years. AO was completely erred in taxing assignment fee for the assessment year 2008-09. The ld.CIT(A) after considering relevant facts, as rightly deleted addition made by the AO. - Decided in favour of assessee. 50% disallowance of depreciation on Wind Turbine Generators (WTGs) - Number of days asset put to use - CIT-A allowed complete 100% claim - HELD THAT - 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 the supplier, installation and commissioning certificate issued by the supplier and commissioning certificate issued by the Superintending Engineer, Tirunelveli Electricity Distribution Circle of TNEB, as per which all 5 windmills were installed and commissioned before 30.09.2007 and thus, the assessee is eligible for 100% depreciation as per law. The supplier had also certified installation and commissioning of WTGs. We further noted that TNEB had certified commissioning of WTGs, as per which the Superintending Engineer had issued commissioning certificate for 3 WTGs on 28.09.2007 and for remaining 2 WTGs on 30.09.2007. The assessee had also furnished electricity readings provided for the month of October, 2007 issued by TNEB, which reveals that initial meter reading was taken on 28.09.2007 and upto 13.10.2007. From the above, it is very clear that all 5 WTGs were installed and put to use for more than 182 days and hence, we are of the considered view that the assessee is entitled for 100% depreciation as claimed. - Decided in favour of assessee.
Issues Involved:
1. Deletion of addition towards receipt of Assignment Fee. 2. Deletion of disallowance of depreciation on Wind Turbine Generators (WTGs). Issue-wise Detailed Analysis: 1. Deletion of Addition towards Receipt of Assignment Fee: The Revenue contested the deletion of the addition of ?14,74,78,764/- made by the Assessing Officer (AO) towards the receipt of assignment fee, arguing that it should be assessed in the current assessment year (2008-09). The AO's stance was that as per the Escrow Agreement, the assessee had to provide a bank guarantee, which was done on 28.11.2007, thus making the receipt taxable in the current year. The AO also noted several withdrawals from the Escrow Account during FY 2007-08, indicating that the conditions of the Escrow Agreement had been fulfilled. The assessee argued that the assignment agreement with M/s. HTMT Global Solutions Ltd. was conditional upon obtaining planning approval from the concerned authority, which was obtained in the financial year relevant to AY 2009-10. Consequently, the assignment fee was recognized in AY 2009-10. The CIT(A) supported this view, noting that the assignment agreement was completed only when the builder obtained the necessary planning approvals in FY 2008-09. The CIT(A) also observed that the tax rates for AY 2008-09 and 2009-10 were the same, and there was no revenue loss to the Department. The Tribunal upheld the CIT(A)’s decision, agreeing that the assignment agreement was conditional and the conditions were fulfilled in FY 2008-09. The Tribunal noted that the AO had erred in concluding that the assignment was complete upon the provision of the bank guarantee. It was clarified that the withdrawal of funds from the Escrow Account did not imply the completion of the assignment. The Tribunal emphasized that the income was rightly recognized in AY 2009-10, and there was no loss to the Revenue due to the timing difference. 2. Deletion of Disallowance of Depreciation on Wind Turbine Generators (WTGs): The Revenue challenged the deletion of the disallowance of depreciation on WTGs amounting to ?2,29,54,319/-. The AO had allowed only 50% depreciation, arguing that the WTGs could not have been put to use for more than 180 days as they were commissioned towards the end of September 2007. The assessee contended that all five WTGs were installed and commissioned before 30.09.2007, thus qualifying for 100% depreciation. The CIT(A) accepted the assessee’s evidence, including delivery notes, invoices, installation and commissioning certificates, and electricity readings, which confirmed that the WTGs were operational before 30.09.2007. The Tribunal upheld the CIT(A)’s decision, noting that the evidences provided by the assessee, such as the commissioning certificates issued by the Superintending Engineer, Tirunelveli Electricity Distribution Circle, and the electricity readings, substantiated that the WTGs were installed and generating electricity before 30.09.2007. Thus, the assessee was entitled to 100% depreciation. Conclusion: The Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s decisions on both issues. The assignment fee was correctly recognized in AY 2009-10, and the assessee was entitled to 100% depreciation on the WTGs for AY 2008-09. The Tribunal's order was pronounced on 17th September 2021 at Chennai.
|
