9911796707
TMI Blog2013 (9) TMI 371X X X X Extracts X X X X X X X X Extracts X X X X ..... ver Narmada for providing drinking water and water for irrigation in four states of India. Assessee filed return of income for AY 2005-06 on 29.10.2005 declaring loss of Rs 590,55,01,979/-. The case was selected for scrutiny and thereafter the assessment was framed u/s 143(3) vide order dated 31.12.2007 and the total income was determined at Rs 32,17,25,820/-. Aggrieved by the order of AO, Assessee carried the matter before CIT(A). CIT(A) vide order dated 29.10.2008 granted partial relief to the assessee. Aggrieved by the aforesaid order of CIT(A), Revenue is now in appeal before us and the Assessee has also filed Cross objections (CO). The effective grounds raised by the Revenue read as under: 1. The learned CIT(Appeals) has erred in law and on facts in directing the A.O. to allow the claim of the assessee under the head "incident expenditure pending capitalization" holding that the assessee Corporation was already set up and commenced business. 2. The learned CIT(Appeals) has erred in law and on facts of the case in directing the A.O. to treat the income from other sources cr Rs.26.35 Crores as business income and allow expenditure being incidental expenditure pending capitaliz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as carried before CIT(A). CIT(A) allowed the claim of the Assessee by holding as under: 5.4 The matter has been given due consideration. As stated earlier, the appellant seems to have agreed to the fact that the incidental expenditure allowable as revenue expenses, i.e. which are either not likely to be capitalized or are not disallowable, are Rs. 48.69 Cr. only. Therefore, the dispute primarily is concerning the Assessing Officer not even allowing this amount. The action of the Assessing Officer in refusing the set off of these expenses on the ground that assessee may. in future, capitalize some of them and may claim depreciation thereof, may not be a very sound logic. If a claim is valid and legal, the Department is duty bound to allow it and it is for the Department to develop its system in terms of proper recording in the assessment order or in internal notes that if there is a duplicate claim in the subsequent year, the same can be checked and counter acted. Further, the Assessing Officer's action in theoretically reducing the claim to the extent of the Government of Gujarat's share in the overall cost of the project vis-a-vis the other participating States is also not upheld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allow expenditure being incidental expenditure pending capitalization in computing income/loss under the head business." 13. We have already discussed this ground of Revenue's appeal in ITA No.696/Ahd/2006 and respectfully following the decision of Hon'ble Special Bench of this Tribunal in assessee's own case (supra) and taking a consistent view in terms of decision of Hon. Special Bench in assessee's own case (supra). Hence, this ground of Revenue's appeal is dismissed. 11. Before us, the Revenue could not bring any material on record to controvert the finding of CIT(A). In view of the aforesaid facts, and respectfully following the decision of co-ordinate bench, we find no reason to interfere with the order of CIT(A) and thus uphold the order of CIT(A). Thus this ground of Revenue is dismissed for both the years. 12. 2nd ground is with respect to treating income of Rs 26.35 crore as business income: 13. During the course of assessment proceedings AO noticed that the canal has been built for the purpose of irrigation. He was of the view that there should be proof that the distributaries and branch canals which have been built are in operation to carry the water of the main can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Ld. A.R. on the other hand submitted that CIT(A) for Ay 2002-03 to 2004-05 has decided the issue in favour of assessee after relying on the tribunal's decision in Assessee's own case. He further submitted that if in a particular year it is held that business has commenced, then in subsequent years there cannot be a different conclusion of the same facts.. He further submitted that Special Bench in Assessee's own case (ITA No. 2654/Ahd/2004 order dated 7.09.2012 has held that the business of Assessee was set up on 21.02.2001 when water was supplied through the main canals. He thus supported the order of CIT(A) 15. We have heard the rival submissions and perused the material on record. We find that CIT(A) while granting relief has noted that his predecessor after relying on the order of tribunal in Assessee's own case has decided the appeal in Assessee's favour. Further the Special Bench of Tribunal ITA No. 2654/Ahd/2004 order dated 7.09.2012 has held that the business of Assessee was set up on 21.02.2001 when water was supplied through the main canals. Before us, the Ld. D.R. could not bring order of High Court where the decision on the aforesaid issue has been reversed. In view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all effect the cost of assets in the hands of the appellant. The Assessing Officer's assertion that appellant's share in project cannot exceed the share of Government of Gujarat overlooks the distinction of financial relationship between States vis-a-vis manner of implementing a project through a carrier, in this case a company. Therefore, I do not agree with the Assessing Officer's action of holding that cost of assets in the hands of the appellant has to be restricted as per cost-sharing formula determined by the Tribunal. 3.3.1 As far as the issue of "Indira Sagar Dam" is concerned , obviously the accounting treatment given by the appellant is incorrect on the basis of appellant's own logic. Hence while giving appeal effect, the Assessing Officer is directed not to treat whose assets as belonging to the appellant, with its due follow up consequences like withdrawal of depreciation. 19. Aggrieved by the order of CIT(A), Revenue is now in appeal before us. Before us, Id.D.R. relied on the order of AO. On the other hand Id.A.R. reiterated the submissions made before CIT(A) and supported his order. 20. We have heard the rival submissions and perused the material on record. CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case we have any transaction of transfer of only land, the same shall have to be covered u/s.45. Whether such transaction, if any, shall result in short-term capital gain or long- term capital gain depend on the details of the purchase /acquisition. 7.3.2Hence, to sum up, at the appeal effect stage, the Assessing Officer shall scrutinize the instances of land sale involved and see whether these deals involved buildings and the land appurtenant or the land was sold separately. In case of the former position, appellant's stand shall be correct. In case of latter, capital gains shall be chargeable for the transaction concerned. 23. Aggrieved by the order of CIT(A), Revenue is now in appeal before us. Before us, Ld.D.R. relied on the order of AO and on the other hand Ld.A.R. submitted that CIT(A) has directed the Assessing Officer to make certain verification and then decide the issue and therefore no prejudice was caused to Revenue. He thus supported the order of CIT(A). 24. We have heard the rival submissions and perused the material on record. We find that CIT(A) has directed the AO to scrutinize the details of sale of land and verify as to whether the sale was of land alone or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ective grounds raised reads as under: 1. The learned CIT(A) has erred in law and on facts in holding that "Indira Sagar Dam" has been built by Madhya Pradesh Government and hence the appellant is not entitled to the claim of depreciation. 2. He has further erred in holding that the rent of residential Building, income on investments and miscellaneous receipts are to be assessed as income from other sources and not as income from Business & Profession of the Nigam. 3. The learned CIT(A) has also erred in holding that interest u/s. 234B & 234Dare mandatory inspite of the fact that the appellant has submitted that interest is not chargeable. 4. The learned CIT(A) has also erred in not considering an alternative ground of appeal that Profit arising on account of business of power generation has to be held as exempt u/s. 80IA(4) of the Income Tax Act, 1961 30. Gr. No 1 is inter-connected with ground no 3 of ITA No 166/Ahd/2009. Since the ground of Revenue has been decided against Revenue and in favour of the Assessee the present ground of Assessee becomes infructuous and therefore dismissed. 31. Gr. No 2 is with respect to holding rent of residential bldg and other misc. Receipts ..... X X X X Extracts X X X X X X X X Extracts X X X X
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