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TMI Blog2016 (4) TMI 705X X X X Extracts X X X X X X X X Extracts X X X X ..... Learned Commissioner of Income Tax(A)-I, Coimbatore dated 30.07.2014 pertaining to the assessment years 2007-08 2008-09. 2. The assessee has raised following grounds for adjudication:- 1. The order of the Commissioner of Income Tax (Appeals) in as much as he has held against the Appellant is opposed to law and contrary to the facts and circumstances of the case and against the principles of natural justice. 2. Liquidated damages- Capital receipt 2.1. The Commissioner of Income tax (Appeals) erred in holding that compensation received by the appellant through waiver of Supplier s credit is revenue receipt liable to tax. 2.2. Commissioner of Income tax (Appeals) ought to have appreciated that the compensation received by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to tax and not a capital receipt . The CIT(A) observed that that for assessment year 2008-09, the compensation is rightly treated as revenue receipt by the AO but the same has to be considered for deduction u/s.80-IA of the Act by the AO. Therefore, CIT(A) confirmed the order of the AO on this issue in treating the windmill compensation as revenue receipt. 5. At the outset, the ld. D.R drew our attention to the fact that this issue is squarely covered by the decision of co-ordinate Bench in assessee s own case for assessment year 2009-10 in ITA No.1652/Mds./2012 vide order dated 21th February, 2013. The ld.A.R could not controvert the submissions of the ld.D.R. 6. We have heard both the parties and perused the material on record. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same manner, if the actual generation is only 4,00,000 units, then No.1 shall adjust for the shortfall of 1,25,000 units at rate, which shall be thrice of the prevailing TNEB rates, against the above supplier credit. 4. Notwithstanding anything mentioned hereinabove No.2 shall not under any circumstances be entitled to claim any amount more than J.25,00,000/- from No.1 towards generation loss. SWFL Windmill V : 2.No. 1 has guaranteed a minimum generation of 5,00,000 units per annum. (Ref. Clause no.6 of No.2 s PO No.2008/01/KD dated 23 rd July 2008). 3. The Parties have agreed that for any shortfall in actual generation against the minimum guaranteed generation, No.1 shall be liable to adjust the shortfall i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... guaranteed units of electricity, the assessee would have earned revenue out of such units, which is revenue receipt. 24. In the case of CIT v. Bombay Burmah Trading Corporation (supra), the assessee was given forest for lease for cutting and removing timber. Later, forests were nationalized and the lease agreements were terminated by the Government of Burma, but the compensation was paid to the assessee for residuary rights under lease in the shape of logs. The assessee sold the logs and realized the compensation. The Hon'ble Supreme Court held that the timber received by the assessee is capital in the hands of the assessee and profit on sale of logs is not assessable as income. The Hon'ble Supreme Court held that the forest l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l receipt. In the present case, the assessee has not received compensation for delay in commissioning of wind mill. The assessee has not received any Liquidated Damages for delay in supply of machinery. Here, the compensation received by the assessee is for loss of earnings. 26. The decision in the case of CIT v. South India Flour Mills Pvt. Ltd. (supra) is distinguishable on facts and has no application to the facts of the assessee. 27. In the case of CIT v. Manna Ramji Co.,(Supra), the assessee carried on business in timber. Its Office and six sheds for ITA 1652,2028,1679 2029/Mds/12 storing timber which it had constructed on site taken on a long lease. The premises was requisitioned under the Defence of India Act. Though th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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