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TMI Blog2021 (9) TMI 349X X X X Extracts X X X X X X X X Extracts X X X X ..... use before passing the assessment order - assessee has also submitted its response explaining the factual as well as the legal position and the fact that the matter has been examined earlier by the Tribunal in assessee s own case for A.Y 2007-08 and which has also been affirmed by the Hon ble Rajasthan High Court - where the AO has taken into consideration the decision of the Tribunal as well as of jurisdictional High Court in assessee s own case and find that identical facts and circumstances of the case are prevailing during the year under consideration, the opinion formed by the AO cannot be held as erroneous in nature. It is therefore not a case of lack of inquiry as held by the Pr. CIT rather it is a case where the AO has taken into consideration the factual and the legal position, the decision in assessee s own case rendered by the Tribunal and affirmed by the Hon ble High Court and also the fact that there is prospective amendment in the statue which is not applicable in the instant year - findings of the ld. Pr. CIT to the effect that there is a failure on the part by the AO to examine the claim of exemption by the assessee and the assessment order has been passed in a rout ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry as held by the ld. Pr. CIT rather it is a case where the Assessing Officer has taken into consideration the factual and the legal position and then has decided to accept the claim of the expenditure so claimed by the assessee. Therefore, the findings of the ld. Pr. CIT to the effect that there is a failure on the part by the Assessing Officer to examine the claim of expenses by the assessee and the assessment order has been passed in a routine and perfunctionary manner cannot be sustained and is hereby set aside - Appeal of the assessee is allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... Rajasthan Summit 2015 and thus submitted that the same is allowable u/s 37(1) being incurred wholly and exclusively for the purpose of business. 4. It was submitted that the AO again vide notice u/s 142(1) dt. 28.09.2018 at Point No.2 required the assessee to provide proof as to how the payment of ₹ 20,26,50,000/- to Resurgent Rajasthan is related to and has been spent wholly and exclusively for the purpose of business and at Point No.5 required the assessee to explain how and under what statutory provisions, CER of ₹ 2,58,48,598/- has been claimed as exempt income when the same are in the nature of revenue receipts. In response to said notice, the assessee vide letter dt. 11.10.2018 furnished the detailed explanation at Point No.1 & 4. The AO after examining all the details/ explanation accepted the claim of assessee. 5. The ld. AR submitted that thereafter, Ld. CIT vide show cause notice dt. 16.03.2021 issued u/s 263 required the assessee to show cause as to why the order passed u/s 143(3) on 28.12.2018 may not be revised as the said order is erroneous in so far as it is prejudicial to the interest of the revenue on account of the following:- (a) The assessee had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the details/ explanation/ case laws accepted the claim of assessee. Thus, when the AO has made necessary inquiry/ verification which he should have made as also inquired into the claim of CER being capital receipt and has applied his mind on both the issues, his order cannot be said to be erroneous so far as it is prejudicial to the interest of revenue only for the reason that the Ld. PCIT holds a different view. For this purpose, reliance is placed on the following cases:- • Sir Dorabji Tata Trust Vs. DCIT(E) 188 ITD 38 (Mum) • CIT Vs. Vijay Kumar Koganti (2020) 275 Taxman 394 (Mad) • CIT Vs. Green Fields Commercial Pvt. Ltd (2015) 119 DTR 303 (J&K) 8. The ld. AR submitted that the principles laid down in these decisions when applied to the facts of assessee's case, it is evident that in the assessee's case, the AO has made all the necessary enquiry and verification as can be expected of a prudent, judicious and responsible AO in normal course of his assessment work. The Ld. CIT has not specified as to what type of enquiry ought to have been made by AO which would have resulted into income or disallowance or any other adverse action. Thus, none of the condit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the P & L account. This claim of the assessee company was not justified. In any case, the AO has failed to examine the veracity of the expenditure made by the assessee company and expenses which were debited by the assessee company in the year under consideration was also not examined by the AO during the course of assessment proceedings. 6. From the above facts and circumstances of the case and having regard to the material available on record, the Assessing Officer failed to consider/ apply his mind while framing/passing assessment order of the above named assessee company. Thus, the order passed on 28.12.2018 is without making necessary verification cum examination of the exemption of income claimed by the assessee company and the expenses incurred by the assessee company debited in the Profit & Loss account and as such the assessment was made without application of mind on the given facts on record. This in turn has resulted in passing of an erroneous order by the Assessing Officer in the case due to non application of mind to relevant material an incorrect assumption of facts and an incorrect application of mind to law which is prejudicial to the interest of the Revenue. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso a note explaining such claim of exemption which was submitted as part of its return of income. Thereafter, the Assessing Officer as part of notice u/s 142(1) dated 30.07.2018 has asked the assessee company to provide details of any carbon emission receipts during the year and whether the same has been shown as income. In response, the assessee company vide its submission dated 27.08.2018 has submitted that during the year, it has received an amount of ₹ 2,58,48,598/- on account of sale of CER/REC certificates and after reducing expenses of ₹ 65,494/-, it has claimed exemption of ₹ 2,57,83,104/- as capital receipt. It was also submitted that in assessee's own case for A.Y 2007-08, the matter has been decided by the Tribunal vide its order dated 03.05.2017 which has subsequently been approved by the Hon'ble Rajasthan High Court vide its order dated 28.11.2017. We further note that the Assessing Officer has thereafter issued a specific show cause notice dated 28.09.2018 asking the assessee company to explain the carbon emission receipts of ₹ 2,58,48,598/- as to how and under what statutory provisions the same has been claimed as exempt income when the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment order has been passed in a routine and perfunctionary manner cannot be sustained and is hereby set aside. 13. The second issue which has been raised by the ld. Pr. CIT in the show cause notice relates to amount paid by assessee company to organize the event "Resurgent Rajasthan" in nature of assistance/contribution and no details/nature of expenditure/utilization by the nodal agency, was available on record. As per ld. PCIT, the expenditure of ₹ 20,26,50,000/- incurred by the assessee company cannot said to be laid out or expended wholly and exclusively for the purposes of assessee's business and the same deserves to be disallowed. Here also, the ld. Pr. CIT has recorded a finding that expenditure so claimed by the Assessing Officer has not been examined by the Assessing Officer and has therefore, held that the order has been passed in a routine and perfunctory manner which is clearly erroneous and prejudicial to the interest of the Revenue. 14. In this regard, during the course of hearing, our reference was drawn by the ld AR to the notice u/s 142(1) dated 07.07.2018 wherein the Assessing Officer has specifically asked the assessee company to justify its cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee in finding joint venture partners in PPP mode or otherwise towards mineral development in Rajasthan which is a step forward for the objectives of the assessee. The expenditure was approved by the Board of Directors in its 398th Meeting convened on 30.09.2015. It was submitted that because of the participation in the summit, a MOU was entered by the subsidiary company of the assessee M/s Rajasthan State Gas Ltd. for ₹ 2700 Crores with the State Government for the development of Gas and Pipelines Infrastructures, CNG and CGD network. This will bring more and more petroleum and gas companies in the state which will fetch huge Revenue to the company and profits to the assessee. Besides, Government of Rajasthan has also entered into various agreements with Fertilizers, Cement and Steel Industries to setup new plants or expand their manufacturing activities which will directly benefit the assessee in increasing its turnover and profits as the main raw material in Fertilizer industries is Rock Phosphate, in Cement Industry is Limestone and Gypsum. Further steel industry also uses limestone for its various manufacturing activities. Also these industries will be having hug ..... X X X X Extracts X X X X X X X X Extracts X X X X
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