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TMI Blog2024 (1) TMI 852X X X X Extracts X X X X X X X X Extracts X X X X ..... he issue after providing due and reasonable opportunity of being heard to the assessee. Appeal is allowed for statistical purposes. - Shri Saktijit Dey, Vice-President And Shri Pradip Kumar Kedia, Accountant Member For the Assessee : Sh. Gautam Jain, Advocate For the Revenue : Sh. Kanav Bali, Sr. DR ORDER Captioned appeal by the assessee arises out of order dated 21.03.2023 passed by National Faceless Appeal Centre (NFAC), Delhi pertaining to assessment year 2017-18. 2. The core issue arising for consideration in the appeal is whether an amount of 7,67,07,293/- is allowable as business expenditure under section 37(1) of the Income-tax Act, 1961. Before we proceed to decide the issue, it is necessary to provide brief factual matrix leading to the present dispute. 3. The assessee, previously known as M/s. Quanta Towergen (P) Ltd., is a resident corporate entity. As stated, the assessee was earlier owned by Quanta Services (Netherlands) Ltd., which in turn was owned by Quanta Services Inc., an USA based company. The assessee is basically engaged in the business of owning and operating solar installations including batteries on telecom towers owned and oper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. entered into a settlement agreement with M/s. Team Sustain Ltd. on 14.02.2017, in terms of which, the assessee and Quanta Power Solutions (India) Pvt. Ltd paid certain amounts to M/s. Team Sustain Ltd. in addition to waiver of loans including interest granted to M/s. Team Sustain Ltd. as per framework agreement. In terms with the settlement agreement, an amount of Rs. 5,58,45,000/- was paid as compensation to M/s. Team Sustain Ltd., out of which, assessee s share was Rs. 81,70,000/- and that of Quanta Power Solutions (India) Pvt. Ltd. was Rs. 4,76,75,000/-. 5. In course of assessment proceedings, the Assessing Officer examined assessee s claim of deduction qua write-off of Rs. 8,02,05,204/- comprising of loan waiver and compensation paid. After examining assessee s claim in the context of facts and materials on record, the Assessing Officer concluded that the amounts written off on account of loans and advances is not allowable as deduction in terms of section 36(2)(i) of the Act. The assessee contested the aforesaid disallowance by filing an appeal before learned Commissioner (Appeals). While deciding the appeal, learned Commissioner (Appeals) held that the deduction claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in such arrangements. This is so because Ld CIT (A) has held that loans and advances written off in favour of TSL subsequent to Settlement Agreement dated 14th February 2017 are Capital expense as having made to acquire assets, including intangible of enduring nature as against the claim of the assessee that such waiving/write off of loans given to TSL is a revenue expenditure incurred in the regular course of business. The examination of the issue and findings of Ld CIT(A) are at Para 7.7 to 7.15 of CIT (A) order. In Page 235 of PB of the assessee, a reference has been made to Transaction Documents. However copies of these documents are not provided by the assessee. 5. It has been submitted by the appellant that TSL was to execute solar installation projects, monitor the performance of solar power generator through a network operating centre by using various software and maintain the solar assets on the sites. Refer Para 4 of the synopsis dated 02/01/2024 of the assessee. It has further been submitted by the assessee in Para 11 of the same synopsis that till financial year 2015-16 , the appellant was in the sole business of owning, installing and operating solar energy gener ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above , following further submissions are made hereunder :- i) This transaction is not a trade debt or a sum receivable on account of sales or rendering of services. ii) Its repayment to the assessee would not have swelled the profits as it is on capital account. iii) When no enduring benefit is arising to the appellant (as claimed by appellant) on account of any assets, knowhow, right to use ,IP assignments etc then why loan and interest has been waived off remains unanswered. More so when after this write off /waiver of loan and interest TSL has stopped working as associate of the appellant in subsequent years. Therefore this arrangement is in reality a compensation to TSL and is a Capital expense. Reference is also made to Page 270 of assessee PB which is SCHEDULE IX to Framework Agreement containing SPECIFIED REPRESENTATIONS AND WARRANTIES and Clause 17 deals with warranties of Intellectual Property IP held by TSL. 8. In view of the above Ld CIT (A), after examining the nature of transaction has very rightly held it as Capital Expenditure. As the appellant has challenged order and findings of Id CIT appeal before Hon ble ITAT and the main question whether this expe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esentative that since, the issue in dispute is a purely factual issue and has to be decided on examination of facts, these agreements, which have never been examined at any stage, need to be examined. 9. In response to the aforesaid submission of learned Departmental Representative, learned counsel appearing for the assessee has submitted that the departmental authorities have neither raised any query with regard to these documents nor called upon the assessee to furnish them for examination. Therefore, there was no occasion for the assessee to furnish them. He further submitted, if the departmental authorities so desire and want to examine the issue factually with reference to the documents referred to by learned Departmental Representative in his submissions, the assessee is willing to furnish them before the Assessing Officer. Thus, learned counsel for the assessee submitted for restoration of the issue to the Assessing Officer for de novo adjudication. Learned Departmental Representative also agreed for restoration of the issue, as according to him, various agreements/documents not examined earlier have to be examined for coming to a proper conclusion on facts. 10. Having ..... 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